Document:

Exhibit 10.1

 

600
TOWNSEND STREET, SAN FRANCISCO

 

 

LEASE

 

 

by and
between

 

TODA
DEVELOPMENT, INC.,

a
California corporation,

 

Landlord

 

and

 

ADVENT
SOFTWARE, INC.,

a Delaware
corporation,

 

Tenant

 

1

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
  DEFINITIONS

  	
  3

  
	
  1.1

  	
  Definitions

  	
  3

  
	
  1.2

  	
  “Additional Rent”

  	
  3

  
	
  1.3

  	
  “Base Expenses”

  	
  3

  
	
  1.4

  	
  “Base Rent”

  	
  3

  
	
  1.5

  	
  “Base Year”

  	
  3

  
	
  1.6

  	
  “Building”

  	
  3

  
	
  1.7

  	
  “Commencement Date”

  	
  3

  
	
  1.8

  	
  “Common Areas”

  	
  3

  
	
  1.9

  	
  “Computation Year”

  	
  3

  
	
  1.10

  	
  “Expiration Date”

  	
  3

  
	
  1.11

  	
  “Landlord’s Broker”

  	
  3

  
	
  1.12

  	
  “Operating Cost”

  	
  3

  
	
  1.13

  	
  “Permitted Use”

  	
  3

  
	
  1.14

  	
  “Premises”

  	
  3

  
	
  1.15

  	
  “Project”

  	
  3

  
	
  1.16

  	
  “Real Estate Taxes”

  	
  4

  
	
  1.17

  	
  “Rent”

  	
  4

  
	
  1.18

  	
  “Rentable Area”

  	
  4

  
	
  1.19

  	
  “Security Deposit”

  	
  5

  
	
  1.20

  	
  “Tenant Improvements”

  	
  5

  
	
  1.21

  	
  “Tenant’s Broker”

  	
  5

  
	
  1.22

  	
  “Tenant’s Proportionate Share”

  	
  5

  
	
  1.23

  	
  “Term”

  	
  5

  
	
  1.24

  	
  Other Terms

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  PREMISES

  	
  5

  
	
  2.1

  	
  Lease

  	
  5

  
	
  2.2

  	
  Modification of Premises

  	
  5

  
	
  2.3

  	
  Acceptance of Premises

  	
  6

  
	
  2.4

  	
  Early Access; Move In Period

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
  TERM AND USE

  	
  7

  
	
  3.1

  	
  Term

  	
  7

  
	
  3.2

  	
  Extension Options

  	
  8

  
	
  3.3

  	
  Termination Right; Partial Termination
  Right

  	
  9

  
	
  3.4

  	
  Use

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
  RENT AND SECURITY DEPOSIT

  	
  9

  
	
  4.1

  	
  Base Rent

  	
  9

  
	
  4.2

  	
  Tenant’s Proportionate Share of Increased
  Operating Cost and Real Estate Taxes

  	
  10

  
	
  4.3

  	
  Operating Cost

  	
  11

  
	
  4.4

  	
  Real Estate Taxes.

  	
  13

  
	
  4.5

  	
  Late Charge

  	
  13

  
	
  4.6

  	
  Interest on Past-Due Obligations

  	
  14

  

 

i

 

	
  4.7

  	
  Security Deposit

  	
  14

  
	
  4.8

  	
  Utilities

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
  LANDLORD’S COVENANTS

  	
  15

  
	
  5.1

  	
  Basic Services

  	
  15

  
	
  5.2

  	
  Extra Services

  	
  16

  
	
  5.3

  	
  Window Coverings

  	
  16

  
	
  5.4

  	
  Graphics and Signage

  	
  17

  
	
  5.5

  	
  Repair Obligation

  	
  18

  
	
  5.6

  	
  Quiet Enjoyment

  	
  18

  
	
  5.7

  	
  Landlord Compliance with Law

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
  TENANT’S COVENANTS

  	
  19

  
	
  6.1

  	
  Payments by Tenant

  	
  19

  
	
  6.2

  	
  Taxes on Personal Property and Tenant
  Improvements

  	
  19

  
	
  6.3

  	
  Repairs by Tenant

  	
  19

  
	
  6.4

  	
  Waste

  	
  19

  
	
  6.5

  	
  Compliance With Laws and Insurance
  Standards

  	
  20

  
	
  6.6

  	
  Limitation on Tenant’s Compliance
  Obligations

  	
  20

  
	
  6.7

  	
  Rules and Regulations

  	
  20

  
	
  6.8

  	
  No Nuisance; No Overloading

  	
  20

  
	
  6.9

  	
  Furnishing of Financial Statements;
  Tenant’s Representations

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
  ASSIGNMENT OR SUBLEASE

  	
  21

  
	
  7.1

  	
  No Assignment Without Consent

  	
  21

  
	
  7.2

  	
  Notice of Assignment

  	
  21

  
	
  7.3

  	
  Landlord Consent

  	
  21

  
	
  7.4

  	
  Assignment/Subletting Fee

  	
  22

  
	
  7.5

  	
  Assignment/Sublease Profit

  	
  22

  
	
  7.6

  	
  No Waiver

  	
  22

  
	
  7.7

  	
  Tenant Remains Liable

  	
  22

  
	
  7.8

  	
  Short Term Sublease Exception to Landlord
  Recapture and Profit Sharing Rights

  	
  22

  
	
  7.9

  	
  Affiliate Transferees

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
  ALTERATIONS, ADDITIONS AND IMPROVEMENTS

  	
  23

  
	
  8.1

  	
  Landlord Consent

  	
  23

  
	
  8.2

  	
  Permits and Plans

  	
  24

  
	
  8.3

  	
  Freedom From Liens

  	
  24

  
	
  8.4

  	
  Alterations Upon Lease Expiration

  	
  24

  
	
  8.5

  	
  Construction of Alterations

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
  SUBORDINATION, NONDISTURBANCE AND
  ATTORNMENT

  	
  25

  
	
  9.1

  	
  Subordination

  	
  25

  
	
  9.2

  	
  Lease Modifications

  	
  25

  
	
  9.3

  	
  Landlord Mortgagee Cure Rights

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
  ENVIRONMENTAL MATTERS

  	
  26

  
	
  10.1

  	
  Hazardous Materials Prohibited

  	
  26

  
	
  10.2

  	
  Definition of Hazardous Material

  	
  26

  
	
  10.3

  	
  Limitations on Assignment and Subletting

  	
  26

  

 

ii

 

	
  10.4

  	
  Right of Entry

  	
  26

  
	
  10.5

  	
  Notice to Landlord

  	
  27

  
	
  10.6

  	
  Landlord Representation

  	
  27

  
	
  10.7

  	
  Exculpation

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
  INSURANCE, INDEMNITY

  	
  27

  
	
  11.1

  	
  Tenant’s Liability Insurance

  	
  27

  
	
  11.2

  	
  Tenant’s Additional Insurance Requirements

  	
  28

  
	
  11.3

  	
  Landlord Insurance

  	
  29

  
	
  11.4

  	
  Indemnity and Exoneration

  	
  29

  
	
  11.5

  	
  Waiver of Subrogation

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
  CONDEMNATION

  	
  30

  
	
  12.1

  	
  Condemnation

  	
  30

  
	
  12.2

  	
  Landlord Termination Rights

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13.

  	
  DAMAGE OR DESTRUCTION

  	
  30

  
	
  13.1

  	
  Premises Damaged; Landlord Repair
  Obligations

  	
  30

  
	
  13.2

  	
  Project Damaged; Landlord Repair
  Obligations

  	
  31

  
	
  13.3

  	
  Damage During Last Twelve Months of Term

  	
  31

  
	
  13.4

  	
  Extensive Damage; Uninsured Damage; Rights
  of Landlord and Tenant to Terminate

  	
  31

  
	
  13.5

  	
  Rent Abatement

  	
  32

  
	
  13.6

  	
  Insurance Proceeds

  	
  32

  
	
  13.7

  	
  Waiver

  	
  32

  
	
  13.8

  	
  No Further Repair Obligations

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14.

  	
  DEFAULT BY TENANT

  	
  33

  
	
  14.1

  	
  Events of Default

  	
  33

  
	
  14.2

  	
  Remedies Upon Default

  	
  34

  
	
  14.3

  	
  Computation of Rent for Purposes of Default

  	
  35

  
	
  14.4

  	
  Landlord’s Right to Perform

  	
  35

  
	
  14.5

  	
  Remedies Cumulative

  	
  35

  
	
  14.6

  	
  Waiver

  	
  35

  
	
  14.7

  	
  Repeated Defaults

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15.

  	
  SURRENDER; HOLDING OVER

  	
  35

  
	
  15.1

  	
  Surrender

  	
  35

  
	
  15.2

  	
  Holding Over

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
  ENTRY BY LANDLORD

  	
  36

  
	
  16.1

  	
  Landlord Entry

  	
  36

  
	
  16.2

  	
  Keys

  	
  36

  
	
  16.3

  	
  Waiver

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17.

  	
  EMERGENCY GENERATOR EQUIPMENT

  	
  36

  
	
  17.1

  	
  Right to Use Building Generator

  	
  36

  
	
  17.2

  	
  Cost of Operation

  	
  37

  
	
  17.3

  	
  Landlord Right to Suspend Operations

  	
  37

  
	
  17.4

  	
  Evacuation

  	
  37

  
	
  17.5

  	
  Rights Personal; Termination

  	
  37

  

 

iii

 

	
  ARTICLE 18.

  	
  EXPANSION RIGHTS

  	
  38

  
	
  18.1

  	
  Right of First Offer

  	
  38

  
	
  18.2

  	
  Expansion Options

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19.

  	
  TERMINATION RIGHTS

  	
  40

  
	
  19.1

  	
  Termination Option

  	
  40

  
	
  19.2

  	
  Termination Fee

  	
  40

  
	
  19.3

  	
  Termination

  	
  41

  
	
  19.4

  	
  Effectiveness of Termination

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20.

  	
  RIGHT OF FIRST OFFER TO PURCHASE

  	
  41

  
	
  20.1

  	
  Right of First Offer

  	
  41

  
	
  20.2

  	
  Escrow; Closing

  	
  42

  
	
  20.3

  	
  Failure to Exercise

  	
  42

  
	
  20.4

  	
  Rights Personal; Termination

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21.

  	
  ANTENNA INSTALLATIONS

  	
  42

  
	
  21.1

  	
  Antennae Installations

  	
  42

  
	
  21.2

  	
  Installation; Proper Identification of
  Equipment

  	
  42

  
	
  21.3

  	
  Costs

  	
  43

  
	
  21.4

  	
  Construction

  	
  43

  
	
  21.5

  	
  Interference by Equipment

  	
  43

  
	
  21.6

  	
  Use; Compliance with Law; Permits

  	
  43

  
	
  21.7

  	
  Removal of Equipment

  	
  44

  
	
  21.8

  	
  Access to Antenna Site

  	
  44

  
	
  21.9

  	
  Liability; Indemnity; Insurance

  	
  44

  
	
  21.10

  	
  Maintenance; Repair

  	
  45

  
	
  21.11

  	
  Relocation and Substitution

  	
  45

  
	
  21.12

  	
  Damage or Destruction; Eminent Domain

  	
  45

  
	
  21.13

  	
  Rights Personal; Termination

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22.

  	
  DECK AND STAIRWELL

  	
  45

  
	
  22.1

  	
  Deck License Area

  	
  45

  
	
  22.2

  	
  Stairwell Use

  	
  46

  
	
  22.3

  	
  Right to Revoke License

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 23.

  	
  MISCELLANEOUS MATTERS

  	
  47

  
	
  23.1

  	
  USA Patriot Act and Anti-Terrorism Laws

  	
  47

  
	
  23.2

  	
  Telecommunications

  	
  47

  
	
  23.3

  	
  Parking and Shuttle Service

  	
  48

  
	
  23.4

  	
  Brokers

  	
  48

  
	
  23.5

  	
  No Waiver

  	
  49

  
	
  23.6

  	
  Recording

  	
  49

  
	
  23.7

  	
  Estoppel Certificate

  	
  49

  
	
  23.8

  	
  Transfers by Landlord

  	
  49

  
	
  23.9

  	
  Attorneys’ Fees

  	
  49

  
	
  23.10

  	
  Termination; Merger

  	
  50

  
	
  23.11

  	
  Amendments; Interpretation

  	
  50

  
	
  23.12

  	
  Severability

  	
  50

  
	
  23.13

  	
  Notices

  	
  50

  
	
  23.14

  	
  Force Majeure

  	
  50

  

 

iv

 

	
  23.15

  	
  Successors and Assigns

  	
  50

  
	
  23.16

  	
  Waiver of Jury Trial

  	
  51

  
	
  23.17

  	
  Further Assurances

  	
  51

  
	
  23.18

  	
  Incorporation of Prior Agreements

  	
  51

  
	
  23.19

  	
  Applicable Law

  	
  51

  
	
  23.20

  	
  Time of the Essence

  	
  51

  
	
  23.21

  	
  No Joint Venture

  	
  51

  
	
  23.22

  	
  Limitation on Landlord’s Liability

  	
  51

  
	
  23.23

  	
  Authority

  	
  51

  
	
  23.24

  	
  No Light, Air or View Easement

  	
  52

  
	
  23.25

  	
  Offer

  	
  52

  
	
  23.26

  	
  Building Name

  	
  52

  
	
  23.27

  	
  Exhibits

  	
  52

  
	
  23.28

  	
  Condition of Ground Floor Lobby and
  Exterior Courtyard; Termination of Art Program

  	
  52

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  FLOOR PLAN OF PREMISES

  	
   

  
	
  EXHIBIT B

  	
  INITIAL IMPROVEMENT OF THE PREMISES; ALLOWANCE

  	
   

  
	
  EXHIBIT C

  	
  CONFIRMATION OF TERM OF LEASE

  	
   

  
	
  EXHIBIT D

  	
  BUILDING RULES AND REGULATIONS

  	
   

  
	
  EXHIBIT E

  	
  TENANT CONSTRUCTION AND RULES OF THE SITE

  	
   

  
	
  EXHIBIT F

  	
  STANFORD STREET LEASE HOLD OVER PROVISIONS

  	
   

  

 

v

 

LEASE

BASIC LEASE
INFORMATION

 

	
  Date of Lease:

  	
   

  	
  Dated for reference purposes only January 1, 2006

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  Toda Development, Inc.,

  
	
   

  	
   

  	
  a California corporation

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  c/o Bay West Group

  2 Henry Adams Street,
  Suite 450

  
	
   

  	
   

  	
  San Francisco, CA 94103

  
	
   

  	
   

  	
  Attention: Tim Treadway

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  Advent Software, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address:

  	
   

  	
  Prior to Commencement Date:

  301 Brannan Street, Sixth
  Floor
San Francisco, CA 94107
Attn: Chief Financial Officer

  	
   

  	
  From and after Commencement Date:

  600 Townsend Street
San Francisco, CA 94103
Attn: Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Floors on which the Premises are located:

  	
   

  	
  Second (2nd), third (3rd), fourth (4th)
  and fifth (5th)

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  The “Second Floor Premises”, the “Third Floor Premises”, the “Fourth
  Floor Premises”, and the “Fifth Floor Premises”, described as follows:

  Second Floor Premises:
  That portion of the second (2nd) floor of the Building shown on Exhibit A, consisting of approximately
  21,000 rentable square feet.

  Third Floor Premises: The
  entire leaseable area of the third (3rd) floor of the Building, as
  shown on Exhibit A,
  consisting of approximately 42,000 rentable square feet.

  Fourth Floor Premises:
  That portion of the fourth (4th) floor of the Building shown on Exhibit A, consisting of
  approximately 15,200 rentable square feet.

  Fifth Floor Premises: The
  entire leaseable area of the fifth (5th) floor of the Building, as
  shown on Exhibit A,
  consisting of approximately 38,000 rentable square feet.

  Subject to the provisions of Section 2.2 below, Tenant shall
  have the right to modify the size and configuration of the Second Floor
  Premises, the Third Floor Premises and the Fourth Floor Premises by written
  notice to Landlord given on or before the date which is the earlier of
  February 1, 2006 or the date which is sixty (60) days following the date
  this Lease is executed by Landlord and Tenant, and in such event Landlord and
  Tenant shall execute an amendment to this Lease modifying the description of
  the Premises, confirming the Rentable Area of the Premises as so modified in
  accordance with BOMA (ANSI Z65.1-1996), and replacing Exhibit A to this Lease with a
  substitute exhibit depicting the modified Premises.

  
	
   

  	
   

  	
   

  
	
  Rentable Area of the Premises:

  	
   

  	
  The total rentable square footage of the Premises shall be confirmed
  pursuant to Section 2.2 below.

  

 

1

 

	
  Commencement Date:

  	
   

  	
  The Commencement Date shall be the date which is fifteen (15) days
  after the date (the “Completion Date”) which is earlier to occur of:
  (i) the date of Substantial Completion of the Tenant Improvements (as
  such terms are defined in the Work Letter attached hereto as Exhibit B), or (ii) the date on
  which the Tenant Improvements would have been Substantially Completed but for
  the occurrence of any Tenant Delays (as defined in the Work Letter)
  established in accordance with the provisions of the Work Letter, as
  reasonably determined by Landlord in good faith.

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  The last day of the one hundred twentieth (120th) full calendar month
  following the Commencement Date, subject to possible extension pursuant to
  the provisions of Section 3.2 below or early termination pursuant to the
  provisions of Article 9 below.

  
	
   

  	
   

  	
   

  
	
  Base Rent:

  	
   

  	
  Period

  	
   

  	
  Base Rent Per Annum

  
	
   

  	
   

  	
  First, Second and Third Rent Years:

  	
   

  	
  $

  	
  20.00 per square foot per
  annum

  
	
   

  	
   

  	
  Fourth, Fifth Sixth and Seventh Rent Years:

  	
   

  	
  $

  	
  23.00 per square foot per
  annum

  
	
   

  	
   

  	
  Eighth, Ninth and Tenth Rent Years:

  	
   

  	
  $

  	
  26.50 per square foot per
  annum

  
	
   

  	
   

  	
   

  
	
  Initial Base Rent Abatement:

  	
   

  	
  Notwithstanding the foregoing, no Base Rent shall be payable with
  respect to that portion of the Premises located on the third, fourth, and
  fifth floors of the Building during the eleven (11) month period commencing
  on the Commencement Date, and no Base Rent shall be payable with respect to
  that portion of the Premises located on the second floor of the Building
  during the seventeen (17) month period commencing on the Commencement Date.

  
	
   

  	
   

  	
   

  
	
  Rent Year Defined:

  	
   

  	
  For rent purposes only, the first “Rent Year” shall be the period
  commencing on the Commencement Date and ending on the last day of the twelfth
  (12th) full calendar month thereafter. Each twelve (12) calendar
  month period thereafter shall constitute a “Rent Year”, provided that the
  Tenth Rent Year shall extend through the Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Base Year:

  	
   

  	
  2006

  
	
   

  	
   

  	
   

  
	
  Tenant’s

  Proportionate Share:

  	
   

  	
  An amount, expressed as a percentage, calculated by dividing Rentable
  Area Premises by the rentable square footage of the Building, which shall be
  established in accordance with the provisions of Section 1.8 below.

  
	
   

  	
   

  	
   

  
	
  Parking Spaces:

  	
   

  	
  One (1) unreserved space per each 1,500 square feet of the
  Rentable Area of the Premises.

  
	
   

  	
   

  	
   

  
	
  Parking Spaces Rental:

  	
   

  	
  The rate charged from Landlord from time to time, as provided in
  Section 17.1. As of the date this Lease is executed by Landlord and
  Tenant, the rate is $200.00 per month per parking space.

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  An amount calculated by multiplying (a) $12.00
  by (b) the Rentable Area of the Premises, established in accordance with
  the provisions of Section 1.18 below and subject to adjustment as set
  forth in Section 4.7 below. Based on an estimated Rentable Area of the
  Premises of 100,000 square feet, the Security Deposit initially required
  hereunder will be $1,200,000.00 (the “Estimated
  Deposit Amount”).

  
	
   

  	
   

  	
   

  
	
  Landlord’s Broker:

  	
   

  	
  HC&M Commercial Properties, Inc.

  
	
   

  	
   

  	
   

  
	
  Tenant’s Broker:

  	
   

  	
  The Axiant Group/Simmonds Realty Group

  

 

2

 

THIS LEASE is entered into between Landlord and Tenant.

 

ARTICLE 1.

DEFINITIONS

 

1.1          Definitions. 
Terms used herein shall have the following meanings:

 

1.2          “Additional Rent” shall mean all monetary obligations of
Tenant under this Lease other than the obligation for payment of Base Rent and
Tenant’s Proportionate Share of Increased Operating Cost, including without
limitation the rental due for any parking spaces leased hereunder.

 

1.3          “Base Expenses” shall mean the amount of Operating Cost for
the Base Year.

 

1.4          “Base Rent” shall mean the sums due from time to time as
rental for the Premises.

 

1.5          “Base Year” shall mean the calendar year specified on
the Basic Lease Information page.

 

1.6          “Building” shall mean 600 Townsend Street, San
Francisco, California.

 

1.7          “Commencement Date” shall mean the date when the Term commences
as determined pursuant to Section 3.1 hereof.

 

1.8          “Common Areas” shall mean the areas on individual floors of
the Building devoted to non-exclusive uses such as common corridors, lobbies,
stairways, elevators, electric and telephone closets, restrooms, mechanical
closets, janitor closets and other similar facilities for the benefit of all
tenants (and invitees) on the particular floor and other floors.

 

1.9          “Computation Year” shall mean each twelve (12) consecutive
month period commencing January 1st of each year during the Term following
the Base Year and any partial calendar year in which the Lease expires or is
terminated.

 

1.10        “Expiration Date” shall mean the date when the Term shall end
as determined pursuant to Section 3.1 hereof, unless sooner terminated
pursuant to the terms of this Lease.

 

1.11        “Landlord’s Broker” shall mean the individual or corporate
broker identified on the Basic Lease Information page as the broker for
Landlord, if any.

 

1.12        “Operating Cost” shall have the meaning given in Section 4.3.

 

1.13        “Permitted Use” shall mean general office purposes
consistent with the operation of the Building as a first-class office building
in the San Francisco south of Market Street area (including, without
limitation, software research and development); provided, however, that
Permitted Use shall not include (a) offices or agencies of any foreign
government or political subdivision thereof; (b) offices of any agency or
bureau of any state, county or city government; (c) offices of any health
care professionals or service organization; (d) schools or other training
facilities which are not ancillary to corporate, executive or professional
office use; (e) retail or restaurant uses; (f) communications firms
such as radio and/or television stations; (g) or personnel or employment
agencies (other than executive offices of the same not having substantial
dealings with the public).

 

1.14        “Premises” shall mean that certain portion of the
Building shown on the floor plan attached hereto as Exhibit A.

 

1.15        “Project” shall mean the Building, the parking garage
affiliated therewith, and the real property on which the Building and the
parking garage are located, but not any other buildings.  The lobby of the Building and a portion of
the garage of the Building are the subject of that certain Grant of Easement,
recorded on December 19, 1986 in Book E238, Page in the official
records of the County of San Francisco, California (the 

 

3

 

“Official Records”), as
amended by that First Amendment to Grant of Easement (Re Gallery, Etc.), dated June 19,
1991, and recorded on June 27, 1991 in the Official Records (as so
amended, the “Lobby Easement”).

 

1.16        “Real Estate Taxes” shall have the meaning set forth in Section 4.4
below.

 

1.17        “Rent” shall mean the sum of Base Rent, Tenant’s
Proportionate Share of Increased Operating Cost plus Additional Rent.

 

1.18        “Rentable Area” shall mean the area or areas of space within
the Project determined by Landlord to be usable area, plus a load factor
established by Landlord which represents an approximate allocation of the
square footage of the Building’s elevator and mechanical equipment areas, telephone
and electrical rooms, janitorial service areas, public lobbies and corridors,
stairwells and entranceways, as determined by Landlord in accordance with BOMA
(ANSI Z65.1-1996). The calculation of this load factor may vary from floor to
floor but remains consistent on any given floor.  Landlord shall cause Ostgren Associates (“Landlord’s Architect”) to measure the
usable area of the Premises and the Building and to determine the load factor
applicable to each floor of the Building, all in accordance with BOMA (ANSI
Z65.1-1996) as soon as possible following the execution of this Lease by
Landlord and Tenant, but in no event later than January 2, 2006.  Landlord shall promptly provide Tenant with
written notice of Landlord’s determination of the Rentable Area of the Premises
and the Building and the load factor applicable to each floor of the Building,
together with the calculations on which such determinations were based (the “Rentable Area Calculation Notice”).  During the sixty (60) day period commencing
on Tenant’s receipt of the Rentable Area Calculation Notice (the “Review Period”), Tenant shall have the
right, at Tenant’s sole cost, to cause MacCracken Architect or another
architect engaged by Tenant and reasonably approved by Landlord to verify Landlord’s
determination of the Rentable Area of the premises or the Building and the
applicable load factors in accordance with BOMA (ANSI Z65.1-1996).  If the Rentable Area of the Premises or the
Building or the load factor applicable to any floor of the Building on which
the Premises are located, as determined by Tenant’s architect pursuant to the
provisions of this Section 1.18, varies from the Rentable Area of the
Premises or the Building or the load factor applicable to any floor of the
Building on which the Premises are located as specified in the Rentable Area
Calculation Notice by less than five percent (5%) (a “Minor Variation”), then for the purposes of
this Lease the Rentable Area of the Premises and the Building and the load
factors for such floors shall be as specified in the Rentable Area Calculation
Notice; provided, however, Tenant and/or Tenant’s Architect may in such event
advise Landlord’s Architect in writing of any error(s) in Landlord’s Architect’s
measurements or calculations prior to the expiration of the Review Period, and
if Landlord’s Architect in its sole good faith judgment agrees that it has made
such error(s), then Landlord’s Architect will revise its calculations
accordingly and the Rentable Area of the Premises or the Building or the load
factors for such floors in which the Minor Variation was the result of such
error shall be appropriately adjusted by Landlord’s Architect.  If the Rentable Area of the Premises or the
Building or the load factor applicable to any floor of the Building on which
the Premises are located, as determined by Tenant’s architect pursuant to the
provisions of this Section 1.18, varies from the figures specified in the
Rentable Area Calculation Notice by five percent (5%) or more, then provided
that Tenant provides Landlord with written notice of such variance, together
with the calculations on which Tenant’s architect’s determination were based
(an “Objection Notice”) by the end
of the Review Period, Landlord and Tenant shall each instruct their respective architects
to attempt in good faith to resolve the discrepancy in calculations.  If Landlord’s architect and Tenant’s
architect do not reach a mutual agreement on the disparate measurements and
calculations by the date which is thirty (30) days after the date of the
Objection Notice, Landlord shall engage Huntsman Architectural Group (“Huntsman”) to verify the determination of
the Rentable Area of the Building and the load factor applicable to each floor
of the Building factors in accordance with BOMA (ANSI Z65.1-1996), and shall
instruct Huntsman to specify whether the figures specified in the Rentable Area
Calculation Notice or the figures specified in the Objection Notice are closest
to the figures established by Huntsman, and for the purposes of this Lease the
Rentable Area of the Premises and Building and the load factor applicable to
each floor of the Building shall be as set forth in the Rentable Area
Calculation Notice or the Objection Notice, as specified by Huntsman.  If Huntsman selects the figures in the
Rentable Area Calculation Notice, Tenant shall reimburse Landlord for the cost
of Huntsman’s services hereunder.  If
Tenant does not provide an Objection Notice by the end of the Review Period,
then for the purposes of this Lease the Rentable Area of the Premises and the
Building and the load factors for such floors shall be as specified in the
Rentable Area Calculation Notice. The load factors established pursuant to this
Section 1.18 are referred to as the “Approved
Load Factors”. Landlord and Tenant acknowledge that if additional
common corridors or other common area elements are constructed on any floor of
the Building, the load factor for such floor shall be modified. Upon
determination of the Rentable Area of the Premises and the Building and the
Approved 

 

4

 

Load Factors, Landlord and Tenant shall execute an amendment to this
Lease, which amendment shall (i) state the Rentable Area of the Building,
as determined in accordance with this Section 1.18, (ii) state the
Rentable Area of the Premises, as determined in accordance with this Section 1.18,
using the Approved Load Factors, (iii) state Tenant’s Percentage Share
based on the Rentable Area of the Premises and the Rentable Area of the
Building, (iv) state the Base Rent payable by Tenant under this Lease and
the Improvement Allowance payable by Landlord pursuant to the Work Letter,
based on the Rentable Area of the Premises, and (v) state the amount of
the Security Deposit calculated in accordance with the Basic Lease Information
page.  If there is a modification in the
size of the Premises pursuant to the provisions of Section 2.2 of this
Lease, the provisions of Section 2.2 below shall apply.

 

1.19        “Security Deposit” shall mean the amount specified on the Basic
Lease Information page to be paid by Tenant to Landlord and held and
applied pursuant to Section 4.6.

 

1.20        “Tenant Improvements” shall mean the improvements to the Premises
installed or to be installed for Tenant pursuant to Exhibit B.

 

1.21        “Tenant’s Broker” shall mean the individual or corporate
broker identified on the Basic Lease Information page as the broker for
Tenant, if any.

 

1.22        “Tenant’s Proportionate
Share” is specified on the
Basic Lease Information page and is based on the percentage which the
Rentable Area of the Premises bears to the total Rentable Area of the
Building.  If the Rentable Area of the
Premises changes as a result of the modification of the Premises in accordance
with the provisions of Section 2.2 below, Tenant’s Proportional Share
shall be recalculated.

 

1.23        “Term” shall mean the period commencing with the
Commencement Date and ending at 11:59 p.m. on the Expiration Date.

 

1.24        Other Terms. 
Other terms used in this Lease and on the Basic Lease Information page shall
have the meanings given to them herein and thereon.

 

ARTICLE 2.

PREMISES

 

2.1          Lease. 
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the Premises upon all of the terms, covenants and conditions set forth in this
Lease.

 

2.2          Modification of Premises. 
Tenant shall have the right to increase or decrease the size of the
Premises described in the Basic Lease Information and shown on the attached Exhibit A, provided the specific
configuration of the modified Premises shall be subject to Landlord’s approval,
which shall not be unreasonably withheld, and such modification shall be made
in accordance with the terms and conditions of this Section 2.2.  If Tenant desires to increase the size of the
Second Floor Premises or the Fourth Floor Premises, or to decrease the size of
the Second Floor Premises, the Third Floor Premises, or the Fourth Floor
Premises, Tenant shall provide Landlord with written notice of such election
(the “Premises Modification Notice”)
not later than sixty (60) days after the full execution of this Lease by
Landlord and Tenant (the “Premises
Modification Notice Deadline”), which Premises Modification Notice
shall include a depiction of the desired configuration of the modified
Premises.  Tenant’s right to modify the
Premises is subject to the following terms and conditions: (i) the total
Rentable Area of the Premises following such modification shall not be less
than 92,000 rentable square feet, (ii) the Second Floor Premises may be
increased to include part or all of the area labeled “Initial Expansion Area”
on attached Exhibit A (the “Initial Expansion Area”), (iii) the configuration of each
increment of the Premises must be permitted by applicable laws regarding
exiting, (iv) space included in the Premises on each floor shall be
reasonably contiguous, (v) if Tenant leases a portion of the Initial
Expansion Area, the balance of the Initial Expansion Area not leased by Tenant,
taken together with the balance of the then-unleased space on the floor, shall
in Landlord’s reasonable judgment be readily leaseable for general office
purposes with legal exiting and access to restrooms and elevators, and (vi) if
Tenant surrenders a portion of the Premises on any floor, the space so
surrendered, taken together with the balance of the then-unleased space on the
floor, shall in Landlord’s reasonable judgment be readily leaseable for general
office purposes with legal exiting and access to restrooms and elevators.  Landlord may consider such 

 

5

 

factors as Landlord reasonably deems relevant in determining whether
space is readily leaseable for general office purposes, including, without
limitation, whether it is less than 2,000 feet, is of an unusual configuration,
or consists entirely of interior space (i.e., without windows).  If Landlord disapproves of Tenant’s proposed
configuration of the Premises as depicted in the Premises Modification Notice,
Landlord shall provide Tenant with written notice of such disapproval, and
Landlord and Tenant shall cooperate in good faith to identify a configuration
which is acceptable to both Landlord and Tenant.  Upon Landlord’s approval of Tenant’s desired
modification of the Premises, Landlord and Tenant shall execute an amendment to
this Lease, which amendment shall (i) modify the description of the Second
Floor Premises, Third Floor Premises, or Fourth Floor Premises, as applicable, (ii) confirm
the Rentable Area of the Premises as so modified, as reasonably determined by
Landlord in accordance with BOMA (ANSI Z65.1-1996), using the Approved Load
Factors established pursuant to Section 1.18 above, (iii) confirm
Tenant’s Percentage Share based on the modified Rentable Area of the Premises, (iv) replace
Exhibit A to this Lease with
a substitute exhibit depicting the modified Premises, (v) state the Base
Rent payable by Tenant under this Lease and the Improvement Allowance payable
by Landlord pursuant to the Work Letter, based on the Rentable Area of the
modified Premises, and (vi) confirm the recalculated amount of the
Security Deposit pursuant to Section 4.7 below.  If Tenant does not deliver the Premises
Modification Notice by the Premises Modification Notice Deadline, Tenant shall
have no further rights under this Section 2.2.  If Tenant desires to verify the usable square
footage of the modified Premises, Tenant shall cause Tenant’s architect to
verify the measurement of the usable square footage of the modified Premises
within thirty (30) days after Landlord provides Tenant with Landlord’s calculation
thereof.  Landlord and Tenant shall use
good faith efforts to resolve any dispute regarding the calculation of the
usable square footage of the Premises.

 

2.3          Acceptance of Premises. 
Tenant acknowledges that: (a) it has been advised by Landlord,
Landlord’s Broker and Tenant’s Broker, if any, to satisfy itself with respect
to the condition of the Premises (including, without limitation, the HVAC,
electrical, plumbing and other mechanical installations, security and
environmental aspects) and the present and future suitability of the Premises
for Tenant’s intended use; (b) Tenant has made such inspection and
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to Tenant’s occupancy of the
Premises and the term of this Lease; and (c) neither Landlord nor any of
Landlord’s agents has made any oral or written representations or warranties
with respect to the condition, suitability or fitness of the Premises other
than as may be specifically set forth in this Lease.  Tenant accepts the Premises in its AS IS condition, subject to all matters of
record and applicable laws, ordinances, rules and regulations, subject to
the completion of Landlord’s Work, as described in Exhibit B to this Lease, and subject to completion of the
Tenant Improvements described in Exhibit B
to this Lease.  Tenant acknowledges that
neither Landlord nor Landlord’s Broker nor any of Landlord’s agents has agreed
to undertake or pay for any alterations or additions or to perform any
maintenance or repair of the Premises except for the routine maintenance and
janitorial work specified herein and except as may be expressly set forth in Exhibit B.

 

2.4          Early Access; Move In Period. 
Tenant shall be given access to the Premises for a period of fourteen
(14) days (the “Move In Period”)
following Substantial Completion of the Tenant Improvements (as such terms are
defined in the Work Letter attached as Exhibit B),
in order for Tenant and/or Tenant’s contractors or vendors to install
furniture, cabling and trade fixtures as Tenant elects in accordance with the
terms hereof; provided, however, that Tenant and Tenant’s contractors shall
first have provided the certificates of insurance called for under this Lease,
including pursuant to Sections 11.1 and 11.2 below. During the period of
such early access, (i) Tenant shall be solely responsible for any
equipment, fixtures, furniture or material brought into the Premises in
connection with such early occupancy, and for any loss or damage thereto from
any cause whatsoever, excluding only the gross negligence or deliberate
misconduct of Landlord or Landlord’s contractors, and (ii) Tenant shall
cooperate with Landlord to facilitate the completion of the Tenant
Improvements, provided that Landlord shall ensure that the Premises are
substantially free of Landlord’s contractors in order to maximize the benefits
to Tenant of the Move In Period.  During
the Move In Period Tenant may use the Building’s freight elevator and loading
dock on a non-exclusive basis during business hours, free of charge, other than
as provided in Rule 5 of the Rules and Regulations attached hereto as
Exhibit D, if
applicable.  If Tenant desires use of the
freight elevator or loading dock during other than during business hours on
business days, then Tenant may reserve such use in compliance with the Building’s
rules and procedures and shall pay Landlord a reasonable amount for
providing any security services in connection with such use.  Any such security services shall be solely
for the benefit of Landlord’s property, and in no event shall Landlord be
liable to Tenant for, and Tenant hereby releases Landlord and its agents and
contractors from, liability for, any theft, loss or damage of or to Tenant’s
property.  Landlord shall maintain the
freight elevators in operable condition during the Move In Period, and shall
promptly respond to any service request regarding the 

 

6

 

freight elevators.  If
availability of the freight elevator is interrupted due to a required repair,
the Move In Period shall be extended by one day for each day of such
interruption, and such interruption shall be considered a “Landlord Delay” for
the purposes of Section 3.1(b) below, subject to the following
sentence. If the elevator service company determines that service was required
during the Move In Period due to excessive weight of freight, misuse of
elevator doors, or similar misuse, and it is reasonably apparent that use or
misuse by Tenant or Tenant’s contractors or vendors, rather than by Landlord or
other tenants of the Project, resulted in the required service call, then
Tenant shall pay the cost of the required repair and service call, and there
shall be no extension of the Move In Period on account of any interruption in
service of the freight elevator on account of such required service and such
interruption shall not be a Landlord Delay. 
During the Move In Period, Tenant shall be subject to all of the covenants
in this Lease, except that Tenant’s obligation to pay Base Rent or Additional
Rent shall commence on the Commencement Date or such other date specified in
this Lease.  If Tenant commences its
occupancy of the Premises prior to expiration of the Move In Period for the
purpose of conducting Tenant’s business, then, notwithstanding anything to the
contrary in this Section 2.3 or the provisions of the Basic Lease
Information to the contrary, the Commencement Date of the Lease shall be the
date Tenant so commenced its occupancy of the Premises for the purpose of
conducting Tenant’s business.

 

ARTICLE 3.

TERM AND USE

 

3.1          Term.

 

(a)           Term; Commencement. 
Except as otherwise provided in this Lease, the Term shall commence upon
the Commencement Date, and shall continue in full force thereafter until the
Expiration Date.  Except as otherwise
provided in the Basic Lease Information, Tenant’s obligation to pay Base Rent
shall commence on the first day of the first Rent Year.  Tenant’s other obligations under the Lease
shall commence on the Commencement Date (except as expressly otherwise provided
herein with respect to obligations arising earlier).  No delay in delivery of possession of the
Premises shall operate to extend the term of this Lease or amend Tenant’s
obligations under this Lease, and Landlord shall not be liable to Tenant for
any loss or damage resulting therefrom, except as specifically provided in Section 3.1(b) below).

 

(b)           Delayed Commencement; Hold-Over Premium
Reimbursement; Right to Terminate.  If Landlord’s Contractor
constructs the Tenant Improvements, and the Tenant Improvements have not been
Substantially Completed by January 1, 2007, as such date is extended
pursuant to the provisions of this Section 3.1(b) (the “Credit Trigger Date”), then Landlord shall
reimburse Tenant for the amount (the “Hold-Over
Premium”) by which the holdover rent which Tenant is required to pay
under the terms of its existing lease for holding over in its existing premises
at 35 Stanford Street, San Francisco, California (the “Stanford Street Lease”) (calculated on a
daily basis) exceeds the rental which is payable under the Stanford Street
Lease during the final month of the term of the Stanford Street Lease
(calculated on a daily basis) for the period commencing on the Credit Trigger
Date and ending on the date immediately preceding the Commencement Date (or, if
the Lease is terminated pursuant to the following provisions of this Section 3.1,
ending on the termination date), provided that in no event shall the Hold-Over
Premium exceed $57,753.50 per month, prorated on a daily basis.  Tenant represents and warrants that the hold
over provision and base rent provision of the Stanford Street Lease are
attached hereto as Exhibit F.  The Credit Trigger Date shall be extended by
one (1) day for every two (2) days of delay in the delivery of
possession of the Premises to Tenant that results from strikes, lock-outs,
labor disputes, fire or other casualty, acts of God, Building Permit Delay (as
defined below) or any other cause beyond the reasonable control of Landlord or
Landlord’s Contractor (“Landlord Force
Majeure”) and by one (1) day for each day of Tenant Delay (as
defined in the Work Letter).  Such sums
shall be payable by Landlord within ten (10) days after Landlord’s receipt
of a rent invoice for such holdover rent from the landlord of 35 Stanford
Street.  As used herein, a “Building Permit Delay” is any delay beyond April 28,
2006 in obtaining the required building permits for the Tenant Improvements,
other than delays in issuance of MEP permits resulting from delays by the
relevant Design-Build Subcontractor(s) (as defined in the Work Letter) (except
to the extent such delay by the Design-Build Subcontractor results from Tenant’s
failure to provide, by the dates specified in the Work Letter, the information
required for the Design-Build Subcontractors to commence and complete their
design, from Tenant’s Architect failure to cooperate with the Design-Build
Subcontractors or to respond to inquiries from the Design-Build Subcontractors
as and within the periods required by the Work Letter, or from other delays by
Tenant or Tenant’s Architect). 
Notwithstanding anything to the contrary herein, if Landlord’s
Contractor constructs the Tenant Improvements, and the Tenant 

 

7

 

Improvements have not been Substantially
Completed by February 1, 2007 (as extended by Tenant Delay) (the “Trigger Date”) then Tenant may terminate
this Lease by written notice to Landlord given within ten (10) days after
the Trigger Date.

 

3.2          Extension Options.

 

(a)           Provided (i) there is no uncured Event
of Default under the terms of this Lease at the time this extension option is
exercised or at the commencement of the applicable Extension Term (as
hereinafter defined), and (ii) Tenant is leasing at least 75,000 rentable
feet of the Premises, Tenant shall have the option (the “Extension Options”) to extend the Term of
this Lease for two additional periods of five (5) years each (each, an “Extension Period”), by giving written
notice to Landlord of the exercise of such Extension Option (the “Extension Exercise Notice”) at least twelve
(12) months prior to the expiration of the initial Term hereof, with respect to
the initial Extension Option, and at least twelve (12) months prior to the
expiration of the initial Extension Period, with respect to the second
Extension Option.  Tenant shall have the
right to exercise an Extension Option with respect to the entire Premises
covered by the Lease as of the commencement of the applicable Extension Period,
or with respect to less than the entire Premises then covered by the Lease (the
“Reduced Premises”), provided the
Reduced Premises shall include a minimum of seventy-five percent (75%) the
Premises initially leased hereunder (as modified pursuant to Section 2.2
above, if applicable).  That portion of
the Premises for which the Extension Option is not being exercised is referred
to herein as the “Relinquished Premises”.  If the Reduced Premises shall be so
configured that Landlord shall be required to separately demise any portion of
the Reduced Premises from any portion of Relinquished Premises, Tenant shall
reimburse Landlord for fifty percent (50%) of the reasonable cost of such
demising. The Extension Exercise Notice shall designate whether Tenant is exercising
the option with respect to the entire Premises then leased hereunder, or, if
Tenant is exercising the Extension Option with respect to the Reduced Premises,
in which event such Extension Exercise Notice shall clearly delineate the
Reduced Premises.  If the Extension
Exercise Notice does not indicate whether it is applicable to the entire
Premises or to Reduced Premises, it shall be deemed to apply to the entire
Premises.  The exercise of an Extension
Option by Tenant shall be irrevocable, except as specifically set forth
herein.  Upon such exercise, the Term of
this Lease shall automatically be extended for the applicable Extension Period
without the execution of any further instrument by the parties, provided that
Landlord and Tenant shall, if requested by the other, execute and acknowledge
an instrument confirming the exercise of the Extension Option.  The Extension Options shall terminate if not
exercised precisely in the manner provided herein.  Any extension of the Term hereof shall be
upon all the terms and conditions set forth in this Lease, except that: (i) Tenant
shall have no further option to extend the term of this Lease beyond the second
Extension Period, (ii) Landlord shall not be obligated to contribute funds
toward the cost of any remodeling, renovation, alteration or improvement work
in the Premises, (iii) commencing on the commencement date of the
applicable Extension Period, the “Premises” shall consist of the Reduced
Premises and Tenant’s Proportionate Share shall be calculated based on the
Rentable Area of the Reduced Premises, and (iv) annual Base Rent for any
such Extension Period shall be an amount equal to ninety-five percent (95%) of
the “Fair Market Annual Rent” (as defined below) for the Premises (or Reduced
Premises, as applicable).  Tenant shall
surrender the Relinquished Premises, if any, to Landlord in the condition
required by this Lease prior to the commencement of the applicable Extension
Term.  If Tenant continues to occupy the
Relinquished Premises to Landlord following commencement of the applicable
Extension Term, the provisions of Section 15.2 of this Lease shall govern
such continued occupancy.

 

(b)           “Fair
Market Annual Rent” shall mean the “fair market” Base Rent at the
time or times in question for the applicable space, taking into account the
prevailing rents then being charged to new tenants for leases with terms equal
to the Extension Period in comparable office buildings within the geographic
area in which the Building is located and taking into account such amenities as
existing improvements, the desirability of the location, location in the
Building, size and quality of the space, included services and operating
expense pass-throughs; and taking into account market tenant improvement
allowances, free rent or other market allowances or concessions.

 

(c)           Landlord and Tenant shall endeavor to agree
upon the Fair Market Annual Rent.  If
they are unable to so agree within at least nine (9) months prior to the
commencement of the Extension Period, then Tenant may elect, by written notice
to Landlord given within ten (10) days following such date, to either
rescind and revoke its exercise of the Extension Option or to have the Fair
Market Annual Rent determined by appraisal pursuant to the provisions of this Section 3.2(c).  Failure to make either such election by such
date shall be deemed an election to have Fair Market Annual Rent determined by
appraisal.  If Tenant elects or is deemed
to have elected 

 

8

 

to have the Fair Market Annual Rent
determined by appraisal, then on or before the date which is six (6) months
prior to commencement of the applicable Extension Period, Landlord and Tenant
each, at its cost and by giving notice to the other party, shall appoint a
competent and disinterested full-time real estate appraiser with at least ten (10) years
commercial appraisal experience in San Francisco or real estate broker with at
least ten (10) years commercial leasing experience in San Francisco to
appraise and set the Fair Market Annual Rent. 
If either Landlord or Tenant does not appoint an appraiser or broker by
such date, the single appraiser or broker appointed shall be the sole appraiser
and shall set the Fair Market Annual Rent. 
If two (2) appraisers or brokers are appointed by Landlord and
Tenant as stated in this paragraph, they shall meet promptly and attempt to set
the Fair Market Annual Rent.  If the two (2) appraisers
or brokers are unable to agree within thirty (30) days after the second
appraiser or broker has been appointed, they shall select a third appraiser
(who shall be a real estate appraiser and not a broker) meeting the
qualifications stated in this paragraph within ten (10) days
thereafter.  If they are unable to agree
on the third appraiser, either Landlord or Tenant, by giving ten (10) days
notice to the other party, can apply to the then President of the Real Estate
Board of San Francisco, or to the Presiding Judge of the Superior Court of the
San Francisco County, for the selection of a third appraiser who meets the
qualifications stated in this paragraph. 
The third appraiser, however, selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant.  Within ten (10) days of the appointment
of the third appraiser, the two (2) appraisers or brokers selected by the
parties each shall submit such appraiser’s or broker’s determination of the
Fair Market Annual Rent and, within thirty (30) days thereafter, the third
appraiser shall select one of the two submissions of Fair Market Annual Rent
that comes closest to such third appraiser’s determination of Fair Market
Annual Rent, which selection shall be binding on the parties.  The party whose appraiser’s or broker’s
determination of Fair Market Annual Rent is not selected shall bear the cost of
appointing the third appraiser, if any, and of paying the third appraiser’s
fee.

 

3.3          Termination Right; Partial
Termination Right.  Tenant shall have certain rights to terminate
this Lease early with respect to part or all of the Premises in accordance with
the provisions of Article 19 below.

 

3.4          Use. Tenant shall use the Premises solely for
the Permitted Use and for no other use or purpose whatsoever.

 

ARTICLE 4.

RENT AND SECURITY DEPOSIT

 

4.1          Base Rent.

 

(a)           Tenant shall pay the Base Rent to Landlord in
accordance with the schedule set forth on the Basic Lease Information page and
in the manner described below.  Upon
execution of this Lease, Tenant shall pay one month’s Base Rent for the entire
Premises at the rate first stated in the Basic Lease Information Page, and such
Rent shall be applied to the Base Rent first due hereunder after any Rent
abatement provided for herein.  Tenant
shall pay the Base Rent plus, when applicable in accordance with Section 4.2
below, Tenant’s Proportionate Share of Increased Operating Cost, in monthly
installments on or before the first day of each calendar month during the Term
(subject to any rent abatement specifically provided in this Lease) and any
extensions or renewals thereof, in advance without demand and without any
reduction, abatement (except as specifically provided in this Lease),
counterclaim or setoff, in lawful money of the United States, at Landlord’s
address specified on the Basic Lease Information page or at such other
address as may be designated by Landlord from time to time in the manner
provided for giving notice under Section 17.11 hereof.

 

(b)           If the Term commences on other than the first
day of a month, then the Base Rent provided for such partial month shall be
prorated based upon a thirty (30)-day month and the prorated installment shall
be paid on the first day of the calendar month next succeeding the Commencement
Date together with the other amounts payable on that day.  If the Term terminates on other than the last
day of a calendar month, then the Rent provided for such partial month shall be
prorated based upon a thirty (30)-day month and the prorated installment shall
be paid on the first day of the calendar month in which the date of termination
occurs.

 

9

 

4.2          Tenant’s Proportionate Share
of Increased Operating Cost and Real Estate Taxes.

 

(a)           Commencing with the first day of the calendar
year following the Base Year identified on the Basic Lease Information page,
and continuing through the remainder of the Term, Tenant shall pay to Landlord
Tenant’s Proportionate Share of the total dollar increase, if any, in: (i) Operating
Cost attributable to each Computation Year over Base Expenses, and (ii) Real
Estate Taxes over Base Real Estate Taxes. 
As used herein “Base Real Estate Taxes”
shall mean Real Estate Taxes assessed during the Base Year.

 

(b)           During the last month of each calendar year
preceding a Computation Year (or as soon thereafter as practicable), Landlord
shall give Tenant notice of Landlord’s estimate of the amount payable by Tenant
under Section 4.1(a) for the following Computation Year.  On or before the first day of each month
during the following Computation Year, Tenant shall pay to Landlord one-twelfth
(1/12) of such estimated amount, provided that if Landlord fails to give such
notice in the last month of the prior year, then Tenant shall continue to pay
on the basis of the prior year’s estimate until the first day of the calendar
month next succeeding the date such notice is given by Landlord; and from the
first day of the calendar month following the date such notice is given, Tenant’s
payments shall be adjusted so that the estimated amount for that Computation
Year will be fully paid by the end of that Computation Year.  If at any time or times Landlord determines
that the amount payable under Section 4.1(a) for the current
Computation Year will vary from its estimate given to Tenant, Landlord, by not
less than ten (10) business days’ notice to Tenant, may revise its
estimate for such Computation Year, and subsequent payments by Tenant for such
Computation Year shall be based upon such revised estimate.

 

(c)           Within one hundred twenty (120) days
following the end of each Computation Year, Landlord shall deliver to Tenant a
statement of amounts payable under Section 4.1(a) for such
Computation Year prepared by Landlord (an “Annual
Statement”).  If such Annual
Statement shows an amount owing by Tenant that is less than the payments for
such Computation Year previously made by Tenant, Landlord shall credit such
amount to the next payment(s) of Rent falling due under this Lease.  If such Annual Statement shows an amount
owing by Tenant that is more than the estimated payments for such Computation
Year previously made by Tenant, Tenant shall pay the deficiency to Landlord
within thirty (30) days after delivery of such statement.  The respective obligations of Landlord and
Tenant under this Section 4.2(c) shall survive the Expiration Date,
and, if the Expiration Date is a day other than the last day of a Computation
Year, the adjustment in Tenant’s Proportionate Share of Increased Operating
Cost pursuant to this Section 4.2(c) for the Computation Year in
which the Expiration Date occurs shall be prorated in the proportion that the
number of days in such Computation Year preceding the Expiration Date bears to
three hundred sixty-five (365).

 

(d)           Landlord shall have the same remedies for a
default in the payment of Tenant’s Proportionate Share of Increased Operating
Cost and Real Estate Taxes as for a default in the payment of Base Rent.

 

(e)           Notwithstanding anything to the contrary in
this Section 4.2., if a sale of the Building occurs during the initial
Term of this Lease, then Tenant’s Proportionate Share of increases in Real
Estate Taxes shall be limited to the Tenant’s Proportionate Share of increases
in Real Estate Taxes that would have resulted absent such sale. For purposes of
calculating the Real Estate Taxes that would have resulted absent such sale,
the taxing rate used shall be the rate in effect just prior to such sale as
increased annually by the maximum amount allowable had such sale not occurred.

 

(f)            Tenant’s Audit Rights. 
Tenant shall have the right, by written notice to Landlord given within
one hundred twenty (120) days after Tenant’s receipt of the annual statement,
to request reasonable back-up documentation for specific Operating Costs and
Real Estate Taxes shown on such annual statement, or specific categories
thereof, and Landlord shall provide Tenant with (or make available to Tenant at
Landlord’s offices) reasonable supporting documentation for any expenses or
category of expenses questioned by Tenant in such notice.  If Tenant does not give Landlord such request
within such time, Tenant shall have waived its right to dispute the Annual
Statement.  Promptly after the receipt of
such written request from Tenant, Landlord and Tenant shall endeavor in good
faith to resolve Tenant’s questions or dispute. 
If such efforts do not succeed within ninety (90) days after Tenant’s
initial written request, Tenant shall have the right to cause a nationally
recognized independent certified public accountant or a nationally recognized
commercial real estate company designated by Tenant, to be paid on an hourly
and not a contingent fee basis, to audit the items questioned by Tenant in its
original notice contesting the annual statement, provided that Tenant (i) notifies
Landlord in writing of Tenant’s intention to 

 

10

 

exercise such audit right within sixty (60) days after the expiration
of such ninety (90)-day period, (ii) actually begins such audit within
sixty (60) days after the notice from Tenant to Landlord advising Landlord that
Tenant will require an audit (provided that such 60-day period within which the
audit must be commenced shall be extended by the length of any delay in the
commencement of the audit that is caused by Landlord) and (iii) diligently
pursues such audit to completion as quickly as reasonably possible.  Landlord agrees to make available to Tenant’s
auditors, at Landlord’s office in San Francisco, the books and records relevant
to the audit for review and copying, but such books and records may not be
removed from Landlord’s offices.  Tenant
shall bear all costs of such audit, including Landlord’s actual copying costs
and personnel costs, if any, incurred in connection with such audit, except
that, if the audit (as conducted and certified by the auditor) shows an
aggregate overstatement of Operating Costs of five (5%) or more, and Landlord’s
auditors concur in such findings (or, in the absence of such concurrence, such
overstatement is confirmed by a court of competent jurisdiction or such other
dispute resolution mechanism as to which the parties mutually agree in
writing), then Landlord shall bear all costs of the audit (including the cost
of the dispute resolution mechanism).  If
the agreed or confirmed audit shows an underpayment of Operating Costs by Tenant,
Tenant shall pay to Landlord, within ten (10) business days after the
audit is agreed to or confirmed, the amount owed to Landlord, and, if the
agreed or confirmed audit shows an overpayment of Operating Costs by Tenant,
Landlord shall reimburse Tenant for such overpayment within thirty (30) days
after the audit is agreed to or confirmed. 
Notwithstanding anything to the contrary set forth above, Tenant’s audit
rights under this Section 4.2. shall be conditioned upon (i) Tenant
having paid the total amounts billed by Landlord under this Section 4.2
(including, without limitation, the contested amounts) and (ii) Tenant and
Tenant’s auditor executing, prior to the commencement of the audit, a
confidentiality agreement in form and substance reasonably satisfactory to
Landlord and Tenant in which Tenant and Tenant’s auditor shall agree to keep
confidential, and not disclose to any other party (except to the limited extent
expressly provided in the confidentiality agreement), the results of any such
audit or any action taken by Landlord in response thereto.

 

4.3          Operating Cost.

 

(a)           Operating Cost shall mean, without
duplication, all expenses and costs (but not specific costs which are
separately billed to and paid by particular tenants of the Project) of every
kind and nature which Landlord shall pay or become obligated to pay because of
or in connection with the management, ownership, maintenance, repair,
preservation and operation of the Project and its supporting facilities
directly servicing the Project (including pursuant to the Lobby Easement)
including, but not limited to, the following:

 

(1)           Wages, salaries and related expenses and
benefits of all on-site and off-site employees and personnel engaged in the
operation, maintenance, repair and security of the Project, to the extent such
charges are directly allocable to services rendered by the employees and
personnel for the benefit of the Project (excluding such sums, if any, paid to
personnel employed by subsidiaries or affiliates of Landlord to the extent that
the wages, salaries or benefits materially exceed the amounts normally payable
for similar services under similar circumstances (taking into account the
market factors in effect on the date any relevant contracts were negotiated) in
comparable buildings within the geographic area in which the Project is
located, and in all events excluding executives’ salaries.

 

(2)           Reasonable costs of Landlord’s property
management office in the Building not to exceed 1,000 rentable square feet of
space.

 

(3)           All normal and customary supplies, materials,
equipment and equipment rental used in the operation, maintenance, repair and
preservation of the Project.

 

(4)           Utilities, including water, gas, sewer and
power, telephone, communication and cable television facilities, trash
disposal, lighting, heating, air conditioning and ventilating and the operation
of the cooling tower for the Project (excluding any costs directly charged to
Tenant or other tenants in the Project).

 

(5)           All maintenance, janitorial and service
agreements for the Project and the equipment therein, including, without
limitation, alarm and/or security service, window cleaning, elevator
maintenance, sidewalks, landscaping, Building exterior and service areas.

 

11

 

(6)           Legal and accounting services for the
Project, including the costs of audits by certified public accountants;
provided, however, that legal expenses shall not include the cost of lease
negotiations, termination of leases, extension of leases, negotiation of
estoppels and subordination agreements, or legal costs incurred in proceedings
by or against any specific tenant.

 

(7)           All insurance costs, including, but not
limited to, the cost of property and liability coverage and rental income and
earthquake insurance applicable to the Project and Landlord’s personal property
used in connection therewith, as well as costs (including capital costs, if
applicable) of repairing an insured casualty to the extent of the commercially
reasonable deductible amounts applicable to such insurance (subject to the
limits set forth in the final sentence of Section 4.3(b) below) and
costs of repair of uninsured casualty (subject to the limits set forth in the
final sentence of Section 4.3(b) below).

 

(8)           Repairs, replacements and general maintenance
(except for repairs paid by the proceeds of insurance or by Tenant or other
tenants of the Project or third parties, and alterations attributable solely to
tenants of the Project other than Tenant).

 

(9)           Operating expenses and costs incurred in
connection with the parking garage affiliated with the Building (except those
not directly attributable to parking for Building occupants (e.g., special
event parking).

 

(10)         Amortization (together with reasonable
financing charges) of (A) capital improvements made to the Project
subsequent to the date of this Lease which are designed to improve the
operating efficiency of the Project (provided, however, that, the costs thereof
may only be included in Operating Costs if, at the time such costs were
incurred, Landlord reasonably estimated that the annual saving in Operating
Costs that would result from such expenditure would be equal to or exceed the
annual amortized amount of the cost to be included in Operating Costs pursuant
to this item (10))or (B) capital improvements made to the Project
subsequent to the date of this Lease which may be required by governmental
authorities, including those improvements required for energy conservation and
for the benefit of individuals with disabilities (provided that such
amortization period shall be within the range used to amortize such costs by
landlords of other first-class office buildings in the geographic area of the
Premises in accordance with generally accepted property management
practices).  Notwithstanding the
foregoing, the amortization period used with respect to (B) above shall
not be less than the lesser of (i) one year multiplied by the amount
obtained by dividing the cost of such capital improvement by $50,000 and (ii) the
reasonable useful life of such capital improvement.

 

(11)         All property management fees, not to exceed
four percent (4%) of gross rents of the Project.

 

(b)           Notwithstanding the provisions of Section 4.3(a) above
to the contrary, Operating Cost shall exclude (i) costs arising from the
violation of any applicable law by Landlord, any other occupant of the Project,
or their respective agents, employees or contractors, except to the extent such
costs reflect costs that would have been incurred by Landlord absent such
violation, (ii) the capital cost of repairs and other work occasioned by
insured casualty, except for the deductible amounts set forth in Section 4.3(a)(7) above,
(iii) any repairs of a capital nature necessary to cure defects in the
initial construction of the Project and costs of compliance with applicable
building codes to the extent the Project does not comply with such building
codes as of the date of this Lease and such compliance is required as of the
date of this Lease, (iv) the cost (including permits, licenses and
inspection fees) of decorating, improving for tenant occupancy, renovating,
painting or redecorating portions of the Project to be demised to tenants, (v) costs,
fees and expenses incurred in connection with lease negotiations or lease
disputes with current or prospective Project tenants, (vi) penalties or
other costs incurred due to a violation by Landlord, as determined by written
admission, stipulation, final judgment or arbitration award, of any of the
terms and conditions of this Lease or any other lease relating to the Project
except to the extent such costs reflect costs that would have been incurred by
Landlord absent such violation, (vii) increases in insurance costs
directly attributable to the activities of another tenant in the Project, (viii) the
cost of any Hazardous Material abatement or removal activities, provided,
however, Operating Cost may include minor costs attributable to those actions
taken by Landlord to comply with any laws, rules and regulations
incidental to with the ordinary operation and maintenance of the Project,
including costs incurred in removing limited amounts of Hazardous Materials
from the Building when such removal is directly related to such ordinary
maintenance and operation, (ix) interest, charges, and fees incurred on 

 

12

 

debt, other than as permitted under item (10) above, (x) costs to
maintain the foundation, roof structure, exterior walls and other structural
components of the Building, (xi) co-insurance payments, and (xii) the cost of
any repairs, improvements, alterations or equipment which would be properly
classified as capital expenditures according to generally accepted accounting
principles and practices (except for any capital expenditures expressly
included in Operating Cost pursuant to items (7) and (10) of Section 4.2(a) above).  Tenant’s Proportionate Share of capital
expenditures included in Operating Cost pursuant to item (7) of Section 4.2
above, if greater than $200,000 for any casualty, shall be deemed limited to
$200,000 for such casualty, and Tenant’s Proportionate Share of capital
expenditures included in Operating Cost pursuant to item (10)(B) of Section 4.2
above, if greater than $200,000 for any capital improvement project, shall be
deemed limited to $200,000 for such capital improvement project, provided that
in either such event such $200,000 cap shall be increased to reflect the
percentage increase in the CPI from the CPI Base to the CPI in effect at the
time of such capital expenditure.

 

(c)           Adjustment to Base Year and Other Operating
Costs.  Notwithstanding any other provision of this
Lease to the contrary, (i) in the event that the Project is not fully
occupied during any year of the Term, including the Base Year, an adjustment
shall be made in computing Operating Cost for such year so that Operating Cost
shall be computed as though the Project had been 100% occupied during such
year, and (ii) with respect to types of insurance which Landlord does not
carry during the Base Year but obtains in a calendar year subsequent to the
Base Year (e.g., earthquake insurance), for purposes of calculating Tenant’s
payments pursuant to Section 4.2 for such subsequent calendar year,
Operating Cost for the Base Year shall be deemed increased by the premiums
attributable to such insurance in such calendar year, as such premiums shall be
decreased to reflect any percentage increase in the CPI (as defined below) from
the CPI Base (as defined below) to the CPI in effect for January 1st of
such later calendar year).  Further,
during the Base Year and any period of Initial Base Rent Abatement as provided
in the Basic Lease Information, there shall be included in Operating Cost
management fees calculated as if the gross revenues of the Project for such
period included Base Rent for the Premises at the rate initially payable under
this Lease.

 

(d)           The
term “CPI” as used herein means the Consumer Price
Index for All Urban Consumers (1982-84 = 100) San Francisco-Oakland-San Jose,
California, All Items, published by the Bureau of Labor Statistics of the U.S.
Department of Labor.  If the Bureau of
Labor Statistics ceases to publish the above Index, or is the above Index is
otherwise renamed, discontinued or superseded, the parties agree that the
Bureau of Labor Statistics or any successor governmental agency thereto will be
the sole judge of the comparability of successive indices, but if no such
agency supplies and designates a comparable index, or if no succeeding index is
published, then the calculations under this Lease based on the CPI shall be made
using the most closely comparable statistics on the purchasing power of the
consumer dollar as published by a responsible financial authority selected by
Landlord.  The term “CPI Base” as used herein means the CPI in
effect as of January 1, 2006.

 

4.4          Real Estate Taxes.  “Real Estate Taxes” shall include: all real
estate or personal property taxes, possessory interest taxes, business or
license taxes or fees, service payments in lieu of such taxes or fees, annual
or periodic license or use fees, excises, transit charges, housing fund
assessments, open space charges, assessments, bonds, levies, fees or charges,
general and special, ordinary and extraordinary, unforeseen as well as
foreseen, of any kind which are assessed, levied, charged, confirmed or imposed
by any public authority upon the Project (or any portion or component thereof),
its operations, this Lease, or the Rent due hereunder (or any portion or
component thereof) and any tax or charge which replaces or is in addition to
any of such above-described real estate taxes, except: (i) inheritance or
estate taxes imposed upon or assessed against the Project, or any part thereof
or interest therein, and (ii) Landlord’s personal or corporate income,
gift or franchise taxes. If any Real Estate Taxes are payable in installments
without penalty (except for reasonable interest), then for the purpose hereof
(regardless of whether Landlord elects to pay same in installments) Real Estate
Taxes for any calendar year occurring during the term shall include only those
installments, together with interest, that would have become due if Landlord
opted to pay same in the maximum number of installments permitted.

 

4.5          Late Charge.  If
any payment required to be made by Tenant under this Lease is not received by
Landlord within five (5) days of the date the same is due, Tenant shall
pay to Landlord an amount equal to five percent (5%) of the delinquency.  The parties agree that Landlord would incur
costs not contemplated by this Lease by virtue of such delinquencies, including
without limitation administrative, collection, processing and accounting 

 

13

 

expenses, the amount of which would be extremely difficult to compute,
and the amount stated herein represents a reasonable estimate thereof.  Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant’s breach or default with
respect to such delinquency, or prevent Landlord from exercising any of
Landlord’s other rights and remedies. 
Notwithstanding the foregoing, Tenant shall be entitled to one (1) notice
and three (3)-day cure period during each twelve (12) month period before any
late charges accrue.

 

4.6          Interest on Past-Due
Obligations.  Except as expressly otherwise provided in
this Lease, any Rent due Landlord hereunder, other than late charges, which is
not received by Landlord within five (5) days of the date on which it was
due until the date paid, shall bear interest from the day it was due at the
lesser of 18% per annum or the maximum rate then allowed by law, in addition to
the late charge provided for in Section 4.5.

 

4.7          Security Deposit.

 

(a)           Security Deposit. 
Concurrently with the execution of this Lease by Tenant, Tenant shall
pay to Landlord the Estimated Deposit Amount, which shall be held as a Security
Deposit as security for the full and faithful performance of Tenant’s
obligations under this Lease.  Upon
determination of the Rentable Area of the Premises pursuant to Section 1.18
above, Tenant shall pay Landlord or Landlord shall refund to Tenant, as
applicable, the difference between the Estimated Deposit Amount and the amount
of the Security Deposit established pursuant to Section 1.18.  If at any time during the Term, Tenant shall
be in default beyond any applicable notice and cure period in the payment of
Rent or for any other reason, Landlord may use, apply or retain all or part of
the Security Deposit to the extent necessary for payment of any amount due
Landlord or to cure such default or to reimburse or compensate Landlord for any
liability, loss, cost, expense or damage (including attorneys’ fees) which
Landlord may suffer or incur by reason of Tenant’s defaults.  If Landlord uses or applies all or any part
of the Security Deposit, Tenant shall, within ten (10) days of demand
therefor, pay to Landlord a sum sufficient to restore the Security Deposit to
the full amount required by this Lease. 
Upon expiration of the Term or earlier termination of this Lease and
after Tenant has vacated the Premises, Landlord shall return the Security
Deposit to Tenant, reduced by such amounts as may be required by Landlord to
remedy defaults on the part of Tenant in the payment of Rent, to repair damages
to the Premises caused by Tenant and to clean the Premises.  The portion of the Security Deposit not so
required shall be paid over to Tenant (or, at Landlord’s option, to the last
assignee of Tenant’s interest in this Lease) within thirty (30) days after
expiration of the Term or earlier termination hereof.  Landlord shall hold the Security Deposit for
the foregoing purposes; provided, however, that Landlord shall have no
obligation to segregate the Security Deposit from its general funds or to pay
interest in respect thereof.  No part of
the Security Deposit shall be considered to be held in trust, or to be
prepayment of any monies to be paid by Tenant under this Lease.

 

(b)           Recalculation of Security Deposit.  If
Tenant elects to modify the size of the Premises pursuant to the provisions of Section 2.2
above, the Security Deposit specified in the Basic Lease Information page shall
be recalculated to be an amount equal to (a) the number of square feet of
Rentable Area of the Premises (as so modified) multiplied by (b) $12.00,
and within ten (10) days of such recalculation Landlord shall refund to
Tenant the amount by which the Security Deposit then held by Landlord exceeds
the recalculated Security Deposit, or Tenant shall deposit with Landlord
additional monies in the amount by which the recalculated Security Deposit
exceeds the Security Deposit then held by Landlord, as applicable.

 

(c)           Reduction in Security Deposit. 
Notwithstanding the foregoing provisions of this Section 4.7,
provided that no Event of Default (or default that subsequently matures into an
Event of Default) by Tenant under this Lease has occurred on or prior to the
second (2nd) anniversary of the Commencement Date, then effective as
of such date the Security Deposit amount required hereunder shall be reduced to
an amount equal to one month’s monthly Base Rent at the rate payable under this
Lease during the Tenth Rent Year (the “Reduced Security Deposit Amount”), and
Landlord shall promptly return to Tenant the balance of the Security Deposit
which exceeds the Reduced Security Deposit Amount upon Tenant’s request
therefor; provided, however, that in no event shall any such return be
construed as an admission by Landlord that Tenant has performed all of its
covenants and obligations hereunder.

 

(d)           Letter of Credit.  In
lieu of a cash Security Deposit, the Security Deposit may be delivered by
Tenant to Landlord in the form of an irrevocable and unconditional letter of
credit (the “Letter  of Credit”) governed by the Uniform Customs
and Practice for Documentary Credits (1993 revisions), International 

 

14

 

Chamber of Commerce Publication No. 500, as revised from time to
time in form and substance reasonably satisfactory to Landlord.  The Letter of Credit shall be held and
applied by Landlord in the same manner as a cash Security Deposit as provided
above in Section 4.7(a) above and on the terms and conditions of this
Section 4.7(d). The Letter of Credit may be drawn upon by Landlord upon
presentation of Landlord’s sight draft accompanied by the Letter of Credit and
Landlord’s signed statement that Tenant is in default under the Lease and
Landlord is entitled to draw on the Letter of Credit pursuant to this Lease,
and with no other conditions.  Tenant
shall maintain the Letter of Credit through the date which is thirty (30) days
following the expiration of the Term (including any extension thereof).  The Letter of Credit shall be issued by a
major commercial bank reasonably acceptable to Landlord.  The Letter of Credit shall expressly state
that the Letter of Credit and the right to draw thereunder may be transferred
or assigned by Landlord to any successor or assignee of Landlord under the
Lease without recourse, and in no event shall Landlord be required to pay any
fees or charges in connection with any such transfer.  The Letter of Credit shall permit partial and
multiple draws.  The Letter of Credit
shall have a term of not less than one (1) year and provide that it will
be automatically renewed unless the issuer provides Landlord with written
notice of non-renewal at the notice address herein at least sixty (60) days
prior to the expiration thereof.  If
Tenant fails to furnish Landlord with a replacement Letter of Credit pursuant
to the terms and conditions of this section by the date which is than
thirty (30) days prior to the expiration of the Letter of Credit, then Landlord
shall have the right to draw the full amount of the Letter of Credit, by sight
draft, and shall hold the proceeds of the Letter of Credit as a cash Security
Deposit pursuant to the terms and conditions of this Section 4.7. Any draw
on the Letter of Credit shall not constitute a waiver of any other rights of
Landlord with respect to such default or failure to perform. At the expiration
or termination of this Lease, and after Tenant has vacated the Premises,
Landlord shall return to Tenant the Letter of Credit then held by Landlord, if
applicable; provided that if Tenant is then in default Landlord may first draw
on such Letter of Credit an amount equal to one hundred and fifty percent
(150%) of the amount sufficient to cure such default, as reasonably estimated
by Landlord and upon cure of such default Landlord shall return the unused
balance of the amount so drawn to Tenant; provided, however, that in no event
shall any such return of the Letter of Credit or the balance of the amount
drawn by Landlord be construed as an admission by Landlord that Tenant has
performed all of its covenants and obligations hereunder and in no event shall
Landlord’s estimate of the amount required to cure such default limit Tenant’s
obligations under this Lease.

 

4.8          Utilities. 
Commencing on the first day of the Move In Period and continuing
throughout the Lease term, Tenant shall pay for all electrical utilities and
telephone service supplied to the Premises, together with any taxes thereon.  Tenant shall contract directly with the
utility company and the telephone company, as the case may be, for the
provision of electricity and telephone services to the Premises.

 

ARTICLE 5.

LANDLORD’S COVENANTS

 

5.1          Basic Services. 
Landlord shall:

 

(a)           Furnish Tenant during Tenant’s occupancy of
the Premises the following basic services:

 

(i)            Cold water at those points of supply provided
for general use of other tenants in the Project;

 

(ii)           Condenser water circulation from 8:00 a.m.
to 6:00 p.m. Mondays through Fridays, in each case except legal holidays,
from the Building’s closed system cooling tower and hot water boiler system to
the point of connection with Tenant’s water-source heat pump unit, provided
that Tenant shall have the right to operate the supplementary HVAC units(s)
serving Tenant’s server room twenty-four (24) hours per day, seven (7) days
per week, and Landlord shall supply condenser water to such unit(s) during the
periods Tenant operates such unit(s).

 

(iii)          Structural and exterior maintenance and
routine maintenance, repairs and electric lighting service for all public areas
of the Project in the manner and to the extent deemed by Landlord to be
standard.

 

(iv)          Janitorial service on a five (5) day per
week basis, excluding legal holidays, limited to emptying and removal of
general office refuse and office recyclables, light vacuuming and dusting, as 

 

15

 

needed.  Janitorial service shall
not include disposal of packing material or shipping crates, emptying
dishwashers, washing dishes, or cleaning kitchen or breakroom counters, tables,
or other surfaces other than floors.

 

(v)           Elevator service serving the floor(s) on
which the Premises are situated, including freight elevator service, subject to
such rules and regulations as Landlord shall promulgate from time to time.

 

(b)           Landlord shall cause the electrical utility
company to install and maintain electrical lines to the Building with capacity
sufficient to accommodate a connected load of 8 watts per usable square foot of
the Premises.

 

(c)           Landlord shall not be liable for damages to
property, nor shall Landlord be deemed to have evicted Tenant, nor shall there
be any abatement of Rent, nor shall Tenant be relieved from performance of any
covenant on its part to be performed under this Lease by reason of any (i) deficiency
in the provision of basic services; (ii) breakdown of equipment or
machinery utilized in supplying services; or (iii) curtailment or
cessation of services due to causes or circumstances beyond the reasonable
control of Landlord including, without limitation, rolling blackouts (i.e. the
temporary interruption of utilities due to energy shortages); or (iv) necessary
repairs or improvements, unless such deficiency, breakdown, curtailment or
cessation is due to the active gross negligence or willful misconduct of
Landlord.  Landlord shall use reasonable
diligence to make such repairs as may be required to machinery or equipment
within the Project to provide restoration of services and, where the cessation
or interruption of service has occurred due to circumstances or conditions
beyond Project boundaries, to cause the same to be restored, by diligent
application or request to the provider thereof. 
In no event shall any Holder as defined in Section 9.1 be or become
liable for any default of Landlord under this Section 5.1(b).  Notwithstanding the foregoing, if any
interruption in, or failure or inability to provide any of the services or
utilities described in Section 5.1(b). is (i) within Landlord’s
reasonable control and continues for three (3) or more consecutive
business days, or (ii) outside Landlord’s reasonable control and continues
for sixty (60) or more consecutive days, and Tenant is unable to and does not
use a material portion of the Premises for Tenant’s business purposes as a
result thereof, then Tenant shall be entitled to an abatement of rent
hereunder, which abatement shall be based on the extent of Tenant’s inability
to use the Premises.

 

5.2          Extra Services.  Landlord
may, in Landlord’s sole discretion, provide to Tenant at Tenant’s sole cost and
expense (and subject to the limitations hereinafter set forth) the following
extra services:

 

(a)           Condenser water circulation provided by
Landlord to Tenant during hours other than those specified in Section 5.1(a)(i) above,
upon the prior written request of Tenant submitted to Landlord during
businesses hours at least 24 hours in advance of the time such service is
needed, or pursuant to such other procedures as may be established from time to
time by Landlord for the Building; and

 

(b)           Any basic service in amounts reasonably
determined by Landlord to exceed the amounts required to be provided under Section 5.1(a),
but only if Landlord elects to provide such additional or excess service.

 

As of the date of this Lease, Landlord’s current
rate for after-hours condenser water circulation provided as an extra service
(i.e., heat, ventilation or air conditioning provided during hours other than
those set forth in Section 5.1(a)(i) above) is $20.00 per hour.
Landlord reserves the right to increase such rates from time to time, provided
that in any calendar year such increase shall not exceed the greater of (i) ten
percent (10%) (plus the aggregate of any unimposed ten percent (10%) increases
from prior calendar years) or (ii) the actual increase in cost to Landlord
in providing the service over the cost of providing such service when the prior
rate was set. The cost chargeable to Tenant for all extra services shall
constitute Additional Rent and shall include a management fee payable to
Landlord of ten percent (10%). 
Additional Rent shall be paid monthly by Tenant to Landlord concurrently
with the payment of Base Rent.

 

5.3          Window Coverings. 
Tenant shall not place or maintain any window coverings, blinds,
curtains or drapes other than those specified by Landlord on any exterior
window without Landlord’s prior written approval, which Landlord shall have the
right to grant or withhold in its absolute and sole discretion, provided that
Landlord shall not unreasonably withhold consent for window coverings which
maintain a uniform appearance with other installed window coverings as viewed
from the exterior of the Building.

 

16

 

5.4          Graphics and Signage.

 

(a)           Landlord shall provide identification of
Tenant’s name and suite numerals (i) on a building directory in the
Building lobby and (ii) at the main entrance door to the Premises.  Landlord reserves the right to exclude any
other names from the building directory. 
All signs, notices, advertisements and graphics of every kind or
character, visible in or from the Common Areas or the exterior of the Premises
shall be subject to Landlord’s prior written approval.  Landlord’s approval shall not be unreasonably
withheld with respect to items not visible from the exterior of the Building,
however, Landlord shall have the right to withhold approval for items visible
from the exterior of the Building in its absolute and sole discretion.  Tenant shall be entitle to signage in the
reception area subject to Landlord’s reasonable approval of the design and
specifications thereof.  Landlord may
remove, without notice to and at the expense of Tenant, any sign, notice,
advertisement or graphic of any kind inscribed, displayed or affixed in
violation of the foregoing requirement. 
All approved signs, notices, advertisements or graphics shall be
printed, affixed or inscribed at Tenant’s expense by a person approved by
Landlord.  Landlord shall be entitled to
revise the Project graphics and signage standards at any time at Landlord’s
sole expense.

 

(b)           Building Signage.  At
Tenant’s election, Tenant may install a new blade sign on the exterior of the
Building displaying Tenant’s name and logo horizontally (the “New  Sign”),
subject to the following conditions:

 

(1)           The size, color, design, materials, and
location of the New Sign shall be subject to Landlord’s reasonable approval;

 

(2)           The New Sign shall be fabricated and
installed in accordance with the plans approved by Landlord in writing (and all
wires, transformers, ballasts and other equipment shall be fully concealed from
view, within the sign cabinet or otherwise), and the methods of installation
shall be approved by Landlord in writing, and Tenant shall promptly reimburse
Landlord for any third party costs reasonably incurred by Landlord’s in
reviewing the plans or installation methods;

 

(3)           Tenant shall at all times maintains adequate
liability insurance with respect all exterior signage installed by Tenant, and
property insurance covering the full guaranteed replacement cost thereof,
assumes all risks with respect to New Sign, and, to the greatest extent
permitted by applicable law:  (i) agrees
that Landlord shall not be responsible or liable with respect thereto, (ii) waives
and releases any and all claims against Landlord with respect thereto, and (iii) agrees
to indemnify, hold harmless, protect and defend Landlord against any and all
claims or liabilities arising with respect thereto or in connection therewith;

 

(4)           Tenant shall obtain, maintain in force, and
comply with any and all conditions and requirements of, all permits and other
sorts of governmental consents or approvals, and in all respects comply with
all applicable codes, ordinances, laws, rules, regulations, orders, and other
sorts of governmental requirements, as may be required in connection with the
fabrication, installation, maintenance, removal and disposal of the New Sign;

 

(5)           Tenant shall maintain the New Sign
(including, without limitation, its illumination system) at all times in good,
safe and attractive condition and repair;

 

(6)           Tenant shall remove the New Sign prior to the
expiration of the Lease Term (and Tenant shall remove the New Sign promptly
upon, and in all events within 20 days after, Landlord’s request, if Tenant
does not actually use and occupy at least fifty percent (50%) of the Premises
initially leased hereunder to conduct business as “Advent Software” or the
business of an Affiliate Transferee or in the event of any uncured Event of
Default by Tenant under the Lease) (or, at Landlord’s election, Landlord shall
have the right to remove such signage at Tenant’s expense, and Tenant shall
reimburse Landlord costs thereof reasonably incurred by Landlord within thirty
(30) days after demand);

 

(7)           Tenant shall promptly repair any damage to
the Building caused as a result of such signage, including, without limitation,
the installation or removal thereof (or, at Landlord’s election, Landlord 

 

17

 

shall have the right to perform such repair at Tenant’s expense, and
Tenant shall reimburse Landlord for the cost thereof within thirty (30) days
after demand); and

 

(8)           Landlord shall have the right temporarily to
remove or relocate the New Sign as may be necessary in connection with any
maintenance, repair or restoration work

 

Tenant’s right to Building exterior signage shall be
exclusive to Tenant during the period commencing on the Commencement Date and
ending on the first date that Tenant leases less than 92,000 square feet of
space pursuant to this Lease (the “Special
Occupancy Level Reduction Date”),
and the exclusive nature of such right shall terminate forever on the Special
Occupancy Level Reduction Date.

 

5.5          Repair Obligation.  Landlord’s
shall maintain and repair in good condition and working order: (i) the
structural portions of the Building; (ii) the exterior walls of the
Building, including exterior glass and glazing (including the sealing thereof);
(iii) the roof (including the sealing thereof); (iv) base Building
mechanical, electrical, plumbing and life safety systems; (v) the Building’s
cooling tower, boiler, and closed circuit cooling tower and hot water system; (vi) the
water-source heat pump unit(s) in the Premises connected to the Building’s
closed circuit cooling tower and hot water system; (vii) the Common Areas;
(viii) the Project parking garage; (ix) landscaped areas; and (x) the
elevators.  Landlord shall not be liable
for any failure to make any such repairs or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant.  However, Landlord shall not have any obligation
to repair damage caused by Tenant, its agents, employees, contractors, invitees
or licensees, and Tenant shall pay the costs of such repairs subject to Section 11.5.  Further, Landlord shall have the right, but
not the obligation, to undertake work of repair which Tenant is required to
perform under this Lease and which Tenant fails or refuses to perform in a
timely and efficient manner.  Tenant
shall reimburse Landlord upon demand, as Additional Rent, for all costs
incurred by Landlord in performing any such repair for the account of Tenant,
together with an amount equal to ten percent (10%) of such costs to reimburse
Landlord for its administration and managerial effort.  Except as specifically set forth in this
Lease, Landlord shall have no obligation whatsoever to maintain or repair the
Premises or the Project.  The parties
intend that the terms of this Lease govern their respective maintenance and
repair obligations.  Landlord reserves
the right from time to time, so long as reasonable access and basic services to
the Premises remain available, to install, use, maintain, repair, relocate
and/or replace pipes, conduits, wires and equipment within and around the
Building and to do and perform such other acts and make such other changes in,
to or with respect to the Building or the Project (including without limitation
with respect to the driveways, garage, walkways and entrances to the Project)
as Landlord may, in the exercise of sound business judgment, deem to be
appropriate.  In connection therewith,
Landlord shall have the right to close temporarily any of the Common Areas so
long as reasonable access to the Premises remains available.  In exercising these rights, Landlord shall
make commercially reasonable efforts to minimize the impact on Tenant’s use and
occupancy of the Premises.  Landlord
shall not be liable to Tenant for any interruption of Tenant’s business or
inconvenience caused due to any work performed in the Premises or in the
Building pursuant to Landlord’s rights and obligations under this Lease.  Tenant expressly waives the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to such obligations or which affords Tenant
the right to make repairs at the expense of Landlord.

 

5.6          Quiet Enjoyment. 
While paying the rental and performing its other covenants and
agreements contained in this Lease, Tenant shall peaceably and quietly have,
hold and enjoy the Premises for the Term without hindrance or molestation from
Landlord subject to the terms and provisions of this Lease.  Landlord shall not be liable for any
interference or disturbance by other tenants or third persons, nor shall Tenant
be released from any of the obligations of this Lease because of such
interference or disturbance.  Landlord,
however, shall use reasonable efforts to cause such other tenants to cease any
such unreasonable interference.

 

5.7          Landlord Compliance with Law.  
Landlord shall be responsible for causing the following to comply with
all laws required for Tenant to build out, occupy and use the Premises for the
purposes leased (including, without limitation, the requirements regarding
accessibility and parking) as of the date of delivery of the Premises to
Tenant:  the common area restrooms, restrooms
located within the Premises as of the Effective Date (except to the extent
alterations thereto are required due to the occupancy of the Premises by more
than one person per 138 square feet of Rentable Area of the Premises on any
floor or due to the particular use by Tenant), the common areas of the Building
that are reasonably anticipated to be in Tenant’s path of travel (including
common area entry doors and entry doors to the Premises, to the extent such
doors are not included as elements of the Tenant 

 

18

 

Improvements), the parking garage, the elevators in the Building, the
Building’s life safety system, electrical and telecommunications rooms in the
Building (excluding electrical and telecommunications rooms located within the
Premises which exclusively serve the Premises), and the main boiler room or
rooms serving the Building

 

ARTICLE 6.

TENANT’S COVENANTS

 

6.1          Payments by Tenant. 
Tenant shall pay Rent at the times and in the manner provided in this
Lease.  All obligations of Tenant
hereunder to make payments to Landlord shall constitute Rent and failure to pay
the same when due shall give rise to the rights and remedies provided for in Article 14,
subject to applicable notice and cure periods, if any.  If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.

 

6.2          Taxes on Personal Property
and Tenant Improvements.  In addition to, and wholly apart from its
obligation to pay Tenant’s Proportionate Share of Increased Operating Costs,
Tenant shall be responsible for, and shall pay prior to delinquency, all taxes
or governmental service fees, possessory interest taxes, fees or charges in
lieu of any such taxes, capital levies, and any other charges imposed upon,
levied with respect to, or assessed against Tenant’s personal property, on the
value of the Tenant Improvements (if any) and on its interest pursuant to this
Lease.  To the extent that any such taxes
are not separately assessed or billed to Tenant, Tenant shall pay the amount
thereof as invoiced to Tenant by Landlord.

 

6.3          Repairs by Tenant. 
Tenant shall be obligated to maintain and repair the Premises to keep
the same at all times in good order, condition and repair, and, upon expiration
of the Term, to surrender the same to Landlord in the same condition as on the
Commencement Date, reasonable wear and tear, taking by condemnation, and damage
that is Landlord’s responsibility under Section 5.5 not caused by Tenant,
its agents, employees, contractors, invitees and licensees, excepted, and
damage from casualty to improvements other than the Tenant Improvements and
other improvements paid for from allowances provided by Landlord excepted.  Tenant’s obligations shall include, without
limitation, the obligation to maintain and repair all walls, floor coverings,
ceilings and fixtures, and to repair all damage caused by Tenant, its agents,
employees, contractors, invitees and others using the Premises with Tenant’s
express or implied permission.  Tenant,
at Tenant’s sole cost and expense, shall enter into a contract with a vendor
approved by Landlord to provide for periodic inspection and maintenance of any
dedicated or supplemental heating, ventilating and/or air conditioning units or
systems in the Premises, and shall maintain such contract in force throughout
the Term of this Lease.  Upon Landlord’s
request, Tenant shall deliver a copy of such maintenance contract to Landlord,
and shall at Landlord’s request made from time to time provide Landlord with
copies of inspection and maintenance reports made pursuant to such
contracts.  Any work of repair and
maintenance performed by or for the account of Tenant by persons other than
Landlord shall be performed by contractors approved by Landlord and in
accordance with such reasonable procedures as Landlord shall from time to time
establish.  Tenant shall give Landlord
prompt notice of any damage to or defective condition in any part of the
Building’s mechanical, electrical, plumbing, life safety or other system
servicing, located in or passing through the Premises.  Tenant acknowledges that it is generally
understood that mold spores are present essentially everywhere and that mold
can grow in almost any moist location. 
Tenant acknowledges the necessity of good housekeeping, ventilation, and
moisture control (especially in kitchens, janitor’s closets, bathrooms, break
rooms and around outside walls) for mold prevention, and execution of this
Lease constitutes acknowledgement by Tenant that control of moisture and mold
prevention are integral to Tenant’s obligations under this Lease. Tenant agrees
to immediately notify Landlord if it observes mold/mildew and/or moisture
conditions (from any source, including leaks), and allow Landlord to evaluate
and make recommendations and/or take appropriate corrective action.  Landlord shall deliver the Premises free of
mold or mildew, which Tenant shall verify to Tenant’s satisfaction by
inspection or other means.  Tenant
relieves Landlord from any liability for any damages to property caused by or
associated with moisture or the growth of or occurrence of mold or mildew in
the Premises after the delivery of the Premises to Tenant.  In the event of a conflict between the
provisions of this Section 6.3 and the provisions of Article 13
below, the provisions of Article 13 shall control.

 

6.4          Waste. 
Tenant shall not commit or allow any waste or damage to be committed in
any portion of the Premises or the Project.

 

19

 

6.5          Compliance With Laws and
Insurance Standards.  Tenant shall not occupy or use, or permit any
portion of the Premises to be occupied or used in a manner that violates any
applicable law, ordinance, rule, regulation, order, permit, covenant, easement
or restriction of record relating in any manner to the Project, or for any
business or purpose which is disreputable, reasonably objectionable or
productive of fire hazard.  Tenant shall
not do or permit anything to be done which would result in the cancellation of,
or in any way increase the cost of, the property insurance coverage on the
Project and/or its contents.  If Tenant
does or permits anything to be done which increases the cost of any insurance
covering or affecting the Project (other than the normal occupancy of the
Premises for the Permitted Use), then Tenant shall reimburse Landlord, upon
demand, as Additional Rent, for such additional costs.  Landlord shall deliver to Tenant a written
statement setting forth the amount of any such insurance cost increase and
showing in reasonable detail the manner in which it has been computed.  Tenant shall, at Tenant’s sole cost and
expense, comply with all laws, ordinances, rules, regulations and orders
(state, federal, municipal or promulgated by other agencies or bodies having or
claiming jurisdiction) related to the use, condition or occupancy of the
Premises now in effect or which may hereafter come into effect including, but
not limited to, accessibility and use by individuals with disabilities.  If anything done by Tenant in its particular
use or occupancy of the Premises shall create, require or cause imposition of
any requirement by any public authority for structural or other upgrading of or
alteration or improvement to the Project, Tenant shall, at Landlord’s option,
either perform the upgrade, alteration or improvement at Tenant’s sole cost and
expense or reimburse Landlord upon demand, as Additional Rent, for the cost to
Landlord of performing such work.  The
judgment of any court of competent jurisdiction or the admission by Tenant in
any action against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any law, ordinance, rule, regulation, order, permit,
covenant, easement or restriction shall be conclusive of that fact as between
Landlord and Tenant.

 

6.6          Limitation on Tenant’s
Compliance Obligations.  Notwithstanding the provisions of Section 6.5
above to the contrary, (A) Tenant shall not be required to perform any
changes to the Base Building (as defined below) unless such changes are caused
or triggered by (i) Tenant’s alterations or improvements to the Premises
(other than the Tenant Improvements), (ii) Tenant’s particular use of the
Premises (as opposed to Tenant’s use of the Premises for general office
purposes in a normal and customary manner), including, if applicable, rooms of
size or configuration not typical for general office use in a Class A
office building in the San Francisco South of Market Street area or providing
for occupancy in excess of one (1) person per 138 square feet of rentable
area of the Premises on any floor, or (iii) Tenant’s particular employees
or employment practices, (B) Tenant shall not be required to perform any
alterations or improvements to or improvements to portions of the Project
systems located outside of the Premises, or to other components of the Base
Building located outside of the Premises, by reason of the Tenant Improvements
unless such changes are caused or triggered by (i) the failure of Tenant’s
architect to design the Tenant Improvements in compliance with applicable building
codes and other legal requirements, or (ii) inclusion in the Tenant
Improvements of improvements which are not normal and customary general office
improvements (such as, without limitation, internal stairwells, library, file,
computer or meeting rooms, classroom facilities (other than normal and
customary conference rooms) or areas requiring floor reinforcement or enhanced
systems requirements), and (C) provided that Tenant’s architect shall have
prepared the Final Plans in compliance with applicable building codes and other
legal requirements, Tenant shall not be required to perform any work to the
Premises caused or triggered solely by reason of Landlord’s failure to
construct the Tenant Improvements in accordance with the Final Plans (as
defined in the Work Letter).  As used in
this Section 6.6, “Base Building”
shall mean structural portions of the Project (including exterior walls, roof,
foundation, floor slabs and core of the Project, whether or not comprising a
part of the Premises), or to Building systems (including, without limitation,
elevator, plumbing, heating, electrical, security, and life safety), and the
alterations, improvements and other work which Tenant is specifically excused
from performing pursuant to the provisions of this Section 6.6 are
referred to as “Excused Work.”

 

6.7          Rules and Regulations. 
Tenant shall comply with the rules and regulations for the Project
attached as Exhibit D and
such reasonable and nondiscriminatory amendments thereto as Landlord may adopt
from time to time with prior notice to Tenant. 
Landlord shall apply such rules and regulations in a
nondiscriminatory manner.

 

6.8          No Nuisance; No Overloading. 
Tenant shall use and occupy the Premises, and control its agents,
employees, contractors, invitees and visitors, in such manner so as not to
create any nuisance, or interfere with, annoy or disturb (whether by noise,
odor, vibration or otherwise) any other tenant or occupant of the Project or
Landlord in its operation of the Project. 
Tenant shall not place or permit to be placed any loads upon the floors,

 

20

 

walls or ceilings in excess of the maximum designed load specified by
Landlord or which might damage the Premises, the Building, or any portion
thereof.

 

6.9          Furnishing of Financial
Statements; Tenant’s Representations.  In order to induce Landlord to
enter into this Lease, Tenant agrees that it shall promptly furnish Landlord,
from time to time, within ten (10) business days of receipt of Landlord’s
written request therefor, with financial statements in form and substance
reasonably satisfactory to Landlord reflecting Tenant’s then-current financial
condition; provided, however, that unless the Project is then for sale or
subject to refinancing, or an Event of Default has occurred and is continuing,
Landlord shall not exercise its rights under this Section 6.8 more
frequently than one (1) time per calendar year.  Tenant shall not be required to provide
financial statements pursuant to this Section 6.8 during any period in
which Tenant has outstanding a class of publicly traded securities and is
filing with the Securities and Exchange Commission, on a regular basis, Forms
10Q and 10K and any other periodic filings required under the Securities
Exchange Act of 1934, as amended.  Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.

 

ARTICLE 7.

ASSIGNMENT OR SUBLEASE

 

7.1          No Assignment Without
Consent.  Tenant shall not voluntarily or by operation
of law assign, transfer or encumber (collectively “Assign”) or sublet all or any part of Tenant’s interest in
this Lease or in the Premises without Landlord’s prior written consent, which
shall not be unreasonably withheld subject to the terms of this Article 7.  A change in the control of Tenant in a
transaction or a series of transactions shall not be deemed an assignment
hereunder, unless the essential purpose of such change of control is to
transfer the tenant’s interest in this Lease without actually conveying a
substantial, active, ongoing business, in which event such change of control
shall constitute an assignment requiring Landlord’s consent.  The following transfers shall not be included
in determining whether control has been transferred: the transfer of
outstanding capital stock or other listed equity interests by persons or
parties other than “insiders” within the meaning of the Securities Exchange Act
of 1934, as amended, through the “over the counter” market or any recognized
national or international securities exchange (including, without limitation,
Nasdaq).

 

7.2          Notice of Assignment.  If
Tenant desires to Assign this Lease or any interest herein or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
intent.  Tenant’s notice shall specify
the date the proposed assignment or sublease would be effective and be
accompanied by information pertinent to Landlord’s determination as to the financial
and operational responsibility and appropriateness of the proposed assignee or
subtenant, including, without limitation, its name, business and financial
condition, financial details of the proposed transfer, the intended use
(including any modification) of the Premises, and exact copies of all of the
proposed agreement(s) between Tenant and the proposed assignee or
subtenant.  Tenant shall promptly provide
Landlord with (i) such other or additional information or documents
reasonably requested (within ten (10) days after receiving Tenant’s
notice) by Landlord, and (ii) an opportunity to meet and interview the
proposed assignee or subtenant, if requested by Landlord.

 

7.3          Landlord Consent. 
Landlord shall have a period of ten (10) days following such
interview and receipt of such additional information (or twenty (20) days from
the date of Tenant’s original notice if Landlord does not request additional
information or an interview) within which to notify Tenant in writing that
Landlord elects either (i) to reasonably decline Tenant’s request to
assign or sublease (taking into account Landlord’s obligation not to
unreasonably withhold its consent), in which event this Lease shall remain in
full force and effect; (ii) to terminate this Lease as to the space so
affected as of the effective date specified by Tenant, in which event Tenant
will be relieved of all obligations hereunder as to such space arising after
the effective date of such termination and Tenant’s vacation and surrender of
the Premises; or (iii) to permit Tenant to Assign this Lease or sublet
such space, subject, however, to prior written approval of the proposed
assignee or sublessee by Landlord, such consent not to be unreasonably withheld
so long as the use of the Premises by such proposed assignee or sublessee would
be a Permitted Use, the proposed assignee or sublessee is of sound financial
condition as determined by Landlord in its reasonable discretion, the proposed
assignee or sublessee executes such reasonable assumption documentation as
Landlord shall require, and the proposed assignee or sublessee is not a party
with whom with whom Landlord has negotiated regarding a prospective lease in
the preceding ninety (90) days (which 

 

21

 

negotiations have included, at a minimum, submittal of a written
conditional offer or a letter of intent and counter offer or counter letter of
intent).  If Landlord fails to notify
Tenant in writing of such election within such period, Landlord shall be deemed
to have waived option (ii) above, but written approval by Landlord of the
proposed assignee or sublessee shall still be required.  Failure by Landlord to approve a proposed
subtenant or assignee shall not cause a termination of this Lease.

 

7.4          Assignment/Subletting Fee.  In
the event Tenant shall request the consent of Landlord to any assignment or
subletting hereunder, Tenant shall pay Landlord a processing fee of $750.00 at
the time of such request and shall reimburse Landlord for Landlord’s reasonable
attorneys’ fees incurred in connection therewith.   All such fees shall be deemed Additional
Rent under this Lease.

 

7.5          Assignment/Sublease Profit.  In
the event that Tenant Assigns this Lease, Tenant shall pay to Landlord as
additional rent an amount equal to fifty percent (50%) of any Increased Rent
(as defined below) when and as such Increased Rent is received by Tenant,
provided Tenant shall first be entitled to subtract Transfer Costs from such
Increased Rent.  As used in this Section,
“Increased Rent” shall mean the
excess of (i) all Rent and other consideration which Tenant is entitled to
receive by reason of any sale, sublease, assignment or other transfer of this
Lease over (ii) the Rent otherwise payable by Tenant under this Lease at
such time.  “Transfer Costs” means (a) any brokerage commissions paid
by Tenant in connection with the subletting or assignment (not to exceed
commissions typically paid in the market at the time of such subletting or
assignment), (b) reasonable legal fees paid by Tenant in connection with
such assignment or subletting (provided that Tenant shall submit to Landlord
evidence reasonably acceptable to Landlord of such legal fees actually paid by
Tenant, which evidence shall include copies of the applicable attorney bills), (c) any
improvement allowance or construction costs incurred by Tenant in connection
with the assignment or sublease, and (d) any other concession (including,
without limitation, free rent) provided by Tenant which is they typically
provided in the market, provided that, as a condition to Tenant recapturing the
assignment or subletting costs, Tenant shall provide to Landlord, within ninety
(90) days of Landlord’s execution of Landlord’s consent to the assignment or
subletting, a detailed accounting of the assignment or subletting costs and
supporting documents, such as receipts and construction invoices.  For purposes of the foregoing, any
consideration received by Tenant in form other than cash shall be valued at its
fair market value as determined by Landlord in good faith.

 

7.6          No Waiver.  The
consent of Landlord to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting by Tenant or to any
subsequent or successive assignment or subletting by the assignee or
subtenant.  However, Landlord may consent
to subsequent assignments and sublettings of the Lease or to subleases or
amendments or modifications thereto, without notifying Tenant or any other
party liable on the Lease or the sublease and without obtaining their
consent.  Such action shall not relieve
Tenant or any such other party from liability under this Lease or under any
such sublease.

 

7.7          Tenant Remains Liable.  No
assignment or subletting by Tenant shall relieve Tenant of any obligation under
this Lease.  In the event of default by
an assignee or subtenant of Tenant or any successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed directly against
Tenant without the necessity of exhausting remedies against such assignee,
subtenant or successor.  Any assignment
or subletting which conflicts with the provisions hereof shall be void and, at
Landlord’s option, shall constitute an event of default under this Lease.

 

7.8          Short Term Sublease
Exception to Landlord Recapture and Profit Sharing Rights. 
Notwithstanding anything to the contrary in this Article 7, Tenant
may from time to time enter into one or more Qualifying Subleases of a portion
of the Premises and Landlord’s recapture right pursuant to item (ii) of
the first sentence of Section 7.3 above and Landlord’s profit sharing
rights under Section 7.5 above shall not apply to any such Qualifying
Sublease.  A sublease is a “Qualifying  Sublease” so long as (i) no more than twenty percent
(20%) of the rentable square footage of the Premises is so used at any one
time, (ii) the use of the space is not a use which materially increases (a) the
operating costs for the Building, (b) the burden on the Building services,
or (c) the foot traffic, elevator usage or security concerns in the
Building, (iii) the use of such space is a permitted use under this Lease,
and (iv) the term of such sublease (including any extensions or renewals)
does not exceed twenty four (24) months. 
The rights set forth in this Section 7.8 are personal to the Tenant
originally named under this Lease and its Affiliate Transferees (as defined
below), and shall not inure to the benefit of any other successor, assignee or
subtenant of Tenant.  Tenant shall pay
the cost of any demising (if any) which is required in connection with a 

 

22

 

Qualifying Sublease, and at Landlord’s election shall remove such
required demising walls at the expiration or termination of the Qualifying
Sublease.  Except as specifically provided
in this Section 7.8, the provisions of this Article 7 shall apply to
Qualifying Subleases.

 

7.9          Affiliate Transferees.
Notwithstanding anything to the
contrary in this Article 7, but subject to Sections 7.4, 7.6 and 7.7.
(but not subject to Sections 7.3 and 7.5), Tenant may assign this Lease or
sublet the Premises or any portion thereof, without Landlord’s consent, to any
partnership, corporation or other entity which controls, is controlled by, or
is under common control with Tenant or Tenant’s parent (control being defined
for such purposes as ownership of at least 50% of the equity interests in, or
the power to direct the management of, the relevant entity) or to any
partnership, corporation or other entity resulting from a merger or
consolidation with Tenant or Tenant’s parent, or to any person or entity which
acquires substantially all the assets of Tenant as a going concern
(collectively, an “Affiliate”),
provided that (i) Landlord receives prior written notice of an assignment
or subletting, if possible, and if not possible then Landlord received notice
of the assignment or subletting as soon as reasonably practicable after the
date thereof, (ii) the Affiliate’s net worth is not less than Tenant’s net
worth immediately prior to the assignment or subletting, (iii) the
proposed transfer is not entered into as a subterfuge to evade the obligations
and restrictions relating to transfers set forth in this Article 7, (iv) the
Affiliate assumes (in the event of an assignment) in writing all of Tenant’s obligations
under this Lease, (v) Landlord receives a fully executed copy of an
assignment or sublease agreement between Tenant and the Affiliate, and (vi) there
has been delivered to Landlord a fully executed counterpart of Landlord’s
consent to sublease form or, in the case of an assignment to an Affiliate, a
form in which the Affiliate acknowledges that occupancy of the Premises by
Affiliate is subject to this Lease in which the Affiliate provides waivers and
releases to the same extent as provided by Tenant under this Lease.  If Tenant does not promptly provide Landlord
with all instruments and information required hereunder which are reasonably
required to document that the proposed assignment or sublease is a transfer to
an Affiliate not requiring Landlord’s consent hereunder, then Landlord may, at
Landlord’s election made by written notice to Tenant, treat the transfer or
notice of the assignment or sublease as a notice of intent to assign or sublet
to a non-Affiliate, and all of Landlord’s rights hereunder with respect to a
proposed assignment or sublease to a non-Affiliate shall thereupon apply as if
such request had been made on the date of Landlord’s election.  An Affiliate subtenant or assignee meeting
the requirements of this Section 7.9 is referred to as an “Affiliate Transferee.”

 

ARTICLE 8.

ALTERATIONS, ADDITIONS AND IMPROVEMENTS

 

8.1          Landlord Consent. 
Tenant shall not make or allow to be made any alterations or additions
in or to the Premises without first obtaining the written consent of Landlord.  Landlord’s consent will not be unreasonably
withheld or delayed with respect to proposed alterations and additions which: (i) comply
with all applicable laws, ordinances, rules and regulations; (ii) are
compatible with the Building and its mechanical, electrical, HVAC and life
safety systems; (iii) will not affect the structural portions of the
Building (provided, however, Landlord shall not unreasonably withhold consent
to the construction of an internal staircase in accordance with and subject to
the terms and conditions of the Work Letter); (iv) will not interfere with
the use and occupancy of any other portion of the Building by any other tenant;
and (v) will not trigger any additional costs to Landlord.  Specifically, but without limiting the generality
of the foregoing, Landlord’s right of consent (which shall not be unreasonably
withheld) shall encompass plans and specifications for proposed alterations or
additions, construction means and methods, the identity of any contractor or
subcontractor to be employed on the work of alterations or additions, and the
time for performance of such work. 
Tenant shall supply to Landlord any additional documents and information
requested by Landlord in connection with Tenant’s request for consent
hereunder.  Notwithstanding the foregoing
or anything to the contrary contained elsewhere in this Article 8, Tenant
shall have the right, without Landlord’s consent, to make any alteration that
meets all of the following criteria (a “Cosmetic
Alteration”): (a) the alteration is decorative in nature (such
as paint, carpet or other wall or floor finishes, movable partitions or other
such work) or is limited to Tenant’s data and communications cabling, (b) Tenant
provides Landlord with ten (10)  days’ advance written notice of the
commencement of such alteration, (c) such alteration does not affect the
Building’s electrical, mechanical, life safety, plumbing, security, or HVAC
systems or any other portion of the base building or any part of the Building
other than the Premises, (d) the work will not decrease the value of the
Premises, uses only new or like-new materials comparable in quality to those
being replaced and is performed in a workman like manner and in accordance with
all legal requirements, and (e) the cost of such alteration does not
exceed Ten Thousand Dollars ($10,000.00) per project.  At the time Tenant notifies Landlord of any
Cosmetic Alteration, Tenant shall give Landlord a copy of Tenant’s plans for
the work.  If the Cosmetic Alteration is
of such a nature that formal plans will 

 

23

 

not be prepared for the work, Tenant shall provide Landlord with a
reasonably specific written description of the work.

 

8.2          Permits and Plans.  Any
consent given by Landlord under this Section 8.2 shall be deemed
conditioned upon: (i) Tenant’s acquiring all applicable permits required
by governmental authorities; (ii) Tenant’s furnishing to Landlord copies
of such permits, together with copies of the approved plans and specifications,
prior to commencement of the work thereon; and (iii) compliance by Tenant
with the conditions of all applicable permits and approvals in a prompt and
expeditious manner.

 

8.3          Freedom From Liens. 
Tenant shall provide Landlord with not less than ten (10) days
prior written notice of commencement of the work so as to enable Landlord to
post and record appropriate notices of non-responsibility.  All alterations and additions permitted
hereunder shall be made and performed by Tenant without cost or expense to
Landlord.  Tenant shall pay the
contractors and suppliers all amounts due to them when due and keep the
Premises and the Project free from any and all mechanics’, materialmen’s and
other liens and claims arising out of any work performed, materials furnished
or obligations incurred by or for Tenant. 
Prior to the commencement of any alterations and additions permitted
hereunder, Landlord may require, at its sole option, that Tenant provide
Landlord with satisfactory evidence of Tenant’s ability to pay for the work.

 

8.4          Alterations Upon Lease
Expiration.  Any and all alterations, additions or
improvements made to the Premises by Tenant shall be the property of Tenant
during the Lease term, and shall become the property of Landlord upon the
expiration or earlier termination of this Lease, and shall be surrendered to
Landlord without compensation to Tenant upon the termination of this Lease by
lapse of time or otherwise unless Landlord conditioned its approval of such
alterations, additions or improvements on Tenant’s agreement to remove them
(provided that Landlord shall only require the removal of Tenant Cables and
Extraordinary Fixtures, as defined below). 
Notwithstanding the foregoing, on or prior to the expiration of this Lease,
Tenant shall remove from the Premises and the Common Areas all telephone, data
or video cables installed by or on behalf of Tenant (the “Tenant Cables”), except those telephone,
data or video cables which Landlord specifically agrees may remain in a written
notice to Tenant prior to the expiration of the Term.  Tenant shall, by the Expiration Date (or
promptly thereafter), remove such alterations, additions and improvements which
Tenant is required to remove hereunder, repair any damage resulting from such
removal (including any penetrations required for the initial installation of
such items), and restore the Premises to their condition existing prior to the
date of installation of such alterations, additions and improvements.  Notwithstanding anything to the contrary set
forth above, this clause shall not apply to modular walls, movable equipment or
furniture owned by Tenant.  Further,
Tenant shall repair at its sole cost and expense all damage caused to the
Premises and the Project by removal of Tenant’s modular walls, movable equipment
or furniture and such other alterations, additions and improvements as Tenant
shall be required or allowed by Landlord to remove from the Premises.  As used herein, the term “Extraordinary Fixture” means an alteration,
addition or improvement which, at the time of installation, is not the type
quality, or quantity of improvement that is customarily found in a standard
office installation in first class office building in the South of Market
Street area of San Francisco, California. 
By way of example only, rolling or built-in high density file systems,
vaults, safes, raised flooring, dedicated tenant elevators or dumb waiters,
special key card systems on stairwells or other entry doors, and internal
stairways constitute Extraordinary Fixtures.

 

8.5          Construction of Alterations.  All
alterations, additions and improvements permitted under this Section 8.5
shall be constructed diligently, in a good and workmanlike manner with new or
like-new, good and sufficient materials and in compliance with all applicable
laws, ordinances, rules and regulations (including, without limitation,
building codes and those related to accessibility and use by individuals with
disabilities) and in accordance with Landlord’s construction rules attached
hereto as Exhibit E.  Installation by or on behalf of Tenant, prior
to the Commencement Date or during the Term of this Lease, of conduits,
electrical wires, and telephone, data or video cables in the vertical shafts,
horizontal raceways, electrical closets and telephone closets of the Building
or other Common Areas of the Building designed for the installation of such
conduits, electrical wires and cables shall be subject to such regulations and
conditions as Landlord may from time to time reasonably impose.  Tenant shall, promptly upon completion of the
work, furnish Landlord with “as built” drawings for any alterations, additions
or improvements performed under this Section 8.5.  If any alterations, additions or improvements
which Tenant causes to be constructed in the Premises result in Landlord being
required to make any alterations and/or improvements to other portions of the
Project in order to comply with any applicable laws, ordinances or regulations,
then Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred by Landlord in making such alterations 

 

24

 

and/or improvements (provided that Tenant shall not be required to
reimburse Landlord for the costs of Excused Work, as defined in Section 6.6).  Except to the extent otherwise specifically
agreed by Landlord in writing, in the event any alterations or additions to the
Premises are performed by Landlord hereunder, Landlord shall be entitled to
charge Tenant a seven percent (7%) administration fee in addition to the actual
costs of labor and materials provided. 
Such costs and fees shall be deemed Additional Rent under this Lease,
and may be charged and payable prior to commencement of the work.

 

ARTICLE 9.

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT

 

9.1          Subordination.  This
Lease and the rights of Tenant hereunder shall be subject and subordinate to
the lien of any deed of trust, mortgage or other security instrument
(collectively, a “Security Device”)
now or hereafter placed upon, affecting or encumbering the Project or any part
thereof or interest therein, and to any and all advances made thereunder,
interest thereon or costs incurred and any modifications, renewals,
supplements, consolidations, replacements and extensions thereof.  With respect to any Security Device entered
into by Landlord after the date of execution of this Lease, Tenant’s obligation
to subordinate the rights of Tenant hereunder to such Security Device shall be
conditioned on Tenant’s receipt from the holder of or beneficiary under such
encumbrance (each, a “Holder”) of
assurance (a “nondisturbance agreement”),
in commercially reasonable form, that Tenant’s possession and rights under this
Lease will not be disturbed so long as Tenant is not in default under this
Lease and attorns to the record owner of the Premises.  Without the consent of Tenant, a Holder shall
have the right to elect to be subject and subordinate to this Lease, such
subordination to be effective upon such terms and conditions as such Holder may
direct which are not inconsistent with the provisions hereof.  Tenant agrees to attorn to, and recognize as
the Landlord under this Lease, the Holder or any other party that acquires
ownership of the Premises by reason of a foreclosure or sale under any Security
Device (or deed in lieu thereof) and to execute such agreements confirming such
attornment as such party may reasonably request subject to Tenant’s receipt of
a nondisturbance agreement, as required hereunder.  The new owner following a foreclosure or a
sale or deed in lieu of foreclosure under a Security Device shall not be (i) liable
for any act or omission of any prior landlord or with respect to events
occurring prior to acquisition of ownership (but shall cure any default of a
prior landlord that is continuing as of the date the new owner acquires legal
title to the Project); (ii) subject to any offsets or defenses which
Tenant might have against any prior landlord (except to the extent that (A) such
offset or defense is specifically provided by this Lease, (B) the new
owner has been notified in writing of the situation giving rise to such offset
or defense, and (C) the new owner has failed to remedy such situation
within the same period of time as is given the landlord under the Lease (but
not less than thirty (30) days) to remedy such situation); (iii) bound by
prepayment of more than one (1) month’s Rent; or (iv) liable to
Tenant for any security deposit not actually received by such new owner.  Landlord warrants that as of the date hereof
there is no Security Device encumbering the Project.

 

9.2          Lease Modifications. 
Tenant shall not unreasonably withhold its consent to changes or
amendments to this Lease requested by a Holder so long as these changes do not
alter the basic business terms of this Lease or otherwise materially diminish
any rights or materially increase any obligations of Tenant hereunder. Tenant’s
failure to deliver the required document within ten (10) days of Landlord’s
written request therefor shall constitute an Event of Default if the same is not
thereafter delivered within five (5) days of notice of such failure.

 

9.3          Landlord Mortgagee Cure
Rights.  Tenant shall promptly notify each Holder (of
whom Tenant has received written notice) of any default by Landlord under this
Lease which would entitle Tenant to cancel or terminate this Lease, and agrees
that, notwithstanding any provisions of this Lease to the contrary, no notice
of cancellation or termination as a result of such default shall be effective
unless the Holder shall have received notice of the default giving rise to such
cancellation or termination and such Holder shall have failed to cure such
default (i) within the cure period available to Landlord under this Lease
or (ii) within thirty (30) days following the date on which possession of
the Project is obtained by such Holder, if such act or omission is not capable
of being remedied without possession of the Project; provided, however, that if
such default is not capable of cure within the relevant thirty (30)-day period,
then, provided that such Holder has commenced such cure within the relevant
thirty (30)-day period then such period shall be extended so long as such
Holder is thereafter diligently pursuing any action necessary to cure such
default.

 

25

 

ARTICLE 10.

ENVIRONMENTAL MATTERS

 

10.1        Hazardous Materials
Prohibited.  Tenant shall not cause or permit any
Hazardous Material (as defined in Section 10.2 below) to be brought, kept,
used, generated, released or disposed in, on, under or about the Premises or
the Project by Tenant, its agents, employees, contractors or invitees;
provided, however, that Tenant may use, store and dispose of, in accordance
with applicable Laws (as defined in Section 10.2 below) limited quantities
of standard office and janitorial supplies, but only to the extent reasonably
necessary for Tenant’s operations in the Premises.  Tenant hereby indemnifies Landlord from and
against any breach by Tenant of the obligations stated in the preceding
sentence, and hereby agrees to defend and hold Landlord harmless from and
against any all claims, liability, losses, damages, costs and/or expenses
(including, without limitation, diminution in value of the Project, damages for
the loss or restriction on use of rentable space in the Project, damages
arising from any adverse impact on marketing of space in the Project, and sums
paid in settlement of claims, fines, penalties, attorneys’ fees, consultants’
fees and experts’ fees) which arise during or after the Term as a result of
such breach.  This indemnification of
Landlord by Tenant includes, without limitation, death of or injury to person,
damage to any property or the environment or natural resources and costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of any Hazardous
Material present in, on, under or about the Premises or the Project (including
soil and ground water contamination) which results from such a breach.  Without limiting the foregoing, if the
presence of any Hazardous Material in, on, under or about the Premises or the
Project caused or permitted by Tenant results in contamination of any part of
the Project, Tenant shall promptly take all actions at its sole expense as are
necessary to return the same to the condition existing prior to the
introduction of such Hazardous Material; provided that Landlord’s approval of
such actions, and the contractors to be used by Tenant in connection therewith,
shall first be obtained.  This
indemnification of Landlord by Tenant shall survive the expiration or sooner
termination of this Lease.

 

10.2        Definition of Hazardous
Material.  As used in this Lease, the term “Hazardous  Material”
means any hazardous or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State of California or the
United States Government.  The term “Hazardous
Material” includes, without limitation, any substance, material or waste which
is (i) defined as a “hazardous material” or similar term under the laws of
the jurisdiction where the Project is located including without limitation
California Health and Safety Code Section 25260(d); (ii) designated
as a “hazardous substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1321); (iii) defined as a “hazardous
waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903);
(iv) defined as a “hazardous substance” pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); (v) hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or fractions
thereof; (vi) asbestos in any form or condition; or (vii) listed
pursuant to California Health and Safety Code Section 25249.8 as a
chemical known to the State of California to cause cancer or reproductive
toxicity.  As used in this Article 10,
the term “Laws” means any
applicable federal, state or local laws, ordinances, rules or regulations
relating to any Hazardous Material affecting the Project, including, without
limitation, the specific laws, ordinances and regulations referred to in this Section 10.2
above.  References to specific Laws shall
also be references to any amendments thereto and to any applicable successor
Laws.

 

10.3        Limitations on Assignment
and Subletting.  It shall not be unreasonable for Landlord to
withhold its consent to any proposed assignment or subletting of the Premises
if the proposed transferee’s anticipated use of the Premises involves the
generation, storage, use, treatment, or disposal of Hazardous Material
(excluding standard office and janitorial supplies in limited quantities as
hereinabove provided).

 

10.4        Right of Entry. 
Landlord, its employees, agents and consultants, shall have the right to
enter the Premises at any time, in case of an emergency, and otherwise during
reasonable hours and upon at least five (5) business days written notice
to Tenant, in order to conduct periodic environmental inspections and tests to
determine whether any Hazardous Materials are present.  The costs and expenses of such inspections
shall be paid by Landlord unless a default or breach by Tenant of this Article 10
or contamination caused or permitted by Tenant is found to exist.  In such event, Tenant shall reimburse
Landlord upon demand, as Additional Rent, for the costs and expenses of such
inspections.

 

26

 

10.5        Notice to Landlord. 
Tenant shall immediately notify Landlord in writing of: (i) any
enforcement, clean-up, removal or other governmental or regulatory action
instituted or threatened regarding the Premises or the Project pursuant to any
Laws; (ii) any claim made or threatened by any person against Tenant or
the Premises relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from or claimed to result from any Hazardous Material;
and (iii) any reports made to or received from any governmental agency
arising out of or in connection with any Hazardous Material in or removed from
the Premises or the Project, including any complaints, notices, warnings or
asserted violations in connection therewith. 
Tenant shall also supply to Landlord as promptly as possible, and in any
event within three (3) business days after Tenant first receives or sends
the same from or to a governmental entity, copies of all claims, reports,
complaints, notices, warnings, asserted violations or other communications
relating in any way to Hazardous Materials at, or a violation of any Laws with
respect to, the Premises or Tenant’s use thereof.

 

10.6        Landlord Representation.  To
the best knowledge of Landlord, (a) no Hazardous Material is present on
the Project in violation of applicable law, or present in the soil, surface
water or groundwater thereof, (b) no underground storage tanks are present
on the Project, and (c) no action, proceeding or claim is pending or
threatened regarding the Project concerning any Hazardous Material or pursuant
to any environmental law.

 

10.7        Exculpation. 
Under no circumstance shall Tenant be liable for any Hazardous Material
present at any time on or about the Project, or the soil, air, improvements,
groundwater or surface water thereof, or the violation of any laws, orders or
regulations, relating to any such Hazardous Material, except to the extent of
Hazardous Materials brought, kept, used, generated, stored, released or
disposed of in, on, under or about the Premises or the Project by Tenant, its
agents, employees, contractors or invitees.

 

ARTICLE 11.

INSURANCE, INDEMNITY

 

11.1        Tenant’s Liability Insurance. 
Tenant (with respect to both the Premises and the Project) shall secure
and maintain, at its own expense, at all times during the Term, a policy or
policies of commercial general liability insurance with the premiums thereon
fully paid in advance, protecting Tenant and naming Landlord, any Holders or
ground lessors on the Project, and Landlord’s representatives (which term,
whenever used in this Article 11, shall be deemed to include Landlord’s
asset manager, Bay West Group, Bay West Showplace Investors LLC, Landlord’s
partners, any subsidiary or affiliate of Landlord and the officers, directors,
shareholders, partners, employees, managers, independent contractors and agents
of any of the foregoing) as additional insureds against claims for bodily
injury, personal injury and property damage (including attorneys’ fees) based
upon, involving or arising directly or indirectly out of Tenant’s or its
agents, employees, contractors, subcontractors, invitees, subtenants or
licensees’ operations, assumed liabilities or Tenant’s use, occupancy or
maintenance of the Premises and the Project. 
Such insurance shall provide for a minimum amount of Three Million
Dollars ($3,000,000.00) for property damage or injury to or death of one or
more than one person in any one accident or occurrence, with an annual
aggregate limit of at least Five Million Dollars ($5,000,000.00), which
insurance may be provided in a combination of primary and excess limits.  The coverage required to be carried shall
include fire legal liability, blanket contractual liability, personal injury
liability, broad form property damage liability, products liability and
completed operations coverage (as well as owned, non-owned and hired automobile
liability if an exposure exists) and the policy shall contain an exception to any
pollution exclusion should bodily injury or property damage arise out of heat,
smoke or fumes from a hostile fire.  The
foregoing policies carried by Tenant shall be primary to any other insurance
maintained by Landlord.  Such insurance
shall be written on an occurrence basis and contain a separation of insureds
provision or cross-liability endorsement acceptable to Landlord.  Tenant shall provide Landlord with a
certificate evidencing such insurance coverage prior to the Commencement
Date.  Not more frequently than every two
(2) years during the Extension Period or during any other extension of the
term of this Lease, if, in the opinion of any Holder (as defined in Section 9.1)
or of the insurance broker retained by Landlord, the amount of liability insurance
coverage at that time is not adequate, then Tenant shall increase its liability
insurance coverage as required by either any mortgagee of Landlord or Landlord’s
insurance broker, provided such increased amount shall not materially exceed
the greater of (a) those amounts normally required for comparable
buildings in the geographic area of the Project or (b) those amounts
required to provide Landlord with the same relative protection as the amounts
set forth above as of the date of this Lease. 
Tenant shall, at Tenant’s expense, comply with (i) all insurance
company requirements pertaining to the use of the Premises and (ii) all
rules, orders, 

 

27

 

regulations or requirements of the American Insurance Association
(formerly the National Board of Fire Underwriters) and any similar body.

 

11.2        Tenant’s Additional
Insurance Requirements.

 

(a)           Tenant shall secure and maintain, at Tenant’s
expense, at all times during the Term, a policy of physical damage insurance on
all of Tenant’s fixtures, furnishings, equipment, machinery, merchandise and
personal property in the Premises and on any alterations, additions or
improvements made by or for Tenant upon the Premises, all for the full
replacement cost thereof without deduction for depreciation of the covered
items and in amounts that meet any co-insurance clauses of the policies of
insurance.  Such insurance shall insure
against those risks customarily covered in a policy of property insurance in so
called “Special Form” or “Special Perils” form covering physical loss or
damage.  Tenant shall use the proceeds
from such insurance for the restoration of the alterations, additions or
improvements made by or for Tenant to the Premises, including, without limitation,
the Tenant Improvements.  In addition,
Tenant shall secure and maintain, at all times during the Term, business
interruption and extra expense insurance in such amounts as will substantially
support the payment of annual rent under this Lease (not to exceed $2,500,000.00),
to the extent an interruption is attributable to any perils commonly insured
against by prudent tenants or attributable to prevention of access to the
Premises or to the Building as a result of such perils; such insurance shall be
maintained with Tenant’s property insurance carrier.  Further, Tenant shall secure and maintain at
all times during the Term workers’ compensation insurance in such amounts as
are required by law, employer’s liability insurance in the amount of not less
than One Million Dollars ($1,000,000.00) per occurrence, and all such other
insurance as may be required by applicable law. Tenant shall provide Landlord
with certificates of all such insurance prior to the Commencement Date.  The property insurance certificate shall confirm
that the waiver of subrogation required to be obtained pursuant to Section 11.5
is permitted by the insurer.  Tenant
shall, at least thirty (30) days prior to the expiration of any policy of
insurance required to be maintained by Tenant under this Lease, furnish
Landlord with an “insurance binder” or other satisfactory evidence of renewal
thereof.

 

(b)           In the event Tenant makes any alterations,
additions or improvements to the Premises, prior to commencing any work in the
Premises, Tenant shall secure “builder’s all risk” insurance which shall be
maintained throughout the course of construction.  Such policy shall be an all risk builder’s
risk completed value form, in an amount reasonably approved by Landlord, in all
events not less than the total contract price for the construction of such
alterations, additions or improvements and covering the construction of such
alterations, additions or improvements, and such other insurance as Landlord
may require, it being understood and agreed that all of such alterations,
additions or improvements shall be insured by Tenant pursuant to Section 11.2(a) immediately
upon completion thereof.  Tenant shall
promptly provide Landlord with a certificate evidencing such insurance
coverage.

 

(c)           All policies required to be carried by Tenant
under this Lease shall be issued by and binding upon a reputable insurance
company of good financial standing licensed to do business in the State of
California with a rating of at least A:VII, or such other rating as may be
required by any Holder, as set forth in the most current issue of “Best’s
Insurance Reports.”  Tenant shall not do
or permit anything to be done that would invalidate the insurance policies
referred to in this Article 11. 
Evidence of insurance provided to Landlord shall include an endorsement
showing that Landlord, its representatives and any Holders or ground lessors on
the Project, are included as additional insureds with respect to the commercial
general liability insurance and a loss payee with respect to the property
coverage with respect to Landlord’s interest therein, and an endorsement
whereby the insurer agrees to endeavor to provide at least ten (10) days
prior written notice of cancellation to Landlord and any mortgagee of Landlord
named as an additional insured or loss payee.

 

(d)           In the event that Tenant fails to provide
evidence of insurance required to be provided by Tenant under this Lease, prior
to commencement of the Term, and thereafter during the Term, within ten (10) days
following Landlord’s request therefor, and ten (10) days prior to the
expiration date of any such coverage, Landlord shall be authorized (but not
required) to procure such coverage in the amounts stated with all costs thereof
(plus a ten percent (10%) administrative fee) to be chargeable to Tenant and
payable upon written invoice therefor, which amounts shall be deemed Additional
Rent hereunder.

 

28

 

(e)           The minimum limits of insurance required by
this Lease, or as carried by Tenant, shall not limit the liability of Tenant
nor relieve Tenant of any obligation hereunder.

 

11.3        Landlord Insurance. 
During the Term of this Lease Landlord shall maintain property insurance
in so called “Special Form” or “Special Perils” form covering the Project (but
excluding the Tenant Improvements and alterations made by or for Tenant) for
the full replacement cost thereof, excluding footings, foundations and
below-grade improvements, with a deductible provision, if any, that does not
materially exceed that which prudent, efficient operators of first class low
rise office buildings in the downtown San Francisco would carry from time to
time in the exercise of reasonable business judgment.

 

11.4        Indemnity and Exoneration.

 

(a)           Landlord and Landlord’s agents and employees
shall not be liable to Tenant, nor to Tenant’s employees, agents, contractors,
subcontractors, invitees, subtenants or licensees (each, a “Tenant Party”), nor to any other person
whomsoever, for any injury to person or damage to property caused by: (a) the
Premises or other portions of the Project becoming out of repair, (b) any
defect or failure of any structural element of the Premises or of any
equipment, pipes or wiring, or broken glass; (c) the backing up of drains,
(d) gas, water, steam, electricity, or oil leaking, escaping or flowing
into the Premises; or (e) the acts or omissions of other tenants of the
Building or of any other persons whomsoever, excepting only loss or damage to
the extent caused by the gross negligence or willful misconduct of Landlord or
its agents or contractors. Further, Landlord shall not be liable to Tenant, any
Tenant Party, or to any other person whomsoever, for any injury to person or
damage to property on or about the Premises or the Common Area caused by: (i) the
negligence or misconduct of Tenant, any Tenant Party, or any other person
entering the Building under express or implied invitation of Tenant (with the
exception of invitees in the Common Area), (ii) arising out of the use of
the Premises and the conduct of its business therein or parking spaces leased
hereunder by Tenant, or (iii) arising out of any breach or default by
Tenant in the performance of its obligations under this Lease.  Under no circumstances will Landlord ever be
liable to Tenant for consequential damages or lost profits.  Landlord shall not be held responsible in any
way on account of any construction, repair or reconstruction (including
widening) of any private or public roadways, walkways or utility lines.  Tenant’s assumption of risk of damage under
this Section 11.3(a) is a material part of the consideration to
Landlord for this Lease.

 

(b)           Except to the extent caused by the negligence
of willful misconduct of Landlord or its agents or contractors, Tenant shall
indemnify, defend and hold harmless Landlord, Landlord’s asset manager, Bay
West Group, Bay West Showplace Investors LLC, Landlord’s partners, any
subsidiary or affiliate of Landlord and the officers, directors, shareholders,
partners, employees, managers, independent contractors, attorneys and agents of
any of the foregoing (collectively, the “Indemnitees”)
from and against any and all claims, demands, causes of action, judgments,
costs and expenses, and all losses and damages (including consequential and
punitive damages) arising from: (i) Tenant’s use or occupancy of the
Premises and the parking spaces leased hereunder; (ii) the conduct of its
business or from any activity, work, or other acts or things done, permitted or
suffered by Tenant in or about the Premises or the Project; (iii) any
breach or default in the performance of any obligation on Tenant’s part to be
performed under the terms of this Lease; (iv) arising from any act,
omission or negligence or willful or criminal misconduct of Tenant or any
Tenant Party; and (v) all costs, attorneys’ fees and disbursements, and
liabilities incurred in the defense of any such claim or any action or
proceeding which may be brought against, out of or in any way related to this
Lease. Upon notice from Landlord, Tenant shall defend any such claim, demand,
cause of action or suit at Tenant’s expense by counsel reasonably satisfactory
to Landlord.  Except to the extent caused
by the negligence or willful misconduct of Tenant or its agents or contractors
or a breach of Tenant’s obligations under the Lease, Landlord shall indemnify,
defend and hold harmless Tenant and the officers, directors, shareholders,
partners, employees, managers, independent contractors, attorneys and agents of
Tenant from and against any and all claims, demands, causes of action,
judgments, costs and expenses, and all losses and damages (including punitive
damages) (i) to the extent arising from arising from any negligence or
willful or criminal misconduct of Landlord or its agents or contractors; and (ii) all
costs, attorneys’ fees and disbursements, and liabilities incurred in the
defense of any such claim. Upon notice from Tenant, Landlord shall defend any
such claim, demand, cause of action or suit at Landlord’s expense by counsel
reasonably satisfactory to Tenant. 
Notwithstanding anything to the contrary set forth in this Section 11.4,
in no event shall Landlord be liable for any consequential damages, or for loss
of or damage to artwork, currency, jewelry, bullion, securities or other
property in the Premises, not in the nature of ordinary fixtures, furnishings,
equipment and other property used in general business office activities and
functions.

 

29

 

(c)           Tenant shall indemnify, protect, defend and
hold Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses or expenses (including without limitation attorneys’ fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from work or
labor performed, materials or supplies furnished to or at the request of Tenant
or in connection with obligations incurred by or performance of any work done
for the account of Tenant in the Premises or the Project.

 

(d)           The provisions of this Section 11.3
shall survive the expiration or sooner termination of this Lease.

 

11.5        Waiver of Subrogation. 
Notwithstanding anything to the contrary in this Lease, Landlord and
Tenant each hereby waive all rights of recovery against the other on account of
loss and damage occasioned to such waiving party for its property or the
property of others under its control to the extent that such loss or damage is
required to be or is actually insured against hereunder.  Tenant and Landlord shall, upon obtaining
policies of insurance required hereunder, give notice to the insurance carrier
that the foregoing mutual waiver of subrogation is contained in this Lease and
Tenant and Landlord shall cause each insurance policy obtained by such party to
provide that the insurance company waives all right of recovery by way of
subrogation against either Landlord or Tenant in connection with any damage
covered by such policy.

 

ARTICLE 12.

CONDEMNATION

 

12.1        Condemnation.  If
the Premises or any portion thereof are taken under the power of eminent domain
or sold under the threat of the exercise of such power (all of which are
referred to herein as “condemnation”),
this Lease shall terminate as to the part so taken as of the date the
condemning authority takes title or possession, whichever first occurs (the “date of taking”).  If the Premises or any portion of the Project
is taken by condemnation to such an extent as to render the Premises or more
than fifteen percent (15%) thereof untenantable or uneconomical for Tenant’s
business, this Lease shall, at the option of either party to be exercised in
writing within thirty (30) days after receipt of written notice of such taking,
forthwith cease and terminate as of the date of taking.  All proceeds from any condemnation of the
Premises shall belong to and be paid to Landlord, subject to the rights of any
holder of any Security Device(s) on the Project; provided that Tenant shall be
entitled to any compensation separately awarded to Tenant for Tenant’s
relocation expenses or loss of Tenant’s trade fixtures and the unamortized cost
of alterations and improvements paid for by Tenant (including, without
limitation, a share of the cost of the Tenant Improvements).  If this Lease continues in effect after the
date of taking pursuant to the provisions of this Section 12.1, Landlord
shall proceed with reasonable diligence to repair, at its expense, the
remaining parts of the Project and the Premises (other than that portion of the
Tenant Improvements paid for by Tenant) to substantially their former condition
to the extent that the same is feasible (subject to reasonable changes which
Landlord shall deem desirable) and so as to constitute a complete and
tenantable Project and Premises.  Rent
shall abate to the extent appropriate during the period of restoration, and
Rent shall thereafter be equitably adjusted according to the remaining Rentable
Area of the Premises and the Building. 
The rights contained in this Article 18 shall be Tenant’s sole and
exclusive remedy in the event of a taking or condemnation. Each party waives
the provisions of Sections 1265.130 and 1265.150 of the California Code of
Civil Procedure and the provisions of any successor or other law of like
import.

 

12.2        Landlord Termination Rights. 
Notwithstanding anything to the contrary, Landlord may terminate this
Lease with no further liability to Tenant if (i) fifty percent (50%) or
more of the gross leasable area of the Project is taken or (ii) if
following any material taking, the Holder elects to require Landlord to apply
all or a material portion of such award to the outstanding indebtedness.

 

ARTICLE 13.

DAMAGE OR DESTRUCTION

 

13.1        Premises Damaged; Landlord
Repair Obligations.  In the event of a fire or other casualty in
the Premises, Tenant shall immediately give notice thereof to Landlord and the
provisions of this Article 13 shall apply. 
If the damage is limited solely to the Premises, Landlord shall promptly
give Tenant notice of Landlord’s reasonable estimate of the time required to
make the required repairs (the “Premises
Repair Estimate”). If the Lease is not 

 

30

 

terminated by Landlord or Tenant pursuant to this Article 13, then
Landlord shall be obligated to rebuild the same to substantially their former
condition to the extent that the same is feasible (subject to reasonable
changes which Landlord shall deem desirable (provided such changes do not have
a material adverse impact on Tenant’s use or enjoyment of the Premises) and
such changes as may be required by applicable law) and shall proceed with
reasonable diligence to do so and this Lease shall remain in full force and
effect.  Notwithstanding anything to the
contrary in this Article 13, Landlord shall not be required to repair or
replace any of Tenant’s furniture, fixtures, equipment, or any other
improvements to the Premises, including, without limitation, the Tenant
Improvements.

 

13.2        Project Damaged; Landlord
Repair Obligations.  If portions of the Project outside the
boundaries of the Premises are damaged or destroyed (whether or not the
Premises are also damaged or destroyed), Landlord shall promptly give Tenant
notice of Landlord’s reasonable estimate of the time required to make required
repairs (the “Project Repair Estimate”).
If the Lease is not terminated by Landlord or Tenant pursuant to this Article 13,
then Landlord shall be obligated to rebuild the same to substantially their
former condition to the extent that the same is feasible (subject to reasonable
changes which Landlord shall deem desirable (provided such changes do not have
a material adverse impact on Tenant’s use or enjoyment of the Premises) and
such changes as may be required by applicable law) and shall proceed with
reasonable diligence to do so and this Lease shall remain in full force and
effect.

 

13.3        Damage During Last Twelve
Months of Term.  Notwithstanding anything to the contrary
contained in Sections 13.1 or 13.2 above, Landlord shall not have any
obligation whatsoever to repair, reconstruct or restore the Premises or the
Project when the completion of the repair damage thereto or to the Project
would occur during the last six (6) months of the Term and Tenant has not
effectively exercised any option granted to Tenant to extend the Term.  Under such circumstances, Landlord shall
promptly notify Tenant of its decision not to rebuild, whereupon the Lease
shall terminate as of the date of such notice.

 

13.4        Extensive Damage; Uninsured
Damage; Rights of Landlord and Tenant to Terminate.

 

(a)           If the Premises Repair Estimate indicates
that the damage to the Premises cannot be repaired within twelve (12) months of
the date of damage, Tenant may terminate this Lease within thirty (30) days after
the date of such the Premises Repair Estimate, such termination notice to be
immediately effective. If the Project Repair Estimate indicates that the damage
to the Project cannot be repaired within twelve (12) months of the date of
damage, and that portion of the Project damaged is required for Tenant’s use
and enjoyment of the Premises, Tenant may terminate this Lease within thirty
(30) days after the date of such the Premises Repair Estimate, such termination
notice to be immediately effective.  If the
Premises Repair Estimate or the Project Repair Estimate indicates that the
damage to the Premises or the Project cannot be repaired within twelve (12)
months of the date of damage, Landlord may terminate this Lease within thirty
(30) days after the date of such the Premises Repair Estimate or Project Repair
Estimate, as applicable, such termination notice to be immediately effective,
provided that Landlord shall not terminate this Lease unless (i) Landlord
is also terminating the leases of all similarly affected tenants, and (ii) either
(A) more than twenty-five percent (25%) of the total leaseable area of the
Building is damaged or destroyed, or (B) structural portions of the
Premises or of the Building are damaged, the estimated cost of repair which exceeds
twenty percent (20%) of the then estimated replacement cost of the Building.

 

(b)           Further, notwithstanding anything to the
contrary in this Article 13 but subject to the following provisions of
this Section 13.4(b), Landlord shall have no obligation to repair or
restore the Premises or the Project except to the extent that insurance
proceeds are made available to Landlord sufficient for such purpose and for all
other restoration and repair purposes (taking into account the deductible
portion of such loss for which Landlord will be reimbursed by Tenant or other
tenants of the Building as an Operating Cost) (or sufficient proceeds would
have been made available to Landlord had Landlord carried the insurance which
Landlord is required to carry pursuant to the terms of this Lease, in which
event for the purposes of this Section 13.1(b) such proceeds shall be
deemed to have been made available to Landlord).  If sufficient insurance proceeds are not made
available to Landlord (or deemed to have been made available) (taking into
account the deductible portion of such loss for which Landlord will be
reimbursed by Tenant or other tenants of the Building as an Operating Cost) to
repair damage to the Premises or the Project, then the uninsured cost to repair
and restore the portions of the Premises and Project for which Landlord is
responsible, as reasonably estimated by Landlord’s architect, shall be referred
to herein as the “Shortfall”.  If the Shortfall with respect to the Premises
and the common areas of the Project necessary for Tenant’s use and enjoyment of
the Premises is greater than Two Hundred Fifty Thousand Dollars ($250,000.00)
(the 

 

31

 

“Premises Shortfall Trigger”)
or if the Shortfall with respect to the balance of the Project other than the
Premises and the common areas of the Project necessary for Tenant’s use and
enjoyment of the Premises is greater than five percent (5%) of the then
replacement cost of the Building (the “Non-Premises
Shortfall Trigger”), then in either such instance Landlord may elect
by written notice to Tenant to terminate this Lease on account thereof,
provided that Landlord is also terminating the leases of all similarly affected
tenants, in which event Landlord shall provide Tenant with written notice of
the estimated Shortfall and of Landlord’s election to terminate this Lease (the
“Shortfall Termination Notice”).  If Landlord does not elect to terminate the
Lease pursuant to the provisions of this Section 13.4(b), Landlord shall repair
and restore the Premises and the common areas of the Project necessary for
Tenant’s use and enjoyment of the Premises in accordance with the requirements
of Sections 13.1 and 13.2 above.  If
Landlord elects to terminate the Lease pursuant to the provisions of this Section 13.4(b),
Tenant may at its sole discretion elect, by written notice to Landlord given
within twenty (20) days of receipt of the Shortfall Termination Notice, to
contribute the toward Landlord’s repair costs sufficient funds (“Tenant’s Contribution”) such that Tenant’
Contribution, together with the insurance proceeds made available to Landlord
(if any), are sufficient to reduce Landlord’s uninsured repair cost below the
Premises Shortfall Trigger and the Non-Premises Shortfall Trigger.  If Tenant so elects to make Tenant’s
Contribution, Landlord shall thereupon repair and restore the Premises and the
common areas of the Project necessary for Tenant’s use and enjoyment of the
Premises in accordance with the requirements of Sections 13.1 and 13.2
above, Tenant shall pay Landlord Tenant’s Contribution, and this Lease shall
continue in full force and effect.

 

13.5        Rent Abatement. 
During any period when Tenant’s use of the Premises is significantly
impaired by damage or destruction, Rent shall abate in proportion to the degree
to which Tenant’s use of the Premises is impaired until such time as the
Premises are made tenantable as reasonably determined by Landlord; provided
that no such rental abatement shall be permitted if the casualty is a result of
the negligence or willful misconduct of Tenant or Tenant’s employees, agents,
contractors or invitees.

 

13.6        Insurance Proceeds.  The
proceeds from any insurance paid by reason of damage to or destruction of the
Project or any part thereof insured by Landlord shall belong to and be paid to
Landlord, subject to the rights of any holder(s) of any Security Device(s) on
the Project.  If this Lease is not
terminated pursuant to the provisions of this Article 13, Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of its alterations, additions, and improvements (including the
Tenant’s Improvements); provided, however, that Landlord shall have the option
of requiring Tenant to assign to Landlord (or any party designated by Landlord)
some or all of the proceeds payable to Tenant under this Article 13,
whereupon Landlord shall be responsible for the repair and restoration of such
insured property.  Notwithstanding the
foregoing to the contrary, if this Lease is terminated pursuant to the
provisions of this Article 13, then that portion of Tenant’s insurance
proceeds attributable to the Tenant Improvements shall be payable to Landlord
and Tenant in the same proportion as Landlord’s and Tenant’s respective Share
of Costs (as defined in the Work Letter), and that portion of Tenant’s
insurance proceeds attributable to other improvements constructed by Landlord
or funded in whole or in part by an improvement allowance from Landlord shall
be payable to Landlord and Tenant in the same proportion as such party funded
the cost of such improvement.  Tenant
shall use reasonable efforts to collect the insurance proceeds to which it is
entitled under the subject casualty insurance policy.

 

13.7        Waiver. 
Landlord’s repair and restoration obligations under this Section 13.7
shall not impair or otherwise affect the rights and obligations of the parties
set forth elsewhere in this Lease. 
Subject to Section 13.5, Landlord shall not be liable for any
inconvenience or annoyance to Tenant, its employees, agents, contractors or
invitees, or injury to Tenant’s business resulting in any way from such damage
or the repair thereof.  Landlord and
Tenant agree that the terms of this Lease shall govern the effect of any damage
to or destruction of the Premises or the Project with respect to the
termination of this Lease and any statute or regulation of the State of
California, including, without limitation, Sections 1932(2) and 1933(4) of
the California Civil Code, with respect to any rights or obligations concerning
damage or destruction in the absence of an express agreement between the
parties, and any other statute or regulation, now or hereafter in effect, shall
have no application to the Lease or any damage or destruction to all or any part
of the Premises or the Project.

 

13.8        No Further Repair
Obligations.  If this Lease is terminated pursuant to this Article
13, then provided that Tenant pays over to Landlord the insurance proceeds to
which Landlord is entitled pursuant to Section 13.6 above, Tenant shall
have no further obligations under this Lease to repair the Tenant Improvements.

 

32

 

ARTICLE 14.

DEFAULT BY TENANT

 

14.1        Events of Default.  The
occurrence of any of the following shall constitute an “Event of Default” on the part of Tenant:

 

(a)           Tenant shall fail to pay any installment of
Rent or any other obligation under this Lease involving the payment of money
and such failure shall continue for a period of five (5) days after written
notice to Tenant that such amount has become due and payable (any such notice
shall be in lieu of, and not in addition to, any notice required under Section 1161
et  seq. of the California Code of Civil Procedure) provided the
same is served in the manner required under Section 1162 of the California
Code of Civil Procedure;

 

(b)           Tenant shall fail to comply with the
provisions of Sections 9.2, 14.1(a) or 23.7 within the notice and cure
periods provided therein;

 

(c)           Tenant shall fail to comply with any other
provision of this Lease (other than as specified in 14.1(a) or 14.1(b) above)
within the time period provided for such compliance (a “General Default”), and either shall not
cure such General Default within fifteen (15) days after written notice thereof
to Tenant (or if the General Default can be cured but cannot by its nature be
cured within the 15 day period, if Tenant fails to commence to cure such
General Default within the 15 day period and thereafter diligently prosecute
such cure to completion); provided, however, that any such notice shall be in
lieu of, and not in addition to, any notice required under Section 1161 et
seq. of the California Code of Civil Procedure provided the same is
served in the manner required under Section 1162 of the California Code of
Civil Procedure;

 

(d)           Tenant shall abandon the Premises;

 

(e)           Any general assignment by Tenant for the
benefit of creditors;

 

(f)            The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition against Tenant,
which involuntary petition remains undischarged for a period of sixty (60)
days.  In the event that under applicable
law the trustee in bankruptcy or Tenant has the right to affirm this Lease and
continue to perform the obligations of Tenant hereunder, such trustee or Tenant
shall, within such time period as may be permitted by the bankruptcy court
having jurisdiction, cure all defaults of Tenant hereunder outstanding as of
the date of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant’s obligations under this Lease;

 

(g)           The appointment of a trustee or receiver to
take possession of all or substantially all of Tenant’s assets or the Premises,
where possession is not restored to Tenant within thirty (30) days;

 

(h)           The attachment, execution or other judicial
seizure of all or substantially all of Tenant’s assets or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a period of
thirty (30) days after the levy thereof;

 

(i)            The admission by Tenant in writing of its
inability to pay its debts as they become due; the filing by Tenant of a
petition seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future bankruptcy or similar
statute, law or regulation; the filing by Tenant of an answer admitting or
failing timely to contest a material allegation of a petition filed against
Tenant in any such proceeding; or, if within sixty (60) days after the
commencement of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed;

 

(j)            If the performance of Tenant’s obligations
under this Lease is at any time during the Term guaranteed: (i) the death
of a guarantor; (ii) the termination of a guarantor’s liability with respect
to this Lease other than in accordance with the terms of such guaranty; (iii) a
guarantor’s becoming insolvent or the subject of a bankruptcy filing; (iv) a
guarantor’s refusal to honor the guaranty; or (v) a guarantor’s breach of
its guaranty 

 

33

 

obligation on an anticipatory breach basis, and Tenant’s failure,
within thirty (30) days following written notice by or on behalf of Landlord to
Tenant of any such event, to provide Landlord with written alternative
assurance or security, which, when coupled with the then existing resources of
Tenant, equals or exceeds the combined financial resources of Tenant and the
guarantor(s) that existed at the time of execution of this Lease;

 

(k)           If Tenant under this Lease is at any time
during the Term is a partnership or consists of more than one (1) person
or entity, if any partner of the partnership or any person or entity
constituting Tenant is involved in any of the events or acts described in
Sections 14.1(d) through (h); or

 

(l)            The discovery by Landlord that any material
representation, warranty or financial statement given to Landlord by Tenant
under this Lease was materially and knowingly false when made.

 

14.2        Remedies Upon Default.  Upon
an Event of Default, Landlord shall have the following remedies:

 

(a)           If an Event of Default occurs, Landlord shall
have the right, with or without notice or demand, immediately (after expiration
of any applicable grace period specified herein) to terminate this Lease, and
at any time thereafter recover possession of the Premises or any part thereof
(as well as the parking spaces leased by Tenant) and expel and remove therefrom
Tenant and any other person occupying the same, by any lawful means, and again
repossess and enjoy the Premises without prejudice to any of the remedies that
Landlord may have under this Lease, or at law or in equity by reason of Tenant’s
default or by reason of such termination.

 

(b)           Even though Tenant has breached this Lease
and/or abandoned the Premises, this Lease shall continue in effect for so long
as Landlord does not terminate Tenant’s right to possession under Section 14.2(a),
and Landlord may enforce all of its rights and remedies under this Lease,
including (but without limitation) the right to recover Rent as it becomes due,
and Landlord, without terminating this Lease, may exercise all of the rights
and remedies of a landlord under Section 1951.4 of the Civil Code of the
State of California or any amended or successor code section.  Acts of maintenance or preservation, efforts
to relet the Premises or the appointment of a receiver upon application of
Landlord to protect Landlord’s interest under this Lease shall not constitute
an election to terminate Tenant’s right to possession.  If, to the extent permitted by law, Landlord
elects to relet the Premises for the account of Tenant, the rent received by
Landlord from such reletting shall be applied as follows: first, to the payment
of any costs of such reletting; second, to the payment of the cost of any
alterations or repairs to the Premises; third, to the payment of Rent due and
unpaid hereunder; and the balance, if any, shall be held by Landlord and
applied in payment of future Rent as it becomes due.  If that portion of rent received from the reletting
which is applied against the Rent due hereunder is less than the amount of the
Rent due, Tenant shall pay the deficiency to Landlord promptly upon demand by
Landlord.  Such deficiency shall be
calculated and paid monthly.  Tenant
shall also pay to Landlord, as soon as determined, any costs and expenses
incurred by Landlord in connection with such reletting or in making alterations
and repairs to the Premises, which are not covered by the rent received from
the reletting.

 

(c)           Should Landlord terminate this Lease pursuant
to the provisions of Section 14.2(a), Landlord shall have all the rights
and remedies of a landlord provided by Section 1951.2 of the Civil Code of
the State of California or any amended or successor code section.  Upon such termination, in addition to any
other rights and remedies to which Landlord may be entitled under applicable
law, Landlord shall be entitled to recover from Tenant:  (i) the worth at the time of award of
the unpaid Rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination until the time
of award exceeds the amount of such Rent loss that Tenant proves could have
been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of such Rent loss that Tenant proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease or which, in the ordinary course of
things, would be likely to result therefrom. 
The “worth at the time of award” of the amounts referred to in clauses (i) and
(ii) shall be computed with interest at the lesser of ten percent (10%)
per annum or the maximum rate then allowed by law.  The “worth at the time of award” of the
amount referred to in clause (iii) shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award plus one percent (1%).

 

34

 

14.3        Computation of Rent for
Purposes of Default.  For purposes of computing unpaid Rent which
would have accrued and become payable under this Lease, unpaid Rent shall
consist of the sum of: (1) the total Base Rent for the balance of the
Term, plus (2) a computation of Tenant’s Proportionate Share of Increased
Operating Cost and Real Estate Taxes for the balance of the Term, the assumed
amount for the calendar year of the default and each future calendar year in
the Term to be equal to Tenant’s Proportionate Share of Increased Operating
Cost and Real Estate Taxes for the calendar year immediately prior to the year
in which default occurs, compounded at a per annum rate equal to the mean
average rate of inflation for the preceding five (5) calendar years as
determined by the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index (All Urban Consumers, all items (1982-84 = 100)) for the
metropolitan area in which the Project is located.  If such Index is discontinued or revised, the
average rate of inflation shall be determined by reference to the index
designated as the successor or substitute index by the government of the United
States.

 

14.4        Landlord’s Right to Perform. 
Notwithstanding anything to the contrary set forth elsewhere in this
Lease, in the event Tenant fails to perform any affirmative duty or obligation
of Tenant under this Lease, then, after the expiration of any applicable grace
or cure period (unless waiting for such period to expire would jeopardize the
health, safety or quiet enjoyment of the Building by its tenants and occupants or
cause further damage or loss to Landlord or the Project, as reasonably
determined by Landlord, or result in any violation (or continuance of any
violation) of any legal requirement) Landlord may after written notice to
Tenant (and without notice in case of an emergency) (but shall not be obligated
to) perform such duty or obligation on Tenant’s behalf, including, without
limitation, the obtaining of insurance policies or governmental licenses,
permits or approvals.  Tenant shall
reimburse Landlord upon demand for the costs and expenses of any such
performance (including penalties, interest and attorneys’ fees incurred in
connection therewith).  Such costs and
expenses incurred by Landlord shall be deemed Additional Rent hereunder.

 

14.5        Remedies Cumulative.  All
rights, privileges and elections or remedies of Landlord are cumulative and not
alternative with all other rights and remedies at law or in equity to the
fullest extent permitted by law.

 

14.6        Waiver. 
Tenant waives any right of redemption or relief from forfeiture under
California Civil Code Section 3275 and California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law in the event
Tenant is evicted and Landlord takes possession of the Premises by reason of a
default.

 

14.7        Repeated Defaults.  If
Tenant shall cure a General Default (as defined in Section 14.1(c) above)
within the time period provided for such cure pursuant to Section 14.1(c) above,
but shall again fail to comply with the same provision of this Lease within
three (3) months after Landlord’s written notice of the original default,
then in addition to any of Landlord’s rights under this Lease in connection
with such subsequent General Default, Tenant shall pay Landlord the sum of Two
Thousand Five Hundred Dollars ($2,500.00) within five (5) business days of
Landlord’s demand therefor, which Tenant agrees is reasonable compensation for
Landlord’s agreement hereunder to provide Tenant with the opportunity to cure
repetitive General Defaults of the same provision of this Lease, rather than to
provide that any subsequent General Default is an Event of Default immediately
and without further opportunity to cure.

 

ARTICLE 15.

SURRENDER; HOLDING OVER

 

15.1        Surrender. 
Subject to the provisions of Article 8 hereof, on the Expiration
Date (or earlier termination of this Lease), Tenant shall quit and surrender
possession of the Premises to Landlord in as good order and condition as they
were in on the Commencement Date, reasonable wear and tear, taking by condemnation
and repairs which are Landlord’s responsibility excepted, and damage from casualty to improvements
other than the Tenant Improvements and other improvements paid for from
allowances provided by Landlord excepted. 
Reasonable wear and tear shall not include any damage or deterioration
that would have been prevented by good maintenance practice or by Tenant
performing all of its obligations under this Lease.  Tenant shall, without cost to Landlord,
remove all furniture, equipment, trade fixtures, debris and articles of
personal property owned by Tenant in the Premises, and shall repair any damage
to the Project resulting from such removal. 
Any such property not removed by Tenant by the Expiration Date (or
earlier termination of this Lease) shall be considered abandoned, and Landlord
may remove any or all of such items and dispose of same in any lawful manner or
store same in a public 

 

35

 

warehouse or elsewhere for the account and at the expense and risk of
Tenant.  If Tenant shall fail to pay the
cost of storing any such property after storage for thirty (30) days or more,
Landlord may sell any or all of such property at public or private sale, in
such manner and at such times and places as Landlord may deem proper, without
notice to or demand upon Tenant. 
Landlord shall apply the proceeds of any such sale as follows: first, to
the costs of such sale; second, to the costs of storing any such property;
third, to the payment of any other sums of money which may then or thereafter
be due to Landlord from Tenant under any of the terms of this Lease; and
fourth, the balance, if any, to Tenant. 
If Tenant did not elect pursuant to the Work Letter to cause Landlord to
demolish the second floor server room, then at the termination or earlier
expiration of the Lease Tenant shall surrender to Landlord the equipment which
was located in such room immediately prior to the commencement of construction
of the Tenant Improvements.

 

15.2        Holding Over.  If
Tenant holds over after expiration or termination of this Lease without the
written consent of Landlord, then for each month or any part thereof of any
such hold-over period Tenant shall pay Landlord 150% of the greater of (i) fair
market base rent for the Premises, as reasonably determined by Landlord, or (ii) Base
Rent which Tenant was obligated to pay for the month immediately preceding the
end of the Term, together with such other amounts as may become due
hereunder.  No holding over by Tenant
after the Term shall operate to extend the Term.  In the event of any unauthorized holding
over, Tenant shall indemnify, defend and hold Landlord harmless from and
against all claims, demands, liabilities, losses, costs, expenses (including attorneys’
fees), injury and damages incurred by Landlord as a result of Tenant’s delay in
vacating the Premises, including but not limited to any loss, cost or damages
claimed by any prospective tenant of the Premises.

 

ARTICLE 16.

ENTRY BY LANDLORD

 

16.1        Landlord Entry. 
Landlord reserves and shall at all reasonable times have the right to
enter the Premises, upon at least one (1) business day’s advance notice
(provided that no advance notice need be given if an emergency necessitates an
immediate entry or prior to entry to provide routine janitorial services), to
inspect the same, to supply any service to be provided by Landlord to Tenant
under this Lease, to show the Premises to prospective purchasers, mortgagees or
(during the last twelve (12) months of the Term or in connection with Landlord’s
rights under Article 7 or 14) tenants, and to alter, improve or repair the
Premises and any portion of the Project, without abatement of rent, and may for
that purpose erect, use and maintain scaffolding, pipes, conduits and other
necessary structures and open any wall, ceiling or floor in and through the
Project and Premises where reasonably required by the character of the work to
be performed, provided access to the Premises shall not be materially impaired,
and further provided that the business of Tenant shall not be interfered with
unreasonably.  Such entries shall be
subject to Tenant’s reasonable security measures.

 

16.2        Keys.  For
each of the purposes set forth in Section 16.1. above, Landlord shall at
all times have and retain a key with which to unlock all of the doors in the
Premises, excluding Tenant’s vaults and safes or special security areas
(designated in advance), and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency to
obtain entry to any portion of the Premises. 
As to any portion to which access cannot be had by means of a key or
keys in Landlord’s possession, Landlord is authorized to gain access by such
means as Landlord shall elect and the cost of repairing any damage occurring in
doing so shall be borne by Tenant and paid to Landlord as additional rent upon
demand.

 

16.3        Waiver. 
Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 16.

 

ARTICLE 17.

EMERGENCY GENERATOR EQUIPMENT

 

17.1        Right to Use Building
Generator.  Provided that Tenant leases a minimum of
75,000 square feet of space in the Building, Tenant shall have the right,
at Tenant’s sole cost and expense, to connect the Premises to the Building’s
emergency generator for the purpose of supplying emergency power to the
Premises in the event of a power outage. 
Tenant’s allocated share of power from the emergency generator shall be
60,000 watts. Tenant shall not at any time use more than 60,000 watts of
electricity from the generator, or in the event of a change in laws 

 

36

 

regulating emergency generator use, such lower amount as shall be
legally permissible from time to time, and shall not sell electrical power or
use the generator equipment to provide electrical power or services to any
other party.  The method of connection to
the generator shall be as directed by Landlord. Tenant, at Tenant’s sole
expense, shall obtain all permits and approvals required in connection with
Tenant’s connection to and use of the generator equipment and shall otherwise
comply with all legal requirements regarding the installation, construction,
operation and maintenance of Tenant’s connections to the generator
equipment.   Landlord shall maintain and
repair the generator in good working condition and upon Tenant’s written
request from time to time, Landlord shall update Tenant as to the condition of
the generator and shall provide Tenant with copies of the maintenance records
for the generator.  In no event will
Landlord be liable to Tenant for any loss or damage (including, without
limitation, consequential damages for loss of business or income) incurred by
Tenant as a result of the failure of the emergency generator or associated
wiring to operate during an electrical failure in the Building, it being
understood that Landlord’s obligation hereunder is limited to permitting Tenant
to connect to the emergency generator and allowing Tenant to draw power from
the generator if the power is available and the generator and associated wiring
is working properly.  Tenant agrees to
indemnify, defend and hold harmless Landlord and the other Indemnitees from and
against any and all claims which result from or arise out of the installation,
operation, existence, maintenance, repair, removal, replacement or relocation
of Tenant’s generator equipment, whether occurring on the generator site,
conduit areas or any other place within or without the Building.

 

17.2        Cost of Operation.  If
the electricity to the Building is interrupted and the emergency generator is
activated, Tenant shall reimburse Landlord, on demand, for Tenant’s equitable
share (as reasonably determined by Landlord based on Tenant’s use or non-use
thereof) of (i) the cost of the fuel used by the generator while the
generator was in operation and (ii) any additional costs incurred by Landlord
in operating and maintaining the emergency generator while the electricity was
out.

 

17.3        Landlord Right to Suspend
Operations.  If Landlord determines, for safety reasons or
any other reason, that the emergency generator should not be used (or, if the
emergency generator is already in use, that the generator should be turned off)
then Landlord may shut-off the generator and shall not be required to permit
Tenant to use the generator.  However,
Landlord agrees that it will not prohibit Tenant form using the generator if
the generator is in use for the Building systems so long as Tenant’s use of the
generator will not adversely affect Landlord’s ability to continue emergency
systems in the Building during the electrical failure, provided that Tenant’s
rights to use the generator shall be suspended during any period that Tenant is
in default in the payment of sums due under the Lease or is material default of
any other provision of the Lease, and may terminated in accordance with the
provisions of Section 17.5 below.

 

17.4        Evacuation.  If
Landlord closes the Building and calls for its evacuation by means of oral
notice to the Premises (which notice may be personal, telephonic, or by means
of the Building’s public address system), or suggests by means of oral notice
to the Premises (which notice may be personal, telephonic, or by means of the
Building’s public address system) that the Building be evacuated for any
reason, including because of an electrical failure, and if one or more of any
Tenant Parties or other persons acting on behalf of or at the request of Tenant
(collectively, “Tenant’s Personnel”)
remain in or later enter the Building or the Premises during the evacuation
period, then Tenant hereby waives all claims against Landlord and the Indemnitees
for any injury incurred by any of Tenant’s Personnel, or injury to property,
due in whole or in part to Tenant’s failure to evacuate all of Tenant’s
Personnel from the Premises and the Building. 
Further, Tenant will hold the Indemnitees harmless from and defend and
indemnify them against any and all claims incurred by them as a direct or
indirect result of Tenant’s Personnel remaining in the Premises or the Building
during such evacuation period.

 

17.5        Rights Personal; Termination.  The
rights granted pursuant to this Article 17 are personal to Tenant and its
Affiliate Transferees.  If at any time
Tenant leases less than 75,000 feet of Rentable Area in the Building, Landlord
shall have the right to terminate Tenant’s rights under this Article 17
upon written notice to Tenant, and Tenant, at Tenant’s sole cost and expense,
shall promptly remove Tenant’s connections to the Building generator in a
manner approved by Landlord.

 

37

 

ARTICLE 18.

EXPANSION RIGHTS

 

18.1        Right of First Offer.

 

(a)           Right of First Offer. 
Tenant shall have a right of first offer (the “Right of First Offer”) to lease any
increment of space in the Building (each, a “First
Offer Increment”), upon any and each occasion that a First Offer Increment
becomes “available for lease” during the Term of this Lease.  Upon each occasion that a First Offer
Increment becomes available for lease, Landlord shall give Tenant written
notice thereof (the “Availability Notice”),
which Availability Notice shall specify the available space and availability
date or estimated availability date (as applicable, the “Noticed Availability Date”), and the amount
of base rent and tenant improvement allowance, if any, that Landlord is
prepared to offer in marketing the First Offer Increment for lease, which shall
be market terms, as reasonably determined by Landlord.  Landlord and Tenant acknowledge that certain
space will be available to lease in the Building as of the Commencement Date,
and such space shall be considered “available for lease” only after the
expiration of the initial leasing of such space occurring after the
Commencement Date.

 

(b)           Exercise of First Offer Right.  In
order for Tenant to exercise its Right of First Offer and lease a First Offer
Increment, Tenant shall so notify Landlord in writing (“Tenant’s Election Notice”) within ten (10) business
days after the date of the Availability Notice. 
Tenant shall have no right to exercise the Right of First Offer with
respect to less than the entire increment of space which comprises such First
Offer Increment.

 

(c)           Terms and Conditions.  If
Tenant timely exercises Tenant’s Right of First Offer to lease a First Offer
Increment as provided above, Landlord and Tenant shall promptly enter into an
amendment to this Lease, adding the First Offer Increment to the Premises on
all the terms and conditions set forth in the Lease, except that (i) the
term of the lease to Tenant of the First Offer Increment shall commence upon
the date on which the First Offer Increment is tendered to Tenant and shall
continue conterminously with the remaining Term for the Premises (as it may be
extended), (ii) Tenant shall take the First Offer Increment in its then “as-is”
condition or as otherwise set forth in the Availability Notice, and Landlord
shall provide a tenant improvement allowance, if at all, only as set forth in
the Availability Notice, (iii) the Base Rent per rentable square foot
payable by Tenant for the First Offer Increment shall be equal to the rate at
which Landlord was willing to market such space as set forth in the
Availability Notice, (iv) there shall be no rent abatement or “free rent”
period other than as specified, if at all, in the Availability Notice, (v) Tenant’s
Proportionate Share shall be increased appropriately to reflect the addition of
the First Offer Increment to the Premises, (vi) Tenant’s Security Deposit
shall be increased proportionately to reflect the addition of the First Offer
Increment to the Premises, and (vii) this Lease shall otherwise continue
in full force and effect.

 

(d)           Landlord’s Right to Lease to Third Party;
Re-offer to Tenant.  If Tenant does not exercise its right to
lease the First Offer Increment within ten (10) business days after the
date of any Availability Notice given with respect thereto, then Landlord shall
have a period (the “Leasing Period”)
of twelve (12) months to enter into a lease for such First Offer Increment with
any third party on any terms and conditions Landlord desires, provided that if
the net effective rent which Landlord is prepared to offer a third party
(taking into account all concessions)  is
less than ninety percent (90%) of the net effective rent set forth in Landlord’s
Offer Notice, Landlord shall not enter into a lease on such terms without
re-offering the space to Tenant on pursuant to a revised Availability Notice
describing such improved terms, and Tenant shall thereupon have five (5) business
days from the date of such re-offer to deliver a Tenant Election Notice to
Landlord.  If, as of the end of the Leasing
Period, Landlord is in bona fide negotiations with a third party to lease the
First Offer Increment, then the Leasing Period shall be extended for the length
of time that such bona fide negotiations continue. If Landlord does not enter
into a lease with a third party for the First Offer Increment during the
Leasing Period, then the provisions of this Section 18.1 shall again apply
and Landlord shall give Tenant a new Availability Notice with respect thereto
before leasing it to any third party.

 

(e)           Delivery of First Offer Increment.  If
Tenant shall exercise the Right of First Offer, Landlord does not guarantee
that the First Offer Increment will be available on the Noticed Availability
Date for the lease thereof, if the then existing occupant of the First Offer
Increment shall holdover or for any other reason beyond Landlord’s reasonable
control. In such event, neither this Lease nor this Right of First Offer shall
be void or 

 

38

 

voidable, but rent with respect to the First Offer Increment shall be
abated until Landlord delivers the same to Tenant.  Notwithstanding the foregoing, Landlord shall
use commercially reasonable efforts to deliver the First Offer Increment to
Tenant as soon as possible following the Noticed Availability Date for the
lease thereof, and if for any reason such First Offer Increment is not
delivered to Tenant within one hundred twenty (120) days from the Noticed
Availability Date, then Tenant shall have the right by written notice to
Landlord given at any time prior to such delivery to rescind its exercise of
the Right of First Offer with respect to such First Offer Increment.

 

(f)            Limitation on Tenant’s Right of First Offer. Notwithstanding the foregoing, if on the
date of Tenant’s Election Notice, or the date immediately preceding the date
the Lease term for the First Offer Increment is to commence (i) there is
an uncured Event of Default under this Lease, or (ii) Tenant does not
intend to occupy for its own use at least eighty percent (80%) of the First
Offer Increment within two (2) years of the Noticed Availability Date,
then (in any such event) Tenant shall have no right to lease such First Offer
Increment and the Tenant’s Election Notice shall at Landlord’s option be null
and void.  If Tenant exercises it right
pursuant to Article 19 below to terminate this Lease early with respect to
less than the entire Premises, (i) Landlord shall have no obligation to
provide an Availability Notice in connection with the availability resulting
from Tenant’s termination of the Lease with respect to any Terminated Premises
(as defined in Article 19 below) and (ii) Landlord shall have no
obligation hereunder to provide an Availability Notice for the three (3) year
period commencing on the Early Termination Date (as defined in Article 19
below).

 

(g)           Option Personal. 
Tenant’s Right of First Offer as provided in this Section 18.1
shall be personal to the original Tenant executing this Lease and Affiliate
Transferees, and shall not be assignable to any other person under any
circumstances, unless Landlord consents to the assignment of such Right of
First Offer, which consent may be granted or withheld in Landlord’s sole and
absolute discretion.

 

18.2        Expansion Options.

 

(a)           Grant of Expansion Options. 
Provided, that, either at the time of Tenant’s exercise of any such
option or at the time the lease term for the applicable option space is to
commence, (1) Tenant is not in default under this Lease (beyond any
applicable cure period), and (2) Tenant intends to occupy at least eighty
percent (80%) of the space for which Tenant is exercising its option within two
(2) years of the date such space is added to the Premises under the Lease,
Tenant shall have the following options to lease additional space in the
Building:

 

(i)            Fourth Floor Expansion Option. 
Tenant shall have the option to lease the balance of the fourth (4th)
floor of the Building not included in the Fourth Floor Premises (the “Fourth Floor Expansion Space”) for a term
commencing on a date in December 2010 to be designated by Landlord.  Notwithstanding the foregoing, Tenant
acknowledges that the current third party tenant of the Fourth Floor Expansion
Space has an option to extend the term of such party’s lease.  If such third party extends the term of its
lease of the Fourth Floor Expansion Space, Landlord shall promptly notify
Tenant of such exercise and Tenant shall have no further rights to lease such
space pursuant to this Section 18.2 until such time as such lease, as
extended, expires.

 

(ii)           Second Floor Expansion Option. 
Tenant shall have the option to lease the balance of the second (2nd)
floor of the Building not included in the Second Floor Premises (the “Second Floor Expansion Space”) for a term
commencing the first day of the Seventh Rent Year.

 

(b)           Exercise of Expansion Option. 
Tenant shall exercise the option to lease the Fourth Floor Expansion
Space, if at all, by written notice to Landlord given not later than February 28,
2010, and shall exercise the option to lease the Second Floor Expansion Space
by written notice to Landlord given by the last of the third month of the Sixth
Rent Year.

 

(c)           Effect of Late Delivery.  If
Tenant timely exercises the option to lease the Fourth Floor Expansion Space or
the Second Floor Expansion Space (either such space referred to herein as “Expansion
Space”), as applicable, Landlord shall use reasonable efforts to deliver such
Expansion Space by the applicable projected delivery date set forth herein or
otherwise stated in Landlord’s notice, provided that Tenant agrees that, if
Landlord is unable to deliver possession of the Expansion Space on the
projected availability date, Landlord shall not be liable for any damage
thereby, nor shall Tenant’s lease of such Expansion Space be void or voidable,
but rent will not 

 

39

 

accrue for such Expansion Space until the date Landlord delivers
possession of such Expansion Space to Tenant. 
Notwithstanding the foregoing, Landlord shall use commercially reasonable
efforts to deliver the Expansion Space to Tenant as soon as possible following
the projected availability date for the lease thereof, and if for any reason
such Expansion Space is not delivered to Tenant within one hundred twenty (120)
days from projected availability date for such Expansion Space, then Tenant
shall have the right to rescind its exercise of the Expansion Option with
respect to such Expansion Space by written notice to Landlord given at any time
prior to such delivery.

 

(d)           Terms and Conditions.  At
Tenant’s request, Landlord shall permit Tenant to inspect the Expansion Space
prior to the deadline for exercise of the option to lease the Expansion Space,
provided that Tenant’s entry and inspection shall be conducted in a manner
designed to minimize interference with the operations of any party then
occupying the Expansion Space.  If Tenant
will lease the Expansion Space pursuant to Section 18.2(a) above,
then Landlord and Tenant shall enter into a written amendment of this Lease
adding the Expansion Space to the Premises on all of the terms and conditions
set forth in this Lease as to the Premises originally demised hereunder, except
that (i) Tenant shall take the Expansion Space in its then “as-is” state
and condition, (iii) the term of the lease of the Expansion Space shall
commence on the date the Expansion Space is delivered to Tenant, (iv) the
annual Base Rent payable by Tenant for the Expansion Space shall be the
then-Fair Market Annual Rent (as defined in Section 3.2(b) above) for
the Expansion Space, and (v) the Base Year for the Expansion Space shall
be the calendar year in which the Expansion Space is added to the
Premises.  Landlord and Tenant shall
endeavor to agree upon the Fair Market Annual Rent.  If they are unable to so agree within at
least six (6) months prior to the projected delivery date for the
Expansion Space, Fair Market Annual Rent shall be established in accordance
with the procedure described in Section 3.2(c) above.

 

(e)           Option Personal. 
Tenant’s options as provided in this Section 18.2 shall be personal
to the original Tenant executing this Lease and Affiliate Transferees and shall
not be assignable to any other person under any circumstances, unless Landlord
consents to the assignment of such options, which consent may be granted or
withheld in Landlord’s sole and absolute discretion.

 

ARTICLE 19.

TERMINATION RIGHTS

 

19.1        Termination Option. 
Tenant shall have the one-time right (the “Termination  Option”)
to terminate this Lease as to the entire Premises then leased hereunder or as
to one or more Deletion Increments (as defined below), effective as of the end
of the Seventh Rent Year (the “Early
Termination Date”), by giving Landlord not less than twelve (12)
months prior written notice of such termination (the “Termination Notice”).  The Termination Notice shall be irrevocable
and shall specify whether the Termination Option is being exercised (i) with
respect to the entire Premises then leased hereunder or (ii) with respect
to one or more Deletion Increments, in which event the Termination Notice shall
specifically describe the Deletion Increments to be terminated hereunder.   For the purposes of this Article 19, a “Deletion  Increment”
is, with respect to each floor on which a portion of the Premises is located as
of the Early Termination Right, the entire Premises located on such floor.  If the Termination Notice fails to specify
whether it is applicable to the entire Premises or to one or more Deletion
Increments, it shall be deemed to apply to the entire Premises.  That portion of the Premises described in the
Termination Notice is referred to herein as the “Terminated  Premises.”

 

19.2        Termination Fee.  If
Tenant exercises the Termination Option, Tenant shall pay Landlord a
termination fee (the “Termination  Fee”) equal to the sum of (i) an
amount equal to six (6) times the monthly Base Rent under this Lease for
the Terminated Premises, at the rate(s) applicable as of the Early Termination
Date (i.e. $23.00 per rentable square foot per year), plus (ii) the
Amortization Amount, plus (iii) the Unrealized Average Rent for the
Terminated Premises The “Amortization
Amount” shall be the unamortized
amount, as of the Early Termination Date, of the total of (A) the
Improvement Allowance disbursed by Landlord in connection with the construction
of the Tenant Improvements pursuant to the Work Letter and any improvement
allowance paid by Landlord in connection with the leasing of any other space
included in the Terminated Premises, plus (B) the leasing commissions and
reasonable legal fees incurred by Landlord in connection with leasing of the
Terminated Premises.  If the Terminated
Premises is less than the entire Premises then leased hereunder, the
Amortization Amount shall be determined by calculating the amounts described in
(A) and (B) above on a per square foot basis and multiplying such sum
by the Rentable Area of the Terminated Premises (provided that the Amortization
Amount shall be separately calculated for that portion of the Terminated
Premises which is part of the Premises initially leased 

 

40

 

hereunder and for those portions of the Terminated Premises, if any,
added to the Premises after the Commencement Date).  For purposes of calculating the unamortized
portion of the Amortization Amount, the amortization period for the Premises
initially leased hereunder shall be the period commencing on the Commencement
Date of the Lease and ending on the scheduled Expiration Date of the initial
Lease term, and the amortization period for any portion of the Terminated
Premises not part of the Premises initially leased hereunder shall be the
period commencing on the Commencement Date with respect to such space and
ending on the scheduled Expiration Date of the initial Lease term. The amortization
shall be on a straight line basis at an annual interest rate of eight percent
(8%) per annum.  Landlord shall confirm
the total Amortization Amount with respect to any increment of space leased
hereunder upon Tenant’s written request. 
To reflect the fact that this Lease provides for an abatement of the
Base Rent payable hereunder with respect to the Third Floor Premises, Fourth
Floor Premises, and Fifth Floor Premises for a period of twelve (12) months,
and for an abatement of the Base Rent payable hereunder with respect to the
Second Floor Premises for a period of eighteen (18) months, the “Unrealized Average Rents” as of the Early
Termination Date is $15.00 per square foot of Rentable Area of that portion of
the Terminated Premises comprised of the Third Floor Premises, Fourth Floor
Premises, and Fifth Floor Premises initially leased hereunder and $25.00 per
square foot of Rentable Area of the Terminated Premises comprised of the Second
Floor Premises initially leased hereunder. 
Tenant shall pay fifty percent (50%) of the Termination Fee upon
delivery of the Termination Notice and shall pay the remaining balance of the
Termination Fee at least thirty (30) days prior to the Early Termination Date.

 

19.3        Termination. Tenant shall, on or before the Early
Termination Date, vacate and surrender the Terminated Premises to Landlord
vacant and broom-clean, in the condition required by Section 15.1 above,
and all rights and duties of the parties under the Lease with respect to the
Terminated Premises shall terminate effective as of midnight on the Early
Termination Date, except for those obligations which by their nature survive
the expiration of this Lease; provided, however, that Tenant shall remain
liable for all of Tenant’s obligations which arose under the Lease with respect
to the Terminated Premises, prior to midnight on the Early Termination Date,
and provided further that if Tenant exercises the Termination Option, but fails
to vacate and surrender the Termination Premises by the Early Termination Date,
the provisions of Section 15.1 above shall apply to such holdover.  If the Termination Premises is comprised of
less than the entire Premises then leased hereunder, then effective as of the
date immediately following the Early Termination Date, the Base Rent payable
under this Lease and Tenant’s Proportionate Share shall be reduced to reflect
the termination of the Lease with respect to the Terminated Premises.

 

19.4        Effectiveness of Termination. 
Notwithstanding anything to the contrary above, Tenant’s right to
terminate this Lease pursuant to the above shall, at Landlord’s option, be
inapplicable if, at the time of delivery of Tenant’s Termination Notice, or on
the Early Termination Date, there exists an uncured Event of Default under the
Lease, or if Tenant fails to pay the entire Termination Fee required hereunder.

 

ARTICLE 20.

RIGHT OF FIRST OFFER TO PURCHASE

 

20.1        Right of First Offer.  If
Landlord receives a bona fide offer to purchase fee title to the Building and
Landlord desires to accept such offer or Landlord otherwise desires to enter
into an agreement to sell or exchange Landlord’s interest in the Project,
before accepting such offer or entering into a binding agreement to engage in
such transaction, Landlord shall immediately notify Tenant in writing of the
exact terms and conditions of the proposed transaction, including relevant
contingencies (the “Offer Notice”),
and the following provisions shall thereafter apply:

 

(a)           The Offer Notice shall constitute an offer by
Landlord to sell the Project to Tenant on the same terms and conditions as set
forth in the bona fide offer from the third party, and for a period of fifteen
(15) business days thereafter Tenant shall have the right and option,
exercisable by written notice to Landlord (“Notice
of Exercise”), to elect to purchase the Project upon the same terms
and conditions set forth in the Offer Notice (including contingencies, if any,
for title, environmental and physical condition inspections and due diligence),
provided, however, the purchase price shall in all events be payable in all
cash to Landlord (i.e. there shall be no seller financing).

 

(b)           If Tenant fails to exercise such right and
option by giving Notice of Exercise to Landlord within such fifteen (15)
business day period, Landlord may at any time thereafter consummate a sale of
the Project for a total purchase price of not less than ninety percent (90%) of
that specified in the Offer Notice. If Landlord 

 

41

 

elects to reduce the purchase price to a sum which is less than ninety
percent (90%) of that specified in the Offer Notice, Landlord shall give Tenant
written notice of the reduced purchase price, and Tenant shall thereupon have
five (5) business days to elect to purchase the Project at the reduced
purchase price, but otherwise on the terms and conditions set forth herein.

 

20.2        Escrow; Closing.  If
Tenant gives timely Notice of Exercise pursuant to Section 20.1, an escrow
shall be opened at a responsible title insurance company selected by
Tenant.  Landlord shall be obligated to
execute, acknowledge and deposit in such escrow a standard California grant
deed conveying the Project to Tenant or its assignee, together with appropriate
escrow instructions and such other documents and instruments as Tenant may
reasonably require to consummate such transaction.  Title to the Project shall be transferred to
Tenant free and clear of monetary liens arising through Landlord, except as
specifically set forth in the Offer Notice. 
Except as otherwise provided in the Offer Notice, (i) Tenant shall
consummate the purchase of Landlord’s Interest by closing escrow not later than
ninety (90) days after the initial Offer Notice was given, (ii) rent,
property taxes and assessments, and other items of income and expense of a
recurring nature shall be prorated as of the closing date, (iii) the
escrow fee shall be shared equally by Landlord and Tenant, Tenant shall pay for
its own owner’s policy of title insurance, and all other closing costs shall be
apportioned in accordance with prevailing custom in San Francisco,
California.  In the event Landlord or
Tenant desires to engage in a tax-deferred exchange pursuant to Section 1031
of the Internal Revenue Code, the other party shall cooperate in such exchange
by executing such documents and instruments and taking such other actions as
reasonably requested by the party engaging in the exchange, provided that the
cooperating party shall incur no cost or expense in so doing and shall not be
required to execute a promissory note or indemnity in connection therewith, and
the date of close of escrow shall not be extended.

 

20.3        Failure to Exercise.  In
the event Tenant fails or refuses for any reason to exercise its right of first
refusal under this Article 20 with respect to any proposed transaction,
this Article 20 shall not lapse or expire and Tenant’s rights hereunder
shall remain in full force and effect with respect to any subsequent
transaction throughout the term of this Lease.

 

20.4        Rights Personal; Termination.  The
rights granted pursuant to this Article 20 are personal to Tenant and its
Affiliate Transferees.  If at any time
Tenant leases less than 92,000 feet of Rentable Area in the Building,
Landlord shall have the right to terminate Tenant’s rights under this Article 20
shall automatically terminate.

 

ARTICLE 21.

ANTENNA INSTALLATIONS

 

21.1        Antennae Installations. 
Subject to the terms and conditions of this Article 21, Tenant
shall have the nonexclusive license, at Tenant’s sole cost and expense, to install
and operate up to three (3) satellite antenna dishes on the roof of the
Building (the “Antenna Equipment”)
for receipt of transmissions, and to install cables from such satellite dish to
the Premises, provided that the size, design and location of such equipment and
manner of installation shall be subject to Landlord’s reasonable approval
(provided that it shall in all events be reasonable for Landlord to disapprove
any antenna exceeding six feet in diameter). If Tenant desires to install such
equipment, Tenant shall notify Landlord in writing. Upon Landlord’s receipt of
Tenant’s written information to Landlord as to the exact size and the general
description of the proposed equipment, Landlord shall inform Tenant of the
exact location of the antenna site(s) (the “Antenna
Site(s)”).  Tenant shall
further have the non exclusive right to use, in common with one or more other
tenants of the Building and Landlord, the vertical shafts and horizontal
raceways of the Building for the installation of such conduits, electrical
wires and cables (collectively, the “Lines”)
as may be approved by Landlord pursuant to this Article 21, to connect
Tenant’s equipment on the Antenna Site with the Premises. The Antenna Equipment
and Lines are referred to herein collectively as the “Equipment.” 
The Antenna Site(s), vertical shafts and horizontal raceways of the
Building which Tenant is permitted to use hereunder are referred to herein
collectively as the “License Areas.”

 

21.2        Installation; Proper
Identification of Equipment. Tenant
shall submit to Landlord detailed plans and specifications detailing the
location and size of the Equipment and specifically describing all proposed
construction and/or installation work, including engineered drawings for the
Lines that Tenant wishes to install, but shall not commence any construction,
installation or operation of the Equipment until the drawings, plans and 

 

42

 

specifications have been approved in writing by Landlord and until Tenant,
at Tenant’s sole cost, has secured all necessary governmental approvals and
permits in connection therewith and has supplied the same to Landlord. Landlord
shall have no responsibility for, and Tenant shall hold Landlord harmless from,
any failure of the Equipment to comply with applicable law or to function
properly notwithstanding the fact that Landlord may have approved plans and
specifications therefor. Landlord and Tenant shall cooperate in determining the
locations of the risers and other areas of the Building (if any) through which
the Lines will be installed, in order to satisfy Tenant’s reasonable
requirements without unduly interfering with the operation of Building systems
or other tenants’ systems and without interfering with Landlord’s ability to
provide services and utilities to other tenants. Tenant shall install and
operate the Equipment in a safe manner that shall not overburden or otherwise
adversely effect any walls, floors, ceilings or any other structural or non
structural elements in the Building or any electrical system or life safety
system therein. If required by Landlord, Tenant shall erect, at Tenant’s sole
cost, a visual screening fence around the Antenna Site for aesthetic purposes,
the design, size, location and construction of such fence to be reasonably
determined by Landlord.

 

21.3        Costs.  Within
ten (10) days of Landlord’s invoice therefor, Tenant shall pay Landlord’s
charges for monitoring or supervising Tenant’s activities in connection with
the license granted hereunder by any of Landlord’s administrative, engineering,
security or other personnel, which shall be billed to Tenant at the hourly
standard rates for such services, as established from time to time by Landlord,
and shall reimburse Landlord for out of pocket costs incurred by Landlord for
services rendered by consultants, attorneys or other third parties (including
but not limited to engineers, contractors, or security or janitorial personnel)
in connection with the License granted hereunder, together with an amount equal
to ten percent (10%) thereof to cover Landlord’s overhead (provided that such
overhead cost shall be inapplicable to attorney’s fees). Tenant shall be
responsible for promptly paying all additional real and personal property
taxes, assessments, charges, fees or other governmental impositions levied or
assessed on the Building or Landlord due to the Equipment or the construction,
installation, modification, removal or operation thereof.

 

21.4        Construction. Tenant shall give Landlord not less than fifteen
(15) days prior written notice of the commencement of any construction or
installation under this Article 21. The contractor(s) performing the
construction and/or installation work under this Article 21 shall be
subject to Landlord’s prior written approval, which approval shall not be
unreasonably withheld or delayed. The provisions of Article 8 above shall
apply to construction and installation work under this Article 21. Tenant
shall cause Tenant’s contractor(s) to clearly mark (including any color coding
required by the Landlord’s agent) on the exterior of each of the Lines with the
number assigned by Landlord’s property manager and the starting point of the
Line and the destination (e.g. “No. 501, Roof to Floor 5”), and shall
place such identification tags in each closet the Lines pass through, on each
horizontal run of the Lines and on each item of Equipment.

 

21.5        Interference by Equipment.  In no
event may the Equipment interfere with any Building services or with any other
providers of services to the Building or with the reception of or signal from
any other antenna or satellite dish presently or hereinafter erected at the
Project, including the Building. If the operation of the Equipment interferes
with any such other service or antenna or satellite dish then, immediately
following written notice from Landlord to Tenant of such interference, Tenant
shall eliminate such interference. If Tenant is unable to promptly eliminate
such interference, then Landlord may, upon further written notice to Tenant,
terminate Tenant’s license with respect to the License Areas and Tenant shall
immediately cease operation of the Equipment and remove the Equipment from the
License Areas pursuant to Section 21.7 below. Landlord and Tenant shall
cooperate with each other at all times during the term of this Lease so as to
minimize interference between the Equipment and other communications equipment
in the Building or on the Building’s roof, regardless of the installation dates
of the Equipment or such other equipment.

 

21.6        Use; Compliance with Law;
Permits.  Tenant agrees that Tenant shall not sell
communication services or use the Equipment to provide services to any other
party. Tenant represents and warrants that all of the Tenant’s activities shall
be conducted in a safe manner. Tenant, at Tenant’s sole expense, shall comply
with all laws and governmental rules and regulations regarding the
installation, construction, operation and maintenance of the Equipment, and
shall be solely responsible for obtaining and shall obtain and keep in force
all permits, licenses and approvals necessary for operation of the Equipment
and shall pay any increase in rates for insurance carried by Landlord resulting
from the installation or use of the Equipment. Landlord shall cooperate with
Tenant to the extent 

 

43

 

reasonably required to obtain such permits, licenses or approvals,
provided that in no event shall Landlord be required to expend any sum in
connection therewith.

 

21.7        Removal of Equipment.  Upon
the expiration or any sooner termination of the Lease, or upon Landlord’s
written request if Tenant fails to perform any of its obligations under this Article 21
within five (5) business days of written notice to Tenant of such failure,
Tenant shall at its expense remove all of the Equipment from the License Areas
and other Building areas (if any) and restore such areas to their condition
prior to installation (which restoration shall include, without limitation,
removal of equipment, cabling, and all assorted wiring, and patching of all
penetrations of the Building). Any property not so removed within thirty (30)
days after the expiration or termination of the Lease or the license granted
herein shall, at Landlord’s election, be deemed the property of Landlord, or
Landlord may remove and store or dispose of such property for Tenant’s account
and Tenant shall reimburse Landlord on demand for the cost of such storage or
disposal.  If any governmental agency
having jurisdiction requires Tenant to remove any of the Equipment, then Tenant
shall at its expense remove the applicable Equipment and restore the affected
areas to their condition prior to installation. Tenant shall give Landlord not
less than fifteen (15) days prior written notice of the commencement of any
removal and restoration under this Section 21.7. If Tenant retains
possession of the License Areas licensed hereunder or any part thereof after
the expiration or earlier termination of the Lease or the license granted
herein, then, unless Landlord expressly agrees otherwise in writing, Tenant
shall pay Landlord during such holdover period, on a monthly basis, the fair
market rental for the affected space, as reasonably determined by Landlord,
together with all damages sustained by Landlord on account thereof. Any failure
by Tenant to remove any Equipment following written demand for the same by
Landlord pursuant to the provisions of this Section 21.1(g) shall
constitute continuing possession for purposes of the immediately preceding
sentence.

 

21.8        Access to Antenna Site.  Subject
to the rules and regulations of the Building, Tenant shall have the right,
at Tenant’s sole cost and expense, but under the supervision of Landlord, to
enter upon the License Areas during normal business hours and weekends and to
construct, install, operate and maintain the Equipment, until the Lease or the
license granted hereunder terminates. Tenant may have access to the License
Areas for normal repairs during normal business hours upon not less than four (4) hours’
prior telephone notice to the engineer for the Building during normal business
hours, and may have access to the License Areas for repairs during non business
hours provided that Tenant provides Landlord with adequate advance notice
thereof. Tenant shall designate in writing to Landlord the appropriate
authorized person or persons the Tenant will use to make emergency repairs to
the Equipment and shall cause such persons to comply with such safety and
security procedures (including, without limitation, orientation and training)
as Landlord shall establish from time to time. Following such designation and
upon presenting satisfactory identification to Landlord’s Building security
personnel together with a brief description of the reason for the emergency
entry, and subject to compliance with Landlord’s safety and security
procedures, such authorized person(s) may enter upon the portions of the
Building where the Equipment is located to perform emergency repairs to the
Equipment. Landlord may require that authorized representatives of Landlord
accompany Tenant or its representatives to the License Areas.

 

21.9        Liability; Indemnity;
Insurance.  Landlord shall have no obligation to design,
install, construct, use, operate, maintain, repair, replace or remove the
Equipment, nor shall Landlord have any other responsibility or liability in
connection therewith or the operations thereof, except as expressly set forth
in this Article 21.  Notwithstanding
any provision of this Lease to the contrary, the Equipment shall be in or on
the Building at the sole risk of Tenant and Landlord shall not be liable for
damage thereto or theft, misappropriation or loss thereof, and Tenant hereby
waives all claims against Landlord in connection therewith. In the event of an
interruption in, or failure or inability to provide electricity to the
Equipment, such interruption shall not impose upon Landlord any liability
whatsoever (including, without limitation, liability for consequential damages
or loss of business by Tenant) and Tenant hereby waives all claims against
Landlord or its agents or employees for any loss or damage resulting from any
such interruption. Further, notwithstanding any provision of this Lease to the
contrary, except to the extent caused by the gross negligence or willful
misconduct of Landlord or its agents or contractors, Tenant agrees to
indemnify, defend and hold harmless Landlord, and Landlord’s agents and
employees and the holders of any interest in Landlord and/or the Building from
and against any and all claims, which result from or arise out of (i) the
installation, operation, existence, maintenance, repair, removal, replacement
or relocation of the Equipment, (ii) any construction or other work
undertaken by or on behalf of Tenant in or about the License Areas, or (iii) any
breach or default under this Article 21 by Tenant, whether any of the
foregoing occurs on the Antenna Site, the other License 

 

44

 

Areas or any other place within or without the Building and whether
occurring prior to, during or subsequent to the term of this Lease. This Section 21.9
shall survive the expiration or termination of this Lease.

 

21.10      Maintenance; Repair.
Tenant acknowledges and agrees that it
accepts the Antenna Site in its “as is” condition. Tenant, at Tenant’s sole
cost and expense, shall keep the Equipment in good and safe condition and
repair and free of any defects (except for damage caused by the willful
misconduct of Landlord or its agents or representatives), including, without
limitation, correcting any loose bolts, fittings or other appurtenances. If the
Antenna Site is damaged as a result of Tenant’s failure to properly maintain
the Equipment, Tenant, at Tenant’s sole cost and expense, shall promptly repair
such damage. Landlord makes no representation or warranty, express or implied,
as to the suitability of or condition of the Building or the Antenna Site for
the purposes of receipt or transmission of communications signals, or any other
purpose, or whether the use of the Antenna Site is or will be permissible under
applicable laws.

 

21.11      Relocation and Substitution.  At
any time or times hereafter, in addition to the rights reserved by Landlord
under any other provisions of this Lease, Landlord may require upon thirty (30)
days’ prior written notice that Tenant move all or any portion of the Equipment
(including any Lines) to another location or locations in or on the Building.
If Landlord exercises any such rights, the parties agree that: (i) Landlord
shall pay all reasonable, direct out of pocket expenses incurred by Tenant in
connection therewith (excluding lost profits or other consequential damages),
unless the exercise of such rights is necessary for the safety, access, use,
repair, maintenance or operation of the Building including, without limitation,
the repair or replacement of the roof, as determined by Landlord in its sole
discretion, in which event Tenant shall bear such expenses, and (ii) Landlord
shall use reasonable efforts to provide other space in the Building that will
be feasible for Tenant’s purposes (but the installation of new Equipment or
improvements or alterations in or to License Areas or Equipment therein shall
be subject to Landlord’s approval of the drawings therefor and the other
requirements set forth in the other provisions of this Article 21).

 

21.12      Damage or Destruction;
Eminent Domain.  A fire or other casualty or a taking
affecting the License Areas or the Equipment shall not affect the obligations
of Tenant under this Lease, and this Lease shall remain in full force and
effect, without any abatement of any amounts payable to Landlord
hereunder.  Landlord shall be entitled to
all compensation, damages, income, rent awards and interest thereon whatsoever
which may be paid or made in connection with any taking of the License Areas,
and Tenant shall have no claim against Landlord or any governmental authority
for the value of any unexpired term of its rights under this Article 21;
provided, however, that the foregoing shall not prohibit Tenant from
prosecuting a separate claim against the taking authority for an amount
separately designated for the Equipment, so long as any award to Tenant will
not reduce the award to Landlord.

 

21.13      Rights Personal; Termination.  The
rights granted pursuant to this Article 21 are personal to Tenant and its
Affiliate Transferees.  If at any time
Tenant leases less than 50,000 feet of Rentable Area in the Building,
Landlord shall have the right on written notice to Tenant to terminate Tenant’s
rights under this Article 21.

 

ARTICLE 22.

DECK AND STAIRWELL

 

22.1        Deck License Area.  Landlord
hereby grants Tenant a rent-free license to use the area on the roof of the
Building adjacent to the Fifth Floor Premises (the “Deck License Area”) during the term of the Lease, in
accordance with the provisions of this Article 22.  Tenant shall accept the Deck License Area in
its “as-is” condition. Landlord makes no representation regarding the condition
of the Deck License Area or its suitability for Tenant’s use. Tenant represents
and warrants that all of Tenant’s activities on the Deck License Area shall be
conducted in a safe manner.  Tenant
agrees to comply with the rules and regulations established by Landlord
from time to time for the use of the Deck License Area, and to cause Tenant’s
employees and guests to comply with such safety and security procedures as
Landlord shall establish from time to time for use of the Deck License Area.
The foregoing shall in no way obligate Landlord or Landlord’s Building manager
to ensure the safety of persons using the Deck License Area. Without limiting
the foregoing, Tenant specifically agrees that no barbeque equipment, no open
flames and no smoking shall be permitted in the Deck License Area, that the
License Area shall be used in a manner which does not damage the surface of the
roof, and that any furnishings shall either be secured or be of a weight 

 

45

 

such that they will not blow off the roof.  Tenant shall obtain Landlord’s prior written
approval of all furniture, planters, flower boxes or other items placed in the
Deck License Area.  Planters and flower
boxes shall be installed and used in a manner which does not damage the surface
of the roof.  Tenant shall not use or
permit its employees or guests to use the Deck License Area in any way which
will conflict with any law, statute, ordinance or governmental rule, regulation
or requirement now in force or which may hereafter be enacted or promulgated (“Laws”), and upon notice that Tenant’s use
of the Deck License Area is a violation of Laws, Tenant shall cease such use
(and shall cause employees of Tenant to cease such use). Tenant acknowledges
that notwithstanding any provision of the Lease to the contrary, Landlord shall
have no obligation to repair the Deck License Area, the decking (if any), or
the surrounding areas as required for or in connection with Tenant’s use of the
Deck License Area, and shall have no obligation to perform any alterations or
modifications to cause such area to comply with applicable Laws. Tenant shall
keep the Deck License Area, including the decking tiles and any related
installations (such as storage lockers and railings), in a clean condition,
free of debris and in good condition and repair. Tenant shall promptly
reimburse Landlord for any repairs to the decking which are required as a
result of Tenant’s use of the Deck License Area and any increased operating
costs or other costs incurred by Landlord as a result of Tenant’s use of the
Deck License Area. Notwithstanding any provision of the Lease to the contrary,
any personal property of Tenant on the Deck License Area shall be in or on the
Building at the sole risk of Tenant and Landlord shall not be liable for damage
thereto or theft, misappropriation or loss thereof, and Tenant hereby waives
all claims against Landlord in connection therewith. Further, notwithstanding
any provision of the Lease to the contrary, Tenant agrees that Tenant will be
responsible for, and Tenant waives all claims against Landlord and the
Indemnified Parties for all costs, damages or liability of whatever nature
arising out of Tenant’s access to the Deck License Area and Tenant agrees to
indemnify, defend and hold harmless the Indemnified Parties from all claims,
lawsuits, damages, expenses or costs (including direct costs arising from
Tenant’s use of the roof and reasonable attorney’s fees) arising from or
related thereto.

 

22.2        Stairwell Use. 
Tenant shall be permitted a license for non-emergency access to the
three (3) stairwells located in the Northwest corner, central East side,
and Southwest corner of the Building and reentry access via the emergency
stairwell doors on the floors of the Building on which the Premises are located
for the sole purpose of permitting Tenant’s employees to use the stairwells to
travel between adjacent floors of the Premises, and to and from the parking
garage and the main lobby, subject to the provisions of this Section. Tenant
agrees to permit only employees authorized by Tenant to have access to such
stairwell access system and agrees to observe all life safety regulations
imposed by Landlord, the rules and regulations of the Building, and any
and all applicable laws or regulations imposed by governmental authorities.
Tenant acknowledges that the Building’s life safety systems may at times
override Tenant’s access system. Tenant further agrees that if any governmental
or insurance rule, regulation or law restricts or prohibits such access or use,
or if Landlord reasonably determines that such access to or use of the
stairwells presents a life safety or insurance problem for the Building or
otherwise unreasonably interferes with the maintenance or operation of the Building,
then Landlord may revoke Tenant’s rights under this Section upon written
notice to Tenant. Upon the expiration or termination of the Lease with respect
to that portion of the Premises located on any floor of the Building, Tenant’s
rights under this Section with respect to such floor of the Building shall
terminate, and if at any time Tenant does not lease hereunder Premises located
on a minimum of two (2) contiguous floors of the Building above the ground
floor, Tenant’s rights to non-emergency access to the stairwell and rights to
the access system shall automatically terminate. The rights granted hereunder
to Tenant are personal to Advent Software and its Affiliates and shall not
inure to the benefit of any assignee of the Lease or subtenant of any portion
of the Premises.  Tenant shall pay the
entire cost of installation of a stairwell access system or a modification to
the existing stairwell access system, and modifications to the Building’s life
safety systems, if any, which are required to provide Tenant the access from
the stairwells, including Landlord’s costs in reviewing or implementing such
installations or modifications.  Such
installations and modifications shall be subject to Landlord’s prior approval.
Upon the revocation of the license granted hereunder with respect to any floor
of the Building, or the expiration or termination of this Lease, Tenant shall,
at Tenant’s sole cost and expense, promptly remove any magnetic key card
readers or other device used to provide access from the stairwell entries for
which Tenant is no longer permitted access and shall restore the magnetic key
card reader area or other area to its condition prior to the installation or
modification of such access system.

 

22.3        Right to Revoke License.  In
the event Tenant breaches the provisions of this Article 22 and fails to
cure such breach within five (5) business days (or within one (1) business
day in the case of breaches that pose an imminent security or safety risk)
after written notice from Landlord, Landlord may suspend Tenant’s license to
use the Deck License Area or the stairwells until such breach is cured.  If Tenant persistently breaches the same 

 

46

 

provision of this Article 22 after written notice of at least one
such breach, Landlord may terminate Tenant’s license to use the Deck License
Area or the stairwells, as applicable. 
Tenant shall not make any repairs, alterations or improvements to the
Deck License Area without Landlord’s consent, which consent shall not be
unreasonably withheld.  Landlord may
access the Deck License Area at any time in connection with any work Landlord
desires to perform on or about the roof. 
To the extent any of Landlord’s work on the roof requires that the Deck
License Area be temporarily vacated, Tenant shall vacate the Deck License Area
during the performance of such work.  If
Tenant ceases to lease the Fifth Floor Premises immediately adjacent to the
Deck License Area, the license granted under Section 22.1 shall automatically
terminate.

 

ARTICLE 23.

MISCELLANEOUS MATTERS

 

23.1        USA Patriot Act and
Anti-Terrorism Laws.

 

(a)           Tenant and Landlord each represents and
warrants to, and covenants with, the other that neither such party nor any of
its respective constituent owners or affiliates currently are, or shall be at
any time during the Term hereof, in violation of any laws relating to terrorism
or money laundering (collectively, the “Anti-Terrorism Laws”), including
without limitation Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001 and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (the “Executive Order”) and/or the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56) (the “USA Patriot Act”).

 

(b)           Tenant and Landlord each covenants with the
other that neither such party nor any of its respective constituent owners or
affiliates is or shall be during the Term hereof a “Prohibited Person,” which
is defined as follows:  (i) a person
or entity that is listed in the Annex to, or is otherwise subject to, the
provisions of the Executive Order; (ii) a person or entity owned or
controlled by, or acting for or on behalf of, any person or entity that is
listed in the Annex to, or is otherwise subject to the provisions of, the
Executive Order; (iii) a person or entity with whom Landlord is prohibited
from dealing with or otherwise engaging in any transaction by any
Anti-Terrorism Law, including without limitation the Executive Order and the
USA Patriot Act; (iv) a person or entity who commits, threatens or
conspires to commit or support “terrorism” as defined in Section 3(d) of
the Executive Order; (v) a person or entity that is named as a “specially
designated national and blocked person” on the then-most current list published
by the U.S. Treasury Department Office of Foreign Assets Control at its
official website, http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf, or
at any replacement website or other replacement official publication of such
list; and (vi) a person or entity who is affiliated with a person or
entity listed in items (i) through (v) above.

 

(c)           At any time and from time to time during the
Term, Tenant and Landlord shall deliver to the other party, within ten (10) days
after receipt of a written request therefor, a written certification or such
other evidence reasonably acceptable to the other party evidencing and
confirming such party’s compliance with this Section 23.1.

 

23.2        Telecommunications.  Tenant
and its telecommunications companies, including local exchange
telecommunications companies and alternative access vendor services companies,
shall obtain Landlord’s prior written consent (which consent shall not be
unreasonably withheld) for access to and within the Building for the
installation and operation of telecommunications systems, including voice,
video, data, internet, and any other services provided over wire, fiber optic,
microwave, wireless, and any other transmission systems (“Telecommunications Services”), for part or
all of Tenant’s telecommunications within the Building and from the Building to
any other location.  All providers of
Telecommunications Services shall be required to comply with the rules and
regulations of the Building, applicable laws and Landlord’s policies and
practices for the Building.  Tenant
acknowledges that Landlord shall not be required to provide or arrange for any
Telecommunications Services and that Landlord shall have no liability to any
Tenant Party in connection with the installation, operation or maintenance of
Telecommunications Services or any equipment or facilities relating
thereto.  Tenant, at its cost and for its
own account, shall be solely responsible for obtaining all Telecommunications
Services.  All connections shall be made
in a manner reasonably approved by Landlord, shall be made at Tenant’s expense
(including, without 

 

47

 

limitation, any hook up, access and maintenance fees related to the
installation of any equipment, wires and cables in the Premises and the
commencement of service therein, and the maintenance thereafter of such
equipment, wires and cables) by contractors or vendors reasonably approved by
Landlord, and shall be performed in a good and workmanlike manner.

 

23.3        Parking and Shuttle Service. 
Provided Tenant is not in default of any term or provision of this
Lease, Landlord agrees to provide Tenant for use by the employees, agents,
customers and invitees of Tenant the number of parking spaces designated on the
Basic Lease Information page in the Project parking garage on an
unreserved and unassigned basis for the monthly rental stated on the Basic
Lease Information page.  Such monthly
rental payments shall be deemed Additional Rent hereunder and shall be payable
monthly in advance along with Base Rent. 
Tenant shall not use more parking spaces than the number stated on the
Basic Lease Information page.  Unless otherwise
provided by Landlord, in its sole discretion, the parking spaces will not be
separately identified.  Landlord shall
have no obligation to monitor the use of the parking area.  All parking shall be subject to any and all rules and
regulations adopted by Landlord in its discretion from time to time.  Only automobiles no larger than full size
passenger automobiles or pick-up trucks may be parked in the Project
garage.  Tenant shall not permit or allow
any vehicles that belong to or are controlled by Tenant or Tenant’s employees,
agents, customers or invitees to be loaded, unloaded or parked in areas other
than those designated by Landlord for such activities.  A failure by Tenant or any of its employees,
agents, customers or invitees to comply with the foregoing provisions shall
afford Landlord the right, but not the obligation, without notice, in addition
to any other rights and remedies available under this Lease, to remove and to
tow away the vehicles involved and to charge the cost to Tenant, which cost
shall be immediately due and payable upon demand by Landlord.  Tenant may at any time elect to relinquish in
writing its right to use one or more of the parking spaces to be provided
hereunder in which event Tenant shall not be required to pay for any such
relinquished spaces.  If Tenant
relinquishes in writing or by nonpayment any of such parking rights during the
Term, Tenant shall no longer have a right to the parking relinquished and may
obtain future parking solely on a space-available basis.  Landlord may increase the parking spaces
rental rates from time to time at any time during the Term of this Lease, upon
thirty (30) days prior notice to Tenant, but in no event shall such increased
amount exceed the parking rate then generally charged in the area of the
Project for similar facilities.  Tenant
acknowledges that the individuals to whom garage access cards are distributed
pursuant to Tenant’s rights hereunder will be required by Landlord or the
garage operator to execute a commercially reasonable standard parking agreement
acknowledging receipt of the card, providing information regarding the make,
model, and license plate number of the automobile or automobiles such party may
park in the garage, and acknowledging receipt of the rules and regulations
pertaining to garage access and parking. 
In the event Tenant shall require substantially more spaces that the
stated number of parking spaces, at Tenant’s written request accompanied by
Tenant’s commitment to reimburse Landlord for its additional costs in
connection with operating a valet system, Landlord shall consider converting
the parking garage to a valet system, provided that Landlord’s election to
convert or decline to convert to such system shall be made in Landlord’s sole
discretion.  Throughout the term of this
Lease Landlord shall provide a shuttle service between the Building and the
nearest BART station and such other public transit locations, if any,
designated by Landlord, which shall be available to Tenant’s employees free of
charge, subject to the reasonable rules and regulations imposed by the
shuttle service regarding proper identification.  The shuttle shall operate during morning and
afternoon commute hours, provided that the specific hours of operation and schedule for
the shuttle service shall be determined by Landlord, however Landlord shall
consult with Tenant regarding the schedule of the shuttle service. The
cost of operating the shuttle service shall be an Operating Cost, and Operating
Cost for the Base Year shall be deemed to include the cost of a full calendar
year’s shuttle service at the rate initially payable therefor.

 

23.4        Brokers. 
Landlord has been represented in this transaction by Landlord’s
Broker.  Tenant has been represented in
this transaction by Tenant’s Broker. 
Upon full execution of this Lease by both parties, (i) Landlord
shall pay to Landlord’s Broker a fee for brokerage services rendered by it in
this transaction if provided for in a separate written agreement between
Landlord and Landlord’s Broker, and (ii) Landlord shall pay to Tenant’s
Broker a fee for brokerage services rendered by it in this transaction if
provided for in a separate written agreement between Landlord and Tenant’s
Broker.  Landlord and Tenant each
represents and warrants to the other that such party has negotiated this Lease
directly with the real estate Brokers named in the Basic Lease Information page and
has not authorized or employed, or acted by implication to authorize or to
employ, any other real estate broker or salesman to act for such party in
connection with this Lease. Each party shall hold the other harmless from and
indemnify and defend the other against any and all claims by any real estate
broker or salesman other than the real estate Brokers named in the Basic Lease
Information page for a commission, finder’s fee or other compensation as a

 

48

 

result of the inaccuracy of such party’s representation above,
including any costs, expenses and attorneys’ fees incurred with respect such
claims.

 

23.5        No Waiver.  No
waiver by either party of the default or breach of any term, covenant or
condition of this Lease by the other party shall be deemed a waiver of any
other term, covenant or condition hereof, or of any subsequent default or
breach by Tenant of the same or of any other term, covenant or condition
hereof.  Landlord’s consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Landlord’s consent to or approval of, any subsequent or similar act by Tenant,
or be construed as the basis of an estoppel to enforce the provision or
provisions of this Lease requiring such consent.  Regardless of Landlord’s knowledge of a
default or breach at the time of accepting Rent, the acceptance of Rent by
Landlord shall not be a waiver of any preceding default or breach by Tenant of
any provision hereof, other than the failure of Tenant to pay the particular
Rent so accepted.  Any payment given
Landlord by Tenant may be accepted by Landlord on account of monies or damages
due Landlord, notwithstanding any qualifying statements or conditions made by
Tenant in connection therewith, which statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to in writing by
Landlord at or before the time of deposit of such payment.  No payment by Tenant of a lesser amount than
the amount required under this Lease shall be deemed to be other than on
account of the Rent due, and Landlord may accept such payment without prejudice
to Landlord’s right to recover the balance due or to pursue any other remedy
herein provided.

 

23.6        Recording. 
Neither this Lease nor a memorandum thereof shall be recorded without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld.  Tenant shall have the right to
record a short form memorandum of lease in a form reasonably approved by
Landlord.

 

23.7        Estoppel Certificate. 
Within ten (10) business days following Landlord’s request, Tenant
shall execute, acknowledge and deliver written estoppel certificates addressed
to (i) any Holder or prospective mortgagee of Landlord, or (ii) any
purchaser or prospective purchaser of all or any portion of, or interest in,
the Project, on a commercially reasonable form specified by Landlord, certifying
as to such facts (if true) and agreeing to such notice provisions and other
matters as such mortgagee(s) or purchaser(s) may reasonably require, including,
without limitation, the following: (a) that this Lease is unmodified and
in full force and effect (or in full force and effect as modified, and stating
the modifications); (b) the amount of, and date to which Rent and other
charges have been paid in advance; (c) the amount of any Security Deposit;
and (d) acknowledging that to Tenant’s current knowledge without duty of
inquiry, Landlord is not in default under this Lease (or, if Landlord is
claimed to be in default, stating the nature of the alleged default).  Any such estoppel certificate may be relied
upon by any such mortgagee or purchaser. 
If Tenant fails to execute any such certificate complying with the above
provisions within the period described above, and thereafter Tenant does not
deliver such executed document within ten (10) days of written notice from
Landlord of such failure, such failure shall, at Landlord’s election,
constitute an Event of Default hereunder and shall be conclusive upon Tenant
that (1) this Lease is in full force and effect and has not been modified
except as represented by Landlord; (2) not more than one month’s Rent has
been paid in advance; and (3) Landlord is not in default under this
Lease.  At any time and from time to
time, in the context of a sale of Tenant’s business or a financing thereof
only, and upon not less than fifteen (15) business days’ prior notice from
Tenant, Landlord shall execute and deliver to Tenant a statement addressed to
any lender, investor or acquirer of Tenant or prospective lender, lender or
acquirer of Tenant, on a commercially reasonable form specified by Tenant,
certifying (i) the titles and dates of the documents then comprising the
Lease, (ii) the current amounts of and the dates to which the Rent and
other charges have been paid, (iii) the amount to the Security Deposit
then held by Landlord, and (iii) to the best of Landlord’s knowledge
without duty of inquiry that Tenant is not in default under this Lease (or if
Tenant is in default, specifying the nature of such default).

 

23.8        Transfers by Landlord.  In
the event of the transfer and assignment by Landlord of its interest in this Lease
and in the Building to a party expressly assuming Landlord’s obligations under
this Lease, Landlord shall thereby be released from any further obligations
hereunder accruing thereafter, and Tenant agrees to look solely to such
successor in interest of the Landlord for performance of such obligations. Any
security given by Tenant to secure performance of Tenant’s obligations
hereunder shall be assigned and transferred by Landlord to such successor in
interest and Landlord shall thereby be discharged of any further obligation
relating thereto.

 

23.9        Attorneys’ Fees.  In
the event either party places the enforcement of this Lease, or any part of it,
or the collection of any Rent due, or to become due, hereunder, or recovery of
the possession of the Premises, in the 

 

49

 

hands of an attorney, or files suit upon the same, the prevailing party
shall recover its reasonable attorneys’ fees, costs and expenses, including
those which may be incurred on appeal. 
The term “prevailing party”
shall include, without limitation, a party who substantially obtains or defeats
the relief sought, as the case may be, whether by compromise, settlement,
judgment or otherwise.  The attorneys’
fee award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably incurred.

 

23.10      Termination; Merger.  No
act or conduct of Landlord, including, without limitation, the acceptance of
keys to the Premises, shall constitute an acceptance of the surrender of the
Premises by Tenant before the Expiration Date. 
Only a written notice from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish a termination of
this Lease.  Unless specifically stated
otherwise in writing by Landlord, the voluntary or other surrender of this
Lease by Tenant, the mutual termination or cancellation hereof, or a
termination hereof by Landlord for default by Tenant, shall automatically
terminate any sublease or lesser estate in the Premises; provided, however,
Landlord shall, in the event of any such surrender, termination or
cancellation, have the option to continue any one or all of any existing
subtenancies.  Landlord’s failure within
thirty (30) days following any such event to make any written election to the
contrary by written notice to the holder of any such lesser interest, shall
constitute Landlord’s election to have such event constitute the termination of
such interest.

 

23.11      Amendments; Interpretation.  This
Lease may not be altered, changed or amended, except by an instrument in
writing signed by the parties in interest at the time of the modification.  The captions of this Lease are for
convenience only and shall not be used to define or limit any of its
provisions.

 

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

 

23.13      Notices.  All
notices, demands, consents and approvals which are required or permitted by
this Lease to be given by either party to the other shall be in writing and
shall be deemed to have been fully given by personal delivery or by recognized
overnight courier service or when deposited in the United States mail,
certified or registered, return receipt requested, with postage prepaid, and
addressed to the party to be notified at the address for such party specified
on the Basic Lease Information page, or to such other place as the party to be
notified may from time to time designate by at least fifteen (15) days’ notice
to the notifying party given in accordance with this Section 23.13.  A copy of all notices given to Landlord under
this Lease shall be concurrently transmitted to such party or parties at such
addresses as Landlord may from time to time hereafter designate by notice to
Tenant.

 

Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark
thereon.  Notices delivered by recognized
overnight courier shall be deemed given one (1) business day after
delivery of the same to the courier. Notices delivered by United States mail
shall be deemed given three (3) business days after depositing the same as
required hereunder.  If notice is
received on a Saturday, Sunday or legal holiday, it shall be deemed received on
the next business day.

 

23.14      Force Majeure.  Any
prevention, delay or stoppage of work to be performed by Landlord or
Tenant which is due to strikes, labor disputes, inability to obtain labor,
materials, equipment or reasonable substitutes therefor, acts of God,
governmental restrictions or regulations or controls, judicial orders, enemy or
hostile government actions, civil commotion, or other causes beyond the
reasonable control of the party obligated to perform hereunder, shall excuse
performance of the work by that party for a period equal to the duration of
that prevention, delay or stoppage. 
Nothing in this Section 17.12 shall excuse or delay Tenant’s
obligation to pay Rent or other charges due under this Lease.

 

23.15      Successors and Assigns.  This
Lease shall be binding upon and inure to the benefit of Landlord, its successors
and assigns (subject to the provisions hereof, including, without limitation, Section 17.6),
and shall be binding upon and inure to the benefit of Tenant, its successors,
and to the extent assignment or subletting may be approved by Landlord hereunder,
Tenant’s assigns or subtenants.

 

50

 

23.16      Waiver of Jury Trial.  TO
THE EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD AND TENANT HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
LEASE OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THE
PREMISES (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS
LEASE OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). 
Landlord and Tenant agree and intend that this paragraph constitutes a
written consent to waiver of trial by jury within the meaning of California
Code of Civil Procedure Section 631(a)(2). 
Each party hereby authorizes and empowers the other to file this
paragraph and this Lease with the clerk or judge of any court of competent
jurisdiction as a written consent to waiver of jury trial.

 

23.17      Further Assurances. 
Landlord and Tenant each agree to promptly sign all documents reasonably
requested to give effect to the provisions of this Lease.

 

23.18      Incorporation of Prior
Agreements.  This Lease, including the exhibits and
addenda attached to it, contains all agreements of Landlord and Tenant with
respect to any matter referred to herein.  No prior agreement or understanding pertaining
to such matters shall be effective.

 

23.19      Applicable Law.  This
Lease shall be governed by, construed and enforced in accordance with the laws
of the State of California.

 

23.20      Time of the Essence.  Time
is of the essence of each and every covenant of this Lease.  Each and every covenant, agreement or other
provision of this Lease on Tenant’s part to be performed shall be deemed and
construed as a separate and independent covenant of Tenant, not dependent on
any other provision of this Lease or on any other covenant or agreement set
forth herein.

 

23.21      No Joint Venture.  This
Lease shall not be deemed or construed to create or establish any relationship
of partnership or joint venture or similar relationship or arrangement between
Landlord and Tenant hereunder.

 

23.22      Limitation on Landlord’s
Liability.  Redress for any claim against Landlord under
this Lease shall be limited to and enforceable only against and to the extent
of Landlord’s interest in the Project (but in any case Tenant shall also be
allowed to (i) execute any judgment against Landlord in favor of Tenant
against all net sale proceeds then or thereafter held by Landlord in respect of
its interest in the Project and (ii) executed any judgment against
Landlord in favor of Tenant against rents actually received or first receivable
by Landlord following the entry of such judgment).  The obligations of Landlord under this Lease
are not intended to and shall not be personally binding on, nor shall any resort
be had to the private properties of, any of its trustees or board of directors
and officers, as the case may be, its investment manager, the general partners
thereof, or any beneficiaries, stockholders, employees, or agents of Landlord
or the investment manager. 
Notwithstanding any other provision of this Lease, but not in limitation
of the provisions of Article 11 above, Landlord shall not be liable for
any consequential damages for interruption or loss of business, income or
profits, or claims of constructive eviction. 
The review and/or approval by Landlord of any item shall not impose upon
Landlord any liability for accuracy or sufficiency of any such item or the
quality or suitability of such item for its intended use.  Any such review or approval is for the sole
purpose of protecting Landlord’s interest in the Project, and neither Tenant
nor any Tenant Party nor any person or entity claiming by, through or under
Tenant, nor any other third party shall have any rights hereunder by virtue of
such review and/or approval by Landlord.

 

23.23      Authority.  If
Tenant is a corporation, trust or general or limited partnership, each
individual executing this Lease on behalf of Tenant represents and warrants
that he or she is duly authorized to execute and deliver this Lease on Tenant’s
behalf and that this Lease is binding upon Tenant in accordance with its
terms.  If Tenant is a corporation, trust
or partnership, Tenant shall, within ten (10) business days after request
by Landlord, deliver to Landlord evidence satisfactory to Landlord of such
authority.  If Landlord is a corporation,
trust or general or limited partnership, each individual executing this Lease
on behalf of Landlord represents that he or she is duly 

 

51

 

authorized to execute and deliver this Lease on Landlord’s behalf and
that this Lease is binding upon Landlord in accordance with its terms.  If Landlord is a corporation, trust or
partnership, Landlord shall, within fifteen (15) business days after request by
Tenant, deliver to Tenant evidence satisfactory to Tenant of such authority.

 

23.24      No Light, Air or View
Easement.  Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to the Project
shall in no way affect this Lease or the Rent due hereunder, or otherwise
impose any liability on Landlord whatsoever.

 

23.25      Offer. 
Preparation of this Lease by Landlord or Landlord’s agent and submission
of same to Tenant shall not be deemed an offer to lease to Tenant.  This Lease is not intended to be binding and
shall not be effective until fully executed by both Landlord and Tenant.

 

23.26      Building Name. 
Tenant will not, without the written consent of Landlord, use the words “Contract
Design Center”, “600 Townsend Street”, “Galleria Design Center”, “Showplace
Design Center”, “Contract Center”, “Galleria”, “Showplace Square”, the “San
Francisco Design Center” or “The Showplace” or the name of the Building for any
purpose other than as the address of the business to be conducted by Tenant in
the Premises.

 

23.27      Exhibits.  The
following exhibits and addenda are attached to, incorporated in and made a part
of this Lease:  Exhibit A Floor Plan of the Premises; Exhibit B Initial Improvement of the
Premises; Allowance; Exhibit C
Confirmation of Term of Lease; Exhibit D
Building Rules and Regulations; and Exhibit E
Tenant Construction & Rules of the Site.

 

23.28      Condition of Ground Floor
Lobby and Exterior Courtyard; Termination of Art Program. 
Landlord has informed Tenant that Landlord intends to install trees,
plants, tables and chairs in the exterior courtyard behind the main ground
floor lobby of the Project.  If Landlord
elects during the term of this Lease to perform any major modifications,
upgrades or renovations to the main ground floor lobby of the Project (the “Lobby
Changes”), Landlord shall share Landlord’s concept of the Lobby Changes with
Tenant prior to implementing such Lobby Changes.  Landlord shall terminate the existing program
for displaying art in the ground floor lobby prior to December 31, 2006.

 

[No further text this page]

 

52

 

IN WITNESS WHEREOF, the parties hereto have executed
this Lease as of the day and year first written above.

 

	
  “LANDLORD”:

  	
  TODA DEVELOPMENT, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Akinori Nakagawa

  	
   

  
	
   

  	
  Typed Name: 

  	
  Akinori Nakagawa

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Masatoshi Tasaka

  	
   

  
	
   

  	
  Typed Name: 

  	
  Masatoshi Tasaka

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
					

 

 

	
  “TENANT”:

  	
  ADVENT SOFTWARE, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Graham V. Smith

  	
   

  
	
   

  	
  Typed Name: 

  	
  Graham V. Smith

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ John P. Brennan

  	
   

  
	
   

  	
  Typed Name: 

  	
  John P. Brennan

  	
   

  
	
   

  	
  Title:

  	
  V.P. of Human Resources

  	
   

  
					

 

 

[If Tenant is a corporation, Tenant should have one
officer from each of the following categories sign for Tenant: (a) a
president, vice president or chairman of the board and (b) a
secretary, assistant secretary, chief financial officer or assistant
treasurer.]

 

[If Landlord is a corporation, Landlord should have
one officer from each of the following categories sign for Landlord: (a) a
president, vice president or chairman of the board and (b) a secretary,
assistant secretary, chief financial officer or assistant treasurer.]

 

53

 

EXHIBIT A

 

FLOOR PLAN

OF THE

PREMISES

 

1

 

EXHIBIT B

 

INITIAL
IMPROVEMENT OF THE PREMISES; ALLOWANCE

 

1.             Prime Contractor; General Contractor. 
Landlord and Tenant acknowledge that Toda America, Inc. (“Prime Contractor”) has been selected as the
prime contractor for the construction of the Tenant Improvements (as defined
below), and that CCI Commercial Construction & Improvements (“Landlord’s Contractor”) has been selected
by Prime Contractor and approved by Landlord and Tenant as the general
contractor for the construction of the Tenant Improvements.  Landlord shall cause Prime Contractor and
Landlord’s Contractor to complete construction of the initial improvements to
the Premises in accordance with the following terms and provisions of this Exhibit B (the “Work Letter”), in a good and workmanlike
manner and substantially in compliance with applicable laws.

 

2.             Plans.

 

(a)  Space Plans.  On or before December 15, 2005 (the “Space Plan Deadline”), Tenant shall furnish
to Landlord for Landlord’s review and approval (which approval shall not be
unreasonably withheld) detailed layout plans and finish specifications (the “Space Plans”) prepared by MacCracken
Architects or another architect reasonably acceptable to Landlord (“Tenant’s Architect”).  The Space Plans shall show substantially all
of the improvements which Tenant desires to be constructed in the
Premises.  The Space Plans shall
separately note any proposed structural work or extraordinary or supplemental
electrical, plumbing or HVAC requirements, shall identify Design-Build
Components (as defined below), and shall contain such detail and specifications
as would permit the Design-Build Contractors (defined below) to commence work
on their respective plans.  Landlord
shall respond to the Space Plans within five (5) business days of its
receipt thereof.  Tenant shall respond
promptly to any reasonable objections of Landlord to the Space Plans and shall
resubmit appropriately revised Space Plans prepared by Tenant’s Architect
within three (3) business days of Tenant’s receipt of Landlord’s
objections.  The foregoing process shall
be repeated until the Space Plans have been approved by Landlord.  The Space Plans, as finally approved in
writing by Landlord, shall be referred to herein as the “Final Space Plans.”

 

(b)  Working Drawings; Final Plans; Minimum
Required Improvements.  On or before February 1,
2006 (the “Final Drawing Deadline”),
Tenant shall furnish to Landlord for Landlord’s written approval (which shall
not be unreasonably withheld) working plans and specifications (the “Working Drawings”) prepared by Tenant’s
Architect for substantially all of the improvements which Tenant desires to be
constructed in the Premises pursuant to this Work Letter.  The Working Drawings shall show improvements
that substantially conform to the Final Space Plans (except to the extent
specifically noted therein or in accompanying specifications), shall be in
sufficient detail as to enable the general contractor for the work to obtain
all necessary governmental permits for construction of all of the improvements
and to secure complete bids from qualified contractors to perform the work for
all of the improvements to be constructed in the Premises, shall identify any “long
lead” materials (as defined below) then known by Tenant or Tenant’s Architect,
and shall show improvements which substantially conform to applicable building
codes and legal requirements.  Landlord
shall respond to the Working Drawings within ten (10) business days of its
receipt thereof.  Landlord shall not
unreasonably withhold its approval to the Working Drawings and the improvements
set forth thereon. Tenant shall respond promptly to any reasonable objections of
Landlord to the Working Drawings and shall resubmit appropriately revised
Working Drawings prepared by Tenant’s Architect within five (5) days of
Tenant’s receipt of Landlord’s objections. 
Such resubmitted Working Drawings shall clearly indicate which portions
of the plans remain unchanged from the previously submitted plans.  Landlord shall respond to revised Working
Drawings within three (3) business days of receipt thereof, unless such
revised Working Drawings include material revisions to structural, mechanical,
electrical, or life safety components, or unless the revised Working Drawings
cover more than 25,000 square feet of space, in which event Landlord shall
respond within six (6) business days of receipt thereof.  The foregoing procedure shall be repeated
until the Working Drawings have been approved by Landlord.  (The Working Drawings, as approved in writing
by Landlord, as revised by Tenant from time to time with Landlord’s written
approval in accordance with the following provisions of this Work Letter, are
hereinafter called the “Final Plans”,
and the improvements to be performed in accordance with the Final Plans and the
Design-Build Plans (as defined below) are hereinafter called the “Tenant Improvements”).   The Final Plans must, at a minimum, show the
following improvements (the “Minimum Required
Improvements”):  (A) office
improvements to that portion of the Third Floor Premises that is presently in
shell condition, (B) eliminate the corridors in the northern portion of
the Third Floor Premises, and (C) eliminate the 

 

1

 

demising walls and common corridors in the
Fifth Floor Premises to combine the separately demised space into a single
premises.

 

(c)  Demolition Plan; Interior Demolition.  The parties will work in an expeditious
manner to agree on a demolition plan for bid and permit indicating areas and
components to be demolished (the “Demolition
Plan”) and Tenant shall in such manner provide to Landlord for
Landlord’s review and approval (which shall not be unreasonably withheld) a
demolition plan (exclusive of MEP components) issued by Tenant’s Architect,
provided that such plan shall be issued not later than February 1,
2006.  Landlord shall approve or
reasonably disapprove the Demolition Plan within two (2) business days of
receipt thereof and Landlord’s Contractor shall bid such work out to a minimum
of three (3) subcontractors from the Bid List (as defined below). Landlord’s
Contractor will provide Tenant’s Representative with a copy of Landlord’s
Contractor’s suggested subcontractors for the work shown on the Demolition Plan
(the “Demolition Work”), Landlord’s
Contractor’s estimated budget for the Demolition Work, including Landlord’s
Contractor’s fee of 3.1% of the total hard cost of the Demolition Work for
overhead and profit and Landlord’s Contractor’s general conditions for the
Demolition Work.  Tenant shall have two (2) business
days after the receipt of Landlord’s Contractor’s bid analysis to approve or
reasonably disapprove Landlord’s Contractor’s selection of subcontractors and
Landlord’s Contractor’s estimated budget for the demolition work.  Landlord’s Contractor shall commence
demolition of the existing improvements as soon as reasonably possible
following approval of the Demolition Plan, the budget for the Demolition Work,
and the selection of the subcontractors to perform such Demolition Work.

 

(d)  Approval.  Landlord’s approval of any item reviewed by
Landlord under this Work Letter shall merely indicate Landlord’s consent to the
proposed work shown thereon, and in no event shall such consent by Landlord be
deemed to constitute a representation by Landlord that the work called for
therein complies with applicable building codes or other legal requirements,
nor shall such consent release Tenant from Tenant’s obligation to supply
Working Drawings that do so substantially conform to applicable building codes
and legal requirements.

 

(e)  Design-Build; MEP Plans.   Landlord and Tenant acknowledge that
portions of the mechanical, electrical, and plumbing components of the Tenant
Improvements (the “Design-Build Components”)
shall be designed and constructed on a design-build basis by subcontractors
selected by Landlord’s Contractor and approved by Tenant pursuant to Section 3
below.  Upon receipt of the Space Plans
and approval of the Bid List (as defined below), Landlord shall cause Landlord’s
Contractor to solicit bids from not less than three (3) such
subcontractors for the Design-Build Components, except as otherwise approved by
Tenant, and provide Tenant with Landlord’s Contractor’s bid analysis (including
copies of the actual subcontractor bid responses) and recommended
subcontractors for the Design Build Components. 
Tenant shall approve or reasonably disapprove the proposed design-build
subcontractor within two (2) business days of Landlord’s Contractor’s
request for such approval.  The
subcontractors selected to perform the design-build work are referred to herein
as the “Design-Build Subcontractors”.  Landlord and Tenant shall cooperate regarding
the selection of any required Design-Build Subcontractors with the goal of
selecting such Design-Build Subcontractors by January 3, 2006, and during
development of plans by the Design-Build Subcontractors, Tenant shall cause
Tenant’s Architect to cooperate with the Design-Build Subcontractors and to
respond to inquiries from the Design-Build Subcontractors promptly, and in all
events within two (2) business days. 
Tenant shall provide the Design-Build Subcontractors with the
information required for the Design-Build Subcontractors to commence design on February 2,
2006 and to complete design prior to February 24, 2006.  The plans prepared by the Design-Build
Subcontractors for such portions of the electrical, and plumbing components of
the Tenant Improvements shall be subject to Landlord’s and Tenant’s approval,
which approval shall not be unreasonably withheld. Landlord and Tenant shall
respond to such plans within five (5) business days of its receipt
thereof.  Landlord shall cause the Design-Build
Subcontractor(s) respond promptly to any reasonable objections of Landlord or
Tenant to such plans to resubmit appropriately revised plans within five (5) days
of receipt of Landlord’s or Tenant’s objections.  Such resubmitted plans shall clearly indicate
which portions of the plans remain unchanged from the previously submitted
plans.  Landlord and Tenant shall respond
to revised plans within three (3) business days of receipt thereof.  The foregoing procedure shall be repeated
until such plans have been approved by Landlord and Tenant. Such approved plans
are referred to herein as the “Design-Build
Plans”.

 

(f)  Pricing Plans.  Tenant shall provide to Landlord 75% Design
Development Drawings issued by Tenant’s Architect (the “75% Design Development Drawings”) and 50%
Construction Documents prepared by Tenant’s Architect (the “50% Construction Documents”).

 

2

 

3.             Subcontractor Bidding List.  On
or before December 12, 2005, Landlord’s Contractor shall submit to Tenant
Landlord’s Contractor’s list of recommended subcontractors for the Demolition
Work and the balance of the Tenant Improvements, including the design-build
components.  Tenant shall approve or
reasonably disapprove subcontractors on Landlord’s Contractor’s recommended bid
invitation list within three (3) business days of receipt thereof. If
Tenant desires to have Landlord’s Contractor include particular subcontractors
on the bid invitation list, Tenant shall submit the names of such subcontractors
to Landlord’s Contractor on or before December 12, 2005 and, subject to Landlord’s prior approval
(which shall not be unreasonably withheld or delayed), such subcontractors
shall be so included.  The final bid
invitation list of subcontractors as approved by Landlord and Tenant is
referred to herein as the “Bid List”.

 

4.             Tenant’s Representative. For the purposes of this Work Letter,
Tenant’s representative shall be Bryce Mason of KBM Partners or such other representative(s) designated by
Tenant from time to time (“Tenant’s
Representative”).

 

5.             Cooperation.  Landlord and Tenant and their
respective contractors, consultants and representatives, shall communicate and
cooperate with each other to the end that the Tenant Improvements are
constructed in an expeditious manner, having due regard for minimizing
disturbance of other tenants of the Project. 
Landlord and Tenant shall cooperate with each other to resolve any space
planning or other issues that are raised by applicable local, state or federal
building codes during the planning, permit or construction process. Landlord’s
Contractor shall keep Tenant informed regarding the progress of the work, and
Landlord’s Contractor and Tenant’s Representative shall hold construction
meetings with frequency reasonably satisfactory to Tenant.

 

6.             Landlord’s Work.  In
addition to the payment of the Improvement Allowance (as defined below) ,
Landlord shall, at Landlord’s sole cost and expense, perform the following work
(“Landlord’s Work”):

 

 (i) all work necessary to cause the
common restrooms in the Building and existing restrooms in the Premises to
comply with applicable laws and codes regarding handicap access and use (using
Building standard plans and finishes) to the extent such work is required in
connection with the Tenant Improvements (but not with respect to additional
stalls or fixtures required as a result of density of employees in excess of
one per 138 square feet of Rentable Area of the Premises on any floor or as a
result of assembly rooms or similar improvements included in the Tenant
Improvements);

 

(ii) to the extent, if
any, indicated in the Final Plans, demolish the large server room on the second
floor of the Building below ceiling, including the removal or all racks and
equipment in such room, and replace the ducting, HVAC ducting, and sprinkler
grid, if any, removed in connection with such demolition.  If Tenant does not elect to cause Landlord to
demolish the second floor equipment room, Tenant may use the equipment located
in such room during the term of the Lease, and shall surrender such equipment
to Landlord at the termination or earlier expiration of the Lease;

 

(iii) following
demolition required pursuant to the Final Plans, seal all penetrations through
the slab in the Premises in compliance with applicable law;

 

(iv) to the extent not
previously performed, the work set forth in Section 5.7 of the Lease.

 

Tenant
acknowledges that Landlord’s Work may be performed simultaneously with the
construction of the Tenant Improvements.

 

7.             Construction.

 

(a)  Construction Operations Fee.  Notwithstanding the provisions of Section 8.5
of the Lease to the contrary, Landlord acknowledges and agrees that no
administration fee shall be charged by Landlord in connection with the
performance of the Tenant Improvements.

 

(b)  Construction Cost; General Conditions.  Prime Contractor and Landlord’s Contractor
shall construct the Tenant Improvements on a cost basis, plus (i) a fee of
3.1% of the total hard cost of the Tenant Improvements for overhead and profit (“Contractor’s Fee”), (ii) general
conditions in accordance with the schedule attached hereto as Schedule B-1
(the “General Conditions”), and (iii) labor
costs at the rates specified in the schedule attached hereto as Schedule B-2
for labor supplied by Landlord’s Contractor’s personnel for construction in
excess of the 16 weeks of construction assumed in Tenant’s Request for
Proposal.  Tenant acknowledges that the
estimated cost of the General Conditions as shown on Schedule B-1 is based
on the assumptions specified therein, and the actual cost of the General
Conditions may vary to the extent actual conditions vary from such assumptions.

 

3

 

(c)  Preconstruction Services.  Landlord shall cause Landlord’s Contractor to
perform the following preconstruction services, the cost of which is specified
in the General Conditions attached hereto as Schedule B-1: Participate in
a reasonable number of design meetings, provide an estimated budget to Tenant
within five (5) business days of Landlord’s receipt of the 75% Design
Development Drawings, provide an estimated budget to Tenant within five (5) business
days of Landlord’s receipt of the 50% Construction Documents, provide to Tenant
reasonable value engineering, and provide to Tenant an estimated schedule for
the construction of the Tenant Improvements. 
If Landlord’s Contractor reasonably determines that the input of a
subcontractor in one or more trades is required on an hourly fee basis in
connection with the preparation of an estimated budget or in connection with
value engineering, Landlord’s Contractor shall so notify Tenant’s
Representative, and Landlord’s Contractor and Tenant’s Representative shall
cooperate in the prompt selection and engagement of such subcontractor(s), and
the hourly fee charged by such subcontractor(s) in connection therewith shall
be included in the cost of the Tenant Improvements.  Tenant’s Representative shall in all events
approve or reasonably disapprove a proposed consulting subcontractor within
three (3) days of Landlord’s Contractor’s request for such approval.  Landlord shall cause Landlord’s Contractor to
use reasonable care in preparing the estimated budgets, but they shall be good
faith estimates only.

 

(d)  Bidding and Budgets. Landlord shall
cause Landlord’s Contractor to solicit bids from not less than three (3) subcontractors
for each major trade working on the Tenant Improvements (except for the trades
of approved Design-Build Subcontractors, which shall have been previously selected
pursuant to the provisions of Section 2(e) above and except for the
Demolition Work).  When Landlord’s
Contractor has received responses to its bid request, Landlord’s Contractor
will analyze the same and provide Tenant’s Representative with a copy of
Landlord’s Contractor’s bid analysis (including copies of the actual
subcontractor responses), recommended winning bidders and estimated budget for
the Tenant Improvements, based upon the selected subcontractors’ bids
(including the Design-Build Subcontractors) and including Contractor’s Charge
(as defined above), the estimated cost of General Conditions, and a reasonable
contingency not to exceed ten percent (10%). 
Tenant shall have three (3) business days after the receipt of
Landlord’s Contractor’s bid analysis to approve or reasonably disapprove
Landlord’s Contractor’s selection of subcontractors and Landlord’s Contractor’s
estimated budget.  Further, if Tenant
disapproves of the budget and in order to satisfactorily reduce the cost of the
work as shown on the budget the Final Plans must be modified to change the
scope of the work or modify finishes or materials indicated on the Final Plans,
Tenant shall cause Tenant’s Architect to modify the Final Plans in order to
satisfactorily reduce the cost of the work as shown on the budget.  Any and all revisions to the Final Plans
shall be subject to Landlord’s approval (in accordance with Section 9
below) and at Tenant’s cost.  Upon Tenant’s
disapproval of any subcontractor bid or the revision of the Final Plans,
Landlord shall cause Landlord’s Contractor to promptly prepare and submit to
Tenant a revised estimated budget. 
Tenant shall respond to the revised estimated budget in the manner
described above.  Any delay in
Substantial Completion (as defined below) of the Tenant Improvements resulting
from any revision to the Final Plans or the budget shall constitute a Tenant
Delay as defined in and subject to Section 11 below.  If Tenant fails to raise any objections to
the analysis and/or budget within the period(s) described above, Tenant shall
be deemed to have approved Landlord’s Contractor’s recommended bid acceptance
and proposed budget.  Upon approval of
the estimated budget and selection of the subcontractors, Landlord’s Contractor
shall provide Tenant with Landlord’s Contractor’s reasonable and good faith
estimate of the date by which it anticipates the Tenant Improvements will be
completed (the “Anticipated Completion Date”).

 

8.             Commencement of Construction; On-going
Obligations.  Upon approval of the Final Plans and
selection of subcontractors and approval of the budget, and after securing all
necessary permits, Landlord shall cause Prime Contractor and Landlord’s
Contractor to promptly commence and diligently pursue to completion
construction of the Tenant Improvements. 
Landlord’s Contractor shall update the project schedule weekly, and
shall provide to Tenant a tracking of the budget on a weekly basis in the form
of a consolidated one-page summary report including, without limitation,
backup detail and pending and approved change order requests showing impact to
budget and estimated impact to the Anticipated Completion Date.

 

9.             Changes.  If Tenant shall desire any change in or to the
Final Plans (a “Change”), Tenant
shall submit to Landlord for Landlord’s review and written approval revised
Working Drawings prepared by Tenant’s Architect incorporating the requested
Change and clearly identifying the same as such on the revised Working
Drawings.   Landlord shall not
unreasonably withhold or delay its approval of the revised Working Drawings,
provided, however, that Landlord shall have at least three (3) business
days after receipt of the revised Working Drawings to review any proposed
Change, and Landlord shall have at least six (6) business days to review any
proposed change to the structure or the mechanical or life safety systems or
changes which would increase or 

 

4

 

decrease the budget by more than $20,000
(such changes being referred to herein as “Material Changes”).  If Landlord fails to approve or disapprove a
requested Change which is not a Material Change within the three (3) business
day period specified above, Landlord shall be deemed to have approved such
proposed Change.  If Landlord approves
any proposed Change, then together with such approval, if practicable, and if
not practicable as soon thereafter as is practicable, Landlord’ Contractor
shall give Tenant Landlord’s estimated increase or decrease in the cost of the
Tenant Improvements and the estimated delay (if any) which would result from
incorporating such Change.  Landlord will
use reasonable care in preparing the estimates, but they shall be good faith
estimates only and will not limit Tenant’s obligation to pay for the actual
increase in the cost of the Tenant Improvements (subject to the Improvement
Allowance) or Tenant’s responsibility for the actual construction delay
resulting from the Change.  Within two (2) business
days after receipt of such cost and delay estimates, Tenant shall notify
Landlord in writing whether Tenant approves the Change.  If Tenant fails to approve the Change within
such two (2) business day period, construction of the Tenant Improvements
shall proceed as provided in accordance with the Final Plans as they existed
prior to the requested Change.  If,
following Tenant’s review of the estimated costs and delays, Tenant desires
Landlord to incorporate the Change into the Tenant Improvements, then Tenant’s
Architect and Landlord shall execute a change order for such Change on Landlord’s
Contractor’s standard form therefor, and the term “Final Plans” shall
thereafter be deemed to refer to the Working Drawings as so revised and
approved.

 

10.           Substantial Completion.  “Substantial Completion” of the Tenant
Improvements shall be deemed to have occurred when (i) the Tenant
Improvements have been completed pursuant to the Final Plans, subject only to
the completion or correction of Punch List Items, and (ii) Landlord has
obtained all approvals and permits from the appropriate governmental
authorities required for the legal occupancy of the Premises for Tenant’s
intended use.  Punch List Items shall
mean incomplete or defective work or materials in the improvements, of a
nonmaterial nature, called for in the Final Plans which do not materially
impair Tenant’s use of the Premises for the conduct of Tenant’s business
therein.  Upon notice from Landlord that
the Tenant Improvements have been Substantially Completed, Landlord and Tenant
shall tour the Premises and prepare a joint list of Punch List items. Following
Substantial Completion, the parties shall promptly execute a Confirmation of
Term of Lease substantially in the form attached as Exhibit C to the Lease. 
Landlord shall cause Landlord’s Contractor to diligently pursue the Punch
List Items to completion to Tenant’s reasonable satisfaction, and Tenant shall
reasonably cooperate with and accommodate Landlord’s Contractor in connection
therewith.  Upon Substantial Completion,
Tenant shall cause Tenant’s Architect to deliver to Landlord a set of “as-built”
drawings for the Tenant Improvements.

 

11.           Tenant Delays; Landlord Delays.

 

(a) Tenant Delays.  Except to the extent resulting from a
Landlord Delay (as defined below) “Tenant
Delay” shall be any actual delay
in the completion of the Tenant Improvements or Landlord’s Work caused by the
following: (i) the failure of Tenant to submit to Landlord the Space Plans
by the Space Plan Deadline, the Working Drawings by the Final Plan Deadline, or
revisions to the Space Plans or the Working Drawings by the dates or within the
time periods set forth above, (ii) any changes in the Space Plan or
Working Drawings after submission thereof to Landlord (except changes to
respond to Landlord’s comments) and any Changes to the Final Plans (whether or
not such change or Change is a result of Tenant’s disapproval of the budget and
including any cost or delay resulting from proposed changes or Changes that are
not ultimately made, but excluding Changes which result from unknown field
conditions which could not reasonably have been anticipated by Tenant’s
Architect), (iii) any failure by Tenant to timely pay any amounts due from
Tenant hereunder (it being acknowledged that if Tenant fails to make or
otherwise delays making such payments, Landlord may stop work on the Tenant
Improvements rather than incur costs which Tenant is obligated to fund but has
not yet done so and any delay from such a work stoppage will be a Tenant
Delay), (iv) any failure of Tenant to submit any item or to approve or
disapprove any matter within the time frame or by the deadline provided in the
Work Letter, (v) any material changes to the Space Plans after submittal
thereof which delay the completion of plans by the Design-Build Subcontractors,
(vi) delay by Tenant in promptly responding to inquiries regarding the
construction of the Tenant Improvements or Landlord’s Work or in granting
Tenant’s prompt approval or disapproval of materials or finishes for the Tenant
Improvements or Landlord’s Work, (vii) the inclusion in the Tenant Improvements
of any so-called “long-lead” materials (such as fabrics, panelling, tiling or
carpeting, or other items that must be imported, must be specially fabricated,
or are of unusual character or limited availability) to the extent there exists
a reasonable substitute for such material which would not be considered a
long-lead material or would have a shorter lead time , as reasonably determined
by Landlord’s Contractor, (viii) any interference by Tenant or Tenant’s
vendors with the construction of the Tenant Improvements or Landlord’s Work
resulting in a delay beyond the reasonable integration schedule developed
under Section 13 of this Work Letter, (ix) any delay in the issuance
of permits due to the submittal of drawings (other than 

 

5

 

drawings prepared by Design-Build
Subcontractors) which do not comply with applicable codes, to the extent the
code requirement could have reasonably been anticipated by Tenant’s Architect,
(x) Tenant’s failure to provide, by the dates specified herein, the information
required for the Design-Build Subcontractors to commence and complete their
designs, (xi) the failure Tenant’s Architect failure to cooperate with the
Design-Build Subcontractors or to respond to inquiries from the Design-Build
Subcontractors as and within the periods required herein, or (xii) any other
delay requested or caused by Tenant, Tenant’s Representative or Tenant’s
Architect.  Each of the foregoing is
referred to herein and in the Lease as a “Tenant
Delay”.  Landlord’s Contractor
will give Tenant notice of “long-lead items” as soon as reasonably practicable
after being advised of the delay by the suppliers involved, or otherwise
becoming aware of the delay.  Landlord’s
Contractor will suggest alternative products to alleviate the delay, if
feasible.  The inclusion of “long lead”
items in the Tenant Improvements shall be deemed a Tenant Delay only if (A) Tenant
fails to designate a reasonable substitute for such item within two (2) days
after receipt of written notice from Landlord’s Contractor that such item is a “long
lead” item, or (B) Landlord and Tenant do not agree that the Tenant
Improvements will be Substantially Complete notwithstanding the non-completion
of long-lead items and related work (Landlord’s Contractor and Tenant agree
that in such instances, if reasonably appropriate, a short term alternative
product will be installed prior to Substantial Completion and will be replaced
with the long lead item at a later date). 
In determining whether reasonable substitutes exist for long-lead items,
Landlord’s Contractor shall consider the function of the material and shall not
be required to consider the unique aspects of the material or the particular
aesthetic of the material (i.e. a more common material can be a reasonable
substitute for an item of limited availability).  Notwithstanding the foregoing, matters
otherwise designated hereunder as Tenant Delays which first occur following
Landlord’s Contractor’s establishment of the Estimated Completion Date shall be
Tenant Delays only to the extent Substantial Completion of the Tenant
Improvements is delayed beyond the Estimated Completion Date as a result
thereof.

 

(b)  Landlord Delays.  “Landlord
Delays” shall constitute the actual delay in the completion of the
Tenant Improvements beyond the anticipated completion date to the extent caused
by the following: (i) the failure by Landlord to approve or reasonably
disapprove the Space Plans or the Working Drawings or to otherwise comply with
its obligations under this Work Letter by the dates or within the time periods
set forth above, (ii) any Changes requested by Landlord in the Space
Plans, Working Drawings or Final Plans, after approval thereof by Landlord and
Tenant (excluding Changes which result from unknown field conditions which
could not reasonably have been anticipated by Landlord’s Contractor or Changes
required to obtain permits for the work), (iii) any delay caused by the
Prime Contractor, Landlord’s Contractor or the subcontractors including,
without limitation, the failure of the Prime Contractor, Landlord’s Contractor
or the subcontractors to process and execute (or disapprove) any Changes in a
reasonably expeditious manner, (iv) any delay resulting from the
performance of Landlord’s Work, and (v) the interruption in the
availability of the freight elevator due to a required repair, except to the
extent such repair is necessitated due to the actions of Tenant or Tenant’s
vendors or contractors.  In the event and
to the extent a Landlord Delay during the Move In Period results in a delay in
Tenant completing its preparation of the Premises for occupancy in accordance
with Section 2.4 of the Lease by the Commencement Date, the Commencement
Date under the Lease shall be delayed by one (1) day of each day of such
Landlord Delay.

 

12.           Cost of Improvements.  The
cost of the construction and installation of the Tenant Improvements shall be
borne as follows:

 

(a)  Landlord shall pay the entire cost of
Landlord’s Work.

 

(b)  Landlord shall contribute toward the cost
of the construction and installation of the Tenant Improvements an amount not
to exceed Forty Dollars ($40.00) per square foot of Rentable Area of the
Premises (the “Improvement Allowance”).  The following provisions shall govern the
payment of the Improvement Allowance:

 

(i)  Excess Cost;
Share of Costs.  Tenant shall pay the
cost of construction of the Tenant Improvements to the extent such cost exceeds
the funds available therefor from the Improvement Allowance (the “Excess Cost”).  Based on the estimated cost (the “Estimated Costs”) of the construction of
the Tenant Improvements, the prorata share of the Estimated Costs payable by
Landlord and Tenant shall be determined and an appropriate percentage share
established for each (a “Share of Costs”).  Tenant and Landlord shall fund the cost of
such work as the same is performed, in accordance with their respective Share
of Costs for such work.  Tenant’s
payments shall be made from time to time within thirty (30) days of Tenant’s
receipt of a payment request from Landlord’s Contractor (accompanied by
supporting documentation of the type typically submitted by contractors in
support of payment requests, including, without limitation, AIA Document G702
Application and 

 

6

 

Certificate for Payment, the applicable conditional
and unconditional lien waivers, schedule of values including name of
company associated with each trade, and a copy of subcontractor invoices)
reflecting that such work has been performed and such construction is in place,
or that the relevant materials have been delivered to the site, and clearly
reflecting the percentage payable by Tenant on account of such invoice.  At such time as the Improvement Allowance has
been entirely disbursed, Tenant shall pay the remaining Excess Cost, if any,
which payments shall be made in installments as construction progresses in the
same manner as Tenant’s payments of Tenant’s Share of Costs were paid.  If the total actual Excess Cost turns out to
be less than the total payments made by Tenant, Landlord shall refund the
excess to Tenant following the final construction accounting, and if the total
payments made by Tenant turns out to be less than the Excess Costs, Tenant
shall pay the shortfall to Landlord following the final construction
accounting.

 

(ii)  Certain Costs.  Portions of the Improvement Allowance may, at
Tenant’s election, be applied toward Tenant’s reasonable architectural and
engineering fees in connection with the design and construction of the Tenant
Improvements, including the costs of producing the Space Plans, Working
Drawings and Final Plans, the reasonable cost of Tenant’s consultants
associated with the Tenant Improvements or entering into this Lease, and Tenant’s
reasonable moving costs reasonably associated with Tenant’s relocation into the
Premises.  Landlord shall reimburse
Tenant for such portion of such fees and costs (or, if Tenant so notifies
Landlord in writing, will make payments directly to Tenant’s Architect,
engineer or vendor) upon Landlord’s receipt of copies of receipted invoices
covering the same. In no event may any portions of the Improvement Allowance be
applied towards the costs of Tenant’s personal property or movable furniture,
signage or rental obligations.

 

(iii) Rent Credit.  Provided that Tenant has performed the
Minimum Required Improvements and provided that Tenant is not in default
hereunder, at Tenant’s written election the balance of the Improvement
Allowance shall be credited against the Rent first due under the Lease.

 

(iv)  Landlord Costs.  Notwithstanding anything to the contrary
herein, the Excess Cost shall not include, Landlord shall be solely responsible
for, and the Improvement Allowance shall not be used for the following: (a) costs
incurred to remove or encapsulate Hazardous Materials from the Premises, the
Building and the Project; (b) costs to bring the Base Building into
compliance with applicable laws and restrictions (except as otherwise set forth
in Section 6.6 of the Lease), (c) attorneys’ fees incurred in
connection with negotiation of construction contracts, and attorneys’ fees,
experts’ fees and other costs in connection with disputes with third parties; (d) interest
and other costs of financing construction costs; (e) penalties and late
charges attributable to Landlord’s failure to pay construction costs; (f) wages,
labor and overhead for overtime and premium time, except as requested by
Tenant; (g) costs recoverable by Landlord on account of warranties or
insurance, and (h) offsite management or other general overhead costs
incurred by Landlord.

 

13.           Vendor Entry During Construction Period. 
Notwithstanding anything to the contrary in the Lease or this Work
Letter, Tenant may, prior to the Substantial Completion of the Tenant Improvements,
and during and in conjunction with the construction of the Tenant Improvements,
permit Tenant’s vendors to enter the Premises for the purpose of installing
telephones, electronic communication or related equipment, security or
audio/visual equipment, and furniture systems and equipment, provided that
Tenant shall be solely responsible for any of such equipment, fixtures,
furniture or material and for any loss or damage thereto from any cause
whatsoever, excluding only the gross negligence or deliberate misconduct of
Landlord or Landlord’s Contractors.  Such
early access to the Premises and such installation shall be permitted only to
the extent that Landlord determines that such early access and installation
activities will not delay Landlord’s Contractor’s completion of the
construction of the Tenant Improvements, provided that Landlord’s Contractor
shall use reasonable good faith efforts to reasonably integrate the work to be
completed by Tenant’s Vendors into Landlord’s Contractor’s scheduling and planning
such that the Tenant Improvements and the work to be completed by Tenant’s
Vendors will be completed in an efficient manner.  Further, subject to the foregoing, Landlord
and Tenant shall cooperate in the scheduling of Tenant’s early access to the Premises
and of Tenant’s installation activities in an attempt to maximize the benefits
to Tenant of this Paragraph 13 without interfering with the completion of the
construction of the Tenant Improvements.

 

14.           Addresses for Notices and Deliveries. 
Notwithstanding the provisions of Section 23.13 of the Lease to the
contrary, for the purposes of this Work Letter (i) notices, submittals and
deliveries to Landlord shall be 

 

7

 

made to Landlord’s Contractor and Landlord’s
Representative at the addresses set forth below, (ii) notices, submittals
and deliveries to Tenant shall be made to Tenant’s Representative at the
address set forth below, and (iii) notices, submittals and deliveries to
either pay may be made via facsimile transmissions with answerback confirmation
at the respective facsimile numbers set forth below.  Facsimile transmissions received after 6:00 P.M.
shall be deemed to have been given the following business day.

 

	
  (a)

  	
  Landlord’s Contractor:

  	
   

  	
  CCI Commercial Construction & Improvements

  
	
   

  	
   

  	
   

  	
   

  	
  Rich Stevens

  
	
   

  	
   

  	
   

  	
   

  	
  Two Henry Adams Street, Suite M99’

  
	
   

  	
   

  	
   

  	
   

  	
  San Francisco, CA 94103

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (415) 626-3406

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  Tenant’s Representative:

  	
   

  	
  KBM Partners

  
	
   

  	
   

  	
   

  	
   

  	
  Bryce Calvin Mason

  
	
   

  	
   

  	
   

  	
   

  	
  1770 Pacific Avenue, Suite 103

  
	
   

  	
   

  	
   

  	
   

  	
  San Francisco, CA 94109

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (415) 276-3065

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Advent Software, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  301 Brannan, Suite 600

  
	
   

  	
   

  	
   

  	
   

  	
  San Francisco, CA 94107

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (415) 543-5070

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  Landlord’s Representative: 

  	
   

  	
  Bay West Group

  
	
   

  	
   

  	
   

  	
   

  	
  Barry Campbell

  
	
   

  	
   

  	
   

  	
   

  	
  2 Henry Adams St. #450

  
	
   

  	
   

  	
   

  	
   

  	
  San Francisco, CA 94103

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (415) 864-5969

  

 

15.           Removal; Internal Stairway. 
Landlord, simultaneously with Landlord’s final approval of the Working
Drawings, shall notify Tenant (a “Removal
Notice”) in writing, whether, in Landlord’s opinion, any of the
alterations, additions or improvements described in the Working Drawings
constitute an Extraordinary Fixture (as defined in Section 8.4 of
the Lease) which Tenant must remove a the expiration or earlier termination of
the term of the Lease.  Notwithstanding
the foregoing, Tenant acknowledges that any internal stairway shall be
considered an Extraordinary Fixture, and, regardless of whether Landlord
delivers a Removal Notice in connection therewith, Landlord may elect to
require Tenant to remove the internal stairway upon the expiration or
termination of the Lease or at any time Tenant does not lease the entire fifth
(5th) floor of the Building together with that portion of the fourth
(4th) floor of the Building to which such internal stairwell
connects, which election shall be made by written notice to Tenant, given at or
prior to the expiration or earlier termination of the Lease.

 

8

 

Schedule B-1

To
Work Letter

 

Description
of General Conditions

 

	
  No.

  	
   

  	
  Item

  	
   

  	
  Cost

  
	
  1

  	
   

  	
  Preconstruction Services

  	
   

  	
  $53,453.00 (Fixed)

  
	
  2

  	
   

  	
  Bonds

  	
   

  	
  NA

  
	
  3

  	
   

  	
  Insurance

  	
   

  	
  1.05% of cost of tenant
  improvements

  
	
  4

  	
   

  	
  Permits

  	
   

  	
  Cost of Work with no
  overhead and profit markup

  
	
  5

  	
   

  	
  Taxes: Sales

  	
   

  	
  Included

  
	
  6

  	
   

  	
  Taxes: San Francisco Payroll Tax

  	
   

  	
  Estimated: $1,563.00

  
	
  7

  	
   

  	
  Utility Connections/Fees

  	
   

  	
  Cost of Work

  
	
  8

  	
   

  	
  Fringe Tax and Insurance

  	
   

  	
  Included

  
	
  9

  	
   

  	
  Project Manager

  *(For 16 week duration of
  construction)

  	
   

  	
  $22,972.00 *

  
	
  10

  	
   

  	
  Superintendent: Full Time

  *(For 16 week duration of
  construction)

  	
   

  	
  $43,590.00 *

  
	
  11

  	
   

  	
  Project Engineer

  *(For 16 week duration of
  construction)

  	
   

  	
  $14,078.00 *

  
	
  12

  	
   

  	
  Clerical

  	
   

  	
  Included

  
	
  13

  	
   

  	
  MEP Coordinator

  	
   

  	
  Included

  
	
  14

  	
   

  	
  Scheduling (in house)

  	
   

  	
  Included

  
	
  15

  	
   

  	
  Safety Director

  	
   

  	
  Included

  
	
  16

  	
   

  	
  Field Office

  *(For 16 week duration of
  construction)

  	
   

  	
  $2,250.00 *

  
	
  17

  	
   

  	
  Printing-Submittals

  	
   

  	
  Included

  
	
  18

  	
   

  	
  Printing-Construction Documents

  	
   

  	
  Cost of Work

  
	
  19

  	
   

  	
  Copy Machine

  	
   

  	
  Included

  
	
  20

  	
   

  	
  Telephone and Fax: Jobsite

  *(For 16 week duration of
  construction)

  	
   

  	
  $1,800.00*

  
	
  21

  	
   

  	
  Postage and Messengers

  *(For 16 week duration of
  construction)

  	
   

  	
  $800.00*

  
	
  22

  	
   

  	
  Computer Software Service

  	
   

  	
  Included

  
	
  23

  	
   

  	
  Temp. Construction and Protection

  	
   

  	
  Cost of Work

  
	
  24

  	
   

  	
  Progressive Site Cleanup

  *(For 16 week duration of
  construction)

  	
   

  	
  $27,856.00*

  
	
  25

  	
   

  	
  Debris boxes for Progressive Cleanup

  *(For 16 week duration of
  construction)

  	
   

  	
  $7,200.00*

  
	
  26

  	
   

  	
  Final Janitorial

  	
   

  	
  Cost of Work

  
	
  27

  	
   

  	
  Layout (Snapping Lines)

  	
   

  	
  Cost of Work

  
	
  28

  	
   

  	
  Scaffolding

  	
   

  	
  Cost of Work

  
	
  29

  	
   

  	
  Hoists

  	
   

  	
  Cost of Work

  
	
  30

  	
   

  	
  All other tools, Equipment and Materials

  	
   

  	
  Cost of Work

  
	
  31

  	
   

  	
  Parking and Pick-up

  *(For 16 week duration of
  construction)

  	
   

  	
  $1,950.00 *

  
	
  32

  	
   

  	
  Material Handling (Labor of moving general materials)

  	
   

  	
  Cost of Work

  
	
  33

  	
   

  	
  Project Close-out

  	
   

  	
  Included

  
	
  34

  	
   

  	
  Permit Expediting

  	
   

  	
  Cost of Work with no
  overhead and profit markup

  

 

1

 

	
  35

  	
   

  	
  Temp. Utilities and Power

  	
   

  	
  Cost of Work

  
	
  36

  	
   

  	
  Abandonment Cost

  	
   

  	
  NA

  
	
  37

  	
   

  	
  General Superintendent

  	
   

  	
  Included

  
	
  38

  	
   

  	
  Telephone line installation fees

  	
   

  	
  Included

  
	
  39

  	
   

  	
  Accountant

  	
   

  	
  Included

  
	
  40

  	
   

  	
  Chemical Toilets

  	
   

  	
  Cost of Work

  

 

*           See attached

 

2

 

Schedule B-2

To
Work Letter

 

CCI General Contractors LICENSE # 687025

Project Labor 

Rates

 

	
   

  	
   

  	
  Straight

  Time

  	
   

  	
  Overtime

  @ 1.5x

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project
  Manager

  	
   

  	
  $

  	
  95.00

  	
   

  	
  n/a

  	
   

  
	
  Superintendent

  	
   

  	
  $

  	
  85.00

  	
   

  	
  n/a

  	
   

  
	
  Foreman

  	
   

  	
  $

  	
  72.00

  	
   

  	
  $

  	
  108.00

  	
   

  
	
  Carpenter

  	
   

  	
  $

  	
  65.00

  	
   

  	
  $

  	
  97.50

  	
   

  
	
  Laborer

  	
   

  	
  $

  	
  47.50

  	
   

  	
  $

  	
  71.25

  	
   

  

 

1

 

EXHIBIT C

CONFIRMATION
OF TERM OF LEASE

 

This Confirmation of Term of Lease is made by and
between Toda Development, Inc., a California corporation, as Landlord, and
                                      ,
a                                   ,
as Tenant, who agree as follows:

 

1.             Landlord and Tenant entered into a Lease
dated                                 ,
2006 (the “Lease”), in which
Landlord leased to Tenant and Tenant leased from Landlord the Premises
described in the Basic Lease Information page of the Lease (the “Premises”).

 

2.             Pursuant to Section 3.1 of the Lease,
Landlord and Tenant agree to confirm the commencement date and expiration date
of the Term of the Lease as follows:

 

(a)                                       ,
20    , is the Commencement Date;

 

(b)                                       ,
20    , is the Expiration Date;

 

3.             Landlord and Tenant hereby confirm that the
Lease is in full force and effect and:

 

(a)           Tenant has accepted possession of the
Premises as provided in the Lease;

 

(b)           The improvements required to be furnished by
Landlord under the Lease have been Substantially Completed;

 

(c)           The Lease has not been modified, altered or
amended, except as follows:                                                                                                             ;
and

 

(d)           There are no setoffs or credits against Rent
except as specifically set forth in the Lease and                                                           
[describe setoff or credit or insert “not
applicable”] and no security deposit has been paid except as
expressly provided by the Lease.

 

4.            The provisions of this Confirmation of Term
of Lease shall inure to the benefit of, or bind, as the case may require, the
parties and their respective successors and assigns, subject to the
restrictions on assignment and subleasing contained in the Lease.

 

DATED:                           ,
2006

 

	
  “LANDLORD”

  	
   

  	
  “TENANT”:

  
	
   

  	
   

  	
   

  
	
  TODA DEVELOPMENT, INC,

  	
   

  	
   

  	
  ,

  
	
  a California corporation

  	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Typed Name:

  	
   

  	
   

  	
   

  	
  Typed Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Typed Name:

  	
   

  	
   

  	
   

  	
  Typed Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
																

 

1

 

EXHIBIT D

 

BUILDING
RULES AND REGULATIONS

 

1.             The sidewalks, doorways, halls, stairways,
vestibules and other similar areas shall not be obstructed by Tenant or used by
it for any purpose other than ingress to and egress from the Premises, and for
going from one part of the Building to another part.  Corridor doors, when not in use, shall be
kept closed.  Before leaving the Building,
Tenant shall ensure that all doors to the Premises are securely locked and all
water faucets and electricity are shut off. 
Tenant shall not use the corridors, hallways, and common areas of the
Building for any purpose other than ingress or egress from the Premises.

 

2.             Plumbing fixtures shall be used only for
their designated purpose, and no foreign substances of any kind shall be
deposited therein.  Damage to any such
fixtures resulting from misuse by Tenant or any employee or invitee of Tenant
shall be repaired at the expense of Tenant.

 

3.             Subject to the provisions of Section 8
of the Lease, nails, screws and other attachments to the Building require prior
written consent from Landlord, except for the routine hanging of pictures, art,
work space designs, evacuation plans, white boards, diplomas, certifications
and other similar items of normal commercial office use .  Tenant shall not mar or deface the Premises
in any way.  Tenant shall not place
anything on or near the glass of any window, door or wall which may appear
unsightly from outside the Premises.  No
sign, tag, label, picture, advertisement or notice shall be displayed by Tenant
on any part of the Building or the Premises which is visible from outside the
Premises, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld with respect to items which are not visible from
the exterior of the Project.

 

4.             All contractors and technicians rendering any
installation service to Tenant costing in excess of $10,000 or requiring
installations in the common areas, or performing alterations in the Premises,
shall be subject to Landlord’s reasonable approval and supervision prior to
performing services.  This applies to all
work performed in the Building, including, but not limited to, installation of
telephones, telegraph equipment, wiring of any kind, and electrical devices, as
well as all installations affecting floors, walls, woodwork, windows, ceilings
and any other physical portion of the Building.

 

5.             Movement in or out of the Building of
furniture, office equipment, safes or other bulky material shall be restricted
to the Building’s freight elevator and loading dock.  Arrangements shall be made at least 24 hours
in advance with Landlord regarding the time, method, and routing of such
movements.  Tenant shall pay for the
services of the employees of the elevator service company employed when safes
and other unusually heavy articles are moved into or from the Building which
may have an adverse impact on the operational stability of the elevator, and
Tenant shall assume all risks of damage and pay the cost of repairing or
providing compensation for damage to the Building, to articles moved and injury
to persons or property resulting from such moves.  Landlord shall not be liable for any acts or
damages resulting from any such activity.

 

6.             Landlord shall have the right to limit the
weight and size of, and to designate the location of, all safes and other
unusually heavy property brought into the Building.

 

7.             Tenant shall cooperate with Landlord in
maintaining the Premises.  Nothing shall
be swept or thrown into the corridors, halls, elevator shafts or
stairways.  Window cleaning shall be done
only by Landlord’s agents at such times and during such hours as Landlord shall
elect.

 

8.             Deliveries of water, soft drinks, newspapers
or other such items to the Premises shall be made by use of the freight
elevator and loading dock.

 

9.             Except as specifically permitted pursuant to Rule 29
below, no dogs, cats, birds, fish, snakes or animals of any kind shall be
brought into or kept in, on or about the Premises, with the exception of
properly licensed and supervised guide dogs or other service animals where
necessary.

 

10.           Canvassing, peddling, soliciting, and
distribution of handbills in or at the Premises are prohibited and Tenant will
cooperate to prevent these activities.

 

1

 

11.           No cooking shall be done in the Premises
except in connection with a convenience lunch room for the sole use of
employees and guests (on a non-commercial basis) in a manner which complies
with all of the provisions of the Lease and which does not produce fumes or
odors.

 

12.           [Intentionally deleted].

 

13.           Tenant shall not install or operate on the
Premises any electric heater, stove or similar equipment without Landlord’s
prior written consent.  Tenant shall not
use or keep on the Premises any kerosene, gasoline, or inflammable or
combustible fluid or material other than limited quantities reasonably necessary
for the operation and maintenance of office equipment utilized at the
Premises.  No explosives shall be brought
onto the Project at any time.

 

14.           Tenant shall not waste electricity, water or
air conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Building’s heating and air conditioning and to
comply with any governmental energy-saving rules, laws or regulations of which
Tenant has actual notice.

 

15.           Tenant shall cooperate fully with the life
safety program of the Building as established and administered by
Landlord.  This shall include
participation by Tenant and its employees in exit drills, fire inspections,
life safety orientations and other programs relating to fire and life safety
that may be established by Landlord.

 

16.           If Tenant has not installed and maintained an
alternate security access system approved by Landlord, the provisions of this Rule 16
shall apply. Landlord will furnish Tenant with a reasonable number of initial
keys for entrance doors into the Premises, and may charge Tenant for additional
keys thereafter.  Landlord will specify
standard hardware on Tenant entrance doors. 
The locks shall match and be keyed to the Building system.  Landlord shall retain a master key for all
tenant spaces.  Tenant shall provide
entrance door keys only to its authorized employees and shall be responsible
for securing the return of any key issued to any authorized person whose
employment with Tenant terminates for any reason.  All such keys shall remain the property of
Landlord.  No additional locks are
allowed on any door of the Premises without Landlord’s prior written consent
and Tenant shall not make any duplicate keys. 
Upon termination of this Lease, Tenant shall surrender to Landlord all
keys to the Premises, and give to Landlord the combination of all locks for
safes and vault doors, if any, in the Premises.

 

17.           No smoking shall be permitted in the
Building.

 

18.           Landlord retains the right at any time, on at
least 60 days prior written notice to Tenant, without liability to Tenant, to
change the name and street address of the Building.

 

19.           All visitors to the Building after hours or
on weekends must sign in and out at the reception desk in the atrium
lobby.  Tenant must escort visitors into
the Building before or after hours and on weekends.

 

20.           As a courtesy, but not as an obligation,
Landlord may, at Landlord’s election, receive and store articles of merchandise
delivered to Tenant at the Building; 
provided, however, that such articles of merchandise are properly
addressed and identified and all postage, handling and delivery charges are
prepaid by Tenant.  Landlord assumes no
responsibility whatsoever for the loss, damage or destruction of such articles
of merchandise received at the Building by Landlord on behalf of Tenant, and
Tenant hereby waives all claims against Landlord for any damage or loss arising
at any time from the loss, damage or destruction of such articles of
merchandise, whether due to Landlord’s negligence or otherwise.  Tenant agrees to pay to Landlord as
additional rent the amount of all storage, delivery, handling and other
expenses incurred by Landlord as a result of the receipt and storage of such
articles of merchandise.

 

21.           Tenant shall not conduct any auction on the
Premises, nor use any loudspeaker which is audible from the exterior of the
Premises for announcements or music of any type.

 

22.           Except as expressly permitted by Landlord,
the Building and the parking garage shall be closed to the general public from
6:00 p.m. to 7:00 a.m., weekdays, and on all weekends and Legal
Holidays.  Such Legal 

 

2

 

Holidays shall include but are not limited
to:  New Year’s Day, Presidents’
Birthday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Day
after Thanksgiving Day, and Christmas Day. 
Access to the Premises shall be available to Tenant’s employees
twenty-four (24) hours per day, seven (7) days per week, subject to
procedures established by Landlord from time to time.

 

23.           The Building shall be staffed from 7:00 a.m.
to 8:00 p.m. Monday through Friday (except Legal Holidays).  Any entry into or exit from the Building
other than during the aforementioned times shall be made only by persons
signing in and out with the security guard at the front desk, or by the
Building security system with an access card. 
Landlord will levy a charge of 25.00 for the initial issuance of each
access card, subject to reasonable increase from time to time in Landlord’s
reasonable discretion.  The replacement
fee for lost or stolen access card is $25.00, subject to reasonable increase in
Landlord’s reasonable discretion.  Upon
the expiration or earlier termination of the Lease, Tenant shall return all
access cards to Landlord and Landlord shall refund the issuance fee charged in
connection with such cards.

 

24.           Except as expressly permitted by Landlord,
the loading dock will be closed from 6:00 p.m. to 7:00 a.m. Monday
through Friday and on weekends and Legal Holidays.

 

25.           During construction of Tenant’s Premises,
move-in, move-out, and deliveries of furniture and equipment, Tenant shall
provide, at Tenant’s expense, floor covering to protect all corridor floor
covering which is in the traffic pattern from point of delivery to the Premises.  Tenant is responsible for any damage
resulting from the above activity and must restore the hallway to its original
condition upon completion of this activity.

 

26.           For security purposes, all special events
held in the Building which will not conclude by 6:00 p.m. and which will
include more than 30 non-employees must be approved by Landlord, regardless of
whether or not the event is solely held in the Premises, which approval shall
not be unreasonably withheld.  Regardless
of whether or not Landlord’s consent is required hereunder Landlord may require
a security guard, at Tenant’s expense, for special events in the Building which
will include more than 25 non-employees which do not conclude by 6:00 p.m.

 

27.           As a courtesy, the Building will provide during
the Term of the Lease three bicycle cages in the Building garage on a “first
come, first serve” basis.  If the cages
are full, Tenant’s employees or invitees must make other arrangements for
parking their bicycles.  Bicycles are not
allowed inside the Building or in other areas inside the parking garage.  Bicycles will be removed at the expense of
the owner without liability to Landlord if found outside the cages in the
garage, or locked to Building property that is not specifically designed for
bicycles.  Storage of bicycles in the
Building or in other areas inside the parking garage is at Tenant’s sole risk
and Landlord shall in no event be liable for any loss or damage to bicycles
while stored therein.

 

28.           All bicyclists must yield to the cars entering
or exiting the garage.  If a car is
entering or exiting the garage, bicyclists must wait until the car has passed
through the gate and the arm is in the down position before proceeding down or
up the ramp.  If a bicycle rides through
the entrance or exit when the car hasn’t passed through the arm yet, the
bicycle triggers the arm sensor and causes it to go down, damaging the car, as
well as the parking equipment.

 

29.           Dogs shall be permitted in the Project only
in accordance with the terms of this Rule 29.  Tenant shall have the privilege, revocable in
accordance with this Rule 29, of permitting Tenant’s employees to bring
dogs into the Project, subject to the provisions of this Rule 29.

 

29.1  Access: No dogs will be permitted in
the passenger elevators or common areas of the Building. When entering or
leaving the Building, owners and their dogs will use the freight elevator and
the stairwells located in the Northwest and Southwest corners of the Building
only.  Dogs will not be permitted in the
freight elevator at any time the freight elevator is in use by any party other
than the dog owner or other Advent employee.

 

29.2. Noise. Barking
or other noise will not be permitted.

 

29.3. Control. Dogs
will be leashed at all times when outside Tenant’s premises and dog owners will
not allow dogs near other tenants in or about the Project or near any person
within Tenant’s Premises who has 

 

3

 

indicated that such person does not wish to be
approached by a dog. As between Landlord and Tenant, Tenant will be liable for
any claims resulting from the activities or claimed activities of dogs brought
in the Project by Tenant or Tenant’s employees, agents or invitees, including,
without limitation, biting, scratching or menacing, and will indemnify the
landlord and its agents against claims made as a result of injury from a dog
brought in the Project by Tenant or Tenant’s employees, agents or invitees.

 

29.4. Smell and Fleas.
Tenant will ensure that owners keep their dogs in a clean odor-free and
flea-free state of grooming. Tenant will not be permitted to have any dog in
the building that has an offensive smell or that has fleas.

 

29.5. Dog Messes and Dog
Walking. Tenant shall ensure that the dog owners properly bag dog waste, so
none will be present in the vicinity of the building. In the event of a mishap
in the building, tenant shall immediately clean up the mess and shall report
the mishap to the building manager. Landlord reserves the right to have any
such mishap cleaned by a professional cleaning service, at tenant’s sole
cost.  Bagged waste shall be properly
disposed of outside the building in public waste cans, or in such waste can
provided by landlord outside the building or in the building’s garage as
landlord may designate for such purpose. 
If landlord designates a waste can for such purpose, tenant shall
reimburse landlord on demand for any additional cost associated with emptying
or cleaning such waste can.

 

29.6. Licensing:
Tenant will require proper licensing of all dogs, and require that rabies and
other necessary vaccinations be up to date. 
Within five (5) business days of Landlord’s request made from time
to time, Tenant shall provide landlord with evidence of proper licensing and
vaccinations.

 

29.7. Injury to Dogs:
Tenant’s indemnity obligations under the lease will apply to any claims of
injury to dogs by landlord, its agents or other tenants of the building.

 

29.8. Penalty for
Breaking Rules: Tenant must terminate the privilege hereunder of any
employee of tenant who does not comply with the rules.  Tenant shall cooperate with landlord’s
efforts to identify any employee breaking the rules.  At landlord’s election, landlord may suspend
or terminate tenant’s privilege to bring dogs into the building if there is a
violation of this Rule 29 five (5) or more times in any twelve (12)
month period, provided that if there is a serious incident involving a dog
brought into the building by an employee of tenant, Landlord may immediately
suspend or terminate tenant’s privilege to bring dogs into the building.  Landlord’s good faith determination that
there has been a violation or a serious incident shall control.

 

29.9 Privilege Personal.  The privilege to bring dogs into the building
is personal to Advent Software, Inc. and Affiliate Transferees, and is
based on Advent Software, Inc.’s long experience in permitting its
employees to bring dogs into the workplace under clearly established rules without
incident.  This privilege shall not apply
to subtenants or assignees of Advent Software, Inc. other than Affiliate
Transferees.

 

30.           Landlord reserves the right to rescind any of
these rules and regulations, with the exception of Rule 29, and to
make future reasonable, nondiscriminatory rules and regulations required
for the safety, protection and maintenance of the Project, the operation and
preservation of the good order thereof, and the protection and comfort of the
tenants and their employees and visitors, provided, however, such future rules shall
not unreasonably diminish Tenant’s rights under Rule 29.  Such rules and regulations, when made
and written notice thereof given to Tenant, shall be binding as if originally
included herein.  Landlord shall not be
responsible to Tenant for the non-observance or violation of these rules and
regulations by any other tenant of the Building.  Landlord reserves the right to exclude or
expel from the Project any person who, in Landlord’s judgment, is under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these rules and regulations.

 

4

 

EXHIBIT E

 

TENANT
CONSTRUCTION & RULES OF THE SITE

 

1.   The following Rules of the Site and
Tenant Construction requirements shall govern the operation of Tenant’s
Contractor and all Tenant Construction and are issued as Exhibit “E”
pursuant to the Lease between Toda Development Inc. (“Owner” or “Landlord”) and
Tenant.  This Exhibit ”E” shall not
apply with respect to any work completed by Landlord’s Contractor pursuant to
the Work Letter.

 

2.   All plans and specifications for Tenant
Construction must be submitted to the Bay West Group, Operations Department
(Building Management), for review, at least 15 days prior to the start of any
on-site work (5 business days with respect to any work by Tenant’s contractors
or vendors pursuant to Section 13 of the Work Letter).  Tenant must obtain written approval of
Building Management, which will not be unreasonably withheld, prior to the
start of any on site work.  With respect
to any work by Tenant’s contractors or vendors pursuant to Section 13 of
the Work Letter, if Landlord fails to approve or disapprove of any such work
pursuant to the Work Letter within the five (5) business day period
specified above, Landlord shall be deemed to have approved such proposed
work.    Building Management’s approval
of the plans and specifications expresses no opinion or warranty that said
plans and specifications are suitable, practicable or in conformity with Code.

 

3.    In the event that a dispute arises between
Tenant and Tenant’s Contractor over Tenant’s Contractor’s bills, invoices and
statements which result in the filing of a mechanic’s lien, Tenant shall
promptly, upon written request of Landlord, record, at Tenant’s sole cost and
expense a Mechanic’s Lien Release Bond to free the Premises from the applicable
mechanic’s lien.

 

4.    Within 5 business days prior to the start
of any on-site work, delivery of materials, equipment, or personnel, Tenant’s
Contractors will submit to Landlord through Landlord’s management staff (“Building
Management”) the following:

 

A.)  Where necessary, a complete set of drawings
approved by the Owner and subsequently by the City of San Francisco.

 

B.)   A job schedule of the work to be
accomplished.

 

C.)   A complete list of all proposed
subcontractors.  Building Management must
approve all contractors and subcontractors before commencement of their work,
which approval shall not be unreasonably withheld or delayed.

 

D.)   The name and phone number (including
emergency phone numbers) of personnel who are authorized to represent the
Tenant’s Contractor.

 

5.    No material revisions or changes of any
kind may be made to the construction plans without the consent of Owner or
Building Management, which consent shall not be unreasonably withheld or
delayed.  Any proposed revisions or
changes must be submitted to Building Management, in the form of a change
order, for Building Management review and approval prior to commencement of
such changes.  With respect to any work
by by Tenant’s contractors or vendors pursuant to Section 13 of the
Work Letter, if Landlord fails to approve or disapprove of any changes in
connection therewith within five (5) business days of such request for
approval, Landlord shall be deemed to have approved such proposed change.

 

6.    Upon completion of the Tenant’s Contractor’s
work, Building Management will be provided a copy of the inspection record (Job
Card) for the work performed by the Contractor.

 

7.   All of Tenant’s Contractor’s Work must be
scheduled so that it in no way unreasonably conflicts with, interferes with, or
impedes the quiet and peaceful enjoyment of other tenants, or the progress of
Building Management’s work or operations. 
Any work that is in unreasonable conflict will be rescheduled by the
Tenant’s Contractor to such time as reasonably approved by Building
Management.  Additionally, Owner shall
have no liability for any costs or expenses incurred by Tenant or Tenant’s
Contractor in connection with such rescheduling.  Tenant’s Contractor shall protect adjoining
tenant spaces from dust, debris, fumes or other resultant impact of Tenant’s
Contractor’s work.  Tenant or Tenant’s
Contractor may be required to furnish, at Tenant or Tenant’s Contractor’s sole
cost, 

 

1

 

janitorial
service to an adjoining tenant space, regularly during the course of
construction, to clean any resultant dust or debris specifically from their
work from the adjacent tenant space.

 

8.    Materials and tool storage will be limited
to the areas for which access has been granted.

 

9.  Clean-up and rubbish removal required in
connection with Tenant’s Contractor’s work shall be provided by the Tenant’s
Contractor at Tenant’s Contractor’s expense. 
Tenant’s Contractor must remove daily, all rubbish, surplus and waste
material resulting from the performance of this work.  At the request of Building Management, Tenant’s
Contractor shall relocate any materials causing an obstruction as directed by
Owner.

 

10.  In general, Building Management will
interface with Tenant’s Contractor to the extent necessary for work to be
completed within the guidelines of project specifications and for the
enforcement of building rules and regulations.

 

11.  Tenant’s Contractor shall be afforded access
to loading dock space at times during normal work hours as is convenient for
Building Management, or, if required to accommodate Tenant’s Contractor’s
schedule, after normal working hours.  At
no time during normal working hours will the Tenant’s Contractor be given
exclusive reserved use of the freight elevator.

 

12.  Tenant’s Contractor will be afforded
unloading areas as prearranged with Building Management.  All materials unloaded at these areas will be
moved to an area of use immediately and shall not be stored or used in a way
which adversely impacts use of the Building.

 

13.  Tenant will be responsible for the security
of Tenant’s Contractor’s own materials, equipment and work and that of his
subcontractors.  Tenant will also be responsible
for damage caused by Tenant’s Contractor or his subcontractors to the building,
tenant areas and including the loading dock and indoor and outdoor public
areas, freight elevators, etc., subject to Section 11.5 of the Lease.  Any such damages will be promptly repaired to
Building Management’s satisfaction at the sole cost of Tenant.

 

14.  Tenant’s Contractor will comply with all
applicable codes, laws and regulations pertaining to the work of Tenant’s
Contractor, including all safety and health regulations.

 

15.  Except to the extent specifically
contemplated pursuant to the Work Letter in connection with the work described
in Section 13 of the Work Letter, Tenant’s Contractor will not engage in
any labor practice that may delay or otherwise impact the work of Building
Management or any other contractor.

 

16.  No base building systems will be turned off
or disengaged by Tenant’s Contractor or any subcontractor without approval and
supervision, if requested, by Building Management.  Said systems include but are not limited to
sprinklers, electrical circuits, air-handling units, smoke heads and water
supply.

 

17.  Doors to all work areas, including mechanical
and electrical closets in the common areas, will remain closed at all times or
if open must be attended.  Propping doors
open is expressly prohibited.

 

18.  All Tenant Contractor and subcontractor
personnel, materials, tools and equipment are to enter and exit the building
through the freight entrance only unless the freight elevators are not operational
and Building Management has given Tenant its approval.  Use of the passenger elevators is expressly
prohibited.  Building Management may at
any time initiate a reasonable check in/check out system, or a badge system,
for all people and material in the building, and the Tenant’s Contractors will
agree to cooperate with any such system.

 

19.  Before ordering material or doing work which
is dependent upon proper size or installation, the Tenant’s Contractor shall
field verify all dimensions for accessibility with Building conditions, and
shall be responsible for same.

 

20.  Tenant’s Contractor shall not be permitted
any identifying signage or advertising within the project except those affixed
to their clothing, automobiles, machinery and equipment.

 

2

 

21.  During construction, Tenant’s Contractor
shall maintain supervisory personnel on the site at all times reasonably
practicable.  Such personnel shall be
fully authorized to coordinate, respond for and authorize Tenant’s Contractor’s
subcontractors to perform Tenant’s Contractor’s Work as necessary to enable all
work to proceed in a timely and well-ordered fashion.  Should Tenant’s Contractor perform work which
would, in Building Management’s professional judgment, cause or require
Building Management to provide personnel to be present or otherwise perform any
work, Tenant’s Contractor shall reimburse Owner for the actual expense of such
personnel.

 

22.  Tenant’s Contractor shall be responsible for
the protection of his work and the areas adjacent to his work. Specifically,
but not limited to the hallway carpet.

 

23.  Tenant’s Contractor will ensure that all
mechanical rooms, electrical and telephone closets, etc., accessed by Tenant’s
Contractor or subcontractors in conjunction with Contractor’s work, will be
cleaned of Tenant’s Contractor’s debris nightly.

 

24.  Public areas adjacent to Premises where
Contractor’s work is being performed shall remain free of Tenant’s Contractor’s
debris and materials at all times.

 

25.  Except to the extent resulting from the
actions or omissions of the Prime Contractor, Landlord’s Contractor, or
Landlord’s Contractor’s subcontractors in connection with performance of the
Tenant Improvements, Tenant shall be responsible for all of Tenant’s Contractor’s
actions on site as well as those of his subcontractors and shall indemnify,
defend and hold harmless the Owner against any and all claims, losses, or
damages, threatened or incurred, arising from the actions or omissions of Tenant’s
Contractor or its subcontractors.

 

26.  If keys are required by contractors, they
must be checked out daily from the on-site Building Manager or Receptionist and
returned daily.  No key will be
distributed if proper identification and tenant authorization is not provided.

 

27.  No coring holes in the floor or ceiling slab
or cutting holes in the corridor or common area walls, or those of any building
occupant, shall be permitted without prior written consent of Building
Management, which consent shall not be unreasonably withheld and which will be
granted or denied (or deemed granted, as applicable) within the deadlines set
forth in Rule 2 above.  Request for
permission to do such coring or cutting shall include explicit details and
description of work and shall not under any circumstances diminish the
structural integrity of the building components or systems. Notwithstanding any
other provision of these rules to the contrary, if any work is to be done
in another tenant’s space or in any public area, such work is to be done only
with the explicit written permission of Building Management and at times as
directed by Building Management.  Such
work is to be done only under the direct supervision of a competent member of
the Tenant’s Contractor’s staff.  Any
such area is to be promptly repaired and returned to a fully functioning,
complete, and clean condition.

 

28.  All Life Safety Systems of the building are
to be maintained, and all of the Tenant’s work is to be properly interfaced
with and connected to the Base Building systems as required by Code, or by
building operation.  All work is to be
done in such a way as to protect all Base Building operations and warranties.

 

29.  Owner will require an independent inspection
of all tie-ins with the Building systems, to assure compliance of Building
specifications, warranty protection, and proper systems operations.  Tenant will reimburse Landlord within five (5) business
days of Landlord’s written demand accompanied by supporting invoices for the
actual cost of such inspections.

 

30.
Any smoke producing or excessive noise producing activities shall be performed
only with the express consent of Building Management (or Landlord’s Contractor,
if performed pursuant to Section 13 of the Work Letter).  Tenant’s Contractor shall be held fully
accountable for damage to the building or its tenants due to excess noises,
fumes, fire alarms, etc. which are a result of the actions of the Tenant’s
Contractor.

 

31.  In addition to cleaning requirements
described above, Tenant’s Contractor shall, in preparation for substantial
completion or occupancy of the project by Tenant, perform final cleaning
operation of Tenant’s Contractor’s work.

 

3

 

32.  When Tenant’s Contractor takes over an area
from the Owner and before he commences work he shall ascertain that the area is
in a safe and sanitary condition, and  except with respect to any conditions caused by Prime Contractor,
Landlord’s Contractor or Landlord’s Contractor’s subcontractors under the Work
Letter, he shall maintain the area as necessary (at his sole cost and expense)
in a safe and sanitary condition and to a standard meeting all applicable laws
and regulations.

 

33.  Building Management may require job progress
meetings, and shall use reasonable efforts to schedule such meetings at
convenient times which do not interfere with Tenant’s ability to meet schedule or
budget, provided that the foregoing limitation shall in no event preclude
scheduling such meetings in a timely fashion. 
The Tenant’s Contractor, if requested, will attend with a representative
authorized to speak and act on the Tenant’s Contractor’s behalf.  Additionally, the Tenant’s Contractor shall
notify the Building Management of scheduled job progress meetings.

 

34.  Other than work performed pursuant to Section 13
of the Work Letter, which shall be coordinated with Landlord’s Contractor, all
work or on-site activity during non-normal working hours must be coordinated
before-hand with Building Management. The Tenant’s Contractor shall reimburse
Owner for any expenses actually incurred to provide access during these
non-normal working hours.

 

35.  No radios or other audio devices are allowed
(other than cell phones and similar communications devices).

 

36.  Intentionally Deleted.

 

37.  Failure to perform work in a manner
consistent with the above stated Tenant Construction/Rules of The Site,
where such failure materially and adversely impacts the Building, may result in
immediate work stoppage by Building Management until reasonably
satisfactory assurance is received that such failure will be corrected.  Owner shall have no liability for any costs
or expenses incurred by Tenant, Tenant’s Contractor, or any subcontractors in
connection with or as a result of such work stoppage.

 

38.  Intentionally Deleted.

 

39.  In the event of any conflicts between the
provisions of this Exhibit E and the provisions of the Lease or the Work
Letter, the provisions of the Lease or the Work Letter, as applicable, shall
control.

 

4

 

EXHIBIT F

 

STANFORD
STREET LEASE HOLD OVER PROVISIONS

(Attached)

 

1EXHIBIT 10.1

 

COMMERCIAL
REAL PROPERTY SALES CONTRACT

 

1.             PARTIES: 
STEN Corporation, a Minnesota corporation and or assigns (“Buyer”)
agrees to purchase and Robert Nichols Enterprises, Inc.  (“Seller”) agrees to sell and convey to Buyer
the Property described below.

 

2.             PROPERTY: 
The real property situated in Jacksonville, Cherokee County, Texas,
described as:

 

13.679 acres of land, in Block No, 9 of the
Thomas Quevado Three Leagues Grant, Abstract No. 44, Jacksonville,
Cherokee County, Texas, as described on Exhibit A attached hereto together
with all rights, privileges and appurtenances pertaining thereto, including any
right, title and interest of Seller in and to adjacent streets, alleys, and
rights-of-way.  The property sold by this
contract is called the “Property”.

 

3.             SALES PRICE:                                                                                                      $675,000.00

 

The Sales Price shall not be adjusted based
upon any survey that may be obtained by Buyer.

 

4.             THIRD PARTY FINANCING:  None; provided, however, this Agreement is
contingent on the successful closing and funding of the Buyer’s sale of its
real estate located at 13828 Lincoln Street NE, Ham Lake, Minnesota.

 

5.             EARNEST MONEY: Buyer shall deposit $5,000.00 as
Earnest Money with Cherokee Title Co., Inc., Rusk Texas on the Effective
Date of this contract.  The Earnest Money
shall be deposited in a non-interest bearing account in a federally insured
financial institution chosen by Escrow Agent. 
If Buyer fails to deposit the Earnest Money as required by this
contract, Buyer shall be in default.

 

6.             TITLE POLICY AND SURVEY:

 

(a)           TITLE POLICY: 
Subject to paragraph 11(a) Buyer shall obtain an Owner Policy of
Title Insurance (the “Title Policy”) issued by Cherokee Title Co., Inc. in
the amount of the Sales Price, dated at or after closing, insuring Buyer
against loss under the provisions of the Title Policy, subject only to those
title exceptions permitted by this contract, or as maybe approved by Buyer in
writing.  Within 20 days after the Title
Company receives a copy of this contract subject to paragraph 11(a) Buyer
shall obtain a commitment for Title insurance (the “Commitment”).  Seller authorizes the Title Company to
deliver the Commitment and related documents to Buyer at Buyer’s address.  Buyer shall have 10 days after receipt of the
Commitment to object in writing to matters disclosed in the Commitment.  Buyer shall not have the authority to object
to the standard printed exceptions and the exceptions described in this
paragraph.

 

 

(b)           SURVEY: 
Buyer, at Buyer’s expense, may obtain a survey of the Property dated
after the Effective Date of this contract.

 

Buyer may, within (5) days after Buyer’s
receipt of the survey object in writing to any matter which constitutes a
defect or encumbrance to title on the survey or if the survey shows any part of
the Property to lie in a 100-year flood plain area.

 

Buyer’s failure to object under paragraph 6(a) or
6(b) within the time allowed shall constitute a waiver of Buyer’s right to
object except that the requirements in Schedule C of the Commitment shall
not be deemed to have been waived.  If
objections are made by Buyer, or any third party lender, Seller shall cure the
objections within 20 days after the date Seller receives them.  The Closing Date shall be extended as
necessary to cure objections.  If
objections are not cured by the extended Closing Date, this contract shall
terminate and the Earnest Money shall be refunded to Buyer unless Buyer elects
to waive the objections.

 

7.             PROPERTY CONDITION/FEASIBILITY STUDIES:

 

Buyer has occupied the property for a number
of years and has had an opportunity to perform or obtain (i) physical
property inspections; (ii) economic feasibility studies; and (iii) environmental
assessment or engineering study including the performance of tests such as
soils tests or air sampling.  Buyer has
determined that the Property is suitable for Buyers intended use of the
Property.  The Property will be conveyed
AS IS without warranty or representations except for warranty to be included in
the deed.

 

8.             CLOSING:

 

(a)           The closing of the sale shall be on or before January 20,
2006 or within 7 days after objections to title or the survey have been cured,
whichever date is later (the “Closing Date”). 
If either party fails to close this sale by the Closing Date, the
non-defaulting party shall be entitled to exercise the remedies contained in
paragraph 14.

 

(b)           At closing Seller shall furnish, at Seller’s
expense;

 

(1)           tax statements showing no delinquent taxes on
the property;

 

(2)           a Warranty Deed conveying good and indefeasible
title to the Property showing no additional exceptions to those permitted in
paragraph 6;

 

(3)           evidence that the person executing this
contract is legally capable and authorized to bind Seller;

 

(4)           an affidavit of title acceptable to Buyer; and

 

(5)           a FIRPTA.

 

2

 

9.             POSSESSION: 
Seller shall deliver possession of the Property to Buyer on date of
closing and funding.

 

10.           SPECIAL PROVISIONS:  None

 

11.           SALES EXPENSES: 
To be paid in cash at or prior to closing:

 

(a)           Seller’s Expenses:  Releases of existing liens, including
prepayment penalties and recording fees; release of Seller’s loan liability,
see paragraph 8(b)(1) cost of tax statements or certificates; preparation
of deed; one-half of escrow fee; one-half of cost of commitment and one-half of
premium for owner policy of title insurance in the amount of the purchase
price, and other expenses stipulated to be paid by Seller under other
provisions of this contract.

 

(b)           Buyer’s Expenses:  Required premiums for hazard insurance;
one-half of premium for owner policy of title insurance in the amount of the
purchase price: one-half of escrow fee; fees for copies; and other expenses
stipulated to be paid by Buyer under other provisions of this contract.

 

12.           PRORATIONS AND ROLLBACK TAXES:

 

(a)           Current taxes, and any rents shall be prorated
through the Closing Date.  If the amount
of the ad valorem taxes for the year in which the sale is closed is not
available on the Closing Date, proration of taxes shall be made on the basis of
taxes assessed in the previous year.

 

(b)           If this sale or use of the Property after
closing results in the assessment of additional taxes for periods prior to
closing, the additional taxes shall be the obligation of Buyer.  Obligations imposed by this paragraph shall
survive the closing.

 

13.           CONDEMNATION: 
If prior to closing condemnation proceedings are commenced against any
portion of the Property, Buyer may:  (a) terminate
this contract by written notice to Seller within 10 days after Buyer is advised
of the condemnation proceeding and the Earnest Money shall be refunded to
Buyer; or (b) appear and defend in the condemnation proceeding and any
award in condemnation shall, at Buyer’s election, become the property of Seller
and the sales price shall be reduced by the same amount or shall become the
property of Buyer and the sales price shall not be reduced.

 

14.           DEFAULT: 
If Buyer fails to comply with this contract, Buyer shall be in
default.  Seller may either enforce
specific performance, seek other relief as maybe provided bylaw, or both; or
terminate this contract and receive the Earnest Money as liquidated damages,
thereby releasing the parties from this contract.  If Seller fails to comply with this contract,
Seller shall be in default and Buyer may either enforce specific performance,
seek such other relief as may be provided by law, or both; or terminate this
contract and receive the Earnest Money, thereby releasing the parties from this
contract.

 

3

 

15.           ATTORNEY FEES: 
If Buyer or Seller is a prevailing party in any legal proceeding brought
under or with relation to this contract or this transaction, such party shall
be entitled to recover from the non-prevailing parties all costs of such
proceeding and reasonable attorney fees. 
The provisions of this paragraph shall survive closing.

 

16.           ESCROW: 
If either party makes demand for the payment of the Earnest Money,
Escrow Agent has the right to require from all parties and brokers a written
release of liability of Escrow Agent for disbursement of the Earnest
Money.  Any refund or disbursement of
Earnest Money under this contract shall be reduced by the amount of unpaid
expenses incurred on behalf of the party receiving the Earnest Money, and
Escrow Agent shall pay the same to the creditors entitled thereto.  At closing, the Earnest Money shall be
applied to the purchase price.  Demands
and notices required by this paragraph shall be in writing and delivered by
hand delivery or by certified mail, return receipt requested.

 

17.           MATERIAL FACTS: 
Seller shall convey the Property on closing: (i) with no liens,
assessments, or other security interests against the Property which will not be
satisfied out of the Sales Price; and (ii) with no parties in possession
of any portion of the Property as lessees, tenants at sufferance, or
trespassers.

 

18.           NOTICES: 
All notices shall be in writing and effective when hand-delivered,
mailed by certified mail return receipt requested, or sent by facsimile
transmission to:

 

Buyer at:  10275 Wayzata Blvd., Suite 310,
Minnetonka, MN  55305

Phone:  952-545-2776

Fax:       952-591-9037

 

Seller at:  P.O. Box 1591, Jacksonville, Texas 75766

Phone:  903-589-1239

Fax:       903-589-0934

 

19.           FEDERAL TAX REQUIREMENT: If Seller is a “foreign
person”, as defined by applicable law, or if Seller fails to deliver an
affidavit that Seller is not a “foreign person”, then Buyer shall withhold from
the sales proceeds at closing an amount sufficient to comply with applicable
tax law and deliver the same to the Internal Revenue Service, together with
appropriate tax forms. Internal Revenue Service regulations require filing
written reports if cash in excess of specified amounts is received in the
transaction.

 

20.           DISPUTE RESOLUTION:  The parties agree to negotiate in good faith
in an effort to resolve any dispute related to this contract that may arise.

 

21.           AGREEMENT OF THE PARTIES:  This contract shall be binding on the
parties, their heirs, executors, representatives, successors, and assigns.  This contract shall be construed under and in
accordance with laws of the State of Texas. 
This contract contains the entire agreement of the parties and cannot be
changed except by written agreement, if this contract is executed in a number
of identical counterparts, each counterpart is deemed an original and all
counterparts shall, collectively, constitute one agreement.

 

4

 

22.           TIME: 
Time is of the essence in this contract. 
Strict compliance with the times for performance stated in this contract
is required.

 

23.           EFFECTIVE DATE: 
The Effective Date of this contract for the purpose of performance of
all obligations shall be the date this contract is receipted by the Escrow
Agent after all parties have executed this contract.

 

24.           MISCELLANEOUS:

 

(a)           If the Property is situated in utility or other
statutorily created district providing water, sewer, drainage, or flood control
facilities and services.  Chapter 50 of
the Texas Water Code requires Seller to deliver and the Buyer to sign the
statutory notice relating to the tax rate, bonded indebtedness, or standby fee
of the district prior to final execution of this contract.  The Property is not situated in such a
district.

 

(b)           If the Property adjoins or shares a common
boundary with the tidally influenced submerged lands of the state, Section 33.135
of the Texas Natural Resources Code, requires a notice regarding coastal area
property to be included in the contract. 
The Property does not adjoin or share a common boundary with Tidally
influences submerged lands of the state.

 

(c)           Buyer should not rely upon any oral
representations about the Property from any source.

 

25.           CONTRACT AS OFFER:  The execution of this contract by the first
party constitutes an offer to buy or sell the Property.  Unless accepted by the other Party by 5:00 p.m.
(in the time zone in which the Property is located) on November 30,2005
the offer shall lapse and be null and void.

 

26.           IRC 1031 TAX DEFERRED EXCHANGE:  The parties acknowledge that the other may
sell or acquire the Property in a tax deferred exchange (an “Exchange”) within
the meaning of Section 1031 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the “Code”).  Seller and Buyer expressly reserve the right
to assign its rights, but not its obligations, under this Agreement to a “Qualified
Intermediary” as provided under the Code or otherwise engage in an Exchange
with respect to the Property in a manner allowed by the Code.  Seller and Buyer agree to reasonably
cooperate with each other to complete the Exchange if so elected by the other
party, provided neither Seller or Buyer shall be required to incur additional
or material liabilities, expenses or obligations with respect to the other
party’s Exchange, nor shall the Closing be delayed, postponed or conditioned on
the completion of any such Exchange.

 

This is intended to be a legally binding
contract. READ IT CAREFULLY.  CONSULT
YOUR ATTORNEY BEFORE SIGNING.

 

5

 

	
  Buyer’s

  	
   

  	
   

  	
   

  	
  Seller’s

  	
   

  	
   

  
	
  Attorney

  	
   

  	
   

  	
   

  	
  Attorney

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Eldridge Moak

  
	
   

  	
   

  	
   

  	
   

  	
  211 East Commerce Street

  
	
   

  	
   

  	
   

  	
   

  	
  Jacksonville, Texas 75766

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUYER:

  	
   

  	
   

  	
   

  	
  SELLER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STEN Corporation

  	
   

  	
  Robert Nichols Enterprises, Inc., a
  Texas 

  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Kenneth W. Brimmer

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Robert Lee Nichols

  
	
   

  	
   

  	
    Kenneth
  W. Brimmer, Chairman and CEO

  	
   

  	
   

  	
   

  	
  Robert Lee Nichols, President

  
												

 

On this                   day
of                                       ,
2005, Cherokee Title Co., Inc., Escrow Agent, acknowledges receipt of (a) Contract
and (b) Earnest Money in the amount of $5,000.00 represented by:                              
cash/wire/Cashier’s Check/Personal Cheek.

 

The undersigned does not assume any liability
for the disbursement of said sum to any person, firm or corporation until any
and all checks have been paid by the bank or other institution upon which they
are drawn.

 

The undersigned does not agree to pay any
portion of said sum to any person, firm or corporation unless written authority
is given to the undersigned by all parties whose signatures appear on the
foregoing contract, or their duly authorized agent.

 

No other conditions, stipulations or
obligations which may be set out in said contract shall be binding on the
undersigned if such be in conflict with the provisions of this endorsement.

 

Said sum is held without liability for the
payment of interest thereon.

 

	
   

  	
   

  	
  Cherokee
  Title Co., Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  

 

6

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