California-San Francisco-425 Market Street Lease - Metropolitan Life Insurance Co. and Embarcadero Technologies Inc.
OFFICE LEASE BETWEEN METROPOLITAN LIFE INSURANCE COMPANY (LANDLORD) AND EMBARCADERO TECHNOLOGIES, INC. (TENANT) 425 MARKET STREET SAN FRANCISCO, CALIFORNIA <PAGE> TABLE OF CONTENTS PAGE ARTICLE ONE - BASIC LEASE PROVISIONS.......................................1 1.01 BASIC LEASE PROVISIONS...................................1 1.02 ENUMERATION OF EXHIBITS & RIDER(S).......................2 1.03 DEFINITIONS..............................................2 ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE POSSESSION, AND PARKING......6 2.01 LEASE OF PREMISES........................................6 2.02 TERM.....................................................7 2.03 FAILURE TO GIVE POSSESSION...............................7 2.04 AREA OF PREMISES.........................................7 2.05 CONDITION OF PREMISES....................................7 ARTICLE THREE - RENT.......................................................7 ARTICLE FOUR - RENT ADJUSTMENTS AND PAYMENTS...............................7 4.01 RENT ADJUSTMENTS.........................................7 4.02 STATEMENT OF LANDLORD....................................8 4.03 BOOKS AND RECORDS........................................8 4.04 PARTIAL OCCUPANCY........................................8 4.05 TENANT OR LEASE SPECIFIC TAXES...........................9 ARTICLE FIVE - SECURITY DEPOSIT............................................9 ARTICLE SIX - SERVICES....................................................10 6.01 LANDLORD'S GENERAL SERVICES.............................10 6.02 ELECTRICAL SERVICES.....................................10 6.03 ADDITIONAL AND AFTER-HOUR SERVICES......................11 6.04 TELEPHONE SERVICES......................................11 6.05 DELAYS IN FURNISHING SERVICES...........................12 6.06 CHOICE OF SERVICE PROVIDER..............................12 6.07 SIGNAGE.................................................13 ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF PREMISES.................13 7.01 POSSESSION AND USE OF PREMISES..........................13 7.02 LANDLORD ACCESS TO PREMISES; APPROVALS..................14 7.03 QUIET ENJOYMENT.........................................15 ARTICLE EIGHT - MAINTENANCE...............................................15 8.01 LANDLORD'S MAINTENANCE..................................15 8.02 TENANT'S MAINTENANCE....................................16 ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS...............................16 9.01 TENANT ALTERATIONS......................................16 9.02 LIENS...................................................17 ARTICLE TEN - ASSIGNMENT AND SUBLETTING...................................18 10.01 ASSIGNMENT AND SUBLETTING...............................18 10.02 RECAPTURE...............................................20 10.03 EXCESS RENT.............................................20 i <PAGE> 10.04 TENANT LIABILITY........................................20 10.05 ASSUMPTION AND ATTORNMENT...............................20 ARTICLE ELEVEN - DEFAULT AND REMEDIES.....................................21 11.01 EVENTS OF DEFAULT.......................................21 11.02 LANDLORD'S REMEDIES.....................................21 11.03 ATTORNEY'S FEES.........................................23 11.04 BANKRUPTCY..............................................23 11.05 LANDLORD'S DEFAULT......................................24 ARTICLE TWELVE - SURRENDER OF PREMISES....................................24 12.01 IN GENERAL..............................................24 12.02 LANDLORD'S RIGHTS.......................................25 ARTICLE THIRTEEN - HOLDING OVER...........................................25 ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY.......................25 14.01 SUBSTANTIAL UNTENANTABILITY.............................25 14.02 INSUBSTANTIAL UNTENANTABILITY...........................27 14.03 RENT ABATEMENT..........................................27 14.04 WAIVER OF STATUTORY REMEDIES............................27 ARTICLE FIFTEEN - EMINENT DOMAIN..........................................27 15.01 TAKING OF WHOLE OR SUBSTANTIAL PART.....................27 15.02 TAKING OF PART..........................................27 15.03 COMPENSATION............................................28 ARTICLE SIXTEEN - INSURANCE...............................................28 16.01 TENANT'S INSURANCE......................................28 16.02 FORM OF POLICIES........................................28 16.03 LANDLORD'S INSURANCE....................................29 16.04 WAIVER OF SUBROGATION...................................29 16.05 NOTICE OF CASUALTY......................................30 ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY........................30 17.01 WAIVER OF CLAIMS........................................30 17.02 INDEMNITY BY TENANT.....................................30 ARTICLE EIGHTEEN - RULES AND REGULATIONS..................................31 18.01 RULES...................................................31 18.02 ENFORCEMENT.............................................31 ARTICLE NINETEEN - LANDLORD'S RESERVED RIGHTS.............................31 ARTICLE TWENTY - ESTOPPEL CERTIFICATE.....................................32 20.01 IN GENERAL..............................................32 20.02 ENFORCEMENT.............................................32 ARTICLE TWENTY-ONE - RELOCATION OF TENANT.................................32 ARTICLE TWENTY-TWO - REAL ESTATE BROKERS..................................32 ARTICLE TWENTY-THREE - MORTGAGEE PROTECTION...............................32 23.01 SUBORDINATION AND ATTORNMENT............................32 ii <PAGE> 23.02 MORTGAGEE PROTECTION....................................33 ARTICLE TWENTY-FOUR - NOTICES.............................................33 ARTICLE TWENTY-FIVE - MISCELLANEOUS.......................................34 25.01 LATE CHARGES............................................34 25.02 NO JURY TRIAL; VENUE; JURISDICTION......................34 25.03 DEFAULT UNDER OTHER LEASE...............................35 25.04 OPTION..................................................35 25.05 TENANT AUTHORITY........................................35 25.06 ENTIRE AGREEMENT........................................35 25.07 MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE..........35 25.08 EXCULPATION.............................................35 25.09 ACCORD AND SATISFACTION.................................36 25.10 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING..............36 25.11 BINDING EFFECT..........................................36 25.12 CAPTIONS................................................36 25.13 TIME; APPLICABLE LAW; CONSTRUCTION......................36 25.14 ABANDONMENT.............................................37 25.15 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES.............37 25.16 SECURITY SYSTEM.........................................37 25.17 NO LIGHT, AIR OR VIEW EASEMENTS.........................37 25.18 RECORDATION.............................................37 25.19 SURVIVAL................................................37 25.20 RIDERS..................................................37 ARTICLE TWENTY-SIX - HAZARDOUS SUBSTANCES DISCLOSURE......................38 iii <PAGE> OFFICE LEASE ARTICLE ONE BASIC LEASE PROVISIONS 1.01 BASIC LEASE PROVISIONS - In the event of any conflict between these Basic Lease Provisions and any other Lease provision, such other Lease provision shall control. (1) PROJECT AND ADDRESS: 425 Market Street San Francisco, California 94105 (2) LANDLORD AND ADDRESS: Metropolitan Life Insurance Company, a New York corporation Notices to Landlord shall be addressed: Metropolitan Life Insurance Company c/o The Shorenstein Company, LP 425 Market Street San Francisco, California 94105 with copies to the following: Metropolitan Life Insurance Company 101 Lincoln Centre Drive, Suite 600 Foster City, CA 94404 Attention: Assistant Vice President and Metropolitan Life Insurance Company 101 Lincoln Centre Drive, Suite 600 Foster City, CA 94404 Attention: Associate General Counsel (3) TENANT AND CURRENT ADDRESS: Name: Embarcadero Technologies, Inc. State of incorporation: a California corporation Notices to Tenant shall be addressed: Embarcadero Technologies, Inc. At the address of the Premises (4) DATE OF LEASE: as of April 23, 1999 (5) LEASE TERM: Five (5) years (6) PROJECTED COMMENCEMENT DATE: June 15, 1999 1 <PAGE> (7) PROJECTED EXPIRATION DATE: Sixty (60) months after the Commencement Date (8) MONTHLY BASE RENT: PERIOD FROM/TO MONTHLY ANNUAL RATE/SF OF RENTABLE AREA -------------- ------- ------------------------------- Months 01 - 24 $27,520 $32.00 per rentable square foot Months 25 - 36 $29,240 $34.00 per rentable square foot Months 37 - 60 $30,960 $36.00 per rentable square foot (9) RENTABLE AREA OF THE BUILDING: 289,909 square feet (10) RENTABLE AREA OF THE PREMISES: 10,320 square feet (11) SECURITY DEPOSIT: Thirty Thousand Nine Hundred Sixty Dollars ($30,960.00) (12) SUITE NUMBER OF PREMISES: _______________ (13) TENANT'S SHARE: 3.5597% (14) OPERATING EXPENSES BASE YEAR: The calendar year 1999 (15) TAXES BASE YEAR: The City of San Francisco fiscal year beginning July 1, 1999 and ending June 30, 2000. (16) TENANT'S USE OF PREMISES: General office use. (17) BROKERS: Landlord's Broker: Shorenstein Asset Services, L.P. Tenant's Broker: Aegis Realty Partners 1.02 ENUMERATION OF EXHIBITS & RIDER(S) The Exhibits and Rider(s) set forth below and attached to this Lease are incorporated in this Lease by this reference: EXHIBIT A Plan of Premises EXHIBIT B Workletter Agreement (intentionally omitted) EXHIBIT C Rules and Regulations RIDER 1 Commencement Date Agreement RIDER 2 Additional Provisions 1.03 DEFINITIONS For purposes hereof, the following terms shall have the following meanings: ADJUSTMENT YEAR: The applicable calendar year or any portion thereof after the Operating Expenses Base Year and Taxes Base Year for which a Rent Adjustment computation is being made. AFFILIATE: As defined in Section 10.01(f). 2 <PAGE> BUILDING: That certain condominium unit (the "Unit") consisting of space on floors four through fifteen inclusive of the office building located at the Project, together with those easements appurtenant to the condominium unit and that certain undivided interest in the Project Areas appurtenant to the Unit as set forth in the Declaration. For purposes of this Lease, Project Areas means all Land and any portions of the Real Property located on the Land and not a part of Landlord's or any other condominium units in the Project, and includes but is not limited to Common Areas as defined for purposes of this Lease. COMMENCEMENT DATE: The date specified in Section 1.01(6) as the Projected Commencement Date, unless changed by operation of Rider 2. COMMON AREAS: All areas of the Building made available from time to time for the general common use or benefit of the tenants of the Building, and their employees and invitees, or the public, as such areas currently exist and as they may be changed from time to time. DECLARATION: The "Declaration of Covenants, Conditions and Restrictions of the Metropolitan Life Building Condominium Project, San Francisco, California" dated October 12, 1973 as recorded October 12, 1973 at Book B817, Page 164 in the Official Records of the City and County of San Francisco, California as amended by "First Amendment to Declaration of Covenants, Conditions and Restriction" dated November 1, 1988 as recorded in the San Francisco, California Recorder's Office May 9, 1989 as Document E362737 in Reel E866 Image 1302 as hereafter amended from time to time, together with the "Map of Condominium Plan of the Metropolitan Life Building a Condominium Project" consisting of 29 pages and recorded October 12, 1973 under Recorder's Series No. W25240, San Francisco, California. DECORATION: Tenant Alterations which do not require a building permit and which do not involve any of the structural elements of the Building, or any of the Building's systems, including its electrical, mechanical, plumbing, security, heating, ventilating, air-conditioning, communication, and fire and life safety systems. DEFAULT RATE: Two (2) percentage points above the rate then most recently announced by Bank of America N.T.& S.A. at its San Francisco headquarters as its corporate base lending rate, from time to time announced, but in no event higher than the maximum rate permitted by Law. In the event the foregoing rate is no longer announced, Landlord shall choose a reasonably equivalent rate. DELIVERY DATE: The date for Landlord's delivery to Tenant of possession of the Premises, if different from the Commencement Date, as provided in Rider 2. ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation of any Hazardous Material, including the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and the Resource Conservation and Recovery Act of 1976, as amended. EXPIRATION DATE: The date specified in Section 1.01(7) unless changed by operation of Article Two. FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion, strike or labor troubles, or any cause whatsoever beyond the reasonable control of Landlord, including water shortages, energy shortages or governmental preemption in connection with an act of God, a national emergency, or by reason of Law, or by reason of the conditions of supply and demand which have been or are affected by act of God, war or other emergency. HAZARDOUS MATERIAL: Such substances, material and wastes which are or become regulated under any Environmental Law; or which are classified as hazardous or toxic under any Environmental Law; and explosives and firearms, radioactive material, asbestos, and polychlorinated biphenyls. 3 <PAGE> INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the Property, the property manager and the leasing manager for the Property and their respective directors, officers, agents and employees. LAND: The parcel(s) of real estate on which the Building and Project are located. LANDLORD WORK: The construction or installation of improvements to be furnished by Landlord, if any, specifically described in Rider 2 attached hereto. LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements, orders, rulings or decisions adopted or made by any governmental body, agency, department or judicial authority having jurisdiction over the Property, the Premises or Tenant's activities at the Premises and any covenants, conditions or restrictions of record which affect the Property. LEASE: This instrument and all exhibits and riders attached hereto, as may be amended from time to time. LEASE YEAR: The twelve month period beginning on the first day of the first month following the Commencement Date (unless the Commencement Date is the first day of a calendar month in which case beginning on the Commencement Date), and each subsequent twelve month, or shorter, period until the Expiration Date. MONTHLY BASE RENT: The monthly rent specified in Section 1.01(8). MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument encumbering the Property. NATIONAL HOLIDAYS: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord and the janitorial and other unions servicing the Building in accordance with their contracts. OPERATING EXPENSES: All costs, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the ownership, management, operation, maintenance, replacement and repair of the Building, including all of its components and the Building's share of such costs and expenses due from owners of condominium units pursuant to the Declaration and including the amortized portion of any capital expenditure or improvement, together with interest thereon and the costs of changing utility service providers. Operating Expenses shall not include, (i) costs of alterations of the premises of tenants of the Building, (ii) depreciation charges, (iii) interest and principal payments on loans (except for loans for capital improvements which Landlord is allowed to include in Operating Expenses as provided above), (iv) ground rental payments, (v) real estate brokerage and leasing commissions, (vi) advertising and marketing expenses, (vii) costs of Landlord reimbursed by insurance proceeds, (viii) expenses incurred in negotiating leases of other tenants in the Building or enforcing lease obligations of other tenants in the Building and (ix) Landlord's or Landlord's property manager's corporate general overhead or corporate general administrative expenses. If any Operating Expense, though paid in one year, relates to more than one calendar year, at the option of Landlord such expense may be proportionately allocated among such related calendar years. OPERATING EXPENSES BASE YEAR: The calendar year designated in Section 1.01(14). PREMISES: The space located in the Building at the Suite Number listed in Section 1.01(12) and depicted on EXHIBIT A attached hereto, excluding Project Areas on the floor(s) on which the Premises is located. PROJECT or PROPERTY: The Project consists of the office building located at the address specified in Section 1.01(1), together with any and all areas, improvements, parking garage, sidewalks, landscaping and improvements, included as part of the condominium established pursuant to the Declaration, and the Land, 4 <PAGE> any associated interests in real property, and the personal property, fixtures, machinery, equipment, systems and apparatus located in or used in conjunction with any of the foregoing. The Project may also be referred to as the Property. PROJECT AREAS: As defined under the definition of Building above. REAL PROPERTY: The Property excluding any personal property. RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment Deposits, and all other charges, payments, late fees or other amounts required to be paid by Tenant under this Lease. RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses or Taxes. The Rent Adjustments shall be determined and paid as provided in Article Four. RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord's estimate of the Rent Adjustment attributable to each month of the applicable Adjustment Year. On or before the beginning of each Adjustment Year or with Landlord's Statement (defined in Article Four), Landlord may estimate and notify Tenant in writing of its estimate of the excess, if any, of Operating Expenses over those for the Operating Expenses Base Year and of Taxes over those for the Taxes Base Year. Prior to the first determination by Landlord of the amount of Operating Expenses for the Operating Expenses Base Year and of Taxes for the Taxes Base Year, Landlord may estimate such amounts in the foregoing calculation. The last estimate by Landlord shall remain in effect as the applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a change. RENTABLE AREA OF THE BUILDING: The amount of square footage set forth in Section 1.01(9). which represents the sum of the rentable area of all space intended for occupancy in the Building. RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in Section 1.01(10). SECURITY DEPOSIT: The funds specified in Section 1.01(11), if any, deposited by Tenant with Landlord as security for Tenant's performance of its obligations under this Lease. STANDARD OPERATING HOURS: Monday through Friday from 7:00 A.M. to 6:00 P.M., excluding National Holidays. SUBSTANTIALLY COMPLETE OR SUBSTANTIAL COMPLETION: The completion of the Landlord Work or Tenant Work, as the case may be, except for minor insubstantial details of construction, decoration or mechanical adjustments which remain to be done. TAXES: All federal, state and local governmental taxes, assessments and charges of every kind or nature, whether general, special, ordinary or extraordinary, which Landlord shall pay or become obligated to pay because of or in connection with the ownership, leasing, management, control or operation of the Building (including any personal property used in connection therewith), including all of its components and the Building's share of such taxes, assessments and charges of the Project Areas, which may also include any rental or similar taxes levied in lieu of or in addition to general real and/or personal property taxes. For purposes hereof, Taxes for any year shall be Taxes which are assessed for any period of such year, whether or not such Taxes are billed and payable in a subsequent calendar year. There shall be included in Taxes for any year the amount of all fees, costs and expenses (including reasonable attorneys' fees) paid by Landlord during such year in seeking or obtaining any refund or reduction of Taxes. Taxes for any year shall be reduced by the net amount of any tax refund received by Landlord attributable to such year. If a special assessment payable in installments is levied against any part of the Building, Taxes for any year shall include only the installment of such assessment and any interest payable or paid during such year. Taxes shall not include any federal or state inheritance, general income, gift or estate taxes, except that if a change occurs in the method of taxation resulting in whole or in part in the substitution of any such taxes, or any 5 <PAGE> other assessment, for any Taxes as above defined, such substituted taxes or assessments shall be included in the Taxes. TAXES BASE YEAR: The year designated in Section 1.01(15). TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant Alterations. TENANT ALTERATIONS: Any alterations, improvements, additions, installations or construction in or to the Premises or any Real Property systems serving the Premises done or caused to be done by Tenant after the date hereof, whether prior to or after the Commencement Date (including Tenant Work, but excluding Landlord Work); and any supplementary air-conditioning systems installed by Landlord or by Tenant at Landlord's request pursuant to Section 6.01(b). TENANT DELAY: Any event or occurrence which delays the completion of the Landlord Work which is caused by or is described as follows: (i) special work, changes, alterations or additions requested or made by Tenant in the design or finish in any part of the Premises after approval of the plans and specifications (as described in Rider 2); (ii) Tenant's delay in submitting plans, supplying information, approving plans, specifications or estimates, giving authorizations or otherwise; (iii) failure to approve and pay for such work as Landlord undertakes to complete at Tenant's expense; (iv) the performance or completion by Tenant or any person engaged by Tenant of any work in or about the Premises; or (v) failure to perform or comply with any obligation or condition binding upon Tenant pursuant to Rider 2, including the failure to approve and pay for such Landlord Work or other items if and to the extent Rider 2 provides they are to be approved or paid by Tenant. TENANT WORK: All work installed or furnished to the Premises by Tenant in connection with Tenant's initial occupancy pursuant to Rider 2. TENANT'S SHARE: The percentage specified in Section 1.01(13) which represents the ratio of the Rentable Area of the Premises to the Rentable Area of the Building. TERM: The term of this Lease which shall commence on the Commencement Date and expire on the Expiration Date. TERMINATION DATE: The Expiration Date or such earlier date as this Lease terminates or Tenant's right to possession of the Premises terminates. WORKLETTER: (intentionally omitted) ARTICLE TWO PREMISES, TERM, FAILURE TO GIVE POSSESSION, AND PARKING 2.01 LEASE OF PREMISES Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms, covenants and conditions provided in this Lease. 6 <PAGE> 2.02 TERM The Commencement Date shall be the date specified as the Projected Commencement Date, unless changed by operation of Rider 2. 2.03 FAILURE TO GIVE POSSESSION (intentionally omitted; see Rider 2) 2.04 AREA OF PREMISES Landlord and Tenant agree that for all purposes of this Lease the Rentable Area of the Premises and the Rentable Area of the Building as set forth in Article One are controlling, and are not subject to revision after the date of this Lease. 2.05 CONDITION OF PREMISES The Premises shall be delivered and leased in the condition provided in Rider 2. ARTICLE THREE RENT Tenant agrees to pay to Landlord at the first office specified in Section 1.01(2), or to such other persons, or at such other places designated by Landlord, without any prior demand therefor in immediately available funds and without any deduction or offset whatsoever, Rent, including Monthly Base Rent and Rent Adjustments in accordance with Article Four, during the Term. Monthly Base Rent shall be paid monthly in advance on the first day of each month of the Term, except that the first installment of Monthly Base Rent shall be paid by Tenant to Landlord concurrently with execution of this Lease. Monthly Base Rent shall be prorated for partial months within the Term. Unpaid Rent shall bear interest at the Default Rate from the date due until paid. Tenant's covenant to pay Rent shall be independent of every other covenant in this Lease. ARTICLE FOUR RENT ADJUSTMENTS AND PAYMENTS 4.01 RENT ADJUSTMENTS Tenant shall pay to Landlord Rent Adjustments with respect to each Adjustment Year as follows: (i) The Rent Adjustment Deposit representing Tenant's Share of Operating Expenses for the applicable Adjustment Year in excess of Operating Expenses for the Operating Expenses Base Year, monthly during the Term with the payment of Monthly Base Rent; and (ii) The Rent Adjustment Deposit representing Tenant's Share of Taxes for the applicable Adjustment Year in excess of Taxes for the Taxes Base Year, monthly during the Term with the payment of Monthly Base Rent; and (iii) Any Rent Adjustments due in excess of the Rent Adjustment Deposits in accordance with Section 4.02. Rent Adjustments due from Tenant to Landlord for any Adjustment Year shall be Tenant's Share of Operating Expenses for such year in excess of Operating Expenses for the Operating Expenses Base Year and Tenant's Share of Taxes for such year in excess of Taxes for the Taxes Base Year. 7 <PAGE> 4.02 STATEMENT OF LANDLORD As soon as feasible after the expiration of the Operating Expenses Base Year and the Taxes Base Year, and each Adjustment Year thereafter, Landlord will furnish Tenant a statement ("Landlord's Statement") showing the following: (i) Operating Expenses and Taxes for the Operating Expenses Base Year and Taxes Base Year and thereafter for the last Adjustment Year; (ii) The amount of Rent Adjustments due Landlord for the last Adjustment Year, less credit for Rent Adjustment Deposits paid, if any; and (iii) Any change in the Rent Adjustment Deposit due monthly in the current Adjustment Year, including the amount or revised amount due for months preceding any such change pursuant to Landlord's Statement. Tenant shall pay to Landlord within ten (10) days after receipt of such statement any amounts for Rent Adjustments then due in accordance with Landlord's Statement. Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent Adjustment Deposit next coming due, or refunded to Tenant if the Term has already expired provided Tenant is not in default hereunder. No interest or penalties shall accrue on any amounts which Landlord is obligated to credit or refund to Tenant by reason of this Section 4.02. Landlord's failure to deliver Landlord's Statement or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of its right to deliver such items nor constitute a waiver or release of Tenant's obligations to pay such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for the applicable Adjustment Year. During the last complete calendar year or during any partial calendar year in which the Lease terminates, Landlord may include in the Rent Adjustment Deposit its estimate of Rent Adjustments which may not be finally determined until after the termination of this Lease. Tenant's obligation to pay Rent Adjustments survives the expiration or termination of the Lease. Notwithstanding the foregoing, in no event shall the sum of Monthly Base Rent and the Rent Adjustments be less than the Monthly Base Rent payable. 4.03 BOOKS AND RECORDS Landlord shall maintain books and records showing Operating Expenses and Taxes in accordance with sound accounting and management practices, consistently applied. The Tenant or its representative (which representative shall be a certified public accountant licensed to do business in the state in which the Property is located and whose primary business is certified public accounting) shall have the right, for a period of thirty (30) days following the date upon which Landlord's Statement is delivered to Tenant, to examine the Landlord's books and records with respect to the items in the foregoing statement of Operating Expenses and Taxes during normal business hours, upon written notice, delivered at least three (3) business days in advance. If Tenant does not object in writing to Landlord's Statement within sixty (60) days of Tenant's receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then Landlord's Statement shall be considered final and accepted by Tenant. Any amount due to the Landlord as shown on Landlord's Statement, whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as provided above, without prejudice to any such written exception. 4.04 PARTIAL OCCUPANCY For purposes of determining Rent Adjustments, if the Project is not fully occupied during all or a portion of any year during the Term, Landlord may make appropriate adjustments to the Operating Expenses for such year employing sound accounting and management principles consistently applied, to determine the amount of Operating Expenses that would have been paid or incurred by Landlord had the Project been 100% occupied, and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. In the event that the Real Property is not fully assessed for all or a portion of any year during 8 <PAGE> the Term, then Taxes shall be adjusted to an amount which would have been payable in such year if the Real Property had been fully assessed. In the event any other tenant in the Building provides itself with a service of a type which Landlord would supply under the Lease without an additional or separate charge to Tenant, then Operating Expenses shall be deemed to include the cost Landlord would have incurred had Landlord provided such service to such other tenant. 4.05 TENANT OR LEASE SPECIFIC TAXES In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand, any and all taxes payable by Landlord (other than federal or state inheritance, general income, gift or estate taxes) whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by the Rent payable hereunder, including any gross receipts tax or excise tax levied by any governmental or taxing body with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) upon the measured value of Tenant's personal property located in the Premises or in any storeroom or any other place in the Premises or the Property, or the areas used in connection with the operation of the Property, it being the intention of Landlord and Tenant that, to the extent possible, such personal property taxes shall be billed to and paid directly by Tenant; or (d) resulting from Landlord Work, Tenant Work or Tenant Alterations to the Premises, whether title thereto is in Landlord or Tenant; or (e) upon this transaction. Taxes paid by Tenant pursuant to this Section 4.05 shall not be included in any computation of Taxes payable pursuant to Sections 4.01 and 4.02. ARTICLE FIVE SECURITY DEPOSIT Tenant concurrently with the execution of this Lease shall pay to Landlord in immediately available funds the Security Deposit. The Security Deposit may be applied by Landlord to cure, in whole or part, any default of Tenant under this Lease, and upon notice by Landlord of such application, Tenant shall replenish the Security Deposit in full by paying to Landlord within ten (10) days of demand the amount so applied. Landlord's application of the Security Deposit shall not constitute a waiver of Tenant's default to the extent that the Security Deposit does not fully compensate Landlord for all losses, damages, costs and expenses incurred by Landlord in connection with such default and shall not prejudice any other rights or remedies available to Landlord under this Lease or by Law. Landlord shall not pay any interest on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its general accounts. The Security Deposit shall not be deemed an advance payment of Rent, nor a measure of damages for any default by Tenant under this Lease, nor shall it be a bar or defense of any action which Landlord may at any time commence against Tenant. In the absence of evidence satisfactory to Landlord of an assignment of the right to receive the Security Deposit or the remaining balance thereof, Landlord may return the Security Deposit to the original Tenant, regardless of one or more assignments of this Lease. Upon the transfer of Landlord's interest under this Lease, Landlord's obligation to Tenant with respect to the Security Deposit shall terminate upon transfer to the transferee of the Security Deposit, or any balance thereof. If Tenant shall fully and faithfully comply with all the terms, provisions, covenants, and conditions of this Lease, the Security Deposit, or any balance thereof, shall be returned to Tenant within thirty (30) days after Landlord recovers possession of the Premises or such longer time as may be permissible under Law. Tenant hereby waives any and all rights of Tenant under the provisions of Section 1950.7 of the California Civil Code or other Law regarding security deposits. 9 <PAGE> ARTICLE SIX SERVICES 6.01 LANDLORD'S GENERAL SERVICES (a) So long as the Lease is in full force and effect and Tenant has paid all Rent then due, Landlord shall furnish or cause the following services to be furnished to Tenant: (1) heat, ventilation and air-conditioning ("HVAC") in the Premises during Standard Operating Hours, as necessary in Landlord's reasonable judgment for the comfortable occupancy of the Premises under normal business operations, subject to compliance with all applicable voluntary and mandatory regulations and Laws; (2) tempered and cold water for use in restrooms and lavatories in common with other tenants from the regular supply of the Building; (3) customary cleaning and janitorial services in the Premises five (5) days per week, excluding National Holidays; (4) washing of the outside windows in the Premises weather permitting at intervals determined by Landlord; (5) automatic passenger elevator service in common with other tenants of the Building and, subject to reasonable scheduling by Landlord and payment of the standard charges (without mark-up by Landlord), freight elevator service; (b) If Tenant uses heat generating machines or equipment in the Premises to an extent which adversely affects the temperature otherwise maintained by the air-cooling system or whenever the occupancy or electrical load adversely affects the temperature otherwise maintained by the air-cooling system, Landlord reserves the right to install or to require Tenant to install supplementary air-conditioning units in the Premises. Tenant shall bear all costs and expenses related to the installation, maintenance and operation of such units. (c) Tenant shall pay Landlord at rates fixed by Landlord for all tenants in the Building, charges for all water furnished to the Premises beyond that described in Section 6.01(a)(2), including the expenses of installation of a water line, meter and fixtures. 6.02 ELECTRICAL SERVICES (a) So long as the Lease is in full force and effect and Tenant has paid all Rent then due, Landlord shall furnish or cause to be furnished to the Premises electric current for general business office use, including normal lighting, normal business office machines, customary janitorial service, and making alterations or repairs (whether by Landlord or Tenant). Notwithstanding any provision of the Lease to the contrary, without, in each instance, the prior written consent of Landlord, which may be withheld in Landlord's sole discretion, Tenant shall not: (i) make any alterations or additions to the electric equipment or systems; or (ii) install or use or permit the installation or use of any computer or electronic data processing equipment in the Premises other than personal computers, lap-top computers and ancillary equipment. Tenant's use of electric current shall at no time exceed the lesser of (x) the capacity of the wiring, feeders and risers providing electric current to the Premises or the Building; or (y) a connected electrical load for lighting purposes in excess of the wattage per square foot of Rentable Area of the Premises required for Building standard amounts of lighting plus a connected load for all other power requirements of three (3) watts per square foot of Rentable Area of the Premises. The consent of Landlord to the installation of electric equipment shall not relieve Tenant from the obligation to limit usage of electricity to no more than such capacity. 10 <PAGE> (b) If and to the extent electric current is furnished to the Premises in excess of the amount of electric current normally used during Standard Operating Hours in a general business office in a first class office building with the type of electrical equipment and normal business office machines described in subparagraph (a) above, Tenant shall pay Landlord upon notice from Landlord the cost of such excess electric current, as additional Rent. The cost of such excess use and all additional costs separately billed to Tenant pursuant to this Section shall not be included as part of Operating Expenses. At any time and from time to time, Landlord may in its sole discretion either (i) install one or more meters to measure electric current furnished to the Premises or (ii) reasonably estimate electric current furnished to the Premises. Upon notice from Landlord, Tenant shall pay Landlord the cost of installing and maintaining all such meters and of any electrical engineering or consulting firm, if Landlord retains such firm to estimate the electric current furnished to the Premises in lieu of installation of a meter. Tenant shall pay Landlord for such excess electric current at the then current rates charged to Landlord for such electricity provided to the Property by the utility provider chosen by Landlord plus any additional cost of Landlord in keeping account of the electric current so consumed. Landlord's notice shall specify whether such excess use shall be payable (i) in advance as reasonably estimated by Landlord in monthly installments at the time prescribed for monthly installments of Monthly Base Rent or (ii) within ten days after notice from Landlord given from time to time of the amount due for prior excess use as metered or reasonably estimated by Landlord. (c) So long as the Lease is in full force and effect and Tenant has paid all Rent then due, Landlord shall furnish or cause to be furnished to the Premises replacement lamps, bulbs, ballasts and starters used in any normal Building lighting installed in the Premises, except that if the replacement or repair of such items is a result of negligence of Tenant, its employees, agents, servants, licensees, subtenants, contractors or invitees, such cost shall be paid by Tenant within ten days after notice from Landlord and shall not be included as part of Operating Expenses. 6.03 ADDITIONAL AND AFTER-HOUR SERVICES At Tenant's written request, Landlord shall request that the condominium association of the Project furnish additional quantities of any of the services or utilities specified in Section 6.01on the terms set forth herein. For HVAC: (a) for service after Standard Operating Hours on Monday through Friday (except National Holidays), Tenant shall deliver to Landlord a written request before 2:00 P.M. of such day, and (b) for service on a Saturday, Sunday or National Holiday, Tenant shall deliver to Landlord a written request before 2:00 P.M. on the last business day prior to the requested service. For services or utilities requested by Tenant and furnished by Landlord, Tenant shall pay to Landlord as a charge therefor Landlord's prevailing rates charged from time to time for such services and utilities. Without limiting the generality of the foregoing, for HVAC service beyond Standard Operating Hours, as of the date of this Lease, a two (2) hour minimum usage is required per activation. If Tenant shall fail to make any such payment, Landlord may, upon notice to Tenant and in addition to Landlord's other remedies under this Lease, discontinue any or all of such additional services. 6.04 TELEPHONE SERVICES All telegraph, telephone, and communication connections which Tenant may desire shall be subject to Landlord's prior written approval, in Landlord's sole discretion, and the location of all wires and the work in connection therewith shall be performed by contractors approved by Landlord and shall be subject to the direction of Landlord, except that such approval is not required as to Tenant's telephone equipment (including cabling) within the Premises and from the Premises in a route designated by Landlord to any telephone cabinet or panel provided (as existing or as installed as part of Landlord's Work, if any) on Tenant's floor for Tenant's connection to the telephone cable serving the Building so long as Tenant's equipment does not require connections different than or additional to those to the telephone cabinet or panel provided. Except to the extent of such cabling within the Premises or from the Premises to such telephone cabinet or panel, Landlord reserves the right to designate and control the entity or entities providing telephone or other communication cable installation, removal, repair and maintenance in the Building and to 11 <PAGE> restrict and control access to telephone cabinets or panels. In the event Landlord designates a particular vendor or vendors to provide such cable installation, removal, repair and maintenance for the Building, Tenant agrees to abide by and participate in such program. Tenant shall be responsible for and shall pay all costs incurred in connection with the installation of telephone cables and communication wiring in the Premises, including any hook-up, access and maintenance fees related to the installation of such wires and cables in the Premises and the commencement of service therein, and the maintenance thereafter of such wire and cables; and there shall be included in Operating Expenses for the Building all installation, removal, hook-up or maintenance costs incurred by Landlord in connection with telephone cables and communication wiring serving the Building which are not allocable to any individual users of such service but are allocable to the Building generally. If Tenant fails to maintain all telephone cables and communication wiring in the Premises and such failure affects or interferes with the operation or maintenance of any other telephone cables or communication wiring serving the Building, Landlord or any vendor hired by Landlord may enter into and upon the Premises forthwith and perform such repairs, restorations or alterations as Landlord deems necessary in order to eliminate any such interference (and Landlord may recover from Tenant all of Landlord's costs in connection therewith). No later than the Termination Date, Tenant agrees to remove all telephone cables and communication wiring installed by Tenant for and during Tenant's occupancy, which Landlord shall request Tenant to remove. Tenant agrees that neither Landlord nor any of its agents or employees shall be liable to Tenant, or any of Tenant's employees, agents, customers or invitees or anyone claiming through, by or under Tenant, for any damages, injuries, losses, expenses, claims or causes of action because of any interruption, diminution, delay or discontinuance at any time for any reason in the furnishing of any telephone or other communication service to the Premises and the Building. 6.05 DELAYS IN FURNISHING SERVICES (a) Tenant agrees that Landlord shall not be in breach of this Lease nor be liable to Tenant for damages or otherwise, for any failure to furnish, or a delay in furnishing, or a change in the quantity or character of any service when such failure, delay or change is occasioned, in whole or in part, by repairs, improvements or mechanical breakdowns by the act or default of Tenant or other parties or by an event of Force Majeure. No such failure, delay or change shall be deemed to be an eviction or disturbance of Tenant's use and possession of the Premises, or relieve Tenant from paying Rent or from performing any other obligations of Tenant under this Lease, without any deduction or offset. Failure to any extent to make available, or any slowdown, stoppage, or interruption of, the specified utility services resulting from any cause, including changes in service provider or Landlord's compliance with any voluntary or similar governmental or business guidelines now or hereafter published or any requirements now or hereafter established by any governmental agency, board, or bureau having jurisdiction over the operation of the Property, shall not render Landlord liable in any respect for damages to either persons, property, or business, nor be construed as an eviction of Tenant or work an abatement of Rent, nor relieve Tenant of Tenant's obligations for fulfillment of any covenant or agreement hereof. Should any equipment or machinery furnished by Landlord break down or for any cause cease to function properly, Landlord shall use reasonable diligence to repair same promptly, but Tenant shall have no claim for abatement of Rent or damages on account of any interruption of service occasioned thereby or resulting therefrom. (b) Tenant acknowledges that all of Landlord's covenants and obligation under this Article Six are subject to the requirements of the governing documents for the Project of which the Premises form a part. Accordingly, Landlord shall have no liability hereunder if the Project fails to provide a service required to be provided to Tenant hereunder so long as Landlord uses commercially reasonable efforts, at Landlord's sole expense, to cause the Project to do so. 6.06 CHOICE OF SERVICE PROVIDER Tenant acknowledges that Landlord may, at Landlord's sole option, to the extent permitted by applicable law, elect to change, from time to time, the company or companies which provide services (including electrical service, gas service, water, telephone and technical services) to the Building, the Premises and/or its occupants Notwithstanding anything to the contrary set forth in this Lease, Tenant acknowledges that 12 <PAGE> Landlord has not and does not make any representations or warranties concerning the identity or identities of the company or companies which provide services to the Building and the Premises or its occupants and Tenant acknowledges that the choice of service providers and matters concerning the engagement and termination thereof shall be solely that of Landlord. The foregoing provision is not intended to modify, amend, change or otherwise derogate from any provision of this Lease concerning the nature or type of service to be provided or any specific information concerning the amount thereof to be provided. Tenant agrees to cooperate with Landlord and each of its service providers in connection with any change in service or provider. 6.07 SIGNAGE Initial Project standard signage will be installed by Landlord in the directory in the main lobby of the Project and in the directory in the elevator lobby of the floor on which the Premises is located. Tenant may, at Tenant's sole cost and expense and in accordance with the Project standard signage, install a sign identifying Tenant's business at Tenant's main entry door to the Premises. Any change in such initial signage shall be only with Landlord's prior written consent, shall conform to Project standard signage and shall be at Tenant's sole cost and expense. ARTICLE SEVEN POSSESSION, USE AND CONDITION OF PREMISES 7.01 POSSESSION AND USE OF PREMISES (a) Tenant shall occupy and use the Premises only for the uses specified in Section 1.01(16) to conduct Tenant's business. Tenant shall not occupy or use the Premises (or permit the use or occupancy of the Premises) for any purpose or in any manner which: (1) is unlawful or in violation of any Law or Environmental Law; (2) may be dangerous to persons or property or which may invalidate any policy of insurance carried on the Building or Project or covering its operations or which may increase the cost of any such insurance or insurance carried by any other occupant of the Project unless such increased cost is paid by Tenant as provided in the rules and regulations of the Building described in Article Eighteen; (3) is contrary to or prohibited by the terms and conditions of this Lease or the rules and regulations of the Building set forth in Article Eighteen; or (4) would tend to create or continue a nuisance. (b) Tenant shall comply with all Environmental Laws pertaining to Tenant's occupancy and use of the Premises and concerning the proper storage, handling and disposal of any Hazardous Material introduced to the Premises, the Building or the Property by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors, customers or invitees. Landlord shall comply with all Environmental Laws applicable to the Property other than those to be complied with by Tenant pursuant to the preceding sentence. Tenant shall not generate, store, handle or dispose of any Hazardous Material in, on, or about the Property without the prior written consent of Landlord, which may be withheld in Landlord's sole discretion, except that such consent shall not be required to the extent of Hazardous Material packaged and contained in office products for consumer use in general business offices in quantities for ordinary day-to-day use provided such use does not give rise to, or pose a risk of, exposure to or release of Hazardous Material. In the event that Tenant is notified of any investigation or violation of any Environmental Law arising from Tenant's activities at the Premises, Tenant shall immediately deliver to Landlord a copy of such notice. In such event or in the event Landlord reasonably believes that a violation of Environmental Law exists, Landlord may conduct such tests and studies relating to compliance by Tenant with Environmental Laws or the alleged presence of Hazardous Materials upon the Premises as Landlord deems desirable, all of which shall be completed at Tenant's expense. Landlord's inspection and testing rights are for Landlord's own protection only, and Landlord has not, and shall not be deemed to have assumed any responsibility to Tenant or any other party for compliance with Environmental Laws, as a result of the exercise, or non-exercise of such rights. Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claim, demand, action, expense, liability and cost (including attorneys' fees and expenses) arising out of or in any way related to the presence of any Hazardous Material 13 <PAGE> introduced to the Premises during the Lease Term by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors, customers or invitees. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord's sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity. If any Hazardous Material is released, discharged or disposed of on or about the Property and such release, discharge or disposal is not caused by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors customers or invitees, such release, discharge or disposal shall be deemed casualty damage under Article Fourteen to the extent that the Premises are affected thereby; in such case, Landlord and Tenant shall have the obligations and rights respecting such casualty damage provided under such Article. (c) Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the "ADA") establish requirements for business operations, accessibility and barrier removal, and that such requirements may or may not apply to the Premises, the Building and the Project depending on, among other things: (1) whether Tenant's business is deemed a "public accommodation" or "commercial facility", (2) whether such requirements are "readily achievable", and (3) whether a given alteration affects a "primary function area" or triggers "path of travel" requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the Common Areas, except as provided below, (b) Tenant shall be responsible for ADA Title III compliance in the Premises, including any leasehold improvements or other work to be performed in the Premises under or in connection with this Lease, (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III "path of travel" requirements in the Common Areas triggered by Tenant Alterations in the Premises subsequent to the Tenant Work described in Rider 2, and (d) Landlord may perform, or require Tenant to perform, and Tenant shall be responsible for the cost of, ADA Title III compliance in the Common Areas necessitated by the Building being deemed to be a "public accommodation" instead of a "commercial facility" as a result of Tenant's use of the Premises. Tenant shall be solely responsible for requirements under Title I of the ADA relating to Tenant's employees. To the extent Tenant shall occupy a full floor in the Building, all ADA requirements relating to the restrooms, elevator lobbies and corridors on such floor shall be the responsibility of Tenant. All matters relating to "life safety" on such floors shall also be the responsibility of Tenant. (d) Landlord and Tenant agree to cooperate and use commercially reasonable efforts to participate in traffic management programs generally applicable to businesses located in or about the area and Tenant shall encourage and support van and car pooling by, and staggered and flexible working hours for, its office workers and service employees to the extent reasonably permitted by the requirements of Tenant's business. Neither this Section or any other provision of this Lease is intended to or shall create any rights or benefits in any other person, firm, company, governmental entity or the public. (e) Tenant agrees to cooperate with Landlord and to comply with any and all guidelines or controls concerning energy management imposed upon Landlord by federal or state governmental organizations or by any energy conservation association to which Landlord is a party or which is applicable to the Building. 7.02 LANDLORD ACCESS TO PREMISES; APPROVALS (a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts, wiring and conduits in and through the Premises, so long as Tenant's use, layout or design of the Premises is not materially affected or altered. Landlord or Landlord's agents shall have the right to enter upon the Premises in the event of an emergency, or to inspect the Premises, to perform janitorial and other services, to conduct safety and other testing in the Premises and to make such repairs, alterations, improvements or additions to the Premises or the Building or other parts of the Property as Landlord may deem necessary or desirable (including all alterations, improvements and additions in connection with a change in service provider 14 <PAGE> or providers). Janitorial and cleaning services shall be performed after normal business hours. Any entry or work by Landlord may be during normal business hours and Landlord shall use reasonable efforts to ensure that any entry or work shall not materially interfere with Tenant's occupancy of the Premises. (b) If Tenant shall not be personally present to permit an entry into the Premises when for any reason an entry therein shall be necessary or permissible, Landlord (or Landlord's agents), after attempting to notify Tenant (unless Landlord believes an emergency situation exists), may enter the Premises without rendering Landlord or its agents liable therefor, and without relieving Tenant of any obligations under this Lease. (c) Landlord may enter the Premises for the purpose of conducting such inspections, tests and studies as Landlord may deem desirable or necessary to confirm Tenant's compliance with all Laws and Environmental Laws or for other purposes necessary in Landlord's reasonable judgment to ensure the sound condition of the Property and the systems serving the Property. Landlord shall give tenant twenty-four (24) hours prior verbal or written notice of any entry under this Section 7.02(c), except in the event of an emergency no such notice shall be required. Any such entry may be during normal business hours and Landlord shall use reasonable efforts to ensure that any entry shall not materially interfere with Tenant's occupancy of the Premises. Landlord's rights under this Section 7.02(c) are for Landlord's own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use. (d) Landlord may do any of the foregoing, or undertake any of the inspection or work described in the preceding paragraphs without such action constituting an actual or constructive eviction of Tenant, in whole or in part, or giving rise to an abatement of Rent by reason of loss or interruption of business of the Tenant, or otherwise. (e) The review, approval or consent of Landlord with respect to any item required or permitted under this Lease is for Landlord's own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party, as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use. (f) To the extent Tenant shall occupy a full floor in the Building, all ADA requirements relating to the bathrooms, elevator lobbies and corridors on such floor shall be the responsibility of Tenant. All matters relating to "life safety" on such floors shall also be the responsibility of Tenant. 7.03 QUIET ENJOYMENT Landlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as Tenant is in compliance with the covenants and conditions set forth in this Lease, Tenant shall have the right to quiet enjoyment of the Premises without hindrance or interference from Landlord or those claiming through Landlord, and subject to the covenants and conditions set forth in the Lease and to the rights of any Mortgagee or ground lessor. ARTICLE EIGHT MAINTENANCE 8.01 LANDLORD'S MAINTENANCE Subject to the provisions of Articles Seven and Fourteen, Landlord shall perform (or shall cause to be performed) maintenance and necessary repairs to the foundations, roofs, exterior walls, and the structural elements of the Building (and Project, as appropriate), the electrical, plumbing, heating, ventilating, 15 <PAGE> air-conditioning, mechanical, communication, security and the fire and life safety systems of the Building and those corridors, washrooms and lobbies which are Common Areas of the Building, except that: (a) Landlord shall not be responsible for the maintenance or repair of any floor or wall coverings in the Premises (or Project, as appropriate) or any of such systems which are located within the Premises (or Project, as appropriate) and are supplemental or special to the Building's (or Project, as appropriate) standard systems; and (b) the cost of performing any of said maintenance or repairs whether to the Premises or to the Building (or Project as appropriate) caused by the negligence of Tenant, its employees, agents, servants, licensees, subtenants, contractors or invitees, shall be paid by Tenant, subject to the waivers set forth in Section 16.04. Landlord shall not be liable to Tenant for any expense, injury, loss or damage resulting from work done in or upon, or in connection with the use of, any adjacent or nearby building, land, street, or alley. 8.02 TENANT'S MAINTENANCE Subject to the provisions of Article Fourteen, Tenant, at its expense, shall keep and maintain the Premises and all Tenant Additions thereto in good order, condition and repair and in accordance with all Laws and Environmental Laws. Tenant shall not permit waste and shall promptly and adequately repair all damages to the Premises and replace or repair all damaged or broken glass in the interior of the Premises, fixtures or appurtenances. Any repairs or maintenance shall be completed with materials of similar quality to the original materials, all such work to be completed under the supervision of Landlord. Any such repairs or maintenance shall be performed only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, and whose work will not cause or threaten to cause disharmony or interference with Landlord or other tenants in the Building and their respective agents and contractors performing work in or about the Building. If Tenant fails to perform any of its obligations set forth in this Section 8.02, Landlord may, in its sole discretion and upon 24 hours prior notice to Tenant (except without notice in the case of emergencies), perform the same, and Tenant shall pay to Landlord any costs or expenses incurred by Landlord upon demand. ARTICLE NINE ALTERATIONS AND IMPROVEMENTS 9.01 TENANT ALTERATIONS (a) The following provisions shall apply to the completion of any Tenant Alterations: (1) Tenant shall not, except as provided herein, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, make or cause to be made any Tenant Alterations in or to the Premises or any Property systems serving the Premises. Prior to making any Tenant Alterations, Tenant shall give Landlord ten (10) days prior written notice (or such earlier notice as would be necessary pursuant to applicable Law) to permit Landlord sufficient time to post appropriate notices of non-responsibility. Subject to all other requirements of this Article Nine, Tenant may undertake Decoration work without Landlord's prior written consent. Tenant shall furnish Landlord with the names and addresses of all contractors and subcontractors and copies of all contracts. All Tenant Alterations shall be completed at such time and in such manner as Landlord may from time to time designate, and only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, provided, however, that Landlord may, in its sole discretion, specify the engineers and contractors to perform all work relating to the Building's systems (including the mechanical, heating, plumbing, security, ventilating, air-conditioning, electrical, communication and the fire and life safety systems in the Building). The contractors, mechanics and engineers who may be used are further limited to those whose work will not cause or threaten to cause disharmony or interference with Landlord or other tenants in the Building and their respective agents and contractors performing work in or about the Building. Landlord may further condition its consent upon Tenant furnishing to Landlord and Landlord approving prior to the commencement of any work or delivery of materials to the Premises related to the Tenant Alterations such of the following as specified by Landlord: architectural plans and 16 <PAGE> specifications, opinions from Landlord's engineers stating that the Tenant Alterations will not in any way adversely affect the Building's systems, necessary permits and licenses, certificates of insurance, and such other documents in such form reasonably requested by Landlord. Landlord may, in the exercise of reasonable judgment, request that Tenant provide Landlord with appropriate evidence of Tenant's ability to complete and pay for the completion of the Tenant Alterations such as a performance bond or letter of credit. Upon completion of the Tenant Alterations (other than Decorations), Tenant shall deliver to Landlord an as-built mylar and digitized (if available) set of plans and specifications for the Tenant Alterations. (2) Tenant shall pay the cost of all Tenant Alterations and the cost of decorating the Premises and any work to the Property occasioned thereby. In connection with completion of any Tenant Alterations, Tenant shall pay Landlord a construction fee and all elevator and hoisting charges at Landlord's then standard rate. Upon completion of Tenant Alterations, Tenant shall furnish Landlord with contractors' affidavits and full and final waivers of lien and receipted bills covering all labor and materials expended and used in connection therewith and such other documentation reasonably requested by Landlord or Mortgagee. (3) Tenant agrees to complete all Tenant Alterations (i) in accordance with all Laws, Environmental Laws, all requirements of applicable insurance companies and in accordance with Landlord's standard construction rules and regulations, and (ii) in a good and workmanlike manner with the use of good grades of materials. Tenant shall notify Landlord immediately if Tenant receives any notice of violation of any Law in connection with completion of any Tenant Alterations and shall immediately take such steps as are necessary to remedy such violation. In no event shall such supervision or right to supervise by Landlord nor shall any approvals given by Landlord under this Lease constitute any warranty by Landlord to Tenant of the adequacy of the design, workmanship or quality of such work or materials for Tenant's intended use or of compliance with the requirements of Section 9.01(a)(3)(i) and (ii) above or impose any liability upon Landlord in connection with the performance of such work. (b) All Tenant Additions to the Premises, whether installed by Landlord or Tenant, shall without compensation or credit to Tenant, become part of the Premises and the property of Landlord at the time of their installation and shall remain in the Premises, unless pursuant to Article Twelve, Tenant may remove them or is required to remove them at Landlord's request. 9.02 LIENS Tenant shall not permit any lien or claim for lien of any mechanic, laborer or supplier or any other lien to be filed against the Building, the Land, the Premises, or any other part of the Property arising out of work performed, or alleged to have been performed by, or at the direction of, or on behalf of Tenant. If any such lien or claim for lien is filed, Tenant shall within ten (10) days of receiving notice of such lien or claim (a) have such lien or claim for lien released of record or (b) deliver to Landlord a bond in form, content, amount, and issued by surety, satisfactory to Landlord, indemnifying, protecting, defending and holding harmless the Indemnitees against all costs and liabilities resulting from such lien or claim for lien and the foreclosure or attempted foreclosure thereof. If Tenant fails to take any of the above actions, Landlord, in addition to its rights and remedies under Article Eleven, without investigating the validity of such lien or claim for lien, may pay or discharge the same and Tenant shall, as payment of additional Rent hereunder, reimburse Landlord upon demand for the amount so paid by Landlord, including Landlord's expenses and attorneys' fees. 17 <PAGE> ARTICLE TEN ASSIGNMENT AND SUBLETTING 10.01 ASSIGNMENT AND SUBLETTING (a) Without the prior written consent of Landlord, which may be withheld in Landlord's sole discretion, Tenant may not sublease, assign, mortgage, pledge, hypothecate or otherwise transfer or permit the transfer of this Lease or the encumbering of Tenant's interest therein in whole or in part, by operation of Law or otherwise or permit the use or occupancy of the Premises, or any part thereof, by anyone other than Tenant, provided, however, if Landlord chooses not to recapture the space proposed to be subleased or assigned as provided in Section 10.02, Landlord shall not unreasonably withhold its consent to a subletting or assignment under this Section 10.01. Tenant agrees that the provisions governing sublease and assignment set forth in this Article Ten shall be deemed to be reasonable. If Tenant desires to enter into any sublease of the Premises or assignment of this Lease, Tenant shall deliver written notice thereof to Landlord ("Tenant's Notice"), together with the identity of the proposed subtenant or assignee (and certified financial statements thereof for the prior three (3) years) and the proposed principal terms thereof and further financial and other information sufficient for Landlord to make an informed judgment with respect to such proposed subtenant or assignee at least sixty (60) days prior to the commencement date of the term of the proposed sublease or assignment. If Tenant proposes to sublease less than all of the Rentable Area of the Premises, the space proposed to be sublet and the space retained by Tenant must each be a marketable unit as reasonably determined by Landlord and otherwise in compliance with all Laws. Landlord shall notify Tenant in writing of its approval or disapproval of the proposed sublease or assignment or its decision to exercise its rights under Section 10.02 within thirty (30) days after receipt of Tenant's Notice (and all required information). In no event may Tenant sublease any portion of the Premises or assign the Lease to any other tenant of the Building. Tenant shall submit for Landlord's approval (which approval shall not be unreasonably withheld) any advertising which Tenant or its agents intend to use with respect to the space proposed to be sublet. (b) With respect to Landlord's consent to an assignment or sublease, Landlord may take into consideration any factors which Landlord may deem relevant, and the reasons for which Landlord's denial shall be deemed to be reasonable shall include the following: (i) the business reputation or creditworthiness of any proposed subtenant or assignee is not acceptable to Landlord; or (ii) in Landlord's reasonable judgment the proposed assignee or subtenant would diminish the value or reputation of the Building or Landlord; or (iii) any proposed assignee's or subtenant's use of the Premises would violate Section 7.01 of the Lease or would violate the provisions of any other leases of tenants in the Project; (iv) the proposed assignee or subtenant is either a governmental agency, a school or similar operation, or a medical related practice; or (v) the proposed subtenant or assignee is a bona fide prospective tenant of Landlord in the Project as demonstrated by a written proposal dated within ninety (90) days prior to the date of Tenant's request; or (vi) the proposed subtenant or assignee would materially increase the estimated pedestrian and vehicular traffic to and from the Premises and the Building. In no event shall Landlord be obligated to consider a consent to any proposed assignment of the Lease which would assign less than the entire Premises. In the event Landlord wrongfully withholds its consent to any proposed sublease of the Premises or assignment of the Lease, Tenant's sole and exclusive remedy 18 <PAGE> therefor shall be to seek specific performance of Landlord's obligations to consent to such sublease or assignment. (c) Any sublease or assignment shall be expressly subject to the terms and conditions of this Lease. Any subtenant or assignee shall execute such documents as Landlord may reasonably require to evidence such subtenant or assignee's assumption of the obligations and liabilities of Tenant under this Lease. Tenant shall deliver to Landlord a copy of all agreements executed by Tenant and the proposed subtenant and assignee with respect to the Premises. Landlord's approval of a sublease, assignment, hypothecation, transfer or third party use or occupancy shall not constitute a waiver of Tenant's obligation to obtain Landlord's consent to further assignments or subleases, hypothecations, transfers or third party use or occupancy. (d) For purposes of this Article Ten, an assignment shall be deemed to include a change in the majority control of Tenant, resulting from any transfer, sale or assignment of shares of stock or membership interests of Tenant occurring by operation of Law or otherwise, and includes any merger, acquisition, consolidation or reorganization, except as otherwise provided below. Notwithstanding any provision of this Section to the contrary, an assignment for purposes of this Article does not include any transfer of control of the stock or membership interests of Tenant through (i) any public offering of shares of stock in Tenant in accordance with applicable State and Federal law, rules, regulations and orders if thereafter the stock shall be listed and publicly traded through the New York Stock Exchange, American Stock Exchange or Pacific Stock Exchange, or listed and publicly traded through the NASDAQ national market and its price listed at least daily in the WALL STREET JOURNAL; or (ii) public sale of such stock effected through such Exchanges or the NASDAQ national market. If Tenant is a partnership, any change in the partners of Tenant shall be deemed to be an assignment. (e) Notwithstanding anything to the contrary in Sections 10.01(a) and 10.02, but subject to Section 10.03, Tenant shall have the right, without the prior written consent of Landlord, to assign this Lease to an Affiliate or to sublease the Premises or any part thereof to an Affiliate (defined below) provided that (i) Landlord receives thirty (30) days prior written notice of an assignment or sublease; (ii) the Affiliate's net worth after the assignment or subletting is not less than Tenant's net worth immediately prior to the assignment or subletting; (iii) the Affiliate has proven experience in the operation of a first-class business of a type consistent with the use of the Building as a first class office Building; (iv) the Affiliate remains an Affiliate for the duration of the sublease or the balance of the Term in the event of an assignment; (v) the Affiliate assumes (except in the event of a sublease) in writing satisfactory to Landlord all of Tenant's obligations and liability under this Lease and delivers to Landlord a proposed assumption no later than fifteen (15) days prior to the effective date of the assignment and a fully executed original of such assumption promptly after the effective date; (vii) Landlord receives a fully executed copy of an assignment or sublease agreement between Tenant and the Affiliate; and (viii) promptly after Landlord's written request, Tenant and the Affiliate provide such reasonable documents or information which Landlord reasonably requests for the purpose of substantiating whether or not the assignment or sublease is to an Affiliate. (f) For purposes of this Lease, Affiliate shall mean any Person (as defined below) which: (i) is controlled by, controls, or is under common control with Tenant; or (ii) is the corporation or other entity (the "Successor") resulting from a merger, consolidation or non-bankruptcy reorganization with Tenant; or (iii) purchases substantially all the assets of Tenant as a going concern. The word Person means an individual, corporation, limited liability company, partnership, trust, firm or other entity. For purposes of this definition, the word "control," shall mean, with respect to a Person that is a corporation or a limited liability company, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares or membership interests of the controlled Person and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power at all times to direct or cause the direction of the management of the controlled Person. 19 <PAGE> 10.02 RECAPTURE Except as provided in Section 10.01(e) Landlord shall have the option to exclude from the Premises covered by this Lease ("recapture"), the space proposed to be sublet or subject to the assignment, effective as of the proposed commencement date of such sublease or assignment. If Landlord elects to recapture, Tenant shall surrender possession of the space proposed to be subleased or subject to the assignment to Landlord on the effective date of recapture of such space from the Premises, such date being the Termination Date for such space. Effective as of the date of recapture of any portion of the Premises pursuant to this section, the Monthly Base Rent, Rentable Area of the Premises and Tenant's Share shall be adjusted accordingly. 10.03 EXCESS RENT Tenant shall pay Landlord on the first day of each month during the term of the sublease or assignment, one hundred percent (100%) of the amount by which the sum of all rent and other consideration (direct or indirect) due from the subtenant or assignee for such month exceeds: (i) that portion of the Monthly Base Rent and Rent Adjustments due under this Lease for said month which is allocable to the space sublet or assigned; and (ii) the following costs and expenses for the subletting or assignment of such space: (1) brokerage commissions and attorneys' fees and expenses, (2) the actual costs paid in making any improvements or substitutions in the Premises required by any sublease or assignment; and (3) "free rent" periods, costs of any inducements or concessions given to subtenant or assignee, moving costs, and other amounts in respect of such subtenant's or assignee's other leases or occupancy arrangements. All such costs and expenses shall be amortized over the term of the sublease or assignment pursuant to sound accounting principles. 10.04 TENANT LIABILITY In the event of any sublease or assignment, whether or not with Landlord's consent, Tenant shall not be released or discharged from any liability, whether past, present or future, under this Lease, including any liability arising from the exercise of any renewal or expansion option, to the extent such exercise is expressly permitted by Landlord. Tenant's liability shall remain primary, and in the event of default by any subtenant, assignee or successor of Tenant in performance or observance of any of the covenants or conditions of this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said subtenant, assignee or successor. After any assignment, Landlord may consent to subsequent assignments or subletting of this Lease, or amendments or modifications of this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto, and such action shall not relieve Tenant or any successor of Tenant of liability under this Lease. If Landlord grants consent to such sublease or assignment, Tenant shall pay all reasonable attorneys' fees and expenses incurred by Landlord with respect to such assignment or sublease. In addition, if Tenant has any options to extend the term of this Lease or to add other space to the Premises, such options shall not be available to any subtenant or assignee, directly or indirectly without Landlord's express written consent, which may be withheld in Landlord's sole discretion. 10.05 ASSUMPTION AND ATTORNMENT If Tenant shall assign this Lease as permitted herein, the assignee shall expressly assume all of the obligations of Tenant hereunder in a written instrument satisfactory to Landlord and furnished to Landlord not later than fifteen (15) days prior to the effective date of the assignment. If Tenant shall sublease the Premises as permitted herein, Tenant shall, at Landlord's option, within fifteen (15) days following any request by Landlord, obtain and furnish to Landlord the written agreement of such subtenant to the effect that the subtenant will attorn to Landlord and will pay all subrent directly to Landlord. 20 <PAGE> ARTICLE ELEVEN DEFAULT AND REMEDIES 11.01 EVENTS OF DEFAULT The occurrence or existence of any one or more of the following shall constitute a "Default" by Tenant under this Lease: (i) Tenant fails to pay any installment or other payment of Rent including Rent Adjustment Deposits or Rent Adjustments within three (3) days after the date when due; (ii) Tenant fails to observe or perform any of the other covenants, conditions or provisions of this Lease or the Workletter and fails to cure such default within fifteen (15) days after written notice thereof to Tenant, unless the default involves a hazardous condition, which shall be cured forthwith or unless the failure to perform is a Default for which this Lease specifies there is no cure or grace period; (iii) the interest of Tenant in this Lease is levied upon under execution or other legal process; (iv) a petition is filed by or against Tenant to declare Tenant bankrupt or seeking a plan of reorganization or arrangement under any Chapter of the Bankruptcy Act, or any amendment, replacement or substitution therefor, or to delay payment of, reduce or modify Tenant's debts, which in the case of an involuntary action is not discharged within thirty (30) days; (v) Tenant is declared insolvent by Law or any assignment of Tenant's property is made for the benefit of creditors; (vi) a receiver is appointed for Tenant or Tenant's property, which appointment is not discharged within thirty (30) days; (vii) any action taken by or against Tenant to reorganize or modify Tenant's capital structure in a materially adverse way which in the case of an involuntary action is not discharged within thirty (30) days; (viii) upon the dissolution of Tenant; or (ix) upon the third occurrence within any Lease Year that Tenant fails to pay Rent when due or has breached a particular covenant of this Lease (whether or not such failure or breach is thereafter cured within any stated cure or grace period or statutory period). 11.02 LANDLORD'S REMEDIES (a) A Default shall constitute a breach of the Lease for which Landlord shall have the rights and remedies set forth in this Section 11.02 and all other rights and remedies set forth in this Lease or now or hereafter allowed by Law, whether legal or equitable, and all rights and remedies of Landlord shall be cumulative and none shall exclude any other right or remedy. (b) With respect to a Default, at any time Landlord may terminate Tenant's right to possession by written notice to Tenant stating such election. Any written notice required pursuant to Section 11.01 shall constitute notice of unlawful detainer pursuant to California Code of Civil Procedure Section 1161 if, at Landlord's sole discretion, it states Landlord's election that Tenant's right to possession is terminated after expiration of any period required by Law or any longer period required by Section 11.01. Upon the expiration of the period stated in Landlord's written notice of termination (and unless such notice provides an option to 21 <PAGE> cure within such period and Tenant cures the Default within such period), Tenant's right to possession shall terminate and this Lease shall terminate, and Tenant shall remain liable as hereinafter provided. Upon such termination in writing of Tenant's right to possession, Landlord shall have the right, subject to applicable Law, to re-enter the Premises and dispossess Tenant and the legal representatives of Tenant and all other occupants of the Premises by unlawful detainer or other summary proceedings, or otherwise as permitted by Law, regain possession of the Premises and remove their property (including their trade fixtures, personal property and those Tenant Additions which Tenant is required or permitted to remove under Article Twelve), but Landlord shall not be obligated to effect such removal, and such property may, at Landlord's option, be stored elsewhere, sold or otherwise dealt with as permitted by Law, at the risk of, expense of and for the account of Tenant, and the proceeds of any sale shall be applied pursuant to Law. Landlord shall in no event be responsible for the value, preservation or safekeeping of any such property. Tenant hereby waives all claims for damages that may be caused by Landlord's removing or storing Tenant's personal property pursuant to this Section or Section 12.01, and Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claims, demands, actions, expenses, liability and cost (including attorneys' fees and expenses) arising out of or in any way related to such removal or storage. Upon such written termination of Tenant's right to possession and this Lease, Landlord shall have the right to recover damages for Tenant's Default as provided herein or by Law, including the following damages provided by California Civil Code Section 1951.2: (1) the worth at the time of award of the unpaid Rent which had been earned at the time of termination; (2) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such Rent loss that Tenant proves could reasonably have been avoided; (3) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term of this Lease after the time of award exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided; and (4) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. The word "rent" as used in this Section 11.02 shall have the same meaning as the defined term Rent in this Lease. The "worth at the time of award" of the amount referred to in clauses (1) and (2) above is computed by allowing interest at the Default Rate. The worth at the time of award of the amount referred to in clause (3) above is 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%). For the purpose of determining unpaid Rent under clause (3) above, the monthly Rent reserved in this Lease shall be deemed to be the sum of the Monthly Base Rent, monthly storage space rent, if any, and the amounts last payable by Tenant as Rent Adjustments for the calendar year in which Landlord terminated this Lease as provided hereinabove. (c) Even if Tenant is in Default and/or has abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession by written notice as provided in Section 11.02(b) above, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover Rent as it becomes due under this Lease. In such event, Landlord shall have all of the rights and remedies of a landlord under California Civil Code Section 1951.4 (lessor may continue Lease in effect after Tenant's Default and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations), or any successor statute. During such time as Tenant is in Default, if Landlord has not terminated this Lease by written notice and if Tenant requests Landlord's consent to an assignment of this Lease or a sublease of the Premises, subject to Landlord's option to recapture pursuant to Section 10.02, Landlord shall not unreasonably withhold its consent to such assignment or sublease. Tenant acknowledges and agrees that the provisions of Article Ten shall be deemed to constitute reasonable limitations of Tenant's right to assign or sublet. Tenant acknowledges and 22 <PAGE> agrees that in the absence of written notice pursuant to Section 11.02(b) above terminating Tenant's right to possession, no other act of Landlord shall constitute a termination of Tenant's right to possession or an acceptance of Tenant's surrender of the Premises, including acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease or the withholding of consent to a subletting or assignment, or terminating a subletting or assignment, if in accordance with other provisions of this Lease. (d) In the event that Landlord seeks an injunction with respect to a breach or threatened breach by Tenant of any of the covenants, conditions or provisions of this Lease, Tenant agrees to pay the premium for any bond required in connection with such injunction. (e) Tenant hereby waives any and all rights to relief from forfeiture, redemption or reinstatement granted by Law (including California Civil Code of Procedure Sections 1174 and 1179) in the event of Tenant being evicted or dispossessed for any cause or in the event of Landlord obtaining possession of the Premises by reason of Tenant's Default or otherwise; (f) When this Lease requires giving or service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notices required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by Article Twenty-four shall replace and satisfy the statutory service-of-notice procedures, including those required by Code of Civil Procedure section 1162 or any similar or successor statute. (g) The voluntary or other surrender or termination of this Lease, or a mutual termination or cancellation thereof, shall not work a merger and shall terminate all or any existing assignments, subleases, subtenancies or occupancies permitted by Tenant, except if and as otherwise specified in writing by Landlord. (h) No delay or omission in the exercise of any right or remedy of Landlord upon any default by Tenant, and no exercise by Landlord of its rights pursuant to Section 25.15 to perform any duty which Tenant fails timely to perform, shall impair any right or remedy or be construed as a waiver. No provision of this Lease shall be deemed waived by Landlord unless such waiver is in a writing signed by Landlord. The waiver by Landlord of any breach of any provision of this Lease shall not be deemed a waiver of any subsequent breach of the same or any other provision of this Lease. 11.03 ATTORNEY'S FEES In the event any party brings any suit or other proceeding with respect to the subject matter or enforcement of this Lease, the prevailing party (as determined by the court, agency or other authority before which such suit or proceeding is commenced) shall, in addition to such other relief as may be awarded, be entitled to recover attorneys' fees, expenses and costs of investigation as actually incurred, including court costs, expert witness fees, costs and expenses of investigation, and all attorneys' fees, costs and expenses in any such suit or proceeding (including in any action or participation in or in connection with any case or proceeding under the Bankruptcy Code, 11 United States Code Sections 101 ET SEQ., or any successor statutes, in establishing or enforcing the right to indemnification, in appellate proceedings, or in connection with the enforcement or collection of any judgment obtained in any such suit or proceeding). 11.04 BANKRUPTCY The following provisions shall apply in the event of the bankruptcy or insolvency of Tenant: (a) In connection with any proceeding under Chapter 7 of the Bankruptcy Code where the trustee of Tenant elects to assume this Lease for the purposes of assigning it, such election or assignment, 23 <PAGE> may only be made upon compliance with the provisions of (b) and (c) below, which conditions Landlord and Tenant acknowledge to be commercially reasonable. In the event the trustee elects to reject this Lease then Landlord shall immediately be entitled to possession of the Premises without further obligation to Tenant or the trustee. (b) Any election to assume this Lease under Chapter 11 or 13 of the Bankruptcy Code by Tenant as debtor-in-possession or by Tenant's trustee (the "Electing Party") must provide for: The Electing Party to cure or provide to Landlord adequate assurance that it will cure all monetary defaults under this Lease within fifteen (15) days from the date of assumption and it will cure all nonmonetary defaults under this Lease within thirty (30) days from the date of assumption. Landlord and Tenant acknowledge such condition to be commercially reasonable. (c) If the Electing Party has assumed this Lease or elects to assign Tenant's interest under this Lease to any other person, such interest may be assigned only if the intended assignee has provided adequate assurance of future performance (as herein defined), of all of the obligations imposed on Tenant under this Lease. For the purposes hereof, "adequate assurance of future performance" means that Landlord has ascertained that each of the following conditions has been satisfied: (i) The assignee has submitted a current financial statement, certified by its chief financial officer, which shows a net worth and working capital in amounts sufficient to assure the future performance by the assignee of Tenant's obligations under this Lease; and (ii) Landlord has obtained consents or waivers from any third parties which may be required under a lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment. (d) Landlord's acceptance of rent or any other payment from any trustee, receiver, assignee, person, or other entity will not be deemed to have waived, or waive, the requirement of Landlord's consent, Landlord's right to terminate this Lease for any transfer of Tenant's interest under this Lease without such consent, or Landlord's claim for any amount of Rent due from Tenant. 11.05 LANDLORD'S DEFAULT Landlord shall be in default hereunder in the event Landlord has not begun and pursued with reasonable diligence the cure of any failure of Landlord to meet its obligations hereunder within thirty (30) days after the receipt by Landlord of written notice from Tenant of the alleged failure to perform. In no event shall Tenant have the right to terminate or rescind this Lease as a result of Landlord's default as to any covenant or agreement contained in this Lease. Tenant hereby waives such remedies of termination and rescission and hereby agrees that Tenant's remedies for default hereunder and for breach of any promise or inducement shall be limited to a suit for damages and/or injunction. In addition, Tenant hereby covenants that, prior to the exercise of any such remedies, it will give the Mortgagee notice and a reasonable time to cure any default by Landlord. ARTICLE TWELVE SURRENDER OF PREMISES 12.01 IN GENERAL Upon the Termination Date, Tenant shall surrender and vacate the Premises immediately and deliver possession thereof to Landlord in a clean, good and tenantable condition, ordinary wear and tear, and damage caused by Landlord excepted. Tenant shall deliver to Landlord all keys to the Premises. Tenant 24 <PAGE> shall remove from the Premises all movable personal property of Tenant and Tenant's trade fixtures, including, subject to Section 6.04, cabling for any of the foregoing. Tenant shall be entitled to remove such Tenant Additions which at the time of their installation Landlord and Tenant agreed may be removed by Tenant. Tenant shall also remove such other Tenant Additions as required by Landlord, including any Tenant Additions containing Hazardous Materials. Tenant immediately shall repair all damage resulting from removal of any of Tenant's property, furnishings or Tenant Additions, shall close all floor, ceiling and roof openings and shall restore the Premises to a tenantable condition as reasonably determined by Landlord. If any of the Tenant Additions which were installed by Tenant involved the lowering of ceilings, raising of floors or the installation of specialized wall or floor coverings or lights, then Tenant shall also be obligated to return such surfaces to their condition prior to the commencement of this Lease. Tenant shall also be required to close any staircases or other openings between floors. In the event possession of the Premises is not delivered to Landlord when required hereunder, or if Tenant shall fail to remove those items described above, Landlord may (but shall not be obligated to), at Tenant's expense, remove any of such property and store, sell or otherwise deal with such property as provided in Section 11.02(b), including the waiver and indemnity obligations provided in that Section, and undertake, at Tenant's expense, such restoration work as Landlord deems necessary or advisable. 12.02 LANDLORD'S RIGHTS All property which may be removed from the Premises by Landlord shall be conclusively presumed to have been abandoned by Tenant and Landlord may deal with such property as provided in Section 11.02(b), including the waiver and indemnity obligations provided in that Section. Tenant shall also reimburse Landlord for all costs and expenses incurred by Landlord in removing any of Tenant Additions and in restoring the Premises to the condition required by this Lease at the Termination Date. ARTICLE THIRTEEN HOLDING OVER Tenant shall pay Landlord the greater of (i) one hundred and fifty percent (150%) of the monthly Rent payable for the month immediately preceding the holding over (including increases for Rent Adjustments which Landlord may reasonably estimate) or, (ii) one hundred and fifty percent (150%) of the fair market rental value of the Premises as reasonably determined by Landlord for each month or portion thereof that Tenant retains possession of the Premises, or any portion thereof, after the Termination Date (without reduction for any partial month that Tenant retains possession). Tenant shall also pay all damages sustained by Landlord by reason of such retention of possession. The provisions of this Article shall not constitute a waiver by Landlord of any re-entry rights of Landlord and Tenant's continued occupancy of the Premises shall be as a tenancy in sufferance. If Tenant retains possession of the Premises, or any part thereof for thirty (30) days after the Termination Date then at the sole option of Landlord expressed by written notice to Tenant, but not otherwise, such holding over shall constitute an extension of the Term of this Lease for a period of one (1) year on the same terms and conditions (including those with respect to the payment of Rent) as provided in this Lease, except that the Monthly Base Rent for such period shall be equal to the greater of (i) 150% of the Monthly Base Rent payable during the month preceding the Termination Date, or (ii) 150% of the monthly base rent then being quoted by Landlord for similar space in the Building. ARTICLE FOURTEEN DAMAGE BY FIRE OR OTHER CASUALTY 14.01 SUBSTANTIAL UNTENANTABILITY (a) If any fire or other casualty (whether insured or uninsured) renders all or a substantial portion of the Premises, the Building or the Project untenantable, Landlord shall, with reasonable promptness after the occurrence of such damage, estimate the length of time that will be required to substantially complete the repair and restoration and shall by notice advise Tenant of such estimate ("Landlord's Notice"). If Landlord estimates that the amount of time required to substantially complete such repair and restoration 25 <PAGE> will exceed one hundred eighty (180) days from the date such damage occurred, then Landlord, or Tenant if all or a substantial portion of the Premises is rendered untenantable, shall have the right to terminate this Lease as of the date of such damage upon giving written notice to the other at any time within twenty (20) days after delivery of Landlord's Notice, provided that if Landlord so chooses, Landlord's Notice may also constitute such notice of termination. (b) Tenant acknowledges that Landlord shall be entitled to the full proceeds of any insurance coverage, whether carried by Landlord or Tenant, for damages to the Premises, except for those proceeds of Tenant's insurance of its own personal property and equipment which would be removable by Tenant at the Termination Date. All such insurance proceeds shall be payable to Landlord whether or not the Premises are to be repaired and restored, provided, however, if this Lease is not terminated and the parties proceed to repair and restore Tenant Additions at Tenant's cost, to the extent Landlord received proceeds of Tenant's insurance covering Tenant Additions, such proceeds shall be applied to reimburse Tenant for its cost of repairing and restoring Tenant Additions. (c) Notwithstanding anything to the contrary herein set forth: (i) Landlord shall have no duty pursuant to this Section to repair or restore any portion of any Tenant Additions or to expend for any repair or restoration of the Premises or Building or Project amounts in excess of insurance proceeds payable and available for repair or restoration, and if such proceeds are insufficient Landlord shall have the right to terminate this Lease upon giving written notice to Tenant within a reasonable time after determining such proceeds will be insufficient; and (ii) Tenant shall not have the right to terminate this Lease pursuant to this Section if any damage or destruction was caused by the act or neglect of Tenant, its agent or employees. Whether or not the Lease is terminated pursuant to this Article Fourteen, in no event shall Tenant be entitled to any compensation or damages for loss of the use of the whole or any part of the Premises or for any inconvenience or annoyance occasioned by any such damage, destruction, rebuilding or restoration of the Premises or the Building or access thereto. (d) Unless this Lease is terminated as provided in the preceding subparagraphs, Landlord shall proceed with reasonable promptness to repair and restore the Premises to its condition as existed prior to such casualty, subject to reasonable delays for insurance adjustments and Force Majeure delays, and also subject to zoning Laws and building codes then in effect. Landlord shall have no liability to Tenant, and Tenant shall not be entitled to terminate this Lease if such repairs and restoration are not in fact completed within the time period estimated by Landlord so long as Landlord shall proceed with reasonable diligence to complete such repairs and restoration. (e) Any repair or restoration of the Premises performed by Tenant shall be in accordance with the provisions of Article Nine hereof. (f) The provisions of this Article Fourteen are subject and subordinate to the provisions of the Declaration. (g) Notwithstanding anything to the contrary provided herein, Landlord shall have no obligation to repair the Premises, the Building or Project in the event of a decision of the owners of the condominium units in the Building, pursuant to the provisions of the Declaration not to repair or restore following any damage or destruction. In such event, Landlord shall encourage the owners of the condominium units to make a prompt decision to repair and restore or not (a "Repair Decision") , and Landlord shall give prompt written notice of such Repair Decision to Tenant and this Lease shall automatically terminate upon the date of any such decision not to repair or restore. Tenant may from time to time inquire whether a Repair Decision has been made, and Landlord shall promptly respond to any such inquiry. If Landlord has not notified Tenant of the Repair Decision within ninety (90) days of the date of the damage, then, at any time until Landlord informs Tenant of the Repair Decision, Tenant may notify Landlord in writing of Tenant's election to terminate this Lease if Tenant does not receive notice of the Repair Decision by the date (the "Potential Termination Date") which is ten (10) business days after the date Landlord receives Tenant's notice. If Landlord does not inform Tenant of the Repair Decision on or before the Potential Termination 26 <PAGE> Date, this Lease shall terminate on the Potential Termination Date. 14.02 INSUBSTANTIAL UNTENANTABILITY If the Premises or the Building is damaged by a casualty but neither is rendered substantially untenantable and Landlord estimates that the time to substantially complete the repair or restoration will not exceed one hundred eighty (180) days from the date such damage occurred, then Landlord shall proceed to repair and restore the Building or the Premises other than Tenant Additions, with reasonable promptness, unless such damage is to the Premises and occurs during the last six (6) months of the Term, in which event either Tenant or Landlord shall have the right to terminate this Lease as of the date of such casualty by giving written notice thereof to the other within twenty (20) days after the date of such casualty. Notwithstanding the foregoing, Landlord's obligation to repair shall be limited in accordance with the provisions of Section 14.01 above. 14.03 RENT ABATEMENT If all or any part of the Premises are rendered untenantable by fire or other casualty and this Lease is not terminated, Monthly Base Rent and Rent Adjustments shall abate for that part of the Premises which is untenantable on a per diem basis from the date of the casualty until Landlord has Substantially Completed the repair and restoration work in the Premises which it is required to perform, provided, that as a result of such casualty, Tenant does not occupy the portion of the Premises which is untenantable during such period. The foregoing rent abatement shall not apply in the event the Premises are rendered untenantable by reason of a fire or other casualty caused in whole or in part by the negligence or willful act of Tenant or its agents, employees, contractors or invitees if such abatement would adversely affect Landlord's or Tenant's ability to collect under any of its insurance policies providing coverage for rental or business interruptions. 14.04 WAIVER OF STATUTORY REMEDIES The provisions of this Lease, including this Article Fourteen, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, the Premises or the Property or any part of either, and any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of the California Civil Code, with respect to any rights or obligations concerning damage or destruction shall have no application to this Lease or to any damage to or destruction of all or any part of the Premises or the Property or any part of either, and are hereby waived. ARTICLE FIFTEEN EMINENT DOMAIN 15.01 TAKING OF WHOLE OR SUBSTANTIAL PART In the event the whole or any substantial part of the Premises, the Building or the Project is taken or condemned by any competent authority for any public use or purpose (including a deed given in lieu of condemnation) and is thereby rendered untenantable, this Lease shall terminate as of the date title vests in such authority, and Monthly Base Rent and Rent Adjustments shall be apportioned as of the Termination Date. Notwithstanding anything to the contrary herein set forth, in the event the taking is temporary (for less than the remaining term of the Lease), Landlord may elect either (i) to terminate this Lease or (ii) permit Tenant to receive the entire award attributable to the Premises in which case Tenant shall continue to pay Rent and this Lease shall not terminate. 15.02 TAKING OF PART In the event a part of the Building or the Premises is taken or condemned by any competent authority (or a deed is delivered in lieu of condemnation) and this Lease is not terminated, the Lease shall be amended to reduce or increase, as the case may be, the Monthly Base Rent and Tenant's Proportionate Share to reflect 27 <PAGE> the Rentable Area of the Premises or Building, as the case may be, remaining after any such taking or condemnation. Landlord, upon receipt and to the extent of the award in condemnation (or proceeds of sale) shall make necessary repairs and restorations to the Premises (exclusive of Tenant Additions) and to the Building to the extent necessary to constitute the portion of the Building not so taken or condemned as a complete architectural and economically efficient unit. Notwithstanding the foregoing, if as a result of any taking, or a governmental order that the grade of any street or alley adjacent to the Building is to be changed and such taking or change of grade makes it necessary or desirable to substantially remodel or restore the Building or Project or prevents the economical operation of the Building or Project, Landlord shall have the right to terminate this Lease upon ninety (90) days prior written notice to Tenant. 15.03 COMPENSATION Landlord shall be entitled to receive the entire award (or sale proceeds) from any such taking, condemnation or sale without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in such award; provided, however, Tenant shall have the right separately to pursue against the condemning authority a separate award in respect of the loss, if any, to Tenant Additions paid for by Tenant without any credit or allowance from Landlord so long as there is no diminution of Landlord's award as a result. ARTICLE SIXTEEN INSURANCE 16.01 TENANT'S INSURANCE Tenant, at Tenant's expense, agrees to maintain in force, with a company or companies acceptable to Landlord, during the Term: (a) Commercial General Liability Insurance on a primary basis and without any right of contribution from any insurance carried by Landlord covering the Premises on an occurrence basis against all claims for personal injury, bodily injury, death and property damage, including contractual liability covering the indemnification provisions in this Lease. Such insurance shall be for such limits that are reasonably required by Landlord from time to time but not less than a combined single limit of Five Million and No/100 Dollars ($5,000,000.00); (b) Workers' Compensation and Employers' Liability Insurance to the extent required by and in accordance with the Laws of the State of California; (c) "All Risks" property insurance in an amount adequate to cover the full replacement cost of all Tenant Additions to the Premises, equipment, installations, fixtures and contents of the Premises in the event of loss; (d) In the event a motor vehicle is to be used by Tenant in connection with its business operation from the Premises, Comprehensive Automobile Liability Insurance coverage with limits of not less than Three Million and No/100 Dollars ($3,000,000.00) combined single limit coverage against bodily injury liability and property damage liability arising out of the use by or on behalf of Tenant, its agents and employees in connection with this Lease, of any owned, non-owned or hired motor vehicles; and (e) such other insurance or coverages as Landlord reasonably requires. 16.02 FORM OF POLICIES Each policy referred to in 16.01 shall satisfy the following requirements. Each policy shall (i) name Landlord and the Indemnitees as additional insureds (except Workers' Compensation and Employers' Liability Insurance), (ii) be issued by one or more responsible insurance companies licensed to do business in the State of California reasonably satisfactory to Landlord, (iii) where applicable, provide for deductible amounts satisfactory to Landlord and not permit co-insurance, (iv) shall provide that such insurance may not be canceled or amended without thirty (30) days' prior written notice to the Landlord, and (v) each policy of "All-Risks" property insurance shall provide that the policy shall not be invalidated should the insured waive in writing prior to a loss, any or all rights of recovery against any other party for losses covered by such policies. Tenant shall deliver to Landlord, certificates of insurance and at Landlord's request, copies of all policies and renewals thereof to be maintained by Tenant hereunder, not less than ten (10) days prior to the Commencement Date and not less than ten (10) days prior to the expiration date of each policy. 28 <PAGE> 16.03 LANDLORD'S INSURANCE Landlord agrees to purchase (or cause to be purchased) and keep in full force and effect (or cause to be kept in effect) during the Term hereof, including any extensions or renewals thereof, insurance under policies issued by insurers of recognized responsibility, qualified to do business in the State of California on the Building in amounts not less than the greater of eighty (80%) percent of the then full replacement cost (without depreciation) of the Building (above foundations and excluding Tenant Additions to the Premises) or an amount sufficient to prevent Landlord from becoming a co-insurer under the terms of the applicable policies, against fire and such other risks as may be included in standard forms of all risk coverage insurance reasonably available from time to time. Landlord agrees to maintain in force during the Term, Commercial General Liability Insurance covering the Building on an occurrence basis against all claims for personal injury, bodily injury, death and property damage. Such insurance shall be for a combined single limit of Five Million and No/100 Dollars ($5,000,000.00). Neither Landlord's obligation to carry such insurance nor the carrying of such insurance shall be deemed to be an indemnity by Landlord with respect to any claim, liability, loss, cost or expense due, in whole or in part, to Tenant's negligent acts or omissions or willful misconduct. Without obligation to do so, Landlord may, in its sole discretion from time to time, carry insurance in amounts greater and/or for coverage additional to the coverage and amounts set forth above. 16.04 WAIVER OF SUBROGATION (a) Landlord agrees that, if obtainable at no, or minimal, additional cost, and so long as the same is permitted under the laws of the State of California, it will include in its "All Risks" policies appropriate clauses pursuant to which the insurance companies (i) waive all right of subrogation against Tenant with respect to losses payable under such policies and/or (ii) agree that such policies shall not be invalidated should the insured waive in writing prior to a loss any or all right of recovery against any party for losses covered by such policies. (b) Tenant agrees to include, if obtainable at no, or minimal, additional cost, and so long as the same is permitted under the laws of the State of California, in its "All Risks" insurance policy or policies on Tenant Additions to the Premises, whether or not removable, and on Tenant's furniture, furnishings, fixtures and other property removable by Tenant under the provisions of this Lease appropriate clauses pursuant to which the insurance company or companies (i) waive the right of subrogation against Landlord and/or any tenant of space in the Building with respect to losses payable under such policy or policies and/or (ii) agree that such policy or policies shall not be invalidated should the insured waive in writing prior to a loss any or all right of recovery against any party for losses covered by such policy or policies. If Tenant is unable to obtain in such policy or policies either of the clauses described in the preceding sentence, Tenant shall, if legally possible and without necessitating a change in insurance carriers, have Landlord named in such policy or policies as an additional insured. If Landlord shall be named as an additional insured in accordance with the foregoing, Landlord agrees to endorse promptly to the order of Tenant, without recourse, any check, draft, or order for the payment of money representing the proceeds of any such policy or representing any other payment growing out of or connected with said policies, and Landlord does hereby irrevocably waive any and all rights in and to such proceeds and payments. (c) Provided that Landlord's right of full recovery under its policy or policies aforesaid is not adversely affected or prejudiced thereby, Landlord hereby waives any and all right of recovery which it might otherwise have against Tenant, its servants, agents and employees, for loss or damage occurring to the Real Property and the fixtures, appurtenances and equipment therein, to the extent the same is covered by Landlord's insurance, notwithstanding that such loss or damage may result from the negligence or fault of Tenant, its servants, agents or employees. Provided that Tenant's right of full recovery under its aforesaid policy or policies is not adversely affected or prejudiced thereby, Tenant hereby waives any and all right of recovery which it might otherwise have against Landlord, its servants, and employees and against every other tenant of the Real Property who shall have executed a similar waiver as set forth in this Section 16.04 (c) for loss or damage to Tenant Additions, whether or not removable, and to Tenant's furniture, furnishings, fixtures and other property removable by Tenant under the provisions hereof to the extent the same is 29 <PAGE> coverable by Tenant's insurance required under this Lease, notwithstanding that such loss or damage may result from the negligence or fault of Landlord, its servants, agents or employees, or such other tenant and the servants, agents or employees thereof. (d) Landlord and Tenant hereby agree to advise the other promptly if the clauses to be included in their respective insurance policies pursuant to subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore provided and thereafter to furnish the other with a certificate of insurance or copy of such policies showing the naming of the other as an additional insured, as aforesaid. Landlord and Tenant hereby also agree to notify the other promptly of any cancellation or change of the terms of any such policy which would affect such clauses or naming. All such policies which name both Landlord and Tenant as additional insureds shall, to the extent obtainable, contain agreements by the insurers to the effect that no act or omission of any additional insured will invalidate the policy as to the other additional insureds. 16.05 NOTICE OF CASUALTY Tenant shall give Landlord notice in case of a fire or accident in the Premises promptly after Tenant is aware of such event. ARTICLE SEVENTEEN WAIVER OF CLAIMS AND INDEMNITY 17.01 WAIVER OF CLAIMS To the extent permitted by Law, Tenant releases the Indemnitees from, and waives all claims for, damage to person or property sustained by the Tenant or any occupant of the Premises or the Property resulting directly or indirectly from any existing or future condition, defect, matter or thing in and about the Premises or the Property or any part of either or any equipment or appurtenance therein, or resulting from any accident in or about the Premises or the Property, or resulting directly or indirectly from any act or neglect of any tenant or occupant of the Property or of any other person, including Landlord's agents and servants, except to the extent caused by the willful and wrongful act of any of the Indemnitees. To the extent permitted by Law, Tenant hereby waives any consequential damages, compensation or claims for inconvenience or loss of business, rents, or profits as a result of such injury or damage, whether or not caused by the willful and wrongful act of any of the Indemnitees. If any such damage, whether to the Premises or the Property or any part of either, or whether to Landlord or to other tenants in the Property, results from any act or neglect of Tenant, its employees, servants, agents, contractors, invitees or customers, Tenant shall be liable therefor and Landlord may, at Landlord's option, repair such damage and Tenant shall, upon demand by Landlord, as payment of additional Rent hereunder, reimburse Landlord within ten (10) days of demand for the total cost of such repairs, in excess of amounts, if any, paid to Landlord under insurance covering such damages. Tenant shall not be liable for any such damage caused by its acts or neglect if Landlord or a tenant has recovered the full amount of the damage from proceeds of insurance policies and the insurance company has waived its right of subrogation against Tenant. 17.02 INDEMNITY BY TENANT To the extent permitted by Law, Tenant hereby indemnifies, and agrees to protect, defend and hold the Indemnitees harmless, against any and all actions, claims, demands, liability, costs and expenses, including attorneys' fees and expenses for the defense thereof, arising from Tenant's occupancy of the Premises, from the undertaking of any Tenant Additions or repairs to the Premises, from the conduct of Tenant's business on the Premises, or from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or from any willful act or negligence of Tenant, its agents, contractors, servants, employees, customers or invitees, in or about the Premises or the Property or any part of either. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such 30 <PAGE> action or proceeding by counsel chosen by Landlord, in Landlord's sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity. The foregoing indemnity shall not operate to relieve Indemnitees of liability to the extent such liability is caused by the willful and wrongful act of Indemnitees. Further, the foregoing indemnity is subject to and shall not diminish any waivers in effect in accordance with Section 16.04 by Landlord or its insurers to the extent of amounts, if any, paid to Landlord under its "All-Risks" property insurance. ARTICLE EIGHTEEN RULES AND REGULATIONS 18.01 RULES Tenant agrees for itself and for its subtenants, employees, agents, and invitees to comply with the rules and regulations listed on EXHIBIT C attached hereto and with all modifications and additions thereto which Landlord may make from time to time. 18.02 ENFORCEMENT Nothing in this Lease shall be construed to impose upon the Landlord any duty or obligation to enforce the rules and regulations as set forth on EXHIBIT C or as hereafter adopted, or the terms, covenants or conditions of any other lease as against any other tenant, and the Landlord shall not be liable to the Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees. Landlord shall use reasonable efforts to enforce the rules and regulations of the Building in a uniform and non-discriminatory manner. ARTICLE NINETEEN LANDLORD'S RESERVED RIGHTS Landlord shall have the following rights exercisable without notice to Tenant and without liability to Tenant for damage or injury to persons, property or business and without being deemed an eviction or disturbance of Tenant's use or possession of the Premises or giving rise to any claim for offset or abatement of Rent: (1) to change the Project's name or street address upon thirty (30) days' prior written notice to Tenant; (2) to install, affix and maintain all signs on the exterior and/or interior of the Building or Project; (3) to designate and/or approve prior to installation, all types of signs, window shades, blinds, drapes, awnings or other similar items, and all internal lighting that may be visible from the exterior of the Premises; (4) upon reasonable notice to Tenant, to display the Premises to prospective purchasers at reasonable hours at any time during the Term and to prospective tenants at reasonable hours during the last twelve (12) months of the Term; (5) to grant to any party the exclusive right to conduct any business or render any service in or to the Building or Project, provided such exclusive right shall not operate to prohibit Tenant from using the Premises for the purpose permitted hereunder; (6) to change the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, washrooms or public portions of the Building or Project, and to close entrances, doors, corridors, elevators or other facilities, provided that such action shall not materially and adversely interfere with Tenant's access to the Premises or the Building; (7) to have access for Landlord and other tenants of the Project to any mail chutes and boxes located in or on the Premises as required by any applicable rules of the United States Post Office; and (8) to close the Project after Standard Operating Hours, except that Tenant and its employees and invitees shall be entitled to admission at all times, under such regulations as Landlord prescribes for security purposes. 31 <PAGE> ARTICLE TWENTY ESTOPPEL CERTIFICATE 20.01 IN GENERAL Within fifteen (15) days after request therefor by Landlord, Mortgagee or any prospective mortgagee or owner, Tenant agrees as directed in such request to execute an Estoppel Certificate in recordable form, binding upon Tenant, certifying (i) that this Lease is unmodified and in full force and effect (or if there have been modifications, a description of such modifications and that this Lease as modified is in full force and effect); (ii) the dates to which Rent has been paid; (iii) that Tenant is in the possession of the Premises if that is the case; (iv) that Landlord is not in default under this Lease, or, if Tenant believes Landlord is in default, the nature thereof in detail; (v) that Tenant has no offsets or defenses to the performance of its obligations under this Lease (or if Tenant believes there are any offsets or defenses, a full and complete explanation thereof); (vi) that the Premises have been completed in accordance with the terms and provisions hereof, that Tenant has accepted the Premises and the condition thereof and of all improvements thereto and has no claims against Landlord or any other party with respect thereto; (vii) that if an assignment of rents or leases has been served upon the Tenant by a Mortgagee, Tenant will acknowledge receipt thereof and agree to be bound by the provisions thereof; (viii) that Tenant will give to the Mortgagee copies of all notices required or permitted to be given by Tenant to Landlord; and (ix) to any other information reasonably requested. 20.02 ENFORCEMENT In the event that Tenant fails to deliver an Estoppel Certificate, then such failure shall be a Default for which there shall be no cure or grace period. In addition to any other remedy available to Landlord, Landlord may impose a charge equal to $500.00 for each day that Tenant fails to deliver an Estoppel Certificate and Tenant shall be deemed to have irrevocably appointed Landlord as Tenant's attorney-in-fact to execute and deliver such Estoppel Certificate. ARTICLE TWENTY-ONE RELOCATION OF TENANT (Intentionally omitted.) ARTICLE TWENTY-TWO REAL ESTATE BROKERS Tenant represents that, except for the broker(s) listed in Section 1.01(17), Tenant has not dealt with any real estate broker, sales person, or finder in connection with this Lease, and no such person initiated or participated in the negotiation of this Lease, or showed the Premises to Tenant. Tenant hereby agrees to indemnify, protect, defend and hold Landlord and the Indemnitees, harmless from and against any and all liabilities and claims for commissions and fees arising out of a breach of the foregoing representation. Landlord agrees to pay any commission to which Landlord's Broker listed in Section 1.01(17) is entitled in connection with this Lease pursuant to Landlord's written agreement with such broker. Landlord and Tenant agree that any commission payable to Tenant's Broker shall be paid by Tenant except to the extent Tenant's Broker and Landlord's Broker have entered into a separate agreement between themselves to share the commission paid to Landlord's Broker by Landlord. ARTICLE TWENTY-THREE MORTGAGEE PROTECTION 23.01 SUBORDINATION AND ATTORNMENT This Lease is and shall be expressly subject and subordinate at all times to the Declaration and all other documents relating to the condominium of which the Building forms a part and to (i) any ground or underlying 32 <PAGE> lease of the Real Property, now or hereafter existing, and all amendments, extensions, renewals and modifications to any such lease, and (ii) the lien of any mortgage or trust deed now or hereafter encumbering fee title to the Real Property and/or the leasehold estate under any such lease, and all amendments, extensions, renewals, replacements and modifications of such mortgage or trust deed and/or the obligation secured thereby, unless such ground lease or ground lessor, or mortgage, trust deed or Mortgagee, expressly provides or elects that the Lease shall be superior to such lease or mortgage or trust deed. If any such mortgage or trust deed is foreclosed (including any sale of the Real Property pursuant to a power of sale), or if any such lease is terminated, upon request of the Mortgagee or ground lessor, as the case may be, Tenant shall attorn to the purchaser at the foreclosure sale or to the ground lessor under such lease, as the case may be, provided, however, that such purchaser or ground lessor shall not be (i) bound by any payment of Rent for more than one month in advance except payments in the nature of security for the performance by Tenant of its obligations under this Lease; (ii) subject to any offset, defense or damages arising out of a default of any obligations of any preceding Landlord; or (iii) bound by any amendment or modification of this Lease made without the written consent of the Mortgagee or ground lessor; or (iv) liable for any security deposits not actually received in cash by such purchaser or ground lessor. This subordination shall be self-operative and no further certificate or instrument of subordination need be required by any such Mortgagee or ground lessor. In confirmation of such subordination, however, Tenant shall execute promptly any reasonable certificate or instrument that Landlord, Mortgagee or ground lessor may request. Tenant hereby constitutes Landlord as Tenant's attorney-in-fact to execute such certificate or instrument for and on behalf of Tenant upon Tenant's failure to do so within fifteen (15) days of a request to do so. Upon request by such successor in interest, Tenant shall execute and deliver reasonable instruments confirming the attornment provided for herein. 23.02 MORTGAGEE PROTECTION Tenant agrees to give any Mortgagee or ground lessor, by registered or certified mail, a copy of any notice of default served upon the Landlord by Tenant, provided that prior to such notice Tenant has received notice (by way of service on Tenant of a copy of an assignment of rents and leases, or otherwise) of the address of such Mortgagee or ground lessor. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee or ground lessor shall have an additional thirty (30) days after receipt of notice thereof within which to cure such default or if such default cannot be cured within that time, then such additional notice time as may be necessary, if, within such thirty (30) days, any Mortgagee or ground lessor has commenced and is diligently pursuing the remedies necessary to cure such default (including commencement of foreclosure proceedings or other proceedings to acquire possession of the Real Property, if necessary to effect such cure). Such period of time shall be extended by any period within which such Mortgagee or ground lessor is prevented from commencing or pursuing such foreclosure proceedings or other proceedings to acquire possession of the Real Property by reason of Landlord's bankruptcy. Until the time allowed as aforesaid for Mortgagee or ground lessor to cure such defaults has expired without cure, Tenant shall have no right to, and shall not, terminate this Lease on account of default. This Lease may not be modified or amended so as to reduce the Rent or shorten the Term, or so as to adversely affect in any other respect to any material extent the rights of the Landlord, nor shall this Lease be canceled or surrendered, without the prior written consent, in each instance, of the ground lessor or the Mortgagee. ARTICLE TWENTY-FOUR NOTICES (a) All notices, demands or requests provided for or permitted to be given pursuant to this Lease must be in writing and shall be personally delivered, sent by Federal Express or other reputable overnight courier service, or mailed by first class, registered or certified United States mail, return receipt requested, postage prepaid. 33 <PAGE> (b) All notices, demands or requests to be sent pursuant to this Lease shall be deemed to have been properly given or served by delivering or sending the same in accordance with this Section, addressed to the parties hereto at their respective addresses listed in Sections 1.01(2) and (3). (c) Notices, demands or requests sent by mail or overnight courier service as described above shall be effective upon deposit in the mail or with such courier service. However, the time period in which a response to any such notice, demand or request must be given shall commence to run from (i) in the case of delivery by mail, the date of receipt on the return receipt of the notice, demand or request by the addressee thereof, or (ii) in the case of delivery by Federal Express or other overnight courier service, the date of acceptance of delivery by an employee, officer, director or partner of Landlord or Tenant. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given, as indicated by advice from Federal Express or other overnight courier service or by mail return receipt, shall be deemed to be receipt of notice, demand or request sent. Notices may also be served by personal service upon any officer, director or partner of Landlord or Tenant, and shall be effective upon such service. (d) By giving to the other party at least thirty (30) days written notice thereof, either party shall have the right from time to time during the term of this Lease to change their respective addresses for notices, statements, demands and requests, provided such new address shall be within the United States of America. ARTICLE TWENTY-FIVE MISCELLANEOUS 25.01 LATE CHARGES (a) All payments required hereunder (other than the Monthly Base Rent, Rent Adjustments, and Rent Adjustment Deposits, which shall be due as hereinbefore provided) to Landlord shall be paid within ten (10) days after Landlord's demand therefor. All such amounts (including Monthly Base Rent, Rent Adjustments, and Rent Adjustment Deposits) not paid when due shall bear interest from the date due until the date paid at the Default Rate in effect on the date such payment was due. (b) In the event Tenant is more than five (5) days late in paying any installment of Rent due under this Lease, Tenant shall pay Landlord a late charge equal to five percent (5%) of the delinquent installment of Rent. The parties agree that (i) such delinquency will cause Landlord to incur costs and expenses not contemplated herein, the exact amount of which will be difficult to calculate, including the cost and expense that will be incurred by Landlord in processing each delinquent payment of rent by Tenant, (b) the amount of such late charge represents a reasonable estimate of such costs and expenses and that such late charge shall be paid to Landlord for each delinquent payment in addition to all Rent otherwise due hereunder. The parties further agree that the payment of late charges and the payment of interest provided for in subparagraph (a) above are distinct and separate from one another in that the payment of interest is to compensate Landlord for its inability to use the money improperly withheld by Tenant, while the payment of late charges is to compensate Landlord for its additional administrative expenses in handling and processing delinquent payments. (c) Payment of interest at the Default Rate and/or of late charges shall not excuse or cure any default by Tenant under this Lease, nor shall the foregoing provisions of this Article or any such payments prevent Landlord from exercising any right or remedy available to Landlord upon Tenant's failure to pay Rent when due, including the right to terminate this Lease. 25.02 NO JURY TRIAL; VENUE; JURISDICTION Each party hereto (which includes any assignee, successor, heir or personal representative of a party) shall not seek a jury trial, hereby waives trial by jury, and hereby further waives any objection to venue in the County in which the Building is located, and agrees and consents to personal jurisdiction of the courts of the 34 <PAGE> State of California, in any action or proceeding or counterclaim brought by any party hereto against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises, or any claim of injury or damage, or the enforcement of any remedy under any statute, emergency or otherwise, whether any of the foregoing is based on this Lease or on tort law. No party will seek to consolidate any such action in which a jury has been waived with any other action in which a jury trial cannot or has not been waived. It is the intention of the parties that these provisions shall be subject to no exceptions. By execution of this Lease the parties agree that this provision may be filed by any party hereto with the clerk or judge before whom any action is instituted, which filing shall constitute the written consent to a waiver of jury trial pursuant to and in accordance with Section 631 of the California Code of Civil Procedure. No party has in any way agreed with or represented to any other party that the provisions of this Section will not be fully enforced in all instances. The provisions of this Section shall survive the expiration or earlier termination of this Lease. 25.03 DEFAULT UNDER OTHER LEASE It shall be a Default under this Lease if Tenant or any Affiliate holding any other lease with Landlord for premises in the Building defaults under such lease and as a result thereof such lease is terminated or terminable. 25.04 OPTION This Lease shall not become effective as a lease or otherwise until executed and delivered by both Landlord and Tenant. The submission of the Lease to Tenant does not constitute a reservation of or option for the Premises, but when executed by Tenant and delivered to Landlord, the Lease shall constitute an irrevocable offer by Tenant in effect for fifteen (15) days to lease the Premises on the terms and conditions herein contained. 25.05 TENANT AUTHORITY Tenant represents and warrants to Landlord that it has full authority and power to enter into and perform its obligations under this Lease, that the person executing this Lease is fully empowered to do so, and that no consent or authorization is necessary from any third party. Landlord may request that Tenant provide Landlord evidence of Tenant's authority. 25.06 ENTIRE AGREEMENT This Lease, the Exhibits and Rider(s) attached hereto contain the entire agreement between Landlord and Tenant concerning the Premises and there are no other agreements, either oral or written, and no other representations or statements, either oral or written, on which Tenant has relied. This Lease shall not be modified except by a writing executed by Landlord and Tenant. 25.07 MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE If Mortgagee of Landlord requires a modification of this Lease which shall not result in any increased cost or expense to Tenant or in any other substantial and adverse change in the rights and obligations of Tenant hereunder, then Tenant agrees that the Lease may be so modified. 25.08 EXCULPATION Tenant agrees, on its behalf and on behalf of its successors and assigns, that any liability or obligation under this Lease shall only be enforced against Landlord's equity interest in the Property up to a maximum of Five Million Dollars ($5,000,000.00) and in no event against any other assets of the Landlord, or Landlord's officers or directors or partners, and that any liability of Landlord with respect to this Lease shall be so limited and Tenant shall not be entitled to any judgment in excess of such amount. 35 <PAGE> 25.09 ACCORD AND SATISFACTION No payment by Tenant or receipt by Landlord of a lesser amount than any installment or payment of Rent due shall be deemed to be other than on account of the amount due, and no endorsement or statement on any check or any letter accompanying any check or payment of Rent shall be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such installment or payment of Rent or pursue any other remedies available to Landlord. No receipt of money by Landlord from Tenant after the termination of this Lease or Tenant's right of possession of the Premises shall reinstate, continue or extend the Term. Receipt or acceptance of payment from anyone other than Tenant, including an assignee of Tenant, is not a waiver of any breach of Article Ten, and Landlord may accept such payment on account of the amount due without prejudice to Landlord's right to pursue any remedies available to Landlord. 25.10 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING In the event of any sale or other transfer of the Building, Landlord shall be entirely freed and relieved of all agreements and obligations of Landlord hereunder accruing or to be performed after the date of such sale or transfer, and any remaining liability of Landlord with respect to this Lease shall be limited to the dollar amount specified in Section 25.08 and Tenant shall not be entitled to any judgment in excess of such amount. 25.11 BINDING EFFECT Subject to the provisions of Article Ten, this Lease shall be binding upon and inure to the benefit of Landlord and Tenant and their respective heirs, legal representatives, successors and permitted assigns. 25.12 CAPTIONS The Article and Section captions in this Lease are inserted only as a matter of convenience and in no way define, limit, construe, or describe the scope or intent of such Articles and Sections. 25.13 TIME; APPLICABLE LAW; CONSTRUCTION Time is of the essence of this Lease and each and all of its provisions. This Lease shall be construed in accordance with the Laws of the State of California. If more than one person signs this Lease as Tenant, the obligations hereunder imposed shall be joint and several. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each item, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by Law. Wherever the term "including" or "includes" is used in this Lease, it shall have the same meaning as if followed by the phrase "but not limited to". The language in all parts of this Lease shall be construed according to its normal and usual meaning and not strictly for or against either Landlord or Tenant. 25.14 ABANDONMENT In the event Tenant vacates or abandons the Premises but is otherwise in compliance with all the terms, covenants and conditions of this Lease, Landlord shall (i) have the right to enter into the Premises in order to show the space to prospective tenants, (ii) have the right to reduce the services provided to Tenant pursuant to the terms of this Lease to such levels as Landlord reasonably determines to be adequate services for an unoccupied premises and (iii) during the last six (6) months of the Term, have the right to prepare the Premises for occupancy by another tenant upon the end of the Term. Tenant expressly acknowledges that in the absence of written notice pursuant to Section 11.02(b) or pursuant to California Civil Code Section 36 <PAGE> 1951.3 terminating Tenant's right to possession, none of the foregoing acts of Landlord or any other act of Landlord shall constitute a termination of Tenant's right to possession or an acceptance of Tenant's surrender of the Premises, and the Lease shall continue in effect. 25.15 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES If Tenant fails timely to perform any of its duties under this Lease, Landlord shall have the right (but not the obligation), to perform such duty on behalf and at the expense of Tenant without prior notice to Tenant, and all sums expended or expenses incurred by Landlord in performing such duty shall be deemed to be additional Rent under this Lease and shall be due and payable upon demand by Landlord. 25.16 SECURITY SYSTEM Landlord shall not be obligated to provide or maintain any security patrol or security system. Landlord shall not be responsible for the quality of any such patrol or system which may be provided hereunder or for damage or injury to Tenant, its employees, invitees or others due to the failure, action or inaction of such patrol or system. 25.17 NO LIGHT, AIR OR VIEW EASEMENTS Any diminution or shutting off of light, air or view by any structure which may be erected on lands of or adjacent to the Project shall in no way affect this Lease or impose any liability on Landlord. 25.18 RECORDATION Neither this Lease, nor any notice nor memorandum regarding the terms hereof, shall be recorded by Tenant. Any such unauthorized recording shall be a Default for which there shall be no cure or grace period. Tenant agrees to execute and acknowledge, at the request of Landlord, a memorandum of this Lease, in recordable form. 25.19 SURVIVAL The waivers of the right of jury trial, the other waivers of claims or rights, the releases and the obligations of Tenant under this Lease to indemnify, protect, defend and hold harmless Landlord and/or Indemnitees shall survive the expiration or termination of this Lease, and so shall all other obligations or agreements which by their terms survive expiration or termination of the Lease. 25.20 RIDERS All Riders attached hereto and executed both by Landlord and Tenant shall be deemed to be a part hereof and hereby incorporated herein. 37 <PAGE> ARTICLE TWENTY-SIX HAZARDOUS SUBSTANCES DISCLOSURE California law requires landlords to disclose to tenants the existence of certain hazardous substances. Accordingly, Tenant is hereby notified of the existence of asbestos containing materials ("ACM"). Certain areas of the Building contain ACM, but these areas are generally inaccessible to tenants, such as machinery rooms, the inside of sealed walls and above suspended ceilings. Tenant agrees not to expose or disturb any ACM unless Landlord has given Tenant prior written consent thereto and Tenant complies with all applicable legal requirements and the Building's written procedures for handling ACM. Tenant may obtain a copy of the Building's written procedures for handling asbestos from the Building office. IN WITNESS WHEREOF, this Lease has been executed as of the date set forth in Section 1.01(4) hereof. TENANT: LANDLORD: Embarcadero Technologies, Inc., Metropolitan Life Insurance Company, a California corporation a New York corporation By /s/ Stephen Wong By /s/ Edward J. Hayes --------------------------------- --------------------------------- Stephen Wong Edward J. Hayes --------------------------------- --------------------------------- Print name Print name Its Chairman Its Assistant Vice President --------------------------------- --------------------------------- (Chairman of Board, President or Vice President) By /s/ Ann M. Roesch --------------------------------- Ann M. Roesch --------------------------------- Print name Its Assistant Secretary --------------------------------- (Secretary, Assistant Secretary, CFO or Assistant Treasurer) 38 <PAGE> EXHIBIT A PLAN OF PREMISES Exhibit A - Page 1 <PAGE> EXHIBIT B WORKLETTER AGREEMENT (intentionally omitted) Exhibit B - Page 1 <PAGE> EXHIBIT C RULES AND REGULATIONS As used here, all capitalized terms, including, for example, Premises, Landlord, Tenant, Building and Project, shall have the meanings set forth in the Lease of which these Rules and Regulations form a part. 1. No sign, placard, picture, advertisement, name or notice shall be inscribed, displayed, printed or affixed on or to any part of the outside or inside of the Building or Project or elsewhere on or within the Premises, except in the interior of the Premises, unless approved by the Landlord. Nothing shall be placed near the glass of any window, door, partition, or wall which may appear unsightly from outside the Project and no curtains, draperies, blinds, shutters, shades, screens or other coverings, hangings or decorations shall be attached to, hung or placed in, or used in connection with, any window in the Premises unless approved by the Landlord. In any event, where approved by the Landlord, all such items shall be installed inboard of the standard draperies provided for the Premises and shall in no way be visible from the exterior of the Project. The doors, windows, light fixtures and any lights or skylights that reflect or admit light into the halls or other places of the Building shall not be covered or obstructed. 2. Except for any food and/or beverage services and except for any vending machine services approved by the Landlord for operation in the Project, no part of the Premises shall be used to manufacture any commodity or to prepare or dispense any food or beverage, nor shall any cooking be done or permitted in or about the Premises, and no vending machine or machines of any description which dispense or sell any food, beverage or product shall be installed, maintained or operated in or about the Premises. 3. Nothing shall be done or permitted in or about the Premises, or brought or kept therein, which shall in any way increase the rate of or cause a cancellation of or otherwise affect any fire or other insurance upon the Building, the Project or any property kept therein, or conflict with any fire laws or regulations or with any insurance policy upon the Premises or any part thereof. Unless approved by the Landlord, no kerosene, gasoline or inflammable or combustible fluid or material shall be used or kept in or about the Premises; nor shall any method of heating or air conditioning be used for the Premises other than that supplied by the Landlord. The Tenant shall comply with all fire regulations that may be approved by the Landlord. In the event any use or activity shall lead to an increase in fire or other insurance premiums payable on the insurance obtained by the Landlord, or insurance covering Project Areas for which the Building pays a share, or insurance procured by an individual tenant, the party causing such increase shall be liable for payment of the same to the Landlord, the owners of the Project or such individual tenant, as the case may be. The party so charged with increasing premium costs shall have the right to contest the validity of such increase. 4. Nothing shall be done or permitted in or about the Premises which shall in any way obstruct or interfere with the use of the Premises for their intended purposes, or obstruct or interfere with the rights of any Tenant or occupant of the Project, or injure or annoy them, nor shall the Premises or any part thereof be used for any immoral, unlawful, disorderly or extra-hazardous purpose, or for lodging or sleeping, nor shall any nuisance be caused, maintained or permitted in or about the Premises, nor shall any animals or birds be brought or kept in or about the Premises. 5. The floors of the Building shall not be overloaded, nor shall any safe or other heavy object be installed in the Premises without sufficient provision being made for the proper distribution of the weight thereof. 6. Tenant shall not install any radio or television antenna, loudspeaker or any other device on the exterior of the office building of which the Building is a part. 7. Tenant shall keep its Premises in a good state of preservation and cleanliness. It shall not allow anything whatever to fall from the windows or doors of the Premises, nor shall it sweep or throw from the Premises any dirt or other substance into any of the corridors or halls, elevators, ventilators or elsewhere Exhibit C - Page 1 <PAGE> in the Building or the Project. Refuse shall be placed in containers in such manner and at such times and places as may be directed by the Landlord, the manager of the Building or Project, or its agents. 8. The sidewalks, entrances, elevators, vestibules, stairways, corridors, halls, landings and fire exits must not be obstructed or encumbered or used for any purpose other than ingress and egress to and from the Premises, the Building and the Project. 9. Tenant and occupants shall not cause or permit any disturbing noises or objectionable odors to be produced upon or to emanate from the Premises. 10. Water closets and other water apparatus in the Building shall not be used for any purpose other than those for which they were designed, nor shall any sweepings, rubbish, rags or other articles be thrown into same. Any damage resulting from misuse of any water closets or other apparatus in the Premises shall be repaired and paid for by Tenant. 11. No vehicle belonging to a Tenant or to an employee, licensee, invitee, contractor, agent, client or visitor of a Tenant or occupant shall be parked in such manner as to impede or prevent ready access by any other vehicle to any entrance to or exit from the Building, Project or parking garage. 12. Tenant and occupants and employees, licensees, invitees, contractor, agents, clients or visitors shall not at any time or for any reason whatsoever enter upon or attempt to enter upon the roof of the office building of which the Building is a part. 13. Canvassing, soliciting and peddling in or about the Premises shall be prohibited and Tenant and occupants of the Premises shall cooperate to prevent the same. 14. Unless approved by the Landlord, no hand trucks, except those equipped with rubber tires and side guards, shall be used in or about the Project, and no other carts or vehicles of any kind shall be used in or about the Building except for those which are permitted to be used in the Project's parking garage. 15. No furniture, freight, or equipment of any kind shall be brought into or received in the Project or carried in the elevators, except at such time and in such manner as shall be approved by the Landlord or by the manager of the Building or Project. 16. The bulletin board or directory of the Project shall be used exclusively for the display of the names and locations of the tenants and occupants of the Project, and Landlord reserves the right to exclude any other names therefrom, to limit the number of names associated with particular occupants of the Building to be identified thereon, and to charge for names associated with such occupants at rates applicable to all occupants of the Building. 17. Tenant shall see that the exterior doors of its Premises are closed and securely locked on Saturdays, Sundays and legal holidays and not later than 7:00 P.M. of each other day. Tenant shall exercise care and caution that all water faucets or water apparatus are entirely shut off before Tenant or its employees leave the Premises, and that all utilities, electricity, gas or air, shall likewise be carefully shut off so as to prevent waste or damage. 18. Tenant shall comply with such security measures and procedures as may be approved by Landlord for the operation of the Building and the conduct of business therein. 19. Complaints regarding services or operation of the Building shall be made in writing to Landlord or the manager of the Building. 20. All work performance by or on behalf of Tenant shall be performed in compliance with the 425 Market Street Tenant Construction Standards and in accordance with the Conditions for Construction Exhibit C - Page 2 <PAGE> and Asbestos Procedures. 21. These rules and regulations and any consent or approval given hereunder may be added to, amended or repealed at any time by Landlord. Exhibit C - Page 3 <PAGE> RIDER 1 COMMENCEMENT DATE AGREEMENT Metropolitan Life Insurance Company, a New York corporation ("Landlord"), and Embarcadero Technologies, Inc., a California corporation ("Tenant"), have entered into a certain Office Lease dated as of __________________, 1999 (the "Lease"). WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement Date and Expiration Date of the Lease as provided for in Section 2.02(b) of the Lease; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and in the Lease, Landlord and Tenant agree as follows: 1. Unless otherwise defined herein, all capitalized terms shall have the same meaning ascribed to them in the Lease. 2. The Commencement Date (as defined in the Lease) of the Lease is _______________. 3. The Expiration Date (as defined in the Lease) of the Lease is ______________. 4. Tenant hereby confirms the following: (a) That it has accepted possession of the premises pursuant to the terms of the Lease; (b) That the Landlord Work, if any, is Substantially Complete; and (c) That the Lease is in full force and effect. 5. Except as expressly modified hereby, all terms and provisions of the Lease are hereby ratified and confirmed and shall remain in full force and effect and binding on the parties hereto. 6. The Lease and this Commencement Date Agreement contain all of the terms, covenants, conditions and agreements between the Landlord and the Tenant relating to the subject matter herein. No prior other agreements or understandings pertaining to such matters are valid or of any force and effect. TENANT: LANDLORD: ------ -------- Embarcadero Technologies, Inc., Metropolitan Life Insurance Company, a California corporation a New York corporation By By -------------------------------- --------------------------------- Print name Print name Its Its -------------------------------- --------------------------------- (Chairman of Board, President or Vice President) By -------------------------------- Rider 1 - Page 1 <PAGE> -------------------------------- Print name Its -------------------------------- (Secretary, Assistant Secretary, CFO or Assistant Treasurer) Rider 1 - Page 2 <PAGE> RIDER 2 ADDITIONAL PROVISIONS This Rider 2 ("Rider") is attached to and a part of a certain Office Lease dated as of ____________, 1999 executed concurrently herewith by Metropolitan Life Insurance Company, a New York corporation, as Landlord, and Embarcadero Technologies, Inc., a California corporation, as Tenant, for the Premises as described therein (the "Lease"). SECTION 1. DEFINED TERMS; FORCE AND EFFECT Capitalized terms used in this Rider shall have the same meanings set forth in the Lease except as otherwise specified herein and except for terms capitalized in the ordinary course of punctuation. This Rider forms a part of the Lease. Without limiting the generality of the foregoing, any default by any party hereunder shall have the same force and effect as a default under the Lease. Should any inconsistency arise between this Rider and any other provision of the Lease as to the specific matters which are the subject of this Rider, the terms and conditions of this Rider shall control. SECTION 2. PREMISES LEASED "AS-IS"; DELIVERY; COMMENCEMENT DATE; AND CONSTRUCTION 2.1. AS-IS; DELIVERY; COMMENCEMENT DATE. Notwithstanding any provision of the Lease to the contrary: (a) AS-IS. Except to the extent of any Landlord Work and Landlord Maximum Contribution described below: (i) Landlord shall deliver the Premises to Tenant in its AS IS condition, without any express or implied representations or warranties of any kind by Landlord, its brokers, manager or agents, or the employees of any of them regarding the Premises; and (ii) Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation. (b) DELIVERY & COMMENCEMENT DATE. Landlord shall tender to Tenant possession of the Premises June 1, 1999 (the "Delivery Date"). Possession will be adequately tendered to Tenant by Landlord either delivering the keys (or other means of access) to Tenant or Tenant's Broker, or by Landlord giving written notice that the keys (or other means of access) to the Premises are available for Tenant or its representative to pick up at the office of Landlord or of the Property Manager of the Building. Tenant's possession from the Delivery Date (or from any earlier date Tenant takes possession in the event that Landlord, in its sole discretion, tenders possession earlier) to the Commencement Date may be referred to as the Interim Term, and is to provide some time for purposes of design and construction of Tenant Work and Landlord Work, fixturing and moving. Tenant's possession of the space shall be subject to all of the terms, covenants and conditions of this Lease, including any amounts payable under this Lease, except that Monthly Base Rent shall not be payable by Tenant and the initial Term shall not commence until the Commencement Date. The Commencement Date shall be the date specified as the Projected Commencement Date. (c) DELAY IN DELIVERY. If Landlord does not obtain and tender possession of the Premises by the Delivery Date by reason of the following: (i) the holding over or retention of possession of any tenant, tenants or occupants, or (ii) for any other reason, then Landlord shall not be subject to any liability for the failure to give possession on said date. Under such circumstances the Commencement Date shall be delayed by a number of days equal to the days of delay in Landlord's delivery of possession to Tenant. No such failure to give possession shall affect the validity of this Lease or the obligations of the Tenant hereunder. Within thirty (30) days following the occurrence of the Commencement Date, Landlord and Tenant shall enter into an agreement (which is attached to this Lease as RIDER 1) confirming the Rider 2 - Page 1 <PAGE> Commencement Date and the Expiration Date. If Tenant fails to enter into such agreement, then the Commencement Date and the Expiration Date shall be the dates designated by Landlord in such agreement. 2.2 LANDLORD WORK. Notwithstanding any provision of the Lease to the contrary: (a) DEFINITION. Landlord shall be responsible for, but may include in Operating Expenses the cost of, the following (the "Landlord's Work"): upgrades and modifications if and to the extent necessary so that the existing core restrooms on the floor on which the Premises is located and a path of travel through the Common Areas to the Premises comply with Title 24 accessibility standards, as applicable and as interpreted at the time of execution of this Lease. (b) RIGHT OF ENTRY; TENANT'S RESPONSIBILITIES. Landlord shall select a general contractor who shall commence the Landlord Work within a reasonable time after the Delivery Date and thereafter shall complete it with reasonable diligence. To the extent that design and construction of any or all of the Landlord Work pursuant to this Rider will require access, work or construction within or through the Premises, Landlord and Landlord's representatives and contractors shall have the right to enter the Premises to perform such work, and Tenant agrees that such entry and work shall not constitute an eviction of Tenant in whole or in part and that rent and other sums due and payable by Tenant under the Lease with respect to the Premises after the Commencement Date shall in no way be abated or reduced by reason of inconvenience, annoyance, disturbance or injury to the business of Tenant due to such access, work or construction. Tenant shall cooperate with Landlord and Landlord's contractors(s) to allow such access and any necessary coordination of construction. (c) ACCEPTANCE OF LANDLORD WORK. Tenant shall notify Landlord in writing within thirty (30) days after the Commencement Date of any defects claimed by Tenant in the Landlord Work. Except for defects stated in such thirty (30) day notice and Latent Defects (defined below) (collectively, "Defects") of which Tenant gives Landlord notice ten (10) months after Substantial Completion of the Landlord Work, Tenant shall be conclusively deemed to have accepted the Landlord Work "AS IS" in the condition existing on the date Tenant first takes possession, and to have waived all claims relating to its condition. Landlord shall proceed diligently to correct the Defects stated in the applicable notice unless Landlord disputes the existence of any such Defects. For purposes of this Lease, "Latent Defects" shall mean defects in Landlord Work which were not readily apparent when the thirty (30) day notice was due. 2.3. TENANT WORK GENERALLY. Landlord and Tenant acknowledge and agree that notwithstanding any provisions of the Lease to the contrary: (a) Tenant shall be responsible for all design, demolition, repair, remodeling, improvement or alteration in connection with its initial occupancy, which for purposes of this Lease is referred to as the Tenant Work; (b) all Tenant Work, if any, shall be done as Tenant Alterations within the meaning of Article Nine of the Lease, subject to and in compliance with all conditions and provisions of the Lease applicable to Tenant Alterations, except as otherwise expressly provided in this Rider; (c) without limiting the generality of any provisions of Article Nine, Tenant's selection of Tenant's space planner and/or architect and Tenant's selection of contractor(s) shall be subject to Landlord's prior written approval, which shall not unreasonably be withheld; (d) if the Tenant Work does not exceed the amount of Landlord's Maximum Contribution, Tenant shall not be required to obtain a completion and lien indemnity bond for the Tenant Work; (e) such work, including all design, plan review, obtaining all approvals and permits, and construction shall be at Tenant's sole cost and expense (subject to reimbursement from Landlord's Maximum Contribution), including delivery to Landlord of plans and specifications of such Tenant Work (including 3 mylar copies of as-built plans and specifications upon completion); and (f) Tenant shall pay Landlord a fee ("Construction Monitoring Fee") equal to five percent (5%) of the construction costs (exclusive of Soft Costs, as defined below) for the review and approval of Tenant's plans and specifications, monitoring related to the Tenant Work, access, elevator usage during normal business hours and power. Landlord shall be entitled to deduct and retain such portions of the Construction Monitoring Fee as are payable from time to time to the extent funds are available out of Landlord's Maximum Contribution. Notwithstanding the foregoing, in the event the Tenant shall select and engage Shorenstein Company L. P. as Tenant's general contractor for the Tenant Work, no Construction Monitoring Fee shall be due as long as such company Rider 2 - Page 2 <PAGE> performs the Tenant Work noted above. 2.4. DESIGN & CONSTRUCTION RESPONSIBILITY FOR ANY TENANT WORK. Tenant shall be responsible for the suitability for the Tenant's needs and business of the design and function of all Tenant Work and for its construction in compliance with all Law as applicable and as interpreted at the time of construction of the Tenant Work, including all building codes and the ADA (as defined in the Lease). In the event that this Lease or any improvements or alterations in connection herewith triggers any upgrades or modifications of existing improvements in the Premises to comply with Law, Tenant shall also be responsible for such upgrades and modifications, except to the extent of any Landlord Work and Landlord Maximum Contribution. Tenant, through its architects and/or space planners ("Tenant's Architect"), shall prepare all architectural plans and specifications, and engineering plans and specifications, for the real property improvements to be constructed by Tenant in the Premises in sufficient detail to be submitted to Landlord for approval, as required pursuant to Article Nine of the Lease, and to be submitted by Tenant for governmental approvals and building permits and to serve as the detailed construction drawings and specifications for the contractor, and shall include, among other things, all partitions, doors, heating, ventilating and air conditioning installation and distribution, ceiling systems, light fixtures, plumbing installations, electrical installations and outlets, telephone installations and outlets, any other installations required by Tenant, fire and life-safety systems, wall finishes and floor coverings, whether to be newly installed or requiring changes from the as-is condition of the Premises as of the date of execution of the Lease. Tenant shall be responsible for the oversight, supervision and construction of all Tenant Work in compliance with this Lease, including compliance with all Law as applicable and as interpreted at the time of construction, including all building codes and the ADA. 2.5. LANDLORD'S MAXIMUM CONTRIBUTION: AMOUNT; REIMBURSABLE COSTS & PAYMENT. Landlord's Maximum Contribution means an amount up to a maximum of Seventy-two Thousand Two Hundred and Forty Dollars ($72,240.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises, and shall be payable as provided below. Landlord's Maximum Contribution may not be used to reimburse or pay soft costs ("Soft Costs") associated with the Tenant Work, including costs for design, plans, and obtaining approvals or permits for the real property improvements which constitute the Tenant Work except up to a maximum of Twenty Thousand Six Hundred and Forty Dollars ($20,640.00) ("Soft Costs Maximum") and except for any additional amount in payment of the Construction Monitoring Fee. In no event shall the Landlord's Maximum Contribution be used to reimburse any costs of designing, procuring or installing in the Premises any trade fixtures, signage, movable equipment, furniture, furnishings, telephone equipment, cabling for any of the foregoing, or other personal property (collectively "Personal Property" for purposes of this Rider), and the cost of such Personal Property shall be paid by Tenant. Landlord's Maximum Contribution shall be paid to Tenant within 30 days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of occupancy (if applicable), (ii) final as-built plans and specifications, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Rider 2 - Page 3 <PAGE> 2.6. CERTAIN CONTRACTOR MATTERS. Subject to the approval and other requirements of Article Nine of the Lease, Tenant may select the general contractor to construct the Tenant Work and Tenant shall competitively bid the Tenant Work to a sufficient number of contractors, all of which contractors shall be from an approved list of contractors provided by Landlord. Tenant may in writing submit additional contractors and subcontractors (except that the subcontractors for work relating to Building systems, including the mechanical, heating, plumbing, security, ventilating, air-conditioning, electrical, communication and fire and life safety systems of the Building may be specified by Landlord, in its sole discretion) to Landlord for Landlord's prior written approval for use by Tenant for the Tenant Work, which approval shall not unreasonably be withheld, and Tenant shall include with such request information concerning such contractors and subcontractors qualifications, necessary licenses and references for evaluation by Landlord, and Tenant shall provide such further information as Landlord may reasonably request. IN WITNESS WHEREOF, the parties hereto have executed this Rider 2 as of the date first set forth in the Lease. TENANT: LANDLORD: Embarcadero Technologies, Inc., Metropolitan Life Insurance Company, a California corporation a New York corporation By /s/ Stephen Wong By /s/ Edward J. Hayes --------------------------------- --------------------------------- Stephen Wong Edward J. Hayes --------------------------------- --------------------------------- Print name Print name Its Chairman Its Assistant Vice President --------------------------------- --------------------------------- (Chairman of Board, President or Vice President) By /s/ Ann M. Roesch --------------------------------- Ann M. Roesch --------------------------------- Print name Its Assistant Secretary --------------------------------- (Secretary, Assistant Secretary, CFO or Assistant Treasurer) Rider 2 - Page 4 <PAGE> FIRST AMENDMENT TO OFFICE LEASE This First Amendment to Office Lease ("First Amendment") is dated as of December 22, 1999 by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (herein referred to as "Metropolitan" or "Landlord"), as Landlord, and EMBARCADERO TECHNOLOGIES, INC., a California corporation (herein referred to as "Tenant"), as tenant, with reference to the following facts: RECITALS A. Landlord and Tenant entered into that certain lease dated as of April 23, 1999 (the "Original Lease") for the Premises referred to therein. B. Landlord and Tenant desire to provide for the lease to Tenant of the Expansion Space (defined below) for the extended term specified herein, all subject to al of the conditions, terms, covenants and agreements provided in this First Amendment. NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants set forth herein and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: Section 1. DEFINED TERMS. All capitalized terms not otherwise defined herein have the meanings set forth in the Original Lease unless the context clearly requires otherwise. The Original Lease, as amended by this First Amendment, is hereinafter referred to as the "Lease." Section 2. CONFIRMATION OF TERM. Landlord and Tenant acknowledge and agree that notwithstanding any provision of the Lease to the contrary, the Expiration Date of the Lease including with respect to the Expansion space, is June 14, 2004. Section 3. LEASE OF THE EXPANSION SPACE. (a) Effective as of January 1, 2000 (the "Effective Date") Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Expansion Space (defined below) upon and subject to all of the terms, covenants and conditions of the Lease except as expressly provided herein. The "Expansion Space" is located on the northeast corner of the fifth (5th) floor of the Building as shown on EXHIBIT A to this First Amendment. Landlord and Tenant hereby agree that (i) the Expansion Space is conclusively presumed to be 4,197 rentable square feet; and (ii) this First Amendment contains all rights and obligations of the parties with respect to expansion of the Premises, whether or not in accordance with any other expansion rights previously granted to Tenant; and upon <PAGE> execution hereof, any and all other rights to expand are null, void and of no force or effect. (b) CONSTRUCTION, COMMENCEMENT DATE; TERM; RENT; OTHER PROVISIONS. Notwithstanding any provision of the Lease to the contrary, the following provisions shall govern the Expansion Space: (1) CONDITION; CONSTRUCTION; TERM. Landlord shall deliver the Expansion Space to Tenant in its AS IS condition, without any express or implied representations or warranties of any kind by Landlord, its brokers, managers or agents, or the employees of any of them regarding the Expansion Space, and Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation. Tenant shall perform any improvements to the Expansion Space (the "Expansion Space Improvements") as Tenant Alterations in accordance with the terms of the Original Lease, including Article 9 thereof. Within thirty (30) days following Tenant's satisfaction of all conditions of Article 9 with respect to the Expansion Space Improvements, Landlord shall reimburse the cost of the Expansion Space Improvements up to the amount of Fifty-Eight Thousand Seven Hundred Fifty-Eight Dollars ($58,758.00). Landlord shall not be obligated to pay any amount in excess of Fifty-Eight Thousand Seven Hundred Fifty-Eight Dollars ($58,758.00) on account of the Expansion Space Improvements. Landlord shall deliver possession of the Expansion Space to Tenant for occupancy upon the Effective Date, and, upon such delivery, the Expansion Space shall become part of the Premises, and Tenant's obligation to pay rent with respect to the Expansion Space shall commence as of the Effective Date. The term of the Lease of the Expansion Space shall continue until the Effective Date of the Term of the Lease of the Original Premises. (2) DELAYED OR EARLY DELIVERY OF POSSESSION. If Landlord shall be unable to give possession of the Expansion Space on the Effective Date by reason of the following: (i) the holding over or retention of possession of any tenant, tenants or occupants, or (ii) for any other reason, then Landlord shall not be subject to any liability for the failure to give possession on said date. Under such circumstances the Lease and rent with respect to the Expansion Space shall not commence until the Expansion Space is made available to Tenant by Landlord, and no such failure to give possession on the Effective Date shall affect the validity of this First Amendment, the Lease or the obligations of the Tenant under either The Expansion Space shall be deemed to be ready for Tenant's occupancy in the event any delay in the availability of the Premises for occupancy shall be due to any default on the part of Tenant and/or its subtenant or subtenants. If Landlord delivers possession of the Expansion Space later or earlier than the Effective Date, within thirty (30) days following such earlier or later delivery of possession, Landlord and Tenant shall enter into an agreement (which is attached hereto -2- <PAGE> as EXHIBIT B) confirming such date. If Tenant fails to enter into such agreement, then the actual date of commencement of the Lease with respect to the Expansion Space shall be the date designated by Landlord in such agreement. (c) MONTHLY RENT FOR REMAINING TERM COMMENCING UPON THE EFFECTIVE DATE. Notwithstanding any provision of the Lease to the contrary, in addition to rent payable for the Original Premises, the amount of Monthly Installments of Base Annual Rent due and payable by Tenant for the Expansion Space, accruing on and after the Effective Date and monthly thereafter for the Term shall be as follows: Months 1-2 $0.00 per rentable square foot per year $ 0 Months 3-29 $39.00 per rentable square foot per year $ 13,640.25 per month Months $41.00 per rentable square foot per year $ 14,339.75 30-Expiration Date per month (d) BASE YEAR; TENANT'S SHARE OF OPERATING EXPENSES & OF TAX EXPENSES. Notwithstanding any provision of the Lease to the contrary, with respect to the Expansion Space, Tenant shall pay Tenant's Share of increase over Operating Costs for the Base Year and of increases over Taxes for the Base Year accruing on and after the Effective Date, and for such purposes Tenant's Share is conclusively agreed to be a total of 1.3977% with respect to the Expansion Space for an aggregate of 4.8345% with respect to all of the Premises leased by Tenant under the Lease, as amended hereby. (e) SECURITY DEPOSIT. Notwithstanding anything in the Original Lease to the contrary, Tenant shall deliver an additional security deposit in the amount of Fourteen Thousand Three Hundred Thirty-Nine Dollars and Seventy-Five Cents ($14,339.75), which, together with the original security deposit in the amount of Thirty Thousand Nine Hundred Sixty Dollars ($30,960), shall constitute a Security Deposit in the aggregate amount of Forty-Five Thousand Two Hundred Ninety-Nine Dollars and Seventy-Five Cents ($45,299.75). Section 4. TIME OF ESSENCE. Without limiting the generality of any other provision of the Lease, time is of the essence to each and every term and condition of this First Amendment. Section 5. BROKERS. Notwithstanding any other provision of the Lease to the contrary, Tenant represents and warrants to the Landlord that Shorenstein Realty Services, L.P. is the sole broker who negotiated and brought about the consummation of this First Amendment and that no discussions or negotiations were had with any other -3- <PAGE> broker concerning this First Amendment other than Shorenstein Realty Services, L.P. Based on the foregoing representation and warranty, Landlord has agreed to pay any commission or fee owed Shorenstein Realty Services, L.P. pursuant to Landlord's agreement between Landlord and such broker. Tenant hereby indemnifies and agrees to protect, defend and hold Landlord harmless from and against any claims of brokerage commissions arising out of any discussions or negotiations allegedly had by Tenant with any other broker in connection with the Building and the Premises. The foregoing obligations of Tenant shall survive the expiration or sooner of the Lease. Section 6. GENERAL. The titles or headings of the various parts or sections hereof are intended solely for convenience and are not intended and shall not be deemed to or in any way be used to modify, explain or place any construction upon any of the provisions of this First Amendment. Except as modified by this First Amendment, the terms and provisions of the Lease are hereby ratified and confirmed and shall remain in full force and effect. Should any inconsistency arise between this First Amendment and the Lease as to the specific matters which are the subject of this First Amendment, the terms and conditions of this First Amendment shall control. This First Amendment shall be construed to be a part of the Lease and shall be deemed incorporated in the Lease by this reference. The Lease as amended by this First Amendment constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in the Lease as so amended, in whole or in part, except by a written instrument executed by all of the parties hereto. Each party represents and warrants to the other that it ahs full authority and power to enter into and perform its obligations under this First Amendment, that the person executing this First Amendment is fully empowered to do so, and that no consent or authorization is necessary from any third party. Landlord may request that Tenant provide Landlord evidence of Tenant's authority. This First Amendment may be executed in duplicates or counterparts, or both, and such duplicates or counterparts together shall constitute but one original of the First Amendment. Each duplicate and counterpart shall be equally admissible in evidence, and each original shall fully bind each party who has executed it. -4- <PAGE> IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date first set forth above. Metropolitan Life Insurance Company, a New York corporation By: /s/ Edward J. Hayes ----------------------------------- Its: Assistant Vice President ----------------------------------- Embarcadero Technologies, Inc., a California corporation By: /s/ Stephen Wong ----------------------------------- Its: Chairman ----------------------------------- -5- <PAGE> EXHIBIT B COMMENCEMENT DATE AGREEMENT METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation ("Landlord"), and EMBARCADERO TECHNOLOGIES, INC., a California corporation ("Tenant"), have entered into a certain First Amendment to Office Lease, which First Amendment is dated as of December ___, 1999 (the "First Amendment"). The original Office Lease, as amended by the First Amendment, may be referred to as the "Lease." WHEREAS, Landlord and Tenant wish to confirm and memorialize the actual date as of which the Lease and all of Tenant's obligations thereunder has become effective with respect to the Expansion Space as provided for in the First Amendment; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and in the First Amendment, Landlord and Tenant agree as follows: 1. Unless otherwise defined herein, all capitalized terms shall have the same meaning ascribed to them in the First Amendment and the Lease. 2. The actual date as of which the Lease and all of Tenant's obligations thereunder has become effective with respect to the Expansion Space is ___________. 3. The Effective Date of the Lease, as extended by the First Amendment, is ___________. 4. Tenant hereby confirms the following: (a) that it has accepted possession of the Expansion Space pursuant to the terms of the First Amendment; and (b) that the Lease is in full force and effect. 5. Except as expressly modified hereby, all terms and provisions of the Lease are hereby ratified and confirmed and shall remain in full force and effect and binding on the parties hereto. -1- <PAGE> 6. The Lease and this Expansion Space Commencement Date Agreement contain all of the terms, covenants, conditions and agreements between the Landlord and the Tenant relating to the subject matter herein. No prior other agreements or understandings pertaining to such matters are valid or of any force and effect. Metropolitan Life Insurance Company, a New York corporation By: ----------------------------------- Its: ----------------------------------- Embarcadero Technologies, Inc., a California corporation By: ----------------------------------- Its: ----------------------------------- -2- <PAGE> EXHIBIT A EXPANSION SPACE -3-