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                                                                 EXHIBIT 10.15.1

                  2002 REDWOOD TRUST, INC. INCENTIVE STOCK PLAN

                          (LAST AMENDED MARCH 4, 2004)

SECTION 1.        GENERAL PURPOSE OF PLAN; DEFINITIONS.

         The name of this plan is the 2002 Redwood Trust, Inc. Incentive Stock
Plan (the "Plan"). The Plan was adopted by the Board on March 21, 2002 and
approved by the Company's stockholders on May 9, 2002. The Board approved
amendments to the Plan on March 4, 2004 and directed that the amended Plan be
submitted to stockholders of the Company for approval. The purpose of the Plan
is to enable the Company and its Subsidiaries to obtain and retain competent
personnel who will contribute to the Company's success by their ability,
ingenuity, and industry, to give the Company's non-employee directors a
proprietary interest in the Company, and to provide incentives to the
participating directors, officers and other key employees, and agents and
consultants, that are linked to performance measures and will therefore inure to
the benefit of all stockholders of the Company.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         (1)      "Administrator" means the Board, or as long as the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, or as required under Section 162(m) of the Code, the Committee
appointed by the Board.

         (2)      "Board" means the Board of Directors of the Company.

         (3)      "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.

         (4)      "Committee" means the Compensation Committee of the Board,
which shall be composed of not less than three Board members who shall be (i)
Independent as defined by the rules of the New York Stock Exchange, as they may
be amended from time to time; (ii) a Non-Employee Director as defined in Rule
16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended; and (iii) an Outside Director as defined under Section 162(m) of the
Internal Revenue Code of 1986, as amended, and rules promulgated thereunder.

         (5)      "Company" means Redwood Trust, Inc., a corporation organized
under the laws of the State of Maryland (or any successor corporation).

         (6)      "DERs" shall mean dividend equivalent rights, which are the
right to receive amounts on related Stock awards that are linked to dividends on
the Stock and that may be paid currently in cash or Stock, or accrued in shares
of deferred stock with or without compounding through subsequent payments or
accruals on the accrued shares. Payment of such deferred stock from DER accruals
on Stock Options and Stock Appreciation Rights may or may not be contingent upon
the exercise of the related award, as determined by the Committee at the time of
grant.

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         (7)      "Deferred Stock" means an award granted pursuant to Section 7
of the right to receive Stock at the end of a specified deferral period or on
such other bases as the Administrator may determine.

         (8)      "Disability" means permanent and total disability as
determined under the Company's disability program or policy.

         (9)      "Effective Date" shall mean the date provided pursuant to
Section 11.

         (10) "Eligible Employee" means an employee of the Company or any
Subsidiary, and any person to whom an offer of employment is made by the Company
or any Subsidiary, eligible to participate in the Plan pursuant to Section 4.

         (11)     "Eligible Non-Employee Director" means a member of the Board
or the board of directors of any Subsidiary who is not a bona fide employee of
the Company or any Subsidiary and who is eligible to participate in the Plan
pursuant to Section 4.

         (12)     "Fair Market Value" means, as of any given date, with respect
to any awards granted hereunder, at the discretion of the Administrator and
subject to such limitations as the Administrator may impose, the closing sale
price of the Stock on the next preceding business day as reported in the Western
Edition of the Wall Street Journal Composite Tape.

         (13)     "GAAP" means, for any day, generally accepted accounting
principles, applied on a consistent basis, stated in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants, or in statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by another
entity or entities as may be approved by a significant segment of the accounting
profession, that are applicable to the circumstances for that day.

         (14)     "Incentive Stock Option" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

         (15)     "Non-Employee Director" shall have the meaning set forth in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.

         (16)     "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, including any Stock Option that provides (as of
the time such option is granted) that it will not be treated as an Incentive
Stock Option.

         (17)     "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.

         (18)     "Participant" means any Eligible Employee, Non-Employee
Director, or consultant or agent of the Company or any Subsidiary selected by
the Committee, pursuant to the Administrator's authority in Section 2, to
receive grants under the Plan.

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         (19)     "Performance Share" means an award of shares of Stock granted
pursuant to Section 7 that is subject to restrictions based upon the attainment
of specified performance objectives.

         (20)     "Prior Plan" means the Company's Amended and Restated 1994
Executive and Non-Employee Director Stock Option Plan.

         (21)     "Restricted Stock" means an award granted pursuant to Section
7 of shares of Stock, subject to restrictions that will lapse with the passage
of time or on such other bases as the Administrator may determine.

         (22)     "Stock" means the common stock, $0.01 par value, of the
Company.

         (23)     "Stock Appreciation Right" means the right pursuant to an
award granted under Section 6 to receive an amount equal to the difference
between (A) the Fair Market Value, as of the date such Stock Appreciation Right
or portion thereof is surrendered, of the shares of Stock covered by such right
or such portion thereof, and (B) the aggregate exercise price of such right or
such portion thereof.

         (24)     "Stock Option" means an option to purchase shares of Stock
granted pursuant to Section 5.

         (25)     "Subsidiary" means (A) any corporation (other than the
Company) or other entity whose assets and liabilities are consolidated with
those of the Company on the Company's consolidated balance sheet and (B) any
other business venture designated by the Administrator in which the Company has
a significant interest, as determined in the discretion of the Administrator.

SECTION 2.        ADMINISTRATION.

         The Plan shall be administered by the Administrator, except as
otherwise expressly provided herein.

         The Administrator shall have the power and authority to grant to
Participants pursuant to the terms of the Plan: (a) Stock Options, (b) Stock
Appreciation Rights, (c) Restricted Stock, (d) Deferred Stock, (e) Performance
Shares or (f) any combination of the foregoing. DERs may be granted in
conjunction with any of the Stock awards listed above.

         In addition, the Administrator shall have the authority:

         (a)      to select those employees and prospective employees of the
Company or any Subsidiary who shall be Eligible Employees;

         (b)      to determine whether and to what extent Stock Options (with or
without DERs), Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Performance Shares or a combination of the foregoing, are to be granted to
Participants hereunder;

         (c)      to determine the number of shares to be covered by each such
award granted hereunder;

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         (d)      to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, (x) the restricted period applicable to Restricted or Deferred Stock
awards and the date or dates on which restrictions applicable to such Restricted
or Deferred Stock shall lapse during such period, and (y) the performance goals
and periods applicable to the award of Performance Shares); and

         (e)      to determine the terms and conditions, not inconsistent with
the terms of the Plan, which shall govern all written instruments evidencing the
Stock Options, DERs, Stock Appreciation Rights, Restricted Stock, Deferred
Stock, Performance Shares or any combination of the foregoing.

         The Administrator may designate whether any award being granted to any
Participant is intended to be "performance-based compensation" as that term is
used in Section 162(m) of the Code. Any such awards designated as
"performance-based compensation" shall be conditioned on the achievement of one
or more performance measures. The performance measures that may be used by the
Administrator for such awards shall be based on any one or more of the
following, as selected by the Administrator: revenue; revenue per employee; GAAP
earnings; taxable earnings; GAAP or taxable earnings per employee; GAAP or
taxable earnings per share (basic or diluted); operating income; total
stockholder return; dividends paid or payable; market share; profitability as
measured by return ratios, including return on revenue, return on assets, return
on equity, and return on investment; cash flow; or economic value added
(economic profit); and such criteria generally must be specified in advance and
may relate to one or any combination of two or more corporate, group, unit,
division, affiliate, or individual performances. For awards intended to be
"performance-based compensation," the grant of the awards, the establishment of
the performance measures, and the certification that the performance goals were
satisfied shall be made during the period and in the manner required under Code
Section 162(m).

         The Administrator shall have the authority, in its discretion, to
adopt, alter, and repeal such administrative rules, guidelines, and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan.

         All decisions made by the Administrator pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company, any
Subsidiaries and the Participants. Notwithstanding the foregoing or anything
else to the contrary in the Plan, any action or determination by the
Administrator specifically affecting or relating to an award to a Non-Employee
Director shall be approved and ratified by the Board.

         Notwithstanding anything to the contrary herein, no award hereunder may
be made to any Participant to the extent that, following such award, the shares
subject or potentially subject to such Participant's control (including, but not
limited to, (i) shares of the Company's equity stock owned by the Participant,
(ii) shares of Stock subject to awards granted to the Participant under the
Prior Plan (whether such awards are then exercisable or vested), (iii) Stock
Options, whether or not then exercisable, held by the Participant to purchase
additional such shares, (iv) Restricted Stock, Deferred Stock, and Performance
Share awards to the Participant, whether or not then vested, and (v) shares of
Stock accrued under DERs awarded to the Participant) would constitute more than
9.8% of the outstanding capital stock of the Company.

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SECTION 3.        STOCK SUBJECT TO PLAN.

(1)      Subject to the following provisions of this Section 3, the maximum
number of shares of Stock that may be issued with respect to awards granted
under the Plan subsequent to the approval of Plan amendments on March 4, 2004
shall be equal to the sum of: (i) 735,000 shares of Stock; (ii) 148,540 shares
of Stock remaining available for grant under the Plan immediately prior to the
Board approval of the March 4, 2004 Plan amendments; (iii) any shares of Stock
that are represented by awards granted under the Prior Plan which are (A)
forfeited, expire, or are canceled without delivery of shares of Stock or (B)
settled in cash; and (iv) any shares of Stock that are represented by awards
granted under the Prior Plan which are tendered to the Company (by either
actual delivery or attestation) to satisfy the exercise price of Stock Options
or the applicable tax withholding obligation.

         (2)      Any shares of Stock covered by an award that is forfeited or
canceled, or shares of stock not delivered because the award is settled in cash
or used to satisfy the applicable tax withholding obligation, shall not be
deemed to have been issued for purposes of determining the maximum number of
shares of Stock available for future awards under the Plan.

         (3)      If the exercise price of any Stock Option granted under the
Plan is satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation), only the number of shares of Stock issued net of
the shares of Stock tendered shall be deemed issued for purposes of determining
the maximum number of shares of Stock available for future awards under the
Plan.

         (4)      Subject to Section 3(5), the following additional maximums are
imposed under the Plan:

                  (a) The maximum number of shares of Stock that may be the
subject of awards granted as Incentive Stock Options under the Plan shall be
500,000 shares (regardless of whether the awards are canceled, forfeited, or
materially amended or the shares subject to any such awards are surrendered).

                  (b) The maximum number of shares that may be the subject of
awards granted to any one individual pursuant to Sections 5 and 6 (relating to
Stock Options and Stock Appreciation Rights) shall be 500,000 shares during any
calendar year (regardless of whether such awards are canceled, forfeited, or
materially amended or the shares subject to any such award are surrendered).

                  (c) No more than 500,000 shares of Stock may be the subject of
awards under the Plan granted to any one individual during any one-calendar-year
period (regardless of when such shares are deliverable or whether the awards are
forfeited, canceled or materially amended or the shares subject to any such
award are surrendered) if such awards are intended to be "performance-based
compensation" (as the term is used for purposes of Code Section 162(m)).

                  (d) Shares of Stock issued under the Plan or covered by awards
granted under the Plan pursuant to the settlement, assumption or substitution of
outstanding awards or obligations to grant future awards as a condition of the
Company acquiring another entity shall not count against the maximum number of
shares available for future awards under the Plan.

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         (5) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, or exchange of shares), the Administrator may
adjust awards to preserve the benefits or potential benefits of the awards.
Action by the Administrator may include: (i) adjustment of the number and kind
of shares which may be delivered under the Plan; (ii) adjustment of the number
and kind of shares subject to outstanding awards; (iii) adjustment of the
exercise price of outstanding Stock Options and Stock Appreciation Rights; and
(iv) any other adjustments that the Administrator determines to be equitable, in
its sole discretion.

SECTION 4.        ELIGIBILITY.

         Officers and other key employees of the Company or Subsidiaries who are
responsible for or contribute to the management, growth, and/or profitability of
the business of the Company or its Subsidiaries, Non-Employee Directors, and
consultants and agents of the Company or its Subsidiaries, shall be eligible to
be granted Stock Options, DERs, Stock Appreciation Rights, Restricted Stock,
Deferred Stock or Performance Shares hereunder. The Participants under the Plan
shall be selected from time to time by the Administrator, in its sole
discretion, from among those eligible.

SECTION 5.        STOCK OPTIONS.

         Stock Options may be granted alone or in addition to other awards
granted under the Plan, including DERs. Any Stock Option granted under the Plan
shall be in such form as the Administrator may from time to time approve, and
the provisions of Stock Option awards need not be the same with respect to each
optionee. Recipients of Stock Options shall enter into a Stock Option agreement
with the Company, in such form as the Administrator shall determine, which
agreement shall set forth, among other things, the exercise price, the term, and
provisions regarding exercisability of the Stock Option granted thereunder.

         The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.

         The Administrator shall have the authority under this Section 5 to
grant any optionee (except Eligible Non-Employee Directors) Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without DERs or Stock Appreciation Rights), provided, however, that
Incentive Stock Options may not be granted to any individual who is not an
employee of the Company or its Subsidiaries. To the extent that any Stock Option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option. More than one option may be granted to the same
optionee and be outstanding concurrently hereunder.

         Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:

         (1)      Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall not be less than 100% of the Fair
Market Value of the Stock on such date, and shall not, in

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any event, be less than the par value of the Stock. If an employee owns or is
deemed to own (by reason of the attribution rules applicable under Section
425(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the option price of such Incentive
Stock Option (to the extent required by the Code at the time of grant) shall be
no less than 110% of the Fair Market Value of the Stock on the date such
Incentive Stock Option is granted.

         (2)      Option Term. The term of each Stock Option shall be fixed by
the Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, that if an
employee owns or is deemed to own (by reason of the attribution rules of Section
425(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
more than five years from the date of grant.

         (3)      Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Administrator at or after grant. The Administrator may provide, in its
discretion, that any Stock Option shall be exercisable only in installments, and
the Administrator may waive such installment exercise provisions at any time in
whole or in part based on such factors as the Administrator may determine, in
its sole discretion. To the extent not exercised, installments shall accumulate
and be exercisable in whole or in part at any time after becoming exercisable
but not later than the date the Stock Option expires.

         (4)      Method of Exercise. Subject to Section 5(3), Stock Options may
be exercised in whole or in part at any time during the option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price in cash or its
equivalent as determined by the Administrator. The Administrator may also permit
a Participant to elect to pay the exercise price upon the exercise of a Stock
Option by irrevocably authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Stock Option and
remit to the Company a sufficient portion of the sale proceeds to pay the entire
exercise price and any tax withholding resulting from such exercise. As
determined by the Administrator, in its sole discretion, payment in whole or in
part may also be made by surrendering unrestricted Stock already owned by the
optionee, or, in the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock, or Performance Shares subject to an award hereunder (based, in
each case, on the Fair Market Value of the Stock on the date the option is
exercised); provided, however, that in the case of an Incentive Stock Option,
the right to make payment in the form of already owned shares may be authorized
only at the time of grant. Any payment in the form of stock already owned by the
optionee may be effected by use of an attestation form approved by the
Administrator. If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Performance Shares, the shares received upon the exercise of such Stock Option
(to the extent of the number of shares of Restricted Stock or Performance Shares
surrendered upon exercise of such Stock Option) shall be restricted in
accordance with the original terms of the Restricted Stock or Performance Share
award in question, except that the Administrator may direct that such
restrictions shall apply only to that number of shares equal to the number of
shares surrendered upon the exercise of such option. An optionee shall generally

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have the rights to dividends and other rights of a stockholder with respect to
shares subject to the option only after the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has given the
representation described in paragraph (1) of Section 11.

         (5)      Limits on Transferability of Options.

                  (a)  Subject to Section 5(5)(b), no Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or pursuant to a "qualified domestic relations order," as such
term is defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee or in accordance with the terms of a
qualified domestic relations order.

                  (b)  The Administrator may, in its discretion, authorize all
or a portion of the Non-Qualified Stock Options to be granted to an optionee to
be on terms which permit transfer by such optionee to (i) the spouse, qualified
domestic partner, children, or grandchildren of the optionee and any other
persons related to the optionee as may be approved by the Administrator
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, (iii) a partnership or partnerships in which
such Immediate Family Members are the only partners, or (iv) any other persons
or entities as may be approved by the Administrator, provided that (x) there may
be no consideration for any transfer unless approved by the Administrator, (y)
the stock option agreement pursuant to which such options are granted must be
approved by the Administrator, and must expressly provide for transferability in
a manner consistent with this Section 5(5)(b), and (z) subsequent transfers of
transferred Stock Options shall be prohibited except those in accordance with
Section 5(5)(a) or expressly approved by the Administrator. Following transfer,
any such Stock Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that,
except for purposes of Sections 5(6) and 10(3) hereof, the terms "optionee,"
"Stock Option holder" and "Participant" shall be deemed to refer to the
transferee. The events of termination of employment contained in the option
agreement with respect to such Stock Options shall continue to be applied with
respect to the original optionee, following any which event the Stock Options
shall be exercisable by the transferee only to the extent, and for the periods
specified in such option agreements. Notwithstanding the transfer, the original
optionee will continue to be subject to the provisions of Section 10(3)
regarding payment of taxes, including the provisions entitling the Company to
deduct such taxes from amounts otherwise due to such optionee. Any transfer of a
Stock Option that was originally granted with DERs related thereto shall
automatically include the transfer of such DERs, any attempt to transfer such
Stock Option separately from such DERs shall be void, and such DERs shall
continue in effect according to their terms. "Qualified domestic partner" for
the purpose of this Section 5(5)(b) shall mean a domestic partner living in the
same household as the optionee and registered with, certified by, or otherwise
acknowledged by the county or other applicable governmental body as a domestic
partner or otherwise establishing such status in any manner satisfactory to the
Administrator.

         (6)      Annual Limit on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an optionee under this Plan and all other option plans of the
Company, its Parent Corporation or any Subsidiary become exercisable

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for the first time by the optionee during any calendar year exceeds $100,000,
such Stock Options shall be treated as Non-Qualified Stock Options.

SECTION 6.        STOCK APPRECIATION RIGHTS.

         (1)      Grant and Exercise. Stock Appreciation Rights may be granted
either alone ("Free Standing Rights") or in conjunction with all or part of any
Stock Option granted under the Plan ("Related Rights"). In the case of a
Non-Qualified Stock Option, Related Rights may be granted either at or after the
time of the grant of such Stock Option. In the case of an Incentive Stock
Option, Related Rights may be granted only at the time of the grant of the
Incentive Stock Option.

         A Related Right or applicable portion thereof granted in conjunction
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related Right
granted with respect to less than the full number of shares covered by a related
Stock Option shall only be reduced if and to the extent that the number of
shares covered by the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock Appreciation Right.

         A Related Right may be exercised by an optionee, in accordance with
paragraph (2) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(2) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the Related Rights have
been so exercised.

         (2)      Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Administrator,
including the following:

                  (a)  Stock Appreciation Rights that are Related Rights
("Related Stock Appreciation Rights") shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section 6;
provided, however, that no Related Stock Appreciation Right shall be exercisable
during the first six months of its term, except that this additional limitation
shall not apply in the event of death or Disability of the optionee prior to the
expiration of such six-month period.

                  (b)  Upon the exercise of a Related Stock Appreciation Right,
an optionee shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Stock (or in some combination of cash and
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the option price per share
specified in the related Stock Option multiplied by the number of shares of
Stock in respect of which the Related Stock Appreciation Right is being
exercised, with the Administrator having the right to determine the form of
payment.

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                  (c)  Related Stock Appreciation Rights shall be transferable
or exercisable only when and to the extent that the underlying Stock Option
would be transferable or exercisable under paragraph (5) of Section 5.

                  (d)  Upon the exercise of a Related Stock Appreciation Right,
the Stock Option or part thereof to which such Related Stock Appreciation Right
is related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares of Stock to be issued
under the Plan.

                  (e)  A Related Stock Appreciation Right granted in connection
with an Incentive Stock Option may be exercised only if and when the Fair Market
Value of the Stock subject to the Incentive Stock Option exceeds the exercise
price of such Stock Option.

                  (f)  Stock Appreciation Rights that are Free Standing Rights
("Free Standing Stock Appreciation Rights") shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that no Free Standing Stock
Appreciation Right shall be exercisable during the first six months of its term,
except that this limitation shall not apply in the event of death or Disability
of the recipient of the Free Standing Stock Appreciation Right prior to the
expiration of such six-month period.

                  (g)  The term of each Free Standing Stock Appreciation Right
shall be fixed by the Administrator, but no Free Standing Stock Appreciation
Right shall be exercisable more than ten years after the date such right is
granted.

                  (h)  Upon the exercise of a Free Standing Stock Appreciation
Right, a recipient shall be entitled to receive up to, but not more than, an
amount in cash or that number of shares of Stock (or any combination of cash or
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the price per share specified in
the Free Standing Stock Appreciation Right (which price shall be no less than
100% of the Fair Market Value of the Stock on the date of grant) multiplied by
the number of shares of Stock with respect to which the right is being
exercised, with the Administrator having the right to determine the form of
payment.

                  (i)  Free Standing Stock Appreciation Rights shall be
transferable or exercisable subject to the provisions governing the
transferability and exercisability of Stock Options set forth in paragraphs (3)
and (5) of Section 5.

                  (j) In the event of the termination of an employee who has
been granted one or more Free Standing Stock Appreciation Rights, such rights
shall be exercisable to the same extent that a Stock Option would have been
exercisable in the event of the termination of the optionee.

                  (k) For the purpose of the limitation set forth in Section 3
on the number of shares to be issued under the Plan, the grant or exercise of
Free Standing Stock Appreciation Rights shall be deemed to constitute the grant
or exercise, respectively, of Stock Options with respect to the number of shares
of Stock with respect to which such Free Standing Stock Appreciation Rights were
so granted or exercised.

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SECTION 7.        RESTRICTED STOCK, DEFERRED STOCK, AND PERFORMANCE SHARES.

         (1)      General. Restricted Stock, Deferred Stock, or Performance
Share awards may be issued either alone or in addition to other awards granted
under the Plan. The Administrator shall determine the Participants to whom, and
the time or times at which, grants of Restricted Stock, Deferred Stock, or
Performance Share awards shall be made; the number of shares to be awarded; the
price, if any, to be paid by the recipient of Restricted Stock, Deferred Stock,
or Performance Share awards; the Restricted Period (as defined in Section 7(3))
applicable to Restricted Stock, Deferred Stock, or Performance Share awards; the
performance objectives applicable to Performance Share, Restricted Stock, or
Deferred Stock awards; the date or dates on which restrictions applicable to
such Restricted Stock or Deferred Stock awards shall lapse during such
Restricted Period; and all other conditions of the Restricted Stock, Deferred
Stock, and Performance Share awards. The Administrator may also condition the
grant of Restricted Stock, Deferred Stock, or Performance Share awards upon the
exercise of Stock Options or upon such other criteria as the Administrator may
determine, in its sole discretion. The provisions of Restricted Stock, Deferred
Stock or Performance Share awards need not be the same with respect to each
recipient.

         (2)      Awards and Certificates. The prospective recipient of a
Restricted Stock, Deferred Stock, or Performance Share award shall not have any
rights with respect to such award, unless and until such recipient has executed
an agreement evidencing the award (a "Restricted Stock Award Agreement,"
"Deferred Stock Award Agreement," or "Performance Share Award Agreement," as
appropriate) and delivered a fully executed copy thereof to the Company, within
a period of sixty days (or such other period as the Administrator may specify)
after the award date. Except as otherwise provided below in this Section 7(2),
(i) each Participant who is awarded Restricted Stock or Performance Shares shall
be issued a stock certificate in respect of such shares of Restricted Stock or
Performance Shares; and (ii) such certificate shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:

                  "The transferability of this certificate and the shares of
         stock represented hereby are subject to the terms and conditions
         (including forfeiture) of the 2002 Redwood Trust, Inc. Incentive Stock
         Plan and a Restricted Stock Award Agreement or Performance Share Award
         Agreement entered into between the registered owner and Redwood Trust,
         Inc. Copies of such Plan and Agreement are on file in the offices of
         Redwood Trust, Inc."

         The Company shall require that the stock certificates evidencing such
shares be held in the custody of the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award or
Performance Share award, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.

         (3)      Restrictions and Conditions. The Restricted Stock, Deferred
Stock, and Performance Share awards granted pursuant to this Section 7 shall be
subject to the following restrictions and conditions:

                                       11
<PAGE>

                  (a)  Subject to the provisions of the Plan and the Restricted
Stock, Deferred Stock, or Performance Share award agreement, during such period
as may be set by the Administrator commencing on the grant date (the "Restricted
Period"), the Participant shall not be permitted to sell, transfer, pledge, or
assign shares of Restricted Stock, Performance Shares, or Deferred Stock awarded
under the Plan; provided, however, that the Administrator may, in its sole
discretion, provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on such factors
and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the attainment of certain performance
related goals, the Participant's termination, death, or Disability or the
occurrence of a "Change of Control" (as defined by the Administrator at the time
of grant). Except for certain limited situations, the Restricted Period for
awards subject solely to continued employment restrictions shall be not less
than three years from the date of grant. The Restricted Period for awards
subject to meeting specified performance criteria shall generally not be shorter
than twelve months or longer than five years.

                  (b)  Except as provided in paragraph (3)(a) of this Section 7,
the Participant shall have, with respect to the shares of Restricted Stock or
Performance Shares, all of the rights of a stockholder of the Company, including
the right to vote the shares, and the right to receive any dividends thereon
during the Restricted Period. With respect to Deferred Stock awards, the
Participant shall generally not have the rights of a stockholder of the Company,
including the right to vote the shares during the Restricted Period; provided,
however, that, except as otherwise specified by the Administrator at time of
grant, dividends declared during the Restricted Period with respect to the
number of shares covered by a Deferred Stock award shall accrue to the
Participant. Certificates for shares of unrestricted Stock shall be delivered to
the Participant promptly after, and only after, the Restricted Period shall
expire without forfeiture in respect of such shares covered by the award of
Restricted Stock, Performance Shares, or Deferred Stock, except as the
Administrator, in its sole discretion, shall otherwise determine.

SECTION 8.        AMENDMENT AND TERMINATION.

         The Board may amend, alter, suspend, terminate, or discontinue the Plan
or any portion thereof at any time; provided, however, that no such amendment,
alteration, suspension, discontinuation, or termination shall be made without
(1) stockholder approval if such approval is necessary to qualify for or comply
with any tax or regulatory requirement for which or with which the Board deems
it necessary or desirable to qualify or comply or (2) the consent of the
affected Participant, if such action would impair the rights of such Participant
under any outstanding award. Notwithstanding anything to the contrary herein,
the Committee may amend the Plan in such manner as may be necessary so as to
have the Plan conform to local rules and regulations in any jurisdiction outside
the United States.

         The Administrator may amend the terms of any award theretofore granted
prospectively or retroactively, but no such amendment shall (1) impair the
rights of any Participant without his or her consent or (2) except for
adjustments made pursuant to Section 3(5) or in connection with substitute
awards, reduce the exercise price of outstanding Stock Options or Stock
Appreciation Rights or cancel or amend outstanding Stock Options or Stock
Appreciation Rights with an exercise price that is less than the exercise price
of the original Stock Options or Stock Appreciation Rights without stockholder
approval. Any change or adjustment to an outstanding Incentive Stock Option
shall not, without the consent of the Participant, be made in a manner so

                                       12
<PAGE>

as to constitute a "modification" that would cause such Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the
foregoing, any adjustments made pursuant to Section 3(5) shall not be subject to
these restrictions.

SECTION 9.        UNFUNDED STATUS OF PLAN.

         The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant or
optionee by the Company, nothing contained herein shall give any such
Participant or optionee any rights that are greater than those of a general
creditor of the Company.

SECTION 10.       GENERAL PROVISIONS.

         (1)      The Administrator may require each person purchasing shares
pursuant to a Stock Option to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to distribution thereof.
The certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

         (2)      Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any employee of the Company or any Subsidiary any
right to continued employment with the Company or a Subsidiary, as the case may
be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.

         (3)      Each Participant shall, no later than the date as of which the
value of an award first becomes includable in the gross income of the
Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
(and, where applicable, its Subsidiaries) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Participant.

         (4)      No member of the Board or the Administrator, nor any officer
or employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board or the Administrator and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.

                                       13
<PAGE>

         (5)      The Administrator may permit or require a Participant to
subject any award granted hereunder to any deferred compensation, deferred stock
issuance, or similar plan that may be made available to Participants by the
Company from time to time. The Administrator may establish such rules and
procedures for participation in such deferral plans as it may deem appropriate,
in its sole discretion.

SECTION 11.       EFFECTIVE DATE OF PLAN.

         The Plan became effective (the "Effective Date") on May 9, 2002, the
date the Company's stockholders formally approved the Plan.

SECTION 12.       TERM OF PLAN.

         The Plan shall remain in full force and effect unless terminated by the
Board or no further shares of Stock remain available for awards to be granted
under Section 3 and there are no outstanding awards that remain to become
vested, exercised, or free of restrictions.

                                       14exv10w30w2

 

EXHIBIT 10.30.2

BELVEDERE PLACE

Dated as of the ______ day of February, 2003

between

[_________],

as Landlord,

and

REDWOOD TRUST, INC.,

as Tenant

 

 

BELVEDERE PLACE

BASIC LEASE INFORMATION

	 	 	 	 	 
	1.
	 	Date:	 	February   ,2003
	 
	 	 	 	 
	2.
	 	Landlord:	 	 
	 
	 	 	 	 
	3.
	 	Tenant:	 	Redwood Trust, Inc., a Maryland corporation
	 
	 	 	 	 
	4.
	 	Property:	 	The real property legally described on Exhibit A attached hereto
	 
	 	 	 	 
	5.
	 	Project:	 	The Property, together with the buildings known as One and Two Belvedere Place and all other improvements located thereon
	 
	 	 	 	 
	6.
	 	Building:	 	That certain office building located within the Belvedere Place office center located at One Belvedere Place, Mill Valley, California
	 
	 	 	 	 
	7.
	 	Premises:	 	[ ] rentable square feet located on the top floor of the Building, designated as Suite No. 300, as outlined on the floor plan attached hereto as Exhibit B
	 
	 	 	 	 
	8.
	 	Load Factor:	 	 
	 
	 	 	 	 
	9.
	 	Initial Term:	 	One hundred twenty (120) months
	 
	 	 	 	 
	10.
	 	Delivery Date:	 	Upon full execution and delivery of this Lease by the parties
	 
	 	 	 	 
	11.
	 	Intentionally Omitted:	 	 
	 
	 	 	 	 
	12.
	 	Commencement Date:	 	June 1, 2003
	 
	 	 	 	 
	13.
	 	Expiration Date:	 	May 31, 2013
	 
	 	 	 	 
	14.
	 	Initial Basic Rental Rate:	 	 
	 
	 	 	 	 
	15.
	 	Fair Market Rental Value:	 	The average rental rate per rentable square foot per month (taking into account additional rent and all other monetary payments and considering any base year or expense stop applicable thereto), including all escalations, for all leases for comparable, unencumbered space for approximately the same lease term, executed at the Project and/or any other comparable Class A building in terms of size, quality, level of services, amenities, age and appearance

1

 

	 	 	 	 	 
	 
	 	 	 	located within the Southern Marin County area from the northern border of Corte Madera and Larkspur south to the Golden Gate Bridge, during the twelve (12) month period immediately preceding the date upon which the determination of Fair Market Rental Value is made, and having a commencement date within six (6) months of the date that the Fair Market Rental Value will commence under this Lease, and taking into account any tenant improvements and other concessions granted to Tenant and tenants under leases of such comparable space. The Fair Market Rental Value shall be determined in accordance with the terms and provisions of this Lease below.
	 
	 	 	 	 
	16.
	 	Security Deposit:	 	 
	 
	 	 	 	 
	17.
	 	Base Year:	 	2003.
	 
	 	 	 	 
	18.
	 	Tenant’s Proportionate Share:	 	The ratio which the rentable area of the Premises bears to the rentable area of the Project.
	 
	 	 	 	 
	19.
	 	Tenant Improvement Allowance:	 	 
	 
	 	 	 	 
	20.
	 	Landlord’s Broker:	 	 
	 
	 	 	 	 
	21.
	 	Tenant’s Broker:	 	 
	 
	 	 	 	 
	22.
	 	Extension Term(s):	 	One (1) option term of sixty (60) months, in accordance with Section 40 below.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

 

BELVEDERE PLACE OFFICE LEASE

         THIS LEASE is entered into by and between Landlord and Tenant, as
specified in the Basic Lease Information, which is incorporated herein by
reference, as of the date shown in Paragraph 1 of the Basic Lease Information.

1. PREMISES.

     (a) Initial Premises. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises (as defined in Paragraph 7 of the Basic Lease
Information) upon and subject to the terms, covenants and conditions herein set
forth. Tenant covenants, as a material part of the consideration for this
Lease, to keep and perform each and all of said terms, covenants and conditions
for which Tenant is responsible and that this Lease is entered into upon the
condition of such performance.

     (b) Verification of Usable Square Feet of Premises, Building and Project.
For the purposes of this Lease, “usable square feet” for the Premises shall be
calculated pursuant to the Standard Method for Measuring Floor Area in Office
Buildings, [ANSI Z65.1 – 1996] (“BOMA”), and “rentable square feet” shall equal
(i) the usable square feet contained within the Premises multiplied by (ii) the
sum of (x) one (1) plus (y) the Load Factor (as defined in Paragraph 8 of the
Basic Lease Information). The usable square feet and rentable square feet of
the Premises, Building and the Project are subject to verification by
Landlord’s planner/designer promptly following the full execution and delivery
of this Lease, and confirmation of the same by Tenant and Tenant’s architect.
In the event that Landlord’s planner/designer determines that the amounts
thereof are different from those set forth in this Lease, all amounts,
percentages and figures appearing or referred to in this Lease based upon such
incorrect amount (including, without limitation, the amount of rent and any
security deposit) shall be modified in accordance with such determination. If
such determination is made, it will be confirmed in writing by Landlord to
Tenant.

2. TERM.

     (a) Initial Term. Except as otherwise provided herein, the term of this
Lease shall be the Initial Term as set forth in Paragraph 9 of the Basic Lease
Information, commencing on the Commencement Date, and ending as of the
Expiration Date, as set forth in Paragraph 12 and Paragraph 13, respectively,
of the Basic Lease Information. The Initial Term, together with any extension
term as to which a right has been properly exercised, shall be referred to as
the “Term.”

     (b) Confirmation of Lease Term. When the Commencement Date has occurred,
the parties shall promptly complete and execute a Notice of Lease Term Dates in
the form of Exhibit C attached hereto.

3. BASIC RENT.

     (a) Basic Rent Payments. Tenant agrees to pay Landlord each month, as
base monthly rent, the Basic Rent as set forth in Paragraph 14 of the Basic
Lease Information. Each

1

 

monthly installment of Basic Rent shall be payable in
advance on the first day of each calendar month during the Term, except that
the first month’s installment shall be paid upon the execution hereof. If the
Term commences or ends on a day other than the first day of a calendar month,
then the rent for the months in which this Lease commences or ends shall be
prorated (and paid at the beginning of each such month) in the proportion that
the number of days this Lease is in effect during such month bears to the total
number of days in such month, and such partial month’s installment shall be
paid no later than the commencement of the subject month. In addition to the
Basic Rent, Tenant agrees to pay as additional rent the amount of additional
rent and rent adjustments and other charges required by this Lease. All rent
shall be paid to Landlord, without prior demand and without any deduction or
offset, in lawful money of the United States of America, at the address of
Landlord designated in Section 31 below or to such other person or at such
other place as Landlord may from time to time designate in writing. Except as
otherwise provided in this Lease, in the event of a remeasurement or adjustment
of the area of the Premises, the Basic Rent shall be recalculated using the
Basic Rental Rate referenced in Paragraph 14 of the Basic Lease Information.
Notwithstanding anything to the contrary contained in this Lease, Tenant’s
obligation for payment of Basic Rent shall be conditionally abated for each of
the twelfth (12th), twenty-fourth (24th), thirty-sixth (36th), forty-eighth
(48th), sixtieth (60th), seventy-second (72nd) and eighty-fourth (84th) months
of the Term, provided that in the event of the termination of this Lease due to
Tenant’s default under this Lease (which is not cured within the applicable
period for cure provided under this Lease), then the amount of monthly Basic
Rent theretofore so conditionally abated shall be immediately due and payable
in full to Landlord and Tenant shall not be entitled to any further conditional
abatement of monthly Basic Rent hereunder, and provided that in the event of
the expiration of the Term and Tenant’s surrender of the Premises and
performance of its other obligations under this Lease without such uncured
default, then the abatement of monthly Basic Rent pursuant hereto shall be
final and no longer conditional.

     (b) Intentionally omitted.

     (c) Late Charge. If Tenant fails to pay any installment of Basic Rent,
additional rent or other charges within five (5) days after the same are due,
then Tenant shall pay to Landlord a late charge equal to five percent (5%) of
the amount so payable. Tenant acknowledges that late payments will
cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which costs are extremely difficult and impracticable to calculate.
The parties agree that the late charge described above represents a fair and
reasonable estimate of the extra costs incurred by Landlord as a result of such
late payment. Such late charge shall not be deemed a consent by Landlord to
any late payment, nor a waiver of Landlord’s right to insist upon timely
payments at any time, nor a waiver of any remedies to which Landlord is
entitled hereunder. In addition, all amounts payable by Tenant to Landlord
hereunder, exclusive of the late charge described above, if not paid within
five (5) days after such amounts are due, shall bear interest from the due date
until paid at the rate (the “Interest Rate”) of the greater of (i) two percent
(2%) per annum plus the “Prime Rate” then most recently published in the Wall
Street Journal (or a comparable replacement Prime Rate if the Wall Street
Journal ceases to publish a Prime Rate) or (ii) ten percent (10%) per annum,
provided that in no event shall the Interest Rate exceed the maximum rate of
interest permitted to be collected by the Landlord by law.

2

 

4. ADDITIONAL RENT. In addition to the Basic Rent provided in Section 3
of this Lease, Tenant shall pay Tenant’s Proportionate Share as specified in
Paragraph 18 of the Basic Lease Information, of the increase (the “Operating
Expenses Increase”) in Actual Operating Expenses for each Operating Year over
the Base Amount (as such terms are defined below). Tenant’s Proportionate
Share of the Building may change based on remeasurement or adjustment of the
area of the Project or the Premises as described in Section 1(b). In addition,
whenever additional space is added to the Premises Tenant’s Proportionate Share
of the Project shall increase accordingly.

     (a) Estimated Operating Expenses. Within ninety (90) days after the close
of each Operating Year during the Term, Landlord shall furnish Tenant a written
statement of the “Estimated Operating Expenses” for the then current Operating
Year, and a corresponding calculation of additional rent, which shall be
one-twelfth (1/12) of Tenant’s Proportionate Share of the amount, if any, by
which the Estimated Operating Expenses exceed the Base Amount. Such additional
amount shall be added to the monthly installment of Basic Rent payable by
Tenant under this Lease for each month during such Operating Year.

     (b) Actual Operating Expenses. Within ninety (90) days after the close of
each Operating Year (except the Base Year) during the Term, Landlord shall
deliver to Tenant a written statement setting forth the Actual Operating
Expenses and actual Operating Expenses Increase during the preceding Operating
Year. If such actual Operating Expenses Increase for any Operating Year exceed
the estimated amount theretofore paid by Tenant to Landlord on account thereof
pursuant to Section 4(a), Tenant shall pay the amount of such excess to
Landlord as additional rent within thirty (30) days after receipt by Tenant of
such statement. If such statement shows the actual Operating Expenses Increase
to be less than the estimated amount theretofore paid by Tenant to Landlord on
account thereof pursuant to Section 4(a), then the amount of such overpayment
by Tenant
shall be paid by Landlord to Tenant within thirty (30) days following the
date of such statement or, at Landlord’s option, credited by Landlord to the
payment of rent next due.

     (c) Determinations. The determination of Actual Operating Expenses and
Estimated Operating Expenses shall be made by Landlord. Any payments pursuant
to this Section 4 shall be additional rent payable by Tenant hereunder, and in
the event of nonpayment thereof, Landlord shall have the same rights with
respect to such nonpayment as it has with respect to any other nonpayment of
rent hereunder.

     (d) End of Term. If this Lease shall terminate on a day other than the
last day of an Operating Year, the amount of any adjustment between Estimated
Operating Expenses and Actual Operating Expenses with respect to the Operating
Year in which such termination occurs shall be prorated on the basis which the
number of days from the commencement of such Operating Year, to and including
such termination date, bears to three hundred sixty-five (365); and any amount
payable by Landlord to Tenant or Tenant to Landlord with respect to such
adjustment shall be payable within thirty (30) days after delivery of the
statement of Actual Operating Expenses with respect to such Operating Year.

     (e) Definitions. The following terms shall have the respective meanings
hereinafter specified:

3

 

    (1) “Base Amount” shall mean an amount equal to the Actual Operating
Expenses for the Base Year (as defined in Paragraph 17 of the Basic Lease
Information); provided that, if the Project is not open and operating
during the entire Base Year, then the Actual Operating Expenses actually
incurred for the Base Year (adjusted, if less than ninety-five percent
(95%) of the total rentable area of the Project had been occupied for the
entire Base Year, as if ninety-five percent (95%) of the total rentable
area of the Project had been occupied for the entire Base Year) shall be
annualized to reflect the Actual Operating Expenses that would have been
incurred had the Project been operating during the entire Base Year.

    (2) “Operating Year” shall mean a calendar year commencing January 1
and ending December 31.

    (3) “Operating Expenses” shall mean all expenses paid or incurred by
Landlord for maintaining, owning, operating and repairing the Project (as
defined in Paragraph 5 of the Basic Lease Information), including,
without limitation, the Building, and the personal property used in
conjunction therewith, including, but not limited to expenses incurred or
paid for: (i) Property Taxes (as hereinafter defined); (ii) utilities for
the Project, including but not limited to electricity, power, gas, steam,
oil or other fuel, water, sewer, lighting, heating, air conditioning and
ventilating; (iii) permits, licenses and certificates necessary to
operate, manage and lease the Project; (iv) insurance Landlord deems
appropriate to carry consistent with insurance customarily maintained by
owners
of similar Class A office buildings in the vicinity of the Project,
or is required to carry by any mortgagee under any mortgage encumbering
the Project or any portion thereof or interest therein or encumbering any
of Landlord’s or the property manager’s personal property used in the
operation of the Project; (v) supplies, tools, equipment and materials
used in the operation, repair and maintenance of the Project; (vi)
accounting, legal, inspection, consulting, concierge and other services;
(vii) equipment rental (or installment equipment purchase or equipment
financing agreements); (viii) management agreements (including the cost
of any management fee actually paid thereunder and the fair rental value
of any office space provided thereunder, up to customary and reasonable
amounts); (ix) wages, salaries and other compensation and benefits
(including the fair value of any parking privileges provided) for all
persons engaged in the operation, maintenance or security of the Project,
and employer’s Social Security taxes, unemployment taxes or insurance,
and any other taxes which may be levied on such wages, salaries,
compensation and benefits; (x) payments under any easement, operating
agreement, declaration, restrictive covenant, or instrument pertaining to
the sharing of costs in any planned development or similar arrangement;
(xi) operation, repair, and maintenance of all systems and equipment and
components thereof (including replacement of components, with any capital
expenditure amortized as provided below); (xii) janitorial service, alarm
and security service, window cleaning, trash removal, elevator
maintenance, and cleaning of walks, parking facilities and building
walls; (xiii) replacement of wall and floor coverings, ceiling tiles and
fixtures in lobbies, corridors, restrooms and other common or public
areas or facilities (except that replacements of such items in connection
with an overall remodeling of the lobbies and/or other common areas shall
be treated as a capital expenditure and amortized as provided below;
(xiv) maintenance and replacement of shrubs, trees, grass, sod and other
landscape items,

4

 

irrigation systems, drainage facilities, fences, curbs,
and walkways; (xv) re-paving and re-striping parking facilities; (xvi)
and roof repairs and replacement (provided that any such replacement
shall be amortized as provided below), and (xvii) capital expenditures
made primarily to reduce Operating Expenses, or to comply with any laws
or other governmental requirements, or for replacements (as opposed to
additions or new improvements) of non-structural items located in the
common areas of the Project required to keep such areas in good
condition, which capital expenditures shall be amortized for purposes of
this Lease over their reasonably anticipated useful lives.
Notwithstanding the foregoing, Operating Expenses shall not include (a)
depreciation, interest and amortization on mortgages or other debt costs
or ground lease payments, if any; (b) legal fees in connection with
leasing, tenant disputes or enforcement of leases; (c) real estate
brokers’ leasing commissions; (d) improvements or alterations to tenant
spaces; (e) the cost of providing any service directly to and paid
directly by, any tenant; (f) costs of any items to the extent Landlord
receives reimbursement from insurance proceeds or from a third party
(such proceeds to be deducted from Operating Expenses in the year in
which received); and (g) capital expenditures except those capital
expenditures made primarily to reduce Operating Expenses, or to comply
with any laws or other governmental requirements, or for replacements (as
opposed to additions or new improvements) of non-structural items located
in the common areas of the Project required to keep such areas in good
condition, which capital expenditures (together with
reasonable financing charges) shall be amortized for purposes of
this Lease over their reasonably anticipated useful lives.

    (4) “Estimated Operating Expenses” shall mean Landlord’s estimate of
Operating Expenses for the following Operating Year, adjusted as if
ninety-five percent (95%) of the total rentable area of the Property will
be occupied for the entire Operating Year.

    (5) “Actual Operating Expenses” shall mean the actual Operating
Expenses for any Operating Year, adjusted, if less than ninety-five
percent (95%) of the total rentable area of the Project had been occupied
for the entire Operating Year, as if ninety-five percent (95%) of the
total rentable area of the Project had been occupied for the entire
Operating Year.

    (6) “Property Taxes” shall mean all real and personal property taxes
and assessments imposed by any governmental authority or agency on the
Project; any assessments levied in lieu of such taxes; any
non-progressive tax on or measured by gross rents received from the
rental of space in the Project; and any other costs levied or assessed
by, or at the direction of, any federal, state, or local government
authority in connection with the use or occupancy of the Project or the
Premises or the parking facilities serving the Project; any tax on this
transaction or any document to which Tenant is a party creating or
transferring an interest in the Premises, and any expenses, including the
reasonable cost of attorneys or experts, incurred by Landlord in seeking
reduction by the taxing authority of the above-referenced taxes, less any
tax refunds obtained as a result of an application for review thereof;
but shall not include any net income, franchise, estate or inheritance
taxes.

5

 

5. SECURITY DEPOSIT. Tenant has deposited with Landlord the Security
Deposit specified in Paragraph 16 of the Basic Lease Information. Said sum
shall be held by Landlord as security for the faithful performance by Tenant of
all of Tenant’s obligations under this Lease. If Tenant defaults with respect
to any provision hereof, including but not limited to the provisions relating
to the payment of rent, Landlord may (but shall not be required to) use, apply
or retain all or part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any other amount which Landlord
may incur by reason of Tenant’s default or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of the deposit is so used or applied, Tenant shall, upon demand,
immediately deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Tenant’s failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep the
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such deposit. If Tenant shall fully and faithfully
perform all of its obligations under this Lease, the Security Deposit or any
balance thereof shall be returned to Tenant (or, at Landlord’s option, to the
last assignee of Tenant’s interests hereunder) after the expiration of the
Term, provided that Landlord may retain all or a portion of the Security
Deposit in an amount reasonably determined by Landlord to be necessary to cover
any amounts owed by Tenant for the clean-up and repair of the Premises if
Tenant has failed to
satisfy its obligations under Section 7(b) of this Lease, and Actual
Operating Expenses during the Term.

6. USES; HAZARDOUS MATERIAL.

     (a) Use. Tenant agrees that it will use the Premises for general office
purposes, and for no other business or purpose. Tenant, at its sole cost and
expense, shall promptly comply with all local, state and federal laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force or which may hereinafter be in force, including, without limitation, the
Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. and any governmental
regulations relating thereto, including any required alterations for purposes
of “public accommodations” under such statute which arise as a result of the
particular nature of the use of the Premises by Tenant or any of the Tenant
Parties. Tenant shall not use or permit the Premises to be used in any manner
nor do any act which would increase the existing rate of insurance on the
Project or cause the cancellation of any insurance policy covering the Project,
nor shall Tenant permit to be kept, used or sold, in or about the Premises, any
article which may be prohibited by the standard form of fire insurance policy,
unless Tenant obtains an endorsement to the policy allowing such activity.
Tenant shall not during the Term (i) commit or allow to be committed any waste
upon the Premises, or any public or private nuisance in or around the Project,
(ii) allow any sale by auction upon the Premises, (iii) place any loads upon
the floor, walls, or ceiling of the Premises which endanger the Building, (iv)
use any apparatus, machinery or device in or about the Premises which will
cause any substantial noise or vibration or in any manner damage the Building,
(v) place any harmful liquids in the drainage system or in the soils
surrounding the Project, or (vi) disturb or unreasonably interfere with other
tenants of the Project. If any of Tenant’s office machines or equipment
disturbs the quiet enjoyment of any other tenant in the Building, then Tenant
shall provide adequate insulation, or take such other action as may be
necessary to eliminate the disturbance, all at Tenant’s sole cost and expense.

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     (b) Hazardous Material. As used herein, the term “Hazardous Material”
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Accordingly, the term
“Hazardous Material” includes, without limitation, any material or substance
which is (i) defined as a “hazardous waste,” “extremely hazardous waste” or
“restricted hazardous waste” under Sections 25115, 25117 or 25122.7, or listed
pursuant to Section 25140 of the California Health and Safety Code, Division
20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a “hazardous
substance” under Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory), (iii) defined as a “hazardous substance” under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances), (iv) petroleum, (v) asbestos, (vi) listed
under Article 9 or defined as hazardous or extremely hazardous pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20, (vii)
designated as a “hazardous substance” pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. § 1317), (viii) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. § 6902 et seq., or (ix) defined as a “hazardous
substance” pursuant to Section 101 of the Compensation and Liability Act, 42
U.S.C. § 9601 et seq. Tenant shall not (either with or without negligence)
cause or permit the escape, disposal or release of any Hazardous Materials in
the Premises or the Project by any Tenant Parties. Tenant shall not allow the
storage or use of Hazardous Materials in the Premises in any manner not
sanctioned by law or by the highest standards prevailing in the industry for
the storage or use of such substances or materials, nor allow to be brought
onto the Building or Project any such materials or substances, except that
Tenant may maintain products in the Premises which are incidental to the
operation of its offices, such as photocopy supplies, secretarial supplies and
limited janitorial supplies which products contain chemicals which are
categorized as Hazardous Materials, provided that the use of such products in
the Premises by Tenant shall be in compliance with applicable laws and shall be
in the manner in which such products are designed to be used. In addition,
Tenant shall execute affidavits, representations and the like from time to time
at Landlord’s request concerning Tenant’s best knowledge and belief regarding
the presence of Hazardous Materials on the Premises. The covenants of this
Section 6(b) shall survive the expiration or earlier termination of the Lease.

     (c) Environmental Obligations. Landlord and Tenant shall notify each
other in writing of (i) any enforcement, clean-up, removal or other
governmental action instituted with regard to Hazardous Materials involving the
Project, (ii) any claim made by any person against either of the parties
related to Hazardous Materials in the Premises or the Project, (iii) any
reports made to any governmental agency arising out of or in connection with
Hazardous Materials in the Premises or the Project including, without
limitation, any written complaints, notices or warnings, and (iv) any spill,
release, discharge or disposal of Hazardous Materials in the Premises or the
Project that is required to be reported to any governmental agency or authority
under any applicable governmental law, rule or regulation. Tenant shall
indemnify and hold Landlord and its affiliates harmless with respect to any
environmental claims or liabilities which occur as a result of the breach by
Tenant of any of Tenant’s covenants set forth in Section 6(b) above or this
Section 6(c) and from any escape, seepage, leakage, spillage, discharge,
emission, release from, onto or into the Premises, the Building or the Project
of any Hazardous

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Materials to the extent caused by Tenant or Tenant’s agents,
contractors, trustees, partners, members, shareholders, officers, employees or
invitees (collectively, “Tenant Parties”).

7. MAINTENANCE AND REPAIRS.

     (a) Landlord’s Obligations. Landlord shall maintain and keep in good
repair the foundations, exterior walls, structural portions of the roof and
other structural portions of the Building, the common areas of the Building and
the Project, and the electrical, plumbing, heating and ventilating equipment in
the Building, except such portions thereof as may be specially installed for
Tenant or otherwise
altered by Tenant in connection with Tenant’s work or otherwise; and
except that all damage or injury to the Premises, the Building or the equipment
and improvements therein caused by any act, neglect, misuse or omission of any
duty by Tenant or by any Tenant Parties shall be paid by Tenant to the extent
that the repair of any such damage or injury is not covered by Landlord’s
insurance. 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 by Tenant to Landlord. Tenant hereby waives and releases
its right to make repairs at Landlord’s expense under Sections 1941 and 1942 of
the California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect. Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential
damages (including damages for loss of business) if Tenant’s telecommunications
services in any way are interrupted, damaged or rendered less effective, except
to the extent caused by the gross negligence or willful misconduct of Landlord,
its agents or employees.

     (b) Tenant’s Obligations. Tenant shall at its expense maintain, repair
and replace all portions of the Premises and the equipment or fixtures relating
thereto, except to the extent specified in Section 7(a), above, at all times in
good condition and repair, all in accordance with the laws of the State of
California and all health, fire, police and other ordinances, regulations and
directives of governmental agencies having jurisdiction over such matters.
Tenant shall replace at Tenant’s sole expense any glass that may be broken in
the Premises, and elsewhere in the Building or the Project if done through any
fault or negligence of any of the Tenant Parties, with glass of the same size,
specifications and quality, with signs thereon, if required. At the expiration
of the Term, Tenant shall surrender the Premises in the same condition as it
was received, normal wear and tear and damage by fire or other casualty
excepted, and will clean all walls, floors, suspended ceilings and carpeting
therein. Tenant shall indemnify Landlord for any loss or liability resulting
from any delay by Tenant in surrendering the Premises to Landlord as provided
herein.

8. ALTERATIONS.

     (a) Landlord’s Consent. Tenant shall not make any alterations, additions
or improvements (collectively, “Alterations”) in or to the Premises or make
changes to locks on doors or add, disturb or in any way change any plumbing or
wiring without obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld provided that the Alterations do not affect
the Building’s structure, safety, systems or aesthetics or cause the release of
Hazardous Substances; except, however, that Tenant may make non-structural,
interior

8

 

Alterations to the Premises costing less than $10,000.00 per work of
Alterations and not affecting the Building mechanical or utility systems,
without the prior written consent of Landlord but upon not less than ten (10)
days prior written notice to Landlord.

     (b) Performance of Work. All Alterations shall be made at Tenant’s sole
expense and by contractors or mechanics approved by Landlord, shall be made at
such times and in such manner as Landlord may from time to time reasonably
designate, and shall become the property of Landlord without its obligation to
pay therefor at the expiration or earlier termination of this Lease. All work
with respect to any Alterations shall be performed in a good and workmanlike
manner, shall be of a quality equal to or exceeding the then existing
construction standards for the Project and must be of a type, and the floors
and ceilings must be finished in a manner, customary for general office use and
other uses common to first-class (Class A) office buildings in the vicinity.
Alterations shall be diligently prosecuted to completion to the end that the
Premises shall be at all times a complete unit except during the period
necessarily required for such work. All Alterations shall be made strictly in
accordance with all laws, regulations and ordinances relating thereto, and no
interior improvements installed in the Premises may be removed unless the same
are promptly replaced with interior improvements of the same or better quality.
Landlord hereby reserves the right to require any contractor or mechanic
working in the Premises to provide lien waivers and liability insurance
covering the Alterations to the Premises and, as to any proposed Alterations
costing in excess of $100,000.00, to require Tenant to secure, at Tenant’s sole
cost and expense, completion and lien indemnity bonds satisfactory to Landlord,
and/or to require such other instruments as may be reasonably requested by
Landlord. In addition to the foregoing, Tenant shall provide Landlord with
evidence that Tenant or Tenant’s general contractor carries “Builder’s All
Risk” insurance in an amount approved by the Landlord covering the construction
of such Alterations, and such other insurance as the Landlord may require, it
being understood and agreed that all of such Alterations shall be insured by
Tenant pursuant to Section 14(a) of this Lease immediately upon completion
thereof. Tenant shall give Landlord ten (10) days written notice prior to the
commencement of any Alterations and shall allow Landlord to enter the Premises
and post appropriate notices to avoid liability to contractors or material
suppliers for payment for any Alterations. All Alterations shall remain in and
be surrendered with the Premises as a part thereof at the expiration or earlier
termination of this Lease, without disturbance, molestation or injury, provided
that Landlord may require any Alterations to be removed upon the expiration or
earlier termination of this Lease, provided that Landlord shall not be
permitted to require removal of any Alterations which, at the time of
Landlord’s approval of such Alterations, Landlord agreed would not be subject
to such requirement for removal (and Landlord hereby agrees to notify Tenant
promptly following request therefor from Tenant, whether any such proposed
Alterations shall be subject to such requirement for removal). Further, Tenant
shall not be required to remove any of the initial Tenant Improvements
constructed in the Premises pursuant to Exhibit F. In such event, all expenses
to restore said space to normal building standards shall be borne by Tenant.
If Tenant fails to complete the removal and/or to repair any damage caused by
the removal of any Alterations which are required to be removed as provided
above, Landlord may do so and may charge the cost thereof to Tenant.

     (c) Landlord’s Expenses; Administrative Fee. Tenant shall pay to
Landlord, as additional rent, any out-of-pocket costs incurred by Landlord in
connection with the review, approval and supervision of the Alterations and for
any additional Building services provided to

9

 

Tenant or to the Premises in
connection with any such
Alterations which are beyond the normal services provided to occupants of
the Building. Under no circumstances shall Landlord be liable to Tenant for
any damage, loss, cost or expense incurred by Tenant on account of Tenant’s
plans and specifications, Tenant’s contractors or subcontractors, or Tenant’s
design of any work, construction of any work or delay in completion of any
work.

9. TENANT’S PROPERTY.

     (a) Removal Upon Expiration of Lease. All articles of personal property
and all business and trade fixtures, machinery and equipment, furniture and
movable partitions owned by Tenant or installed by Tenant at its expense in the
Premises shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Term, subject to the other requirements of this
Lease. If Tenant shall fail to remove all of such property from the Premises
at the expiration of the Term or within ten (10) days after any earlier
termination of this Lease for any cause whatsoever, Landlord may, at its
option, remove the same in any manner that Landlord shall choose, and store
such property without liability to Tenant for loss thereof. In such event,
Tenant agrees to pay Landlord upon demand any and all expenses incurred in such
removal, including court costs and attorneys’ fees and storage charges on such
property for any length of time that the same shall be in Landlord’s
possession. Landlord may, at its option, upon written notice to Tenant, sell
said property or any of the same, at private sale and without legal process,
for such price as Landlord may obtain and apply the proceeds of such sale to
any amounts due under this Lease from Tenant to Landlord and to the expense
incident to the removal and sale of said property.

     (b) Personal Property Taxes. Tenant shall be liable for and shall pay, at
least ten (10) days before delinquency, all taxes levied against any personal
property or trade fixtures placed by Tenant in or about the Premises. If any
such taxes on Tenant’s personal property or trade fixtures are levied against
Landlord or Landlord’s property or if the assessed value of the Premises or
Landlord’s obligations are increased by a value placed upon such personal
property or trade fixtures of Tenant and if Landlord, after written notice to
Tenant, pays the taxes or obligations based upon Tenant’s personal property or
trade fixtures, which Landlord shall have the right to do regardless of the
validity thereof, but only under proper protest if requested by Tenant, Tenant
shall, upon demand and receipt by Tenant of appropriate documentation
confirming that the taxes were levied against Tenant’s personal property or
trade fixtures, repay to Landlord the taxes or obligations so levied against
Landlord, or the portion of such taxes or obligations resulting from such
increase in the assessment.

10. ENTRY BY LANDLORD. After reasonable notice (except in emergencies,
where no such notice shall be required), Landlord, its authorized agents,
contractors, and representatives shall at any and all times have the right to
enter the Premises to inspect the same, to supply janitorial service and any
other service to be provided by Landlord to Tenant hereunder, to show the
Premises to
prospective purchasers or tenants, to post notices, to alter, improve or
repair the Premises or any other portion of the Building, all without being
deemed guilty of any eviction of Tenant and without abatement of rent.
Landlord may, in order to carry out such purposes, erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Landlord shall at all times have and
retain a key with which to unlock all

10

 

doors in the Premises, excluding Tenant’s
vaults and safes. Landlord shall have the right to use any and all means which
Landlord may deem proper to open said doors in an emergency in order to obtain
entry to the Premises. Any entry to the Premises obtained by Landlord pursuant
to the terms hereof shall not be deemed to be a forcible or unlawful entry into
the Premises, or an eviction of Tenant from the Premises or any portion
thereof, and Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss in, upon and about the
Premises, except to the extent any such damage or loss is caused by the gross
negligence or wilful misconduct of Landlord or any of Landlord’s employees,
agents or contractors and is not covered by the insurance maintained by Tenant
(and would not have been covered by Tenant’s insurance had Tenant maintained
the insurance required to be maintained by Tenant pursuant to this Lease).

11. LIENS AND INSOLVENCY. Tenant shall keep the Premises, the Building
and the Project free from any liens or encumbrances of any kind or nature
arising out of any work performed, materials ordered or obligations incurred by
or on behalf of Tenant. If Tenant becomes insolvent, makes an assignment for
the benefit of creditors, or if legal proceedings are instituted seeking to
have Tenant adjudicated bankrupt, reorganized or rearranged under the
bankruptcy laws of the United States, or if this Lease shall, by operation of
law or otherwise, pass to any person or persons or entity other than Tenant,
Landlord may, at its option, terminate this Lease, which termination shall
reserve unto Landlord all of the rights and remedies available under Sections
27 and 29 hereof, and Landlord may accept rent from such trustee, assignee or
receiver without waiving or forfeiting said right of termination.

12. INDEMNIFICATION. Tenant shall indemnify, defend and hold Landlord,
its members, employees and agents (collectively, the “Landlord Parties”)
harmless from and against all claims, losses, liabilities, damages, costs,
expenses and claims arising from or relating to (a) Tenant’s use of the
Premises or the conduct of its business or any activity, work, or thing done,
permitted or suffered by Tenant in or about the Premises, (b) any breach or
default in the performance of any obligation to be performed by Tenant under
the terms of this Lease, (c) any act, neglect, fault or omission of any of the
Tenant Parties, and (d) all costs, attorneys’ fees, expenses and liabilities
incurred in or about such claims or any action or proceeding brought thereon,
except to the extent any such damage or loss is caused by the negligence or
wilful misconduct of Landlord or any of Landlord’s employees, agents or
contractors and is not covered by the insurance maintained by Tenant (and would
not have been covered by Tenant’s insurance had Tenant maintained the insurance
required to be maintained by Tenant pursuant to this Lease). In case any
action or proceeding shall be brought against any of the Landlord Parties by
reason of any
such claim, Tenant upon written notice from Landlord shall defend the same
at Tenant’s expense by counsel approved in writing by Landlord. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk of and
waives all claims against the Landlord Parties with respect to damage to
property or injury to persons in, upon or about the Premises from any cause
whatsoever except that which is caused by the negligence or wilful misconduct
of Landlord or any of Landlord’s employees, agents or contractors and is not
covered by the insurance maintained by Tenant (and would not have been covered
by Tenant’s insurance had Tenant maintained the insurance required to be
maintained by Tenant pursuant to this Lease).

11

 

13. DAMAGE TO TENANT’S PROPERTY. Notwithstanding anything to the contrary
in this Lease, the Landlord Parties shall not be liable for (a) any damage to
any property entrusted to employees of the Project or its property managers,
(b) loss or damage to any property by theft or otherwise, (c) any injury or
damage to property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances or plumbing work therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
cause whatsoever, or (d) any damage or loss to the business or occupation of
Tenant arising from the acts or neglect of other tenants or occupants of, or
invitees to, the Project. Tenant shall give prompt written notice to Landlord
in case of fire or accident in the Premises or in the Building or of defects
therein or in the fixtures or equipment.

14. INSURANCE. Tenant shall, during the entire Term of this Lease and any
other period of occupancy, at its sole cost and expense, keep in full force and
effect the following insurance:

     (a) All-Risk Property Insurance. Standard form property insurance
insuring against the perils of fire, vandalism, malicious mischief, cause of
loss-special form (“All-Risk”), sprinkler leakage, and earthquake sprinkler
leakage (provided that Tenant may self-insure for such earthquake sprinkler
leakage coverage). This insurance policy shall be upon all trade fixtures and
other property owned by Tenant, for which Tenant is legally liable and/or that
was installed by or on behalf of Tenant, and which is located in the Building,
including, without limitation, Alterations, furniture, fittings, installations,
fixtures, tenant improvements and any other personal property, in an amount not
less than the full replacement cost thereof. If there shall be a dispute as to
the amount which comprises full replacement cost, the decision of Landlord or
any mortgagees of Landlord shall be conclusive. Such policy shall name
Landlord and any mortgagees of Landlord as additional insured parties, as their
respective interests may appear.

     (b) Liability Insurance. Commercial General Liability Insurance insuring
Tenant against any liability arising out of the lease, use, occupancy, or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be in the amount of Two Million Dollars ($2,000,000) Combined Single
Limit for injury to or death of one or more persons in an occurrence and Three
Million Dollars ($3,000,000) aggregate, and for damage to tangible property
(including loss of use) in an
occurrence, with an Additional Insured  — Landlord Endorsement. The
policy shall insure the hazards of premises and operations, independent
contractors, contractual liability (covering the indemnity contained in Section
12 hereof) and shall (i) name Landlord as an additional insured, (ii) contain a
cross-liability provision, (iii) contain a provision that “the insurance
provided the landlord hereunder shall be primary and noncontributing with any
other insurance available to the landlord,” and (iv) include fire legal
liability coverage in the amount of One Million Dollars ($1,000,000)

     (c) Workers’ Compensation Insurance. Workers’ Compensation and Employer’s
Liability Insurance (as required by state law).

     (d) Boiler and Machinery Insurance. If Tenant installs any boiler,
pressure object, machinery, fire suppression system, supplemental air
conditioning or other mechanical

12

 

equipment within the Premises, Tenant shall
also obtain and maintain at Tenant’s expense, boiler and machinery insurance
covering loss arising from the use of such equipment.

     (e) Other Insurance. Any other form or forms of insurance as Tenant or
Landlord or any mortgagees of Landlord may reasonably require from time to time
in form, amounts and for insurance risks against which a prudent tenant would
protect itself consistent with insurance customarily required by owners of
Class A office buildings in the vicinity of the Premises.

All such policies shall be written in a form reasonably satisfactory to
Landlord and shall be taken out with insurance companies qualified to issue
insurance in the State of California and holding an A.M. Best’s Rating of “A”
and a Financial Size Rating of “X” or better, as set forth in the most current
issue of Best’s Key Rating Guide. Such insurance shall provide that it is
primary insurance, and not contributory with any other insurance in force for
or on behalf of Landlord. Prior to the commencement of the Term, Tenant shall
deliver to Landlord certificates of insurance evidencing the existence of the
amounts and forms of coverage required above and, except for the All-Risk
insurance, naming Landlord, the holder of any Prior Lien and the property
manager each as an additional insured. No such policy shall be cancelable,
terminable or reducible in coverage except after thirty (30) days prior written
notice to Landlord. Tenant shall, within ten (10) days prior to the expiration
of such policies, furnish Landlord with renewals or “binders” thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant as
additional rent, if Tenant fails to so notify Landlord. If Landlord obtains
any insurance that is the responsibility of Tenant under this Section 14,
Landlord shall deliver to Tenant a written statement setting forth the cost of
any such insurance and showing in reasonable detail the manner in which it has
been computed.

     Landlord shall, during the entire term of this Lease, as an item of
Operating Expenses, keep in full force and effect the following insurance: (A)
All Risk insurance (including a vandalism and malicious mischief endorsement
and sprinkler leakage coverage, and also covering such other risks as Landlord
or Landlord’s lender may require) upon the Project (including the Tenant
Improvements constructed under Section 30 below, but excluding any
property which Tenant is obligated to insure under Section 14(a) above) in
an amount not less than the full replacement cost thereof (excluding footings,
foundations and excavation), and including commercially reasonable rental loss
coverage for losses covered by such insurance policy, which insurance policy or
policies shall name Landlord as a named insured, and the deductible under which
All Risk policy shall not exceed such commercially reasonable amount as
Landlord determines to be appropriate given prudent risk management practices;
and (B) commercial general liability insurance coverage, including personal
injury, bodily injury, broad form property damage, automobile, Premises
operations hazard, contractual liability, and products and completed operations
liability, in commercially reasonable amounts. Landlord may satisfy its
insurance obligations under this Lease by blanket, umbrella and/or, as to
liability coverage in excess of One Million Dollars ($1,000,000), excess
liability coverage.

15. WAIVER OF SUBROGATION. Whether any loss or damage to or within the
Project, the Building and/or the Premises is due to the negligence of either of
the parties hereto, their agents or employees, or any other cause, Landlord and
Tenant do each herewith and hereby release and relieve the other from
responsibility for, and waive their entire claim of recovery, for (a) any loss
or damage to the real or personal property of the other located anywhere in the

13

 

Project and including the Project itself, arising out of or incident to the
occurrence of any of the perils which are covered by any “all risk” or “causes
of loss - special form” insurance policy covering the Project; or (b) loss
resulting from business interruption at the Premises, arising out of or
incident to the occurrence of any of the perils which are covered by any
business interruption insurance policy covering the Project. To the extent
that such risks under Clauses (a) and (b) are, in fact, covered by insurance,
each party shall cause its insurance carriers to consent to such waiver and to
waive all rights of subrogation against the other party. Notwithstanding the
foregoing, no such release shall be effective unless the aforesaid insurance
policy or policies shall expressly permit such a release or contain a waiver of
the carrier’s right to be subrogated.

16. CASUALTY. If the Building and/or the Premises are damaged by fire or
other perils covered by insurance carried by Landlord, Landlord shall have the
following rights and obligations:

(a) Repair and Restoration

    (1) If the Building and/or the Premises are damaged or destroyed by
any such peril, to the extent the cost to repair exceeds fifty percent
(50%) of the then full replacement value thereof or the damage thereto is
such that the Building and/or the Premises cannot reasonably be repaired,
reconstructed and restored within nine (9) months from the date of such
damage or destruction, Landlord shall, at its sole option, as soon as
reasonably possible thereafter, either (i) commence or cause the
commencement of the repair, reconstruction and restoration of the
Building and/or the Premises and prosecute or cause the same to be
prosecuted diligently to completion, in which event this Lease shall
remain in full force and effect; or (ii) within sixty (60) days after
such damage or destruction, elect not to so repair, reconstruct or
restore the Building and/or the Premises, in which event this Lease shall
terminate. In either event, Landlord shall
give Tenant written notice of its intention within said sixty (60)
day period. If Landlord elects not to restore the Building and/or the
Premises, this Lease shall be deemed to have terminated as of the date of
such damage or destruction.

    (2) If the Building and/or the Premises are partially damaged or
destroyed by any such peril, to the extent the cost to repair is fifty
percent (50%) or less of the then full replacement value thereof, and if
the damage thereto is such that the Building and/or the Premises
reasonably may be repaired, reconstructed or restored within a period of
nine (9) months from the date of such damage or destruction, then
Landlord shall commence or cause the commencement of and diligently
complete or cause the completion of the work of repair, reconstruction
and restoration of the Building and/or the Premises and this Lease shall
continue in full force and effect.

     (b) Uninsured Casualties. If damage or destruction of the Building and/or
the Premises is due to any cause not covered by collectible insurance carried
by Landlord at the time of such damage or destruction, Landlord may elect to
terminate this Lease if the cost to repair exceeds One Hundred Fifty Thousand
Dollars ($150,000.00). If the repairing or restoring of the damage is delayed
or prevented for longer than nine (9) months after the occurrence of such
damage or destruction by reason of weather, acts of God, war, governmental
restrictions,

14

 

inability to procure the necessary labor or materials, or any
cause that is beyond the reasonable control of Landlord, Landlord may elect to
be relieved of its obligation to make such repairs or restoration and terminate
this Lease. Further, Landlord shall not have any obligation to repair,
reconstruct or restore the Premises and may terminate this Lease when the
damage resulting from any casualty covered under this Section 16 occurs during
the last twelve (12) months of the Term if such damage cannot be repaired
within thirty (30) days from the date of such damage.

     (c) Tenant’s Termination Right. If the work of repair, reconstruction and
restoration in connection with damage or destruction of the Building and/or
Premises initially affects more than twenty-five percent (25%) of the floor
area of the Premises and shall require a period longer than six (6) months to
complete, then Tenant may elect to terminate this Lease, provided that Tenant
shall give written notice to Landlord of its intention within thirty (30) days
after the date it is advised of such repair period.

     (d) Termination of Lease. Upon any termination of this Lease under any of
the provisions of this Section 16, Landlord and Tenant shall each be released
without further obligation to the other from the date possession of the
Premises is surrendered to Landlord or such other date as is mutually agreed
upon by Landlord and Tenant except for payments or other obligations which have
theretofore accrued and are then unpaid or unperformed.

     (e) Rent Abatement. In the event of repair, reconstruction and restoration by or through
Landlord as herein provided, the Basic Rent and Tenant’s Proportionate Share of
the Operating Expense Increase payable under this Lease shall be abated
proportionately to the degree to which Tenant’s use of the Premises is
materially impaired during the period from the date of such damage or
destruction through the date of the Landlord’s substantial completion of its
repair of the Premises. Tenant shall not be entitled to any compensation or
damages for loss of the use of the whole or any part of the Premises and/or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration, nor shall Tenant be entitled to any insurance proceeds, including
those in excess of the amount required by Landlord for such repair,
reconstruction or restoration. Tenant shall not be released from any of its
obligations under this Lease due to damage or destruction of the Building
and/or the Premises except to the extent and upon the conditions expressly
stated in this Section 16.

     (f) Extent of Repair Obligation. If Landlord is obligated to or elects to
repair or restore as herein provided, Landlord shall be obligated to make
repair or restoration only of those portions of the Building and the Premises
which were originally provided at Landlord’s expense, and the repair and
restoration of items not provided at Landlord’s expense shall be the obligation
of Tenant. Tenant shall assign and deliver to the Landlord any insurance
proceeds payable to or received by Tenant in connection with the Tenant
Improvements or any other improvements initially constructed or installed by
the Landlord and insured by the Tenant pursuant to Section 14 hereof, and
Landlord shall thereafter, to the extent that it receives any such insurance
proceeds, repair and restore such Tenant Improvements and other improvements.

     (g) Waiver. The provisions of California Civil Code § 1932(2) and §
1933(4), which permit termination of a lease upon destruction of the Premises,
are hereby waived by Tenant; and the provisions of this Section 16 shall govern
in case of such destruction.

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17. CONDEMNATION.

     (a) Complete Taking. If the whole of the Project, the Building or the
Premises or so much thereof shall be taken by condemnation or in any other
manner for any public or quasi-public use or purpose so that a reasonable
amount of reconstruction will not result in the Premises being reasonably
suitable for Tenant’s continued occupancy, this Lease and the term and estate
hereby granted shall terminate as of the date that possession of the Project,
the Building or the Premises is so taken (herein called “Date of the Taking”),
and the Basic Rent and other sums payable hereunder shall be prorated and
adjusted as of such termination date.

     (b) Partial Taking. If only a part of the Building, the Project or the Premises shall be so
taken and the remaining part thereof after reconstruction is reasonably suited
for Tenant’s continued occupancy, this Lease shall be unaffected by such
taking, except that if the taking affects the Building and/or the Project in
addition to the Premises, Landlord may, at its option, terminate this Lease by
giving Tenant written notice to that effect within sixty (60) days after the
Date of the Taking. In such event, this Lease shall terminate on the date that
such notice from the Landlord to Tenant shall be given, and the Basic Rent and
other sums payable hereunder shall be prorated and adjusted as of such
termination date. Upon a partial taking after which this Lease continues in
force as to any part of the Premises, the Basic Rent and other sums payable
hereunder shall be adjusted according to the rentable area remaining.

     (c) Award. Landlord shall be entitled to receive the entire award or
payment in connection with any taking without deduction therefrom for any
estate vested in Tenant by this Lease, and Tenant shall receive no part of such
award, including any award for the “leasehold bonus value” of this Lease.
Tenant hereby expressly assigns to Landlord all of its right, title and
interest in and to every such award or payment.

     (d) Waiver. Except as may be otherwise provided herein, Tenant hereby
waives and releases any right to terminate this Lease under Sections 1265.120
and 1265.130 of the California Code of Civil Procedure or under any similar
law, statute or ordinance now or hereafter in effect relative to eminent
domain, condemnation or takings.

18. ASSIGNMENT OR SUBLETTING.

     (a) Landlord’s Consent. Without the express prior written consent of
Landlord, Tenant shall not directly or indirectly, voluntarily or by operation
of law, sell, assign, encumber, pledge, or otherwise transfer or hypothecate
all of its interest in or rights with respect to the Premises (collectively,
“Assignment”), or permit all or any portion of the Premises to be occupied by
anyone other than Tenant or sublet all or any portion of the Premises or
transfer a portion of its interest in or rights with respect to the Premises
(collectively, “Sublease”).

     (b) Notice to Landlord. If Tenant desires to enter into an Assignment or
a Sublease, Tenant shall give written notice to Landlord of its intention to do
so (the “Transfer Notice”), containing (i) the name of the proposed assignee or
subtenant (collectively, “Transferee”), (ii) the nature of the proposed
Transferee’s business to be carried on in the Premises, (iii) the material
terms of the proposed Assignment or Sublease, including, without limitation,
the commencement and expiration dates thereof and the rent payable thereunder,
(iv) the portion of

16

 

the Premises proposed to be subleased (the “Transfer
Space”), and (v) the most recent financial statement or other
equivalent financial information reasonably available to Tenant concerning
the proposed Transferee. Within fifteen (15) days after Landlord’s receipt of
the Transfer Notice, Landlord shall, by written notice to Tenant, elect to (1)
consent to the Sublease or Assignment, or (2) disapprove the Sublease or
Assignment; provided, however, that Landlord agrees not to unreasonably
withhold its consent to the Sublease or Assignment. Landlord’s consent shall
not be deemed to have been unreasonably withheld if the proposed sublessee or
assignee is a new concern with no previous business history or if the proposed
sublessee or assignee intends to use the Premises (x) for executive suites or
any other use inconsistent with Section 6 or the operation of a first-class
office building or (y) in a manner which would increase the use of, or the
possibility of disturbance of, Hazardous Substances on the Property.
Landlord’s failure to make such election within fifteen (15) days after
Landlord’s receipt of the Transfer Notice shall be deemed to be Landlord’s
disapproval of the proposed Sublease or Assignment.

     (c) Permitted Transfers. If Landlord consents to any Sublease or
Assignment as set forth in Section 18(b):

    (1) Tenant may thereafter, within ninety (90) days after Landlord’s
consent, enter into such Assignment or Sublease, but only with the party
and upon substantially the same terms as set forth in the Transfer
Notice;

    (2) In the case of a Sublease during such times as Tenant is no
longer then occupying at least an aggregate of five thousand (5,000)
usable square feet within the Premises, Tenant shall pay to Landlord
monthly, together with monthly installments of rent hereunder, fifty
percent (50%) of the difference between (x) any and all sums payable to
Tenant in connection with such Sublease (including key money, bonus money
and any payment in excess of fair market value for services rendered by
Tenant in connection with such Sublease or for assets, fixtures,
inventory, equipment or furniture transferred by Tenant in connection
with such Sublease), minus (y) the sum of the proportionate amount (on a
rentable square footage basis) of Basic Rent payable by Tenant under this
Lease for the space covered by such Sublease plus any actual and
reasonable out-of-pocket costs incurred by the Tenant in connection with
such Sublease (including brokerage commissions and legal fees);

    (3) In the case of an Assignment, Tenant shall pay to Landlord, as
and when received, fifty percent (50%) of any transfer or assignment fee,
purchase price or other consideration received by Tenant in connection
with the Assignment attributable to the value of this Lease, net of any
out-of-pocket expenses incurred by Tenant in connection with such
Assignment;

    (4) Any Sublease or Assignment shall be subject to all of the
provisions of this Lease, and Landlord’s consent to any Sublease or
Assignment shall not be construed as a consent to any terms thereof which
conflict with any of the provisions of this Lease except to the extent
that Landlord specifically agrees in writing to be bound by such
conflicting terms; and

17

 

    (5) No Transferee shall have the right to exercise any right or
option under this Lease to lease additional space, extend the Term, or
terminate this Lease.

     (d) Continuing Liability. Tenant shall not be relieved of any obligation
to be performed by Tenant under this Lease, including the obligation to obtain
Landlord’s consent to any other Assignment or Sublease, regardless of whether
Landlord consented to any Assignment or Sublease. Any Assignment or Sublease
that fails to comply with this Section 18 shall be void and, at the option of
Landlord, shall constitute an Event of Default by Tenant under this Lease. The
acceptance of Basic Rent or other sums by Landlord from a proposed Transferee
shall not constitute Landlord’s consent to such Assignment or Sublease.

     (e) Assumption by Transferee. Each Transferee under an Assignment shall
assume all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of Basic Rent,
additional rent and other charges, and for the performance of all other
provisions of this Lease. Each Transferee under a Sublease, other than
Landlord, shall be subject to this Lease. No Assignment shall be binding on
Landlord unless Landlord shall receive a counterpart of the Assignment and an
instrument in recordable form that contains a covenant of assumption by the
Transferee reasonably satisfactory in substance and form to Landlord and
consistent with the requirements of this Section 18 but the failure of the
Transferee to execute such instrument shall not release the Transferee from its
liability as set forth above. Tenant shall reimburse Landlord, within fifteen
(15) days after Tenant’s receipt of an invoice therefor, for any reasonable
out-of-pocket costs that Landlord may incur in connection with any proposed
Assignment or Sublease, including Landlord’s reasonable attorneys’ fees and the
costs of investigating the acceptability of any proposed Transferee, not to
exceed $2,000 per Sublease or Assignment.

     (f) Default; Waiver. Any Assignment or Sublease in violation of this
Section 18 shall be void and, at the option of Landlord, shall constitute a
material default by Tenant under this Lease. The acceptance of rent or
additional charges by Landlord from a purported assignee or sublessee shall not
constitute a waiver by Landlord of the provisions of this Section 18.

     (g) Change in Control. Any sale or other transfer, including by
consolidation, merger or reorganization, of a majority of the voting stock of
Tenant, if Tenant is a corporation (other than a sale of the majority of the
stock of a publicly traded company in normal open market transactions), or any
sale or other transfer of a majority of or a controlling interest in the
partnership interests in Tenant, if Tenant is a partnership, or any sale or
other transfer of a majority of or a controlling interest in the membership
interests in Tenant, if Tenant is a limited liability company, or any sale or
other transfer of a majority of the beneficial interests in Tenant or of any
controlling interest in Tenant, if Tenant is a trust or other type of entity,
shall be an Assignment for purposes of this Section 18. As used in this
Section 18, the term “Tenant” shall also mean any entity which has guaranteed
Tenant’s obligations under this Lease or any entity which directly or
indirectly owns a majority of the voting stock or partnership or limited
liability company or other beneficial interest of Tenant, and the prohibition
hereof shall be applicable to any sales or transfers of the stock or
partnership or limited liability company or other beneficial interest of said
guarantor or majority owner.

18

 

19. SUBORDINATION. Tenant agrees that this Lease is and shall be
subordinate to any mortgage, deed of trust, ground lease, underlying lease or
other prior lien (hereinafter “Prior Lien”) that may heretofore be placed upon
the Project or the Building, and all renewals, replacements and extensions
thereof. Landlord hereby warrants that as of the date hereof, there is no
Prior Lien encumbering the Project or the Building. If any Prior Lien holder
wishes to have this Lease prior to its Prior Lien, then and in such event, upon
such Prior Lien holder’s notifying Tenant to that effect, this Lease shall be
deemed prior to the Prior Lien. Landlord shall have the right to hereafter
cause this Lease to be subordinated to any mortgage, deed of trust, ground
lease or underlying lease that may hereafter be placed upon the Project or
Building (in which case the same shall be deemed a “Prior Lien” for purposes of
this Lease), provided that the holder of such instrument concurrently provides
Tenant with a commercially reasonable non-disturbance agreement. If any ground
lease or underlying lease terminates for any reason or any mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn to and become
the tenant of the successor in interest to Landlord, provided that such
successor in interest recognizes the interest of Tenant under this Lease if no
default under this Lease then exists. Within fifteen (15) days of
presentation, Tenant shall execute any documents which any such Prior Lien
holder may require to effectuate the provisions of this Section 19 provided
that any such document does not modify Tenant’s rights or obligations hereunder
in any monetary respect or otherwise in any material respect and provided
further that in the event of any subordination of this Lease to a Prior Lien,
the holder of such Prior Lien concurrently provides Tenant with a commercially
reasonable non-disturbance agreement.

20. ESTOPPEL CERTIFICATE. Tenant will, upon ten (10) business days prior
request by Landlord, execute, acknowledge and deliver to Landlord a statement
in writing executed by Tenant, substantially in the form of Exhibit D attached
hereto, certifying, among other things, the date of this Lease, that this Lease
is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified, and
setting forth such modifications) and the date to which the Basic Rent and
additional rent and other sums payable hereunder have been paid, and either
stating that to the knowledge of Tenant no default exists hereunder on the part
of Landlord or Tenant or specifying each such default of which Tenant may have
knowledge and such other matters as may be reasonably requested by Landlord.
The parties agree and intend that any such statement by Tenant may be relied
upon by any prospective purchaser or mortgagee of the Building or the Project.
Tenant’s failure to timely deliver such a statement shall be deemed to be an
acknowledgment by Tenant that this Lease is in full force and effect without
modification (except as set forth by Landlord), there are no uncured defaults
under this Lease by Landlord and no more than one monthly installment of Basic
Rent and additional rent and other sums payable hereunder have been paid in
advance.

21. SERVICES.

     (a) Standard Services. Landlord shall maintain the public and common
areas of the Project and the Building, such as lobbies, stairs, corridors and
restrooms, in good order and condition except for damage occasioned by the acts
or omissions of Tenant Parties, which shall be repaired at Tenant’s sole cost
and expense except to the extent that the cost of such repairs in covered by
Landlord’s insurance. Landlord shall provide janitorial services to the
Premises in accordance with customary practices for comparable “full service”
office buildings in the

19

 

vicinity of the Project. Landlord shall furnish the
Premises with electricity for lighting and operation of low power usage office
machines and elevator service at all times during the Term. Landlord shall
furnish the Premises with heating or normal office air conditioning between the
hours of 7:00 a.m. and 6:00 p.m., Monday through Friday, except for legal
holidays, and between the hours of 9:00 a.m. and 12:00 p.m. on Saturday. Air
conditioning units and electricity therefor or special air conditioning
requirements, such as for any computer centers, and after-hours heating and air
conditioning shall be at Tenant’s expense at an hourly rate established by the
Landlord in its reasonable discretion from time to time consistent with market
rates charged by owners of other Class A office buildings in the vicinity of
the Project for such after-hours usage. After hours heating and air
conditioning as so charged by Landlord to Tenant shall be payable by the Tenant
as Additional Rent concurrently with the payment of Basic Rent hereunder.
Tenant shall be solely responsible for the repair and maintenance of any
separate heating, ventilating, air conditioning or other equipment installed in
the Premises by the Tenant (with the Landlord’s consent) or by the Landlord as
part of the Tenant Improvements. Landlord shall also provide lighting
replacement for Landlord-furnished lighting, toilet room supplies, window
washing with reasonable frequency and customary janitorial service. Landlord
shall not be liable to Tenant for any loss or damage caused by or resulting
from any variation, interruption or failure of said services due to any cause
whatsoever; and no temporary interruption or failure of such services incident
to the making of repairs, Alterations or improvements due to accident or strike
or conditions or events not under Landlord’s control shall be deemed an
eviction of Tenant or relieve Tenant from any of Tenant’s obligations
hereunder. However, notwithstanding anything to the contrary contained in this
Lease, during the Term of the Lease, if Tenant is actually prevented from using
all or a material portion of the Premises as a result of (i) an interruption in
essential utility services to the Premises, (ii) Landlord’s actions in entering
upon the Premises (other than in exercising any remedy or curing any Tenant
failure to perform in accordance with this Lease), or (iii) Landlord’s failure
to perform repair work required to be performed by Landlord under this Lease
within the time for performance required under this Lease, and which prevention
from use is not cured by Landlord within three (3) consecutive business days
following Landlord’s receipt of written notice thereof from Tenant stating
Tenant’s intent to receive an abatement, then Basic Rent and Tenant’s
Proportionate Share of the Operating Expense Increase payable under this Lease
shall thereafter be equitably abated based upon the portion of the Premises
which Tenant is so prevented from using, until and to the extent that Tenant is
no longer so prevented from using such portion of the Premises as a result of
the applicable item described in clause (i), (ii) or (iii) above.
Notwithstanding the foregoing, the provisions of Section 16 above and not the
provisions of the immediately preceding sentence
shall govern in the event of casualty damage to the Premises or Project,
and the provisions of Section 17 above and not the provisions of the
immediately preceding sentence shall govern in the event of condemnation of all
or a part of the Premises or Project.

     (b) Overstandard Use. Tenant shall not, without the Landlord’s prior
written consent, use heat-generating machines, machines other than normal
office machines, or equipment or lighting other than the Building standard
lights located in the Premises, which may affect the temperature otherwise
maintained by the air conditioning system or increase the water normally
furnished for the Premises by Landlord. If such consent is given, Landlord
shall have the right to install supplementary air conditioning units or other
facilities in the Premises, including supplementary or additional metering
devices, and the cost thereof, including the cost of installation, operation
and maintenance, increased wear and tear on existing equipment and

20

 

other
similar charges, together with an administrative fee in the amount set forth in
Section 8(c), shall be paid by Tenant to Landlord upon billing by Landlord. If
Tenant uses water or electricity in excess of that supplied by Landlord
pursuant to subsection (a) above, Tenant shall pay to Landlord, upon billing,
the cost of such excess consumption, the cost of the installation, operation
and maintenance of equipment which is installed in order to supply such excess
consumption, and the cost of the increased wear and tear on existing equipment
caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, including the cost of such
additional metering devices (including installment costs).

22. SIGNS AND ADVERTISING. Landlord shall provide Tenant, at Landlord’s
sole cost and expense, with Building standard signage (as such standard is
established from time to time by Landlord) on the Building directory in the
lobby of the Building. Tenant shall not erect or install or otherwise utilize
signs, lights, symbols, canopies, awnings, window coverings or other
advertising or decorative matter (collectively, “Signs”) on the windows, walls
or exterior doors or otherwise visible from the exterior of the Premises
without first (a) submitting its plans to Landlord and obtaining Landlord’s
written approval thereof and (b) obtaining any required approval of any
applicable governmental authority with jurisdiction at Tenant’s sole cost and
expense. All Signs approved by Landlord shall be professionally designed and
constructed in a first-class workmanlike manner. Landlord shall have the right
to promulgate from time to time additional reasonable rules, regulations and
policies relating to the style and type of said advertising and decorative
matter which may be used by any occupant, including Tenant, in the Building,
and may change or amend such rules and regulations from time to time as in its
discretion it deems advisable. Tenant agrees to abide by such rules,
regulations and policies. At the expiration or earlier termination of this
Lease, all such signs, lights, symbols, canopies, awnings or other advertising
or decorative matter attached to or painted by Tenant upon the Premises,
whether on the exterior or interior thereof, shall be removed by Tenant at its
own expense, and Tenant shall repair any damage or injury to the Premises or
the Building, and correct any unsightly condition, caused by the maintenance
and removal thereof.

23. PARKING. Subject to the rules and regulations of the City and County where the
Project is located, Tenant shall have the right to use the parking facilities
for the Project in common with other tenants, guests and invitees of the
Project during the Term of the Lease, subject to the rules and regulations
applicable to the parking facilities, including, without limitation, hours of
operation. In addition, Landlord shall reasonably designate four (4) single,
reserved parking spaces within the Project parking facilities for use by
Tenant’s employees and visitors which shall be reasonably proximate to the
Building entrance and which shall be identified by Landlord, at Landlord’s
cost, with signage indicating that such parking spaces are reserved for use by
Tenant’s visitors in a manner reasonably acceptable to Tenant. Landlord shall
maintain the signage for such reserved parking spaces throughout the Term in
good condition and repair. All parking which Tenant is entitled to use
pursuant hereto shall be provided free of charge during the Term (and if
Landlord institutes any paid parking system, Tenant shall be entitled to
validations for such paid parking, free of charge). Access to and from the
parking facilities shall be available in accordance with the Landlord’s rules
and regulations established therefor from time to time.

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24. RULES AND REGULATIONS. Tenant agrees to observe and be bound by the
Rules and Regulations applicable to the Project, a copy of which is attached
hereto as Exhibit E. Landlord reserves the right to amend said Rules and
Regulations as Landlord in its judgment may from time to time deem to be
necessary or desirable for the safety, care and cleanliness of the Project and
the preservation of good order therein, and Tenant agrees to comply therewith.
Landlord may make concessions requested by a tenant without granting the same
concessions to any other tenant. To the extent the Rules and Regulations
conflict with this Lease, this Lease shall control.

25. TIME. Time is of the essence of this Lease.

26. QUIET ENJOYMENT. Landlord covenants to control its activities and
personnel such that if and so long as Tenant pays the rent and performs the
covenants contained in this Lease, Tenant shall hold and enjoy the Premises
peaceably and quietly, subject to the provisions of this Lease.

27. DEFAULTS AND REMEDIES.

     (a) Defaults. The occurrence of any one or more of the following events
shall constitute a default hereunder by Tenant (each an “Event of Default”):

    (1) The failure by Tenant to make any payment of Basic Rent,
additional rent, other charges or any other payment required to be made
by Tenant hereunder, as and when due, where such failure shall continue
for a period of ten (10) days after written
notice thereof from Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure § 1161 regarding
unlawful detainer actions.

    (2) The failure by Tenant to observe or perform any of the express
or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in Section 27(a) above,
where such failure shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant. Any such notice shall be
in lieu of, and not in addition to, any notice required under California
Code of Civil Procedure § 1161 regarding unlawful detainer actions. If
the nature of Tenant’s default (other than a default specified in Section
27(a) above) is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default
if Tenant shall commence such cure within said thirty (30) day period and
thereafter diligently prosecute such cure to completion.

    (3) Any of the following: (i) The making by Tenant of any general
assignment for the benefit of creditors; (ii) the filing by or against
Tenant of a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is
dismissed within thirty (30) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant’s
assets
located at the Premises or of Tenant’s interest in this Lease, where
possession is not restored to Tenant within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Tenant’s

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assets located at the Premises or of Tenant’s interest in this
Lease where such seizure is not discharged within thirty (30) days.

     (b) Remedies. If an Event of Default exists, in addition to any other
remedies available to Landlord at law or in equity, Landlord shall have the
following rights and remedies:

    (1) The right to terminate the Lease and pursue its rights and
remedies provided by California Civil Code Section 1951.2, in which event
Landlord may recover

    (A) The worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus

    (B) 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 rental loss that
Tenant proves could be reasonably avoided; plus

    (C) 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 rental loss that Tenant proves could
have been reasonably avoided; plus

    (D) 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, specifically including, but not limited
to, brokerage commissions and advertising expenses incurred,
expenses of remodeling the Premises or any portion thereof for a
new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; plus

    (E) At Landlord’s election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time
by applicable law.

The term “rent” as used hereinabove shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms
of this Lease, whether to Landlord or to others. As used herein, the
“worth at the time of award” shall be computed by allowing interest at
the rate of 12%, but in no case greater than the maximum amount of such
interest permitted by law. As used herein, the “worth at the time of
award” shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%).

    (2) The rights and remedies provided by California Civil Code
Section 1951.4, that allow Landlord to continue this Lease in effect and
to enforce all of its rights and remedies under this Lease, including the
right to recover Basic Rent, additional rent and other charges as they
become due, for so long as Landlord does not terminate Tenant’s right to
possession. Acts of maintenance or preservation, efforts to relet the
Premises or the appointment of a receiver upon Landlord’s initiative to
protect its interest under this Lease shall not constitute a termination
of Tenant’s right to possession;

23

 

    (3) The right to enter the Premises and remove therefrom all persons
and property, store such property in a public warehouse or elsewhere at
the cost of and for the account of Tenant, and sell such property and
apply the proceeds therefrom pursuant to applicable California law; and

    (4) The right to take steps necessary or appropriate to have a
receiver appointed for Tenant in order to take possession of the Premises
and apply any rental collected and exercise all other rights and remedies
granted to Landlord.

     (c) Reentry. If an Event of Default exists, Landlord shall also have the
right, with or without terminating this Lease, to re-enter the Premises and
remove all persons and property from the Premises; such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant. No re-entry or taking possession of the Premises by
Landlord pursuant to this Section 27(c) shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction.

     (d) Remedies Cumulative; Waiver. All rights, options and remedies of
Landlord contained in this Lease or provided by law or in equity shall be
construed and held to be cumulative, and no one of them shall be exclusive
of the other. No waiver of any default hereunder shall be implied from
any acceptance by Landlord of any Basic Rent, additional rent or other charges
due hereunder or any omission by Landlord to take any action on account of such
default, and no express waiver shall affect any default other than as specified
in said waiver. The consent or approval of Landlord to or of any act by Tenant
requiring Landlord’s consent or approval shall not be deemed to waive or render
unnecessary Landlord’s consent or approval to or of any subsequent similar acts
by Tenant.

28. TRANSFER OF LANDLORD’S INTEREST. In the event of any transfer or
transfers of Landlord’s interest in the Project or the Building, other than a
transfer for security purposes only, Tenant agrees that Landlord shall be
automatically relieved of any and all obligations and liabilities on the part
of Landlord accruing from and after the date of such transfer and Tenant agrees
to attorn to the transferee.

29. RIGHT TO PERFORM. If Tenant shall fail to pay any sum of money, other
than Basic Rent required to be paid by it hereunder, or shall fail to perform
any other act on its part to be performed hereunder, and such failure shall
continue for ten (10) days after written notice thereof by Landlord, Landlord
may, but shall not be obligated so to do, and without waiving or releasing
Tenant from any obligations of Tenant, make any such payment or perform any
such other act on Tenant’s part to be made or performed as provided in this
Lease. Tenant shall reimburse Landlord for all costs incurred in connection
with such payment or performance immediately upon demand.

30. IMPROVEMENTS.

     (a) Delivery of Premises. The parties hereby agree and acknowledge that
the Premises is currently vacant and that by the execution and delivery of this
Lease, Landlord shall be deemed to have delivered possession of the Premises to
Tenant. The improvement of the

24

 

Premises with the “Tenant Improvements” by
Tenant shall be governed by the provisions of Exhibit F attached hereto.

     (b) Tenant Improvement Allowance. Landlord shall provide Tenant an
allowance for tenant improvements to the Premises in an amount not to exceed
the Tenant Improvement Allowance specified in Paragraph 19 of the Basic Lease
Information. The Tenant Improvement Allowance shall be used in accordance with
the terms and conditions of Exhibit F attached hereto.

     (c) Acceptance of Premises. Landlord shall have no obligation whatsoever
to construct leasehold improvements for Tenant or to repair or refurbish the
Premises, except as specifically set forth in this Section 30 and except as
expressly provided in Exhibit F. Landlord or Landlord’s agents have made no
representations or promises with respect to the Project, the Building, the
Premises or this Lease except as expressly set forth herein. The taking of
possession of the Premises by Tenant shall be conclusive evidence that Tenant
accepts the same “as is” and that the Premises, the Project and the Building
are suited for the use intended by Tenant and were in good and satisfactory
condition at the time such possession was taken, subject to the provisions of
Exhibit F. Tenant represents and warrants to Landlord that (i) its sole
intended use of the Premises is for general office use which has no special
requirements, including but not limited to, special security requirements, (ii)
it does not intend to use the Premises for any other purpose, and (iii) prior
to executing this Lease it has made such investigations as it deems appropriate
with respect to the suitability of the Premises for its intended use and has
determined that the Premises is suitable for such intended use.

31. NOTICES. All notices under this Lease shall be in writing and sent to
the parties at the following addresses or at such other address as any party
hereto may designate to the other by notice delivered as provided herein:

	 	 	 	 	 
	

	 	To Landlord:	 	 
	 
	 	 	 	 
	

	 	To Tenant:
	 	Prior to Tenant’s Move-In to the Premises:
	

	 	 	 	Redwood Trust, Inc.
	

	 	 	 	591 Redwood Highway, Suite 300
	

	 	 	 	Mill Valley, California 94941
	

	 	 	 	Attention: George Bull
	

	 	 	 	Telephone No.: (415) 389-7373
	

	 	 	 	Facsimile No.: (415) 381-1773
	 
	 	 	 	 
	

	 	 	 	Following Tenant’s Move-In to the Premises:
	

	 	 	 	Redwood Trust, Inc.
	

	 	 	 	One Belvedere Place, Suite 300
	

	 	 	 	Mill Valley, California 94941
	

	 	 	 	Attention: George Bull
	

	 	 	 	Telephone No. and Facsimile No. to be provided by Tenant upon move-in to Premises

25

 

     Any such notices shall be sent by (i) U.S. certified mail, postage
prepaid, return receipt requested, in which case notice shall be deemed
delivered three business days after timely deposit in the mail, (ii) a
nationally recognized overnight courier, in which case notice shall be deemed
delivered one business day after timely deposit with such courier; (iii)
personally delivered, in which case notice shall be deemed delivered upon
receipt, or (iv) electronic communication, whether by telex, telegram or
telecopying, in which case notice shall be deemed delivered on the date of
confirmed dispatch.

32. ATTORNEYS’ FEES. If either party places the enforcement of this Lease or any part
hereof, or the collection of any Basic Rent, additional rent or other charges
due or to become due hereunder, or recovery of the possession of the Premises,
in the hands of an attorney, or files suit upon the same, the non-prevailing
(or defaulting) party shall pay the other party’s reasonable legal and
attorneys’ fees, costs and expenses, including legal and attorneys’ fees, costs
and expenses incurred in connection with any appeals and any bankruptcy or
insolvency proceedings involving Tenant or this Lease. Any such attorneys’
fees and other expenses incurred by either party in enforcing a judgment in its
favor under this Lease shall be recoverable separately from and in addition to
any other amount included in such judgment, and such attorneys’ fees obligation
is intended to be severable from the other provisions of this Lease and to
survive and not be merged into any such judgment. The terms “attorneys’ fees”
and “attorneys’ fees, costs and expenses” shall mean the fees, costs and
expenses of counsel to the parties hereto, which may include printing,
photostating, duplicating and other expenses, air freight charges, and fees
billed for law clerks, paralegals and other persons not admitted to the bar but
performing services under the supervision of an attorney, and the costs and
fees incurred in connection with the enforcement or collection of any judgment
obtained in any such proceeding, and shall include, specifically, all fees,
costs and expenses of expert witnesses. For purposes of this Paragraph 32, the
term “prevailing party” shall include a prevailing party as defined in
California Code of Civil Procedure Section 998.

33. HOLDING OVER. If Tenant holds over after the expiration or earlier
termination of the Term without the express prior written consent of Landlord,
Tenant shall become a tenant at sufferance only, at a rental rate equal to (a)
during the initial thirty (30) days of such holding over, one hundred
twenty-five percent (125%) of the Basic Rent in effect upon the date of such
expiration, prorated on a daily basis, and (b) following the initial thirty
(30) days of such holding over, one hundred one hundred fifty percent (150%) of
the Basic Rent in effect upon the date of such expiration, prorated on a daily
basis, and in each case otherwise subject to the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Landlord of
rent after such expiration or earlier termination shall not result in a renewal
of this Lease and shall not waive Landlord’s right to bring an unlawful
detainer action against Tenant or otherwise remove Tenant from the Premises.
If Tenant fails to surrender the Premises upon the expiration of this Lease
despite demand to do so by Landlord, Tenant shall indemnify, defend and hold
Landlord harmless from all loss or liability, including without limitation, any
claim made by any succeeding tenant founded on or resulting from such failure
to surrender.

34. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation hereof, shall not work a merger, and shall,
at the option of Landlord, operate as an assignment to it of any subleases or
subtenancies.

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35. NON-WAIVER. Neither the acceptance of rent nor any other act or
omission of Landlord at any time or times after the happening of any event
authorizing the cancellation or forfeiture of this
Lease shall operate as a waiver of any past or future violation, breach or
failure to keep or perform any covenant, agreement, term or condition hereof,
or deprive Landlord of its right to cancel or forfeit this Lease, upon the
notice required by law, at any time that cause for cancellation or forfeiture
may exist, or be construed so as to at any future time stop Landlord from
promptly exercising any other option, right or remedy that it may have under
any term or provision of this Lease.

36. MORTGAGEE PROTECTION. In the event of any default on the part of
Landlord, Tenant will give written notice by registered or certified mail to
any beneficiary of a deed of trust or mortgagee under a mortgage covering the
Project or the Building whose address shall have been furnished to Tenant, and
shall offer such beneficiary or mortgagee a reasonable opportunity to cure the
default, including time to obtain possession of the Project or the Building by
power of sale or a judicial foreclosure, if such should prove necessary to
effect a cure.

37. INTENTIONALLY OMITTED.

38. CHANGES TO THE PROJECT. Landlord reserves the right at any time to
make changes, alterations, reductions and additions to the Project, including
the construction of other buildings or improvements in the Project, the leasing
of space to restaurant uses, the building of additional stories on any
building, without any liability or responsibility to Tenant. Landlord will not
block ingress and egress to the Premises nor access to or use of the parking
facilities. No rights to any view or to light or air over any property,
whether belonging to Landlord or any other person, are granted to Tenant by
this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall
be without liability to the Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.

39. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION TO ENFORCE THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR
DAMAGES FOR THE BREACH HEREOF, OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY
HEREUNDER. If either party commences litigation against the other for the
specific performance of this Lease, for damages for the breach hereof or
otherwise for enforcement of any remedy hereunder, the prevailing party shall
be entitled to recover from the other party such costs and reasonable
attorneys’ fees as may have been incurred, including any and all costs incurred
in enforcing, perfecting and executing such judgment.

40. OPTIONS TO EXTEND THE TERM.

     (a) Extension Term. Landlord grants to Tenant the option to extend the
Term (the “Extension Option”) with respect to all (but not less than all) of
the rentable area of the Premises leased by Tenant as of the Expiration Date of
the Initial Term for an additional period of sixty (60) months (the “Extension
Term”). The Extension Term shall commence immediately following the Expiration
Date of the Initial Term. The Extension Option shall be

27

 

exercised, if at all,
by written notice to Landlord at any time during the Initial Term on or before
the date that is nine (9) months prior to the Expiration Date, which notice
shall be irrevocable by Tenant. Notwithstanding the foregoing, if an Event of
Default exists under this Lease either at the time Tenant exercises the
Extension Option or at any time thereafter prior to or upon the commencement of
the Extension Term, Landlord shall have, in addition to all of Landlord’s other
rights and remedies under this Lease, the right to terminate the Extension
Option and to cancel unilaterally Tenant’s exercise of the Extension Option, in
which event the Expiration Date of this Lease shall be and remain the then
scheduled Expiration Date, and Tenant shall have no further rights under this
Lease to renew or extend the Term.

(b) Extension Term Rent.

    (1) The Extension Term (individually, a “Extension Term”) shall be
upon and subject to all of the terms, covenants and conditions of this
Lease; provided, however, that the Basic Rent for the Extension Term
shall be equal to the Fair Market Rental Value. Such Basic Rent shall be
determined by Landlord not later than four (4) months prior to the
commencement of the Extension Term. Tenant shall send to Landlord a
written notice, within twenty (20) days after the date of Landlord’s
notice setting forth the Fair Market Rental Value for the Extension Term,
which notice shall state that Tenant either (x) agrees with Landlord’s
determination of Fair Market Rental Value for the Extension Term or (y)
disagrees with Landlord’s determination of Fair Market Rental Value for
the Extension Term and elects to resolve the disagreement as provided in
Section 40(b)(2) below. If Tenant does not send to Landlord a notice as
provided in the previous sentence within the said twenty (20) day period,
Landlord’s determination of the Fair Market Rental Value shall be
determinative. Until the disagreement is resolved as provided in Section
40(b)(2) below, Tenant’s monthly payments of Basic Rent shall be in an
amount not less than the greater of (x) Tenant’s determination of the
Fair Market Rental Value and (y) the Basic Rent payable for the twelve
(12) month period immediately preceding the commencement of the Extension
Term. Within ten (10) business days following the resolution of such
dispute by the parties or the decision of the brokers/appraisers, as
applicable, one party shall make any necessary payment to the other party
in order to adjust the amount previously paid by Tenant during the
Extension Term to the Fair Market Rental Value as determined.
Notwithstanding anything to the contrary set forth in this Section 40 in
no event shall the Basic Rent for the Extension Term be less than the
effective Basic Rent payable immediately preceding the commencement of
the applicable Extension Term. Tenant shall in any event pay all
applicable additional charges with respect to the Premises, in the manner
and at the times provided in this Lease, effective upon the commencement
of the Extension Term, and notwithstanding any dispute regarding the
Basic Rent for the Extension Term.

    (2) Any disagreement regarding the Fair Market Rental Value as
defined in this Section 40 shall be resolved as follows:

    (i) Within twenty (20) days after Tenant’s response to Landlord’s
notice of the Landlord’s initial determination of the Fair Market Rental
Value, Landlord and

28

 

Tenant shall meet no less than two (2) times, at a
mutually agreeable time and place, to attempt to resolve any such
disagreement.

    (ii) If, within the twenty (20) day consultation period described in
subsection (i) above, Landlord and Tenant cannot reach an agreement as to
the Fair Market Rental Value, they shall each make a separate
determination of the Fair Market Rental Value within five (5) business
days after the expiration of the said twenty (20) day period, and such
determinations shall be submitted to arbitration in accordance with
subsection (iii) below; provided that, if only one (1) determination of
Fair Market Rental Value is submitted to arbitration within the said five
(5) business day period, then such determination shall equal the Basic
Rent for the Extension Term and the parties shall not proceed with
arbitration.

    (iii) If the Basic Rent has not been determined pursuant to the
procedures outlined above, Landlord and Tenant shall each appoint one
arbitrator who shall be either a real estate broker or MAI appraiser and
shall have been active over the five (5) year period ending on the date
of such appointment in the leasing of commercial mid-rise and/or
high-rise properties in the greater San Francisco metropolitan area.
Each such arbitrator shall be appointed within five (5) business days
after the expiration of the twenty (20) day period described in
subsection (ii) above. The two (2) arbitrators so appointed shall within
ten (10) days of the date of appointment of the last appointed arbitrator
agree upon and appoint a third arbitrator who shall be qualified under
the same criteria set forth hereinabove for qualification of the first
two (2) arbitrators. The determination of the arbitrators shall be
limited solely to the issue of whether the Landlord’s or the Tenant’s
submitted Fair Market Rental Value is the closest to the actual fair
market rental value of the Premises, as determined by the arbitrators.
The three (3) arbitrators shall within thirty (30) days of the
appointment of the third arbitrator reach a decision as to whether the
parties shall use the Landlord’s or the Tenant’s submitted Fair Market
Rental Value as the Basic Rent for the Extension Term, and shall notify
Landlord and Tenant thereof. The decision of the majority of the three
(3) arbitrators shall be binding upon Landlord and Tenant. If either
Landlord or Tenant fails to appoint an arbitrator within the five (5)
business day period provided above, then the arbitrator appointed by one
of them shall reach a decision, notify Landlord and Tenant thereof, and
such arbitrator’s decision shall be binding upon Landlord and Tenant. If
the two (2) arbitrators fail to agree upon and appoint a third arbitrator
within the ten (10) day period provided above, or both parties fail to
appoint an arbitrator within the five (5) business day period provided
above, then the Landlord shall prepare and submit to Tenant a list of
three (3) proposed arbitrators that possess the required qualifications
as set forth above; provided that none of such proposed arbitrators nor
the firm for which any of them works
shall be a current or past affiliate of either the Landlord or the
Tenant or currently retained or employed by the Landlord or the Tenant.
Within five (5) business days after receipt of such list, the Tenant
shall select an arbitrator therefrom and such person shall be the third
or single, as the case may be, arbitrator hereunder. If Tenant fails to
make such selection with such five (5) business day period, then the
Landlord shall select the third or single, as the case may be, arbitrator
from such list. Each party shall pay the cost of the arbitrator which it
first selects and the parties shall share equally the cost of the third
arbitrator.

29

 

41. SATELLITE DISH ANTENNA. Tenant shall have a nonexclusive right to
install, at Tenant’s sole cost and expense, one reasonably sized satellite dish
antenna on the roof of the Building for Tenant’s personal, nonprofit use,
without payment of additional rent therefor. Tenant’s rights under this
Section 41: (a) are personal to Tenant and not assignable without Landlord’s
express written consent; (b) shall terminate on the Expiration Date; (c) are
subject to the current and future needs of Landlord relating to the operation,
maintenance and repair of the Building or the Project, and the prior rights of
other tenants; and (d) are subject to the approval of all governmental entities
with jurisdiction of such antenna. Landlord hereby grants to Tenant a
nonexclusive license to use existing and common area passageways in the
Building for ingress to and egress from the roof in connection with the
installation and maintenance of the antenna, provided that Tenant coordinates
ingress to the roof with Landlord. Tenant shall obey all reasonable
requirements imposed by Landlord for the protection of the roof and shall, at
Tenant’s sole cost and expense, obtain all necessary governmental licenses and
permits required for, and comply with all legal requirements (including
recorded covenants and restrictions) in connection with, the construction and
use of the antenna, including, without limitation, the rules and regulations of
the Federal Communications Commission. The antenna shall be deemed to be
Tenant’s personal property for all purposes under this Lease, and upon
termination of this Lease Tenant shall remove the antenna in accordance with
the provisions of this Lease. Tenant shall (i) prevent its antenna and the
antenna’s transmission and frequency from interfering with the transmissions
and frequencies of any other antennas or communications systems located on or
in the Building or the Project, provided, however, that with respect to any
third-party antennas or communications systems installed after the date Tenant
first installs its antenna on the roof of the Building Tenant shall only be
required to use commercially reasonable efforts to avoid any such interference,
(ii) screen the antenna from view as reasonably required by Landlord, and (iii)
cooperate with Landlord or third parties in maximizing the use of the roof area
not used by Tenant. Landlord shall not be responsible for Tenant’s antenna or
any interference with its antenna’s transmission, frequency, operation or use
caused by third parties provided however that Landlord shall use commercially
reasonable efforts to enforce any non-interference covenants in any leases with
other tenants of the Project. Tenant shall not install any facilities or
equipment on the roof or make any alteration to the roof without the prior
written consent of Landlord, which consent may be withheld in Landlord’s sole
discretion. Tenant shall be solely responsible for and shall pay, indemnify,
defend and hold harmless Landlord from and against all claims, liabilities,
demands, damages, losses, costs and expenses incurred in connection with the
installation and use of the antenna.]

42. GENERAL PROVISIONS.

     (a) Entire Agreement. This Lease contains all of the agreements of the
parties, and there are no verbal or other agreements which modify or affect
this Lease. This Lease supersedes any and all prior agreements made or
executed by or on behalf of the parties hereto regarding the Premises.

     (b) Terms and Headings. The words “Landlord” and “Tenant” include the
plural as well as the singular, and words used in any gender include all
genders. The titles to sections of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any part
hereof.

30

 

     (c) Successors and Assigns. All of the covenants, agreements, terms and
conditions contained in this Lease shall inure to and be binding upon Landlord
and Tenant and their respective permitted successors in interest and assigns.

     (d) No Brokers. Tenant represents and warrants to Landlord that it has
not engaged any broker, finder or other person, except for Tenant’s Broker (as
defined in Paragraph 23 of the Basic Lease Information) who would be entitled
to any commission or fees in respect of the negotiation, execution or delivery
of this Lease and shall indemnify, defend and hold harmless Landlord from and
against any claim, demand, damage, loss, cost, liability or expense incurred by
Landlord as a result of any claim asserted by any such broker, finder or other
person, except for Tenant’s Broker or Landlord’s Broker (as defined in
Paragraph 22 of the Basic Lease Information) on the basis of any arrangements
or agreements made or alleged to have been made by or on behalf of Tenant. The
provisions of this section shall not apply to brokers with whom Landlord has an
express written broker agreement. Landlord shall be responsible for paying all
leasing commissions due Landlord’s Broker and Tenant’s Broker in connection
with this Lease. Landlord shall also be responsible for any fees payable to
Landlord’s property manager, GateCapital Properties, LLC, in connection with
this Lease.

     (e) Liability of Landlord. Landlord’s obligations and liability to Tenant
under this Lease shall be limited solely to Landlord’s interest in the Project,
and neither Landlord nor any of the members in Landlord, nor any officer,
director, shareholder or partner of or in Landlord or any members in Landlord
shall have or incur any personal liability whatsoever with respect to this
Lease.

     (f) Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord’s expense or to any setoff of amounts owing
hereunder against Landlord; provided, however, that the foregoing shall in no
way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building or the Project or any portion thereof, and an opportunity is
granted to Landlord and such mortgage holder to correct such violations as
provided above.

     (g) Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and
for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant’s right of occupancy of the Premises after any termination of this
Lease.

     (h) Severability. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof, and the remaining provisions hereof shall nevertheless remain
in full force and effect.

     (i) Force Majeure. Except as may be otherwise specifically provided
herein, time periods for Landlord’s or Tenant’s performance under any
provisions of this Lease not involving the payment of money shall be extended
for periods of time during which the nonperforming

31

 

party’s performance is
prevented due to circumstances beyond the party’s control, including, without
limitation, strikes, embargoes, governmental regulations, acts of God, weather,
war or other strife. Tenant hereby waives and releases its right to terminate
this Lease under Section 1932(1) of the California Civil Code or under any
similar law, statute or ordinance now or hereafter in effect.

     (j) Identification of Tenant. If more than one person executes this Lease
as Tenant:

    (1) Each of such persons is jointly and severally liable for the
performance of all of the terms, covenants and conditions of this Lease,
and

    (2) The term “Tenant” shall mean each of them jointly and severally.
The act or notice from, or notice or refund to, or the signature of any
one or more of them, with respect to the tenancy of this Lease, shall be
binding upon each and all of the persons executing this Lease as Tenant.

     (k) Examination of Lease. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option to lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.

     (l) No Warranty. In executing and delivering this Lease, Tenant has not relied on any
representations, including, but not limited to, any representation as to the
amount of any item comprising additional rent or the amount of the additional
rent in the aggregate or that Landlord is furnishing the same services to other
tenants, at all, on the same level or on the same basis, or any warranty or any
statement of Landlord which is not set forth herein or in one or more of the
exhibits attached hereto.

     (m) Right to Lease. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building and the
Belvedere Place office center. Tenant does not rely on the fact, nor does
Landlord represent, that any specific tenant or type or number of tenants
shall, during the Term, occupy any space in the Building or the Belvedere Place
office center.

     (n) Transportation Management. Tenant shall fully comply with all present
or future governmentally mandated programs intended to manage parking,
transportation or traffic in and around the Project, and in connection
therewith, Tenant shall take responsible action for the transportation planning
and management of all employees located at the Project by working directly with
Landlord, any governmental transportation management organization or any other
transportation-related committees or entities. Such programs may include,
without limitation (i) restrictions on the number of peak-hour vehicle trips
generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of
an in-house ridesharing program and an employee transportation coordinator;
(iv) working with employees and any Project, Building or area-wide ridesharing
program manager; (v) instituting employer-sponsored incentives (financial or
in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work
shifts for employees.

     (o) Modification for Lender. If, in connection with Landlord’s obtaining
construction, interim or permanent financing for the Building or Project, the
lender shall request reasonable modifications in this Lease as a condition to
such financing, Tenant will not

32

 

unreasonably withhold, delay or defer its
consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder or materially adversely affect the leasehold
interest hereby created or Tenant’s rights hereunder.

     (p) Recording. Neither Landlord nor Tenant shall record this Lease nor a
short form memorandum hereof without the consent of the other.

     (q) Applicable Laws. This Lease shall be governed by and construed
pursuant to the laws of the State of California.

     (r) Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venture or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of rent nor any act or omission
of the parties hereto shall be deemed to create any relationship between
Landlord and Tenant other than the relationship of landlord and tenant.

     (s) Landlord’s Title. Landlord’s title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do
any act which can, shall or may encumber the title of Landlord.

     (t) Project or Building Name and Signage. Landlord shall have the right
at any time to change the name of the Building or Project and to install, affix
and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord’s sole discretion, desire.
Tenant shall not use the name of the Project or the Building (including the
name Belvedere Place) or use pictures or illustrations of the Project or the
Building in advertising or other publicity, without the prior written consent
of the Landlord.

     (u) Survival of Obligations. All provisions of this Lease which require
the payment of money or the delivery of property after the termination of this
Lease or require Tenant to indemnify, defend or hold Landlord harmless shall
survive the termination of this Lease.

     (v) Authority. Each individual executing this Lease represents that it
has all requisite power and authority to execute and deliver this Lease on
behalf of the entity for which it is signing, and by his or her signature, will
bind such party to the terms of this Lease.

     (w) Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

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

33

 

	 	 	 	 	 	 	 
	LANDLORD:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	TENANT:	 	REDWOOD TRUST, INC.
	 	 	a Maryland corporation
	 
	 	 	 	 	 	 
	 	 	 	 	By:____________________________
	 
	 	 	 	 	 	Name:
	 
	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 
	 	 	 	 	By:____________________________
	 
	 	 	 	 	 	Name:
	 
	 	 	 	 	 	Title:

34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]