attachment 3 – form of ground lease...smrh draft 01/23/17 smrh:480760344.1 old: 479473041.1 012317...

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ATTACHMENT 3 – FORM OF GROUND LEASE

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GROUND LEASE

between

THE CITY COLLEGE OF SAN FRANCISCO, as landlord,

and

33 GOUGH, LLC, as tenant

Dated as of October 17, 2016

____________________, 2017

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TABLE OF CONTENTS

Page

SECTION 1. PREMISES; TERM .....................................................................................1 1.1 Premises. ......................................................................................................1 1.2 Term. ............................................................................................................3 1.3 Definitions....................................................................................................4

SECTION 2. RENT 4 2.1 Tenant’s Covenant to Pay Rent....................................................................4 2.2 Base Rent. ....................................................................................................4 2.3 Percentage Rent. ..........................................................................................7 2.4 Participations................................................................................................9 2.5 Rent. ...........................................................................................................10 2.6 Manner of Payment of Rent. ......................................................................10 2.7 No Abatement or Setoff; Rent Credit. .......................................................10 2.8 Interest on Delinquent Rent. .................................................................. 1011 2.9 Late Charges. .............................................................................................11 2.10 Additional Rent. .........................................................................................11 2.11 Net Lease. ..................................................................................................11 2.12 Lease Buyout Right....................................................................................12 2.13 Failure to Exercise Buyout Rights. ............................................................13

SECTION 3. USES 14 3.1 Permitted Uses Within Premises. ...............................................................14 3.2 Prohibited Uses. .........................................................................................14 3.3 Name. .........................................................................................................14 3.4 California Civil Code Section 1938 Disclosure. .................................... 1415 3.5 Temporary Use Authorization. ..................................................................15

SECTION 4. TAXES AND ASSESSMENTS ............................................................1516 4.1 Payment of Possessory Interest Taxes and Other Impositions. ............. 1516 4.2 CCSF’s Right to Pay. ............................................................................. 1617

SECTION 5. CONTESTS ...............................................................................................17 5.1 Right of Tenant to Contest Impositions and Liens. ............................... 1718 5.2 CCSF’s Right to Contest Impositions. ................................................... 1718

SECTION 6. COMPLIANCE WITH LAWS ..............................................................1819 6.1 Compliance with Laws and Other Requirements. ................................. 1819 6.2 Regulatory Approvals. ........................................................................... 1819

SECTION 7. TENANT’S MANAGEMENT AND OPERATING COVENANTS....1920 7.1 Covenants. .............................................................................................. 1920

SECTION 8. REPAIR AND MAINTENANCE .........................................................2021

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8.1 Covenants to Repair and Maintain the Premises. .................................. 2021 8.2 Capital Reserve Account........................................................................ 2021

SECTION 9. IMPROVEMENTS ................................................................................2122 9.1 Existing Improvements. ......................................................................... 2122 9.2 Initial Improvements. ............................................................................. 2122 9.3 Title to Improvements. ........................................................................... 2122

SECTION 10. SUBSEQUENT CONSTRUCTION ......................................................2223 10.1 CCSF’s Right to Approve Subsequent Improvement Construction. .........23 10.2 Minor Alterations. ......................................................................................23 10.3 Tenant Occupancy Improvements. ............................................................24 10.4 Construction Documents in Connection with Subsequent

Construction. .......................................................................................... 2324 10.5 CCSF’s Approval of Changes to Construction Documents. .................. 2425 10.6 Construction Schedule. .......................................................................... 2425 10.7 Construction. .......................................................................................... 2425 10.8 Safety Matters. ....................................................................................... 2526 10.9 As-Built Plans and Specifications. ......................................................... 2526

SECTION 11. UTILITY SERVICES ............................................................................2627 11.1 Utility Services....................................................................................... 2627

SECTION 12. DAMAGE OR DESTRUCTION ...........................................................2627 12.1 General; Notice; Waiver. ....................................................................... 2627 12.2 Rent after Damage or Destruction. ........................................................ 2728 12.3 Tenant’s Obligation to Restore. ............................................................. 2728 12.4 Major Damage and Destruction or Uninsured Casualty. ....................... 2728 12.5 Effect of Termination. ............................................................................ 3031 12.6 Distribution Upon Lease Termination. .................................................. 3031 12.7 Use of Insurance Proceeds. ........................................................................31 12.8 No Release of Tenant’s Obligations. .........................................................32 12.9 Arbitration of Disputes. ......................................................................... 3233

SECTION 13. CONDEMNATION ...............................................................................3435 13.1 General; Notice; Waiver. ....................................................................... 3435 13.2 Total Condemnation............................................................................... 3536 13.3 Substantial Condemnation, Partial Condemnation. ............................... 3536 13.4 Awards. .................................................................................................. 3637 13.5 Temporary Condemnation. .................................................................... 3738 13.6 Relocation Benefits, Personal Property. ................................................ 3839 13.7 Reduction in Base Rent. ......................................................................... 3839

SECTION 14. LIENS 3839 14.1 Liens. ...................................................................................................... 3839 14.2 Mechanics’ Liens. .................................................................................. 3839

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SECTION 15. ASSIGNMENT AND SUBLETTING ..................................................3940 15.1 Assignment. ........................................................................................... 3940 15.2 Assignment of Rents. ............................................................................. 4142 15.3 Subletting by Tenant. ............................................................................. 4243

SECTION 16. INDEMNIFICATION OF CCSF ...........................................................4344 16.1 Indemnification of CCSF. ...................................................................... 4344 16.2 Immediate Obligation to Defend. .......................................................... 4344 16.3 Not Limited by Insurance. ..................................................................... 4445 16.4 Survival. ................................................................................................. 4445 16.5 Other Obligations. .................................................................................. 4445 16.6 Defense. ................................................................................................. 4445 16.7 Release of Claims Against CCSF. ......................................................... 4445

SECTION 17. INSURANCE .........................................................................................4446 17.1 Property and Liability Coverage. ........................................................... 4446 17.2 CCSF Entitled to Participate. ................................................................. 4850 17.3 Release and Waiver................................................................................ 4950

SECTION 18. HAZARDOUS MATERIALS ...............................................................4950 18.1 Hazardous Materials Compliance. ......................................................... 4950 18.2 Hazardous Materials Indemnity. ............................................................ 5051

SECTION 19. DELAY DUE TO FORCE MAJEURE .................................................5152 19.1 Delay Due to Force Majeure. ................................................................. 5152

SECTION 20. CCSF’S RIGHT TO PERFORM TENANT’S COVENANTS .............5152 20.1 CCSF May Perform in Emergency. ....................................................... 5152 20.2 CCSF May Perform Following Tenant’s Failure to Perform. ............... 5253 20.3 Tenant’s Obligation to Reimburse CCSF. ............................................. 5253

SECTION 21. EVENTS OF DEFAULT; TERMINATION .........................................5253 21.1 Events of Default. .................................................................................. 5253 21.2 Special Provisions Concerning Mortgagees and Events of Default. ..... 5355

SECTION 22. REMEDIES............................................................................................5455 22.1 CCSF’s Remedies Generally. ................................................................ 5455 22.2 Right to Keep Lease in Effect. ............................................................... 5455 22.3 Right to Terminate Lease. ...................................................................... 5557 22.4 Continuation of Subleases and Other Agreements. ............................... 5658

SECTION 23. EQUITABLE RELIEF...........................................................................5758 23.1 CCSF’S Equitable Relief. ...................................................................... 5758 23.2 Nonliability of Tenant’s Members, Partners, Shareholders, Directors,

Officers and Employees. ........................................................................ 5759

SECTION 24. NO WAIVER .........................................................................................5759

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24.1 No Waiver by CCSF or Tenant. ............................................................. 5759 24.2 No Accord or Satisfaction. ..................................................................... 5759

SECTION 25. DEFAULT BY CCSF; TENANT’S REMEDIES .................................5859 25.1 Default by CCSF; Tenant’s Exclusive Remedies. ................................. 5859

SECTION 26. TENANT’S RECOURSE AGAINST CCSF .........................................5860 26.1 No Recourse Beyond Value of Property Except as Specified. .............. 5860 26.2 No Recourse Against Specified Persons. ............................................... 5960 26.3 Arbitration of Certain Matters. .............................................................. 5960

SECTION 27. LIMITATIONS ON LIABILITY ..........................................................6062 27.1 Waiver of Consequential Damages. ....................................................... 6062 27.2 Limitation on Parties’ Liability Upon Transfer. .................................... 6062

SECTION 28. ESTOPPEL CERTIFICATES BY TENANT ........................................6162 28.1 Estoppel Certificate by Tenant............................................................... 6163

SECTION 29. ESTOPPEL CERTIFICATES BY CCSF ..............................................6163 29.1 Estoppel Certificate by CCSF. ............................................................... 6163

SECTION 30. APPROVALS BY CCSF .......................................................................6263 30.1 Fees for Review. .................................................................................... 6263

SECTION 31. NO MERGER OF TITLE ......................................................................6264 31.1 No Merger of Title. ................................................................................ 6264

SECTION 32. QUIET ENJOYMENT...........................................................................6264 32.1 Quiet Enjoyment. ................................................................................... 6264

SECTION 33. SURRENDER OF PREMISES .............................................................6264 33.1 End of Lease Term. ................................................................................ 6264

SECTION 34. HOLD OVER.........................................................................................6364 34.1 Hold Over............................................................................................... 6365

SECTION 35. NOTICES ...............................................................................................6365 35.1 Notices. .................................................................................................. 6365 35.2 Form and Effect of Notice. .................................................................... 6466

SECTION 36. INSPECTION OF PREMISES BY CCSF .............................................6566 36.1 Entry. ...................................................................................................... 6566 36.2 Exhibit for Lease. ................................................................................... 6567 36.3 Notice, Right to Accompany. ................................................................. 6667

SECTION 37. MORTGAGES .......................................................................................6667 37.1 No Mortgage Except as Set Forth Herein. ............................................. 6667

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37.2 Leasehold Liens. .................................................................................... 6668 37.3 Notice of Liens. ...................................................................................... 6768 37.4 Purpose of Mortgage. ............................................................................. 6768 37.5 Interest Covered by Mortgage. .............................................................. 6970 37.6 Institutional Lender; Other Permitted Mortgagees. ............................... 6971 37.7 Rights Subject to Lease. ......................................................................... 6971 37.8 Required Provisions of Any Mortgage. ................................................. 7072 37.9 Notices to Mortgagee. ............................................................................ 7072 37.10 Mortgagee’s Right to Cure..................................................................... 7173 37.11 Assignment by Mortgagee. .................................................................... 7577 37.12 Transfer of Mortgage. ............................................................................ 7678 37.13 Appointment of Receiver. ...................................................................... 7678 37.14 [Intentionally Deleted] ...............................................................................78

SECTION 38. NO JOINT VENTURE ..........................................................................7678 38.1 No Joint Venture. ................................................................................... 7678

SECTION 39. ECONOMIC ACCESS ..........................................................................7679 39.1 End of Term. .......................................................................................... 7679

SECTION 40. REPRESENTATIONS AND WARRANTIES......................................7779 40.1 Representations and Warranties of Tenant. ........................................... 7780

SECTION 41. SPECIAL PROVISIONS .......................................................................7881 41.1 Mitigation Measures. ............................................................................. 7881 41.2 Waiver of Relocation Assistance Rights................................................ 7881 41.3 Tenant’s Obligations. ............................................................................. 7981

SECTION 42. GENERAL .............................................................................................7981 42.1 Time of Performance. ............................................................................ 7981 42.2 Interpretation of Agreement. .................................................................. 7982 42.3 Successors and Assigns.......................................................................... 8083 42.4 No Third Party Beneficiaries. ................................................................ 8083 42.5 Real Estate Commissions. ...................................................................... 8083 42.6 Counterparts. .......................................................................................... 8183 42.7 Entire Agreement. .................................................................................. 8183 42.8 Amendment. ........................................................................................... 8183 42.9 Governing Law; Selection of Forum. .................................................... 8184 42.10 Recordation. .......................................................................................... 8184 42.11 Extensions by CCSF. ............................................................................. 8284 42.12 Further Assurances................................................................................. 8284 42.13 Attorneys’ Fees. ..................................................................................... 8284 42.14 Effective Date. ...................................................................................... 8285 42.15 Severability. .......................................................................................... 8285 42.16 Joint and Several Liability. .................................................................... 8385 42.17 Non Discrimination. ............................................................................... 8385

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SECTION 43. DEFINITION OF CERTAIN TERMS ..................................................8386

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LIST OF LEASE EXHIBITS

Exhibit Description

EXHIBIT A Description of Property

EXHIBIT B Site Plan

EXHIBIT C Permitted Title Exceptions

EXHIBIT D Scope of Development

EXHIBIT E Form of Ground Lessor Estoppel Certificate

EXHIBIT F Form of Memorandum of Ground Lease

EXHIBIT G Standard Discretionary Regulatory Conditions

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GROUND LEASE

THIS GROUND LEASE (this “Lease”), dated for reference purposes as of ___________, 2016, is by and between (i) the CITY COLLEGE OF SAN FRANCISCO (“CCSF”), as landlord, and (ii) 33 GOUGH LLC, a Delaware limited liability company (collectively, “Tenant”), as tenant.

THIS LEASE IS MADE WITH REFERENCE TO THE FOLLOWING FACTS AND CIRCUMSTANCES:

A. CCSF owns in fee all of that certain real property comprising of approximately 45,600 square feet of land located at 33 Gough Street, and improved with an existing structure consisting of approximately 49,000 square feet, in the City and County of San Francisco (“City”), California. The land that is the subject of this Lease is described on the attached Exhibit A and shown on the attached Exhibit B (the “Site”).

B. On or about December 12, 2014, CCSF authorized the issuance of a Request for Proposals (“RFP”) regarding redevelopment and reuse of the Site. Thereafter, CCSF received several responses to the RFP, including that of Tenant.

C. After an extensive evaluation process CCSF has determined that Tenant’s response to the RFP warranted entering into exclusive negotiations with Tenant.

D. CCSF and Tenant have entered into that certain Exclusive Negotiating Agreement dated as of December 15, 2015 (as the same may be amended from time to time, the “ENA”) pursuant to which Tenant and CCSF agreed to negotiate documents for the long-term ground lease and redevelopment of the Site by Tenant.

E. CCSF and Tenant subsequently entered into that certain Lease Disposition and Development Agreement dated as of _______________, 2016 (as the same may be amended from time to time, the “LDDA”) for the long term Ground Lease of the Property to Tenant andfor Interim Leasing (as defined herein) and for the Project. The term “Project” means the development of a mixed-use building on the Site consisting of street level retail and multi-family residential units or for the rehabilitation of the existing improvements(other than for Interim Leasing) of the Existing Improvements on the Property, all as further described in Exhibit D hereto (the “Project”).

F. Pursuant to the LDDA, and after approval hereof by CCSF, the parties now wish to enter into this Lease, upon all of the terms and conditions hereof.

ACCORDINGLY, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, CCSF and Tenant hereby agree as follows:

SECTION 1. PREMISES; TERM

1.1 Premises.

(a) Lease of Premises; Description. For the Rent and subject to the terms and conditions of this Lease, CCSF hereby leases to Tenant, and Tenant hereby leases from CCSF, the real property in the City and County of San Francisco, California,

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as more particularly described in Exhibit A attached hereto (the “Property”). The Property contains approximately 45,600 square feet of land and all other structures and substructures affixed thereto, including, without limitation, the Existing Improvements, together with all rights, privileges and licenses appurtenant to the Property and owned by CCSF. The Property is shown generally on the site plan attached hereto as Exhibit B. The Property, including all of the Existing Improvements and all other structures, substructures and improvements hereafter located on the Property, are referred to in this Lease as the “Premises.”

(b) Permitted Title Exceptions. The interests granted by CCSF to Tenant pursuant to Sections 1.1(a) are subject to (i) the matters reflected in Exhibit C (the “Permitted Title Exceptions”) and (ii) such other matters as Tenant shall consent to in writing or cause or suffer to arise subject to the terms and conditions of this Lease.

(c) Reservation of Oil, Gas and Mineral Rights. CCSF reserves to itself the sole and exclusive right to prospect for, drill for, produce, and take any oil, gas, or other hydrocarbon or mineral substances and accompanying fluids, including all geothermal resources from the Property, from below the depth of five hundred (500) feet from the surface of the Property, including the rights to slant drill, maintain subsurface pressures, and utilize subsurface storage space for natural substances. This reservation does not include the right of entry from surface access, nor any other right not herein expressly reserved. CCSF covenants that Tenant shall not be disturbed in its quiet enjoyment and peaceful use of the Premises by the aforementioned drilling and production activities, and CCSF agrees to indemnify Tenant and hold it harmless for any damages proximately caused by such activities.

(d) “AS-IS WITH ALL FAULTS.” TENANT AGREES THAT THE PREMISES ARE BEING LEASED BY CCSF, AND ARE HEREBY ACCEPTED BY TENANT, IN THEIR EXISTING STATE AND CONDITION, “AS IS, WITH ALL FAULTS.” TENANT ACKNOWLEDGES AND AGREES THAT NEITHER CCSF NOR ANY OF THE OTHER INDEMNIFIED PARTIES, NOR ANY AGENT OF ANY OF THEM, HAS MADE, AND THERE IS HEREBY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND, WITH RESPECT TO THE CONDITION OF THE PREMISES, THE SUITABILITY OR FITNESS OF THE PREMISES OR ANY APPURTENANCES THERETO FOR THE DEVELOPMENT, USE OR OPERATION OF THE PROJECT, THE COMPLIANCE OF THE PREMISES OR THE PROJECT WITH ANY LAWS, ANY MATTER AFFECTING THE USE, VALUE, OCCUPANCY OR ENJOYMENT OF THE PREMISES OR WITH RESPECT TO ANY OTHER MATTER PERTAINING TO THE PREMISES OR THE PROJECT OR ANY APPURTENANCES TO THE PREMISES.

As part of its agreement to accept the Premises in its “As Is With All Faults” condition, effective upon delivery of the Premises, Tenant, shall be deemed to waive any right to recover from, and forever release, acquit and discharge, CCSF and their Agents of and from any and all Losses, whether direct or indirect, known or unknown, foreseen or unforeseen, that the Tenant may now have or that may arise an account of or in any way be connected with (i) the physical, geotechnical or environmental condition of the Premises, including, without limitation, any

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Hazardous Materials in, on, under, above or about the Premises (including, but not limited to, soils and groundwater conditions), and (ii) any Laws applicable thereto, including without limitation, Hazardous Materials Laws, or Laws pertaining to historic rehabilitation or preservation.

In connection with the foregoing release and the release set forth in Section 16.7 below, the Tenant acknowledges that it is familiar with Section 1542 of the California Civil Code, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Tenant agrees that the release contemplated by this Section includes unknown claims. Accordingly, Tenant hereby waives the benefits of Civil Code Section 1542, or under any other statute or common law principle of similar effect, in connection with the releases contained in this Section. Notwithstanding anything to the contrary in this Lease, the foregoing release shall survive the expiration or any earlier termination of this Lease.

Tenant’s Initials:

1.2 Term.

(a) Initial Term. The Term of this Lease shall commence on the Effective Date hereof (the “Commencement Date”) and shall expire on the date that is seventy-five (75) years thereafter (the “Initial Term”), unless extended or earlier terminated in accordance with the terms of this Lease. If requested by either party, the parties shall execute and cause to be recorded in the then applicable recording office of the City and County of San Francisco, California a memorandum stating the commencement and expiration dates of the Initial Term, provided that failure of the parties to execute such memorandum shall not delay, modify or be a condition to the Commencement Date or affect the rights or obligations of the parties under this Lease.

(b) Option to Extend. Tenant shall have one (1) option to extend the Term of this Lease for an additional period (the “Renewal Period”) of twenty-five (25) years upon all the terms and conditions hereof except Rent shall be determined as provided in Section 2.2(e) below. The foregoing option may be exercised by Tenant by notice in writing to CCSF given not less than one (1) calendar year or more than two (2) calendar years prior to the expiration date of the Initial Term and if not so exercised (time being of the essence) this option shall thereupon expire and be of no further force or effect. Upon exercise of this option, CCSF and Tenant shall prepare a notice thereof in recordable form and cause the same to be recorded in the then applicable recording office of the City and County of San Francisco, California. Notwithstanding anything to the contrary contained herein, Tenant's exercise of the option to extend the Term of the Lease as provided hereunder shall, if CCSF so elects in its absolute discretion, be ineffective in the event that there is a continuing Event of Default of Tenant under the Lease either at the time of

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delivery of written notice exercising such option or as of the commencement of the Renewal Period.

(c) Meaning of Term. As used in this Lease, “Term” shall mean the Initial Term as provided in Section 1.2(a) above, together with the Renewal Period (to the extent exercised by Tenant), except as specifically otherwise used in this Lease.

1.3 Definitions.

All initially capitalized terms used herein are defined in Section 43 or have the meanings given them when first defined.

SECTION 2. RENT

2.1 Tenant’s Covenant to Pay Rent.

During the Term of this Lease, Tenant shall pay Rent for the Premises to CCSF at the times and in the manner provided in this Section 2.

2.2 Base Rent.

(a) Pre-Construction Rent. (i) Commencing on the Rent Commencement Date and continuing until the Construction Commencement Date (the “Pre-Construction Period”), Tenant shall pay to CCSF annual base rent in the amount of One Hundred Thousand and No/100 Dollars ($100,000.00) per year; provided, however, that, unless CCSF terminates this Lease pursuant to Section 2.12 hereof, upon the date Tenant obtains the Final Discretionary Project Approvals, Pre-Construction Rent shall be increased to Five Hundred Thousand Dollars ($500,000) per year. Notwithstanding the foregoing, if litigation challenging such Final Discretionary Project Approvals is initiated prior to the Project Approval Deadline, then the increase to $500,000 per year that would otherwise apply during the period from the commencement of such litigation and the Project Approval Deadline shall be tolled until the first to occur of the resolution of such litigation or the Project Approval Deadline. Notwithstanding the foregoing, if during the Pre-Construction Period Tenant pays CCSF the Five Million Dollar ($5,000,000) “Subsequent Payment” (as defined in the LDDA), then the annual Base Rent from and after the date of such payment and continuing during the Pre-Construction Period shall be One Hundred Thousand Dollars ($100,000) or such higher amount as is provided in Section 2.13. The total amount owing under this Section 2.2(a) shall be referred to as “Pre-Construction Rent.” The Pre-Construction Rent shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) in equal monthly installments on the first day of each month during the Pre-Construction Period. Pre-Construction Rent shall be prorated for any partial months at the beginning and end of the Pre-Construction Period based on the actual number of days in such month.

(b) Construction Rent. Commencing on the earlier of (i) the Construction Loan Closing Date, or (ii) the Commencement of Construction (if construction will not be financed by the proceeds of a Construction Loan), and continuing

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until the Completion Date (the “Construction Period”), Tenant shall pay to CCSF annual Base Rent in an amount equal to the greater of (x) Two Hundred Thousand and No/100 Dollars ($200,000.00) per year and (y) fifty percent (50%) of the Projected Percentage Rent. The total amount owing under this Section 2.2(b) shall be referred to as “Construction Rent” and Tenant shall, upon the occurrence of the first of the events described in clauses (i) and (ii) above, if it has not already done so, pay the Subsequent Payment to CCSF. The Construction Rent shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) in equal monthly installments on the first day of each month during the Construction Period. Construction Rent shall be prorated for any partial months at the beginning and end of the Construction Period based on the actual number of days in such month.

(c) Initial Post-Construction Rent. Commencing on the Completion Date for the Project (the “Post-Construction Date"), and continuing until the first anniversary of the Post-Construction Date (the “Initial Post-Construction Period”), Tenant shall pay to CCSF annual base rent in an amount equal to the greater of (i) Four Hundred Thousand Dollars ($400,000) or (ii) eighty percent (80%) of the Projected Percentage Rent. The total amount owing under this Section 2.2(c) shall be referred to as “Initial Post-Construction Rent,” which amount shall in no event be decreased over the course of subsequent rent adjustments. The Initial Post-Construction Rent shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) in equal monthly installments on the first day of each month during the Initial Post-Construction Period. Initial Post-Construction Rent shall be prorated for any partial months at the beginning and end of the Initial Post-Construction Period based on the actual number of days in such month.

(d) Subsequent Post-Construction Rent.

(i) Subsequent Post-Construction Rent. Commencing on the first anniversary of the Post-Construction Date and continuing until the first Adjustment Date, Tenant shall pay to CCSF annual base rent in an amount equal to the Minimum Rent then in effect as the same shall be increased pursuant to the definition of Minimum Rent set forth in Section 43 hereof.

(ii) Appraisal Adjustment.

(1) Commencing on the first Appraisal Date and continuing on each Appraisal Date occurring thereafter until the expiration of the Term (as extended by the Renewal Period, if applicable), Minimum Rent shall be increased to an amount determined by using the capitalization rate utilized in or, if not expressly stated, imputed from the net operating income assumed in the appraisal obtained for the applicable Appraisal Date and multiplying it by fifteen percent (15%) of the Appraised Fee Value determined in accordance with Section 2.2(d)(ii)(2) below. Notwithstanding anything to the contrary contained herein, in no event shall the Minimum Rent, as adjusted as of each Appraisal Date, be less than the base rent in effect immediately preceding such Appraisal Date, as adjusted

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by the percentage increase, if any, in the Index from the date of the immediately preceding increase made as provided for in the definition of Minimum Rent pursuant to Section 43 through such Appraisal Date.

(2) Whenever this Lease requires an appraisal of the Project to determine its Appraised Fee Value for purposes of calculating any component of Rent due hereunder, the Appraised Fee Value of the Project shall be determined in accordance with this Section 2.2(d)(ii)(2). No later than forty-five (45) days prior to each Appraisal Date, each Party shall separately designate to the other in writing an appraiser to determine the then-current Fair Market Value of the Project. Each appraiser designated shall be an independent MAI appraiser with experience in real estate activities, including at least twenty (20) years of experience in appraising properties similar to the Project in the City and County of San Francisco, California (the “Qualifications”). The failure of either Party to appoint an appraiser meeting the foregoing Qualifications within the time allowed shall be deemed equivalent to appointing the appraiser appointed by the other Party, who shall then determine the then-current Fair Market Value of the Project which Fair Market Value shall thereafter be the Appraised Fee Value of the Project as of the applicable Appraisal Date. Within five (5) business days of their appointment, the two designated appraisers shall jointly designate a third appraiser with the foregoing Qualifications. Within thirty (30) days after their appointment, each of the two appointed appraisers shall submit to the third appraiser a sealed envelope containing such appointed appraiser's good faith determination of the then-current Fair Market Value of the Project; concurrently with such delivery, each such appraiser shall deliver a copy of his or her determination to the other appraiser. If the highest of the two determinations of the appraisers is no greater than one hundred and five percent (105%) of the lowest of the two such determinations, the determinations of the two appraisers shall be averaged and the result shall be the then-current Fair Market Value of the Project. If the highest of the two determinations of the appraisers is greater than one hundred and five percent (105%) of the lowest of the two such determinations, the third appraiser shall, within ten (10) days following receipt of such submissions, then determine which of the two appraisers' determinations most closely reflects the then-current Fair Market Value of the Project. The third appraiser shall have no rights to adjust, amend or otherwise alter the determinations made by the appraisers selected by the Parties, but must select one or the other of such appraisers' submissions. The determination by such third appraiser shall be final and binding upon the Parties. Said third appraiser shall, upon selecting the determination which most closely resembles the then-current Fair Market Value of the Project, concurrently notify both Parties hereto. As used herein, the “Appraised Fee Value” shall be the Fair Market Value of the Project so selected by such third appraiser. The Parties shall share the appraisal expenses equally. Each appraiser selected by a Party or the Parties shall meet the Qualifications.

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(iii) Payment. The amount owing under this Section 2.2(d) shall be referred to as “Subsequent Post-Construction Rent.” The Subsequent Post-Construction Rent shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) in equal monthly installments on the first day of each month during the period commencing on the first anniversary of the Completion Date and continuing through and including the last day of the Initial Term (the “Subsequent Post-Construction Period”). Subsequent Post-Construction Rent shall be prorated for any partial months at the beginning and end of the Subsequent Post-Construction Period based on the actual number of days in such month.

(e) Renewal Period Rent. In the event that Tenant timely exercises its option to extend the Term of this Lease for the Renewal Period pursuant to Section 1.2(b) above, the Minimum Rent during the Renewal Period (the “Renewal Rent”) shall initially be an amount determined by using the capitalization rate utilized in an appraisal obtained for the Renewal Period and multiplying it by twenty-five percent (25%) of the Appraised Fee Value determined in accordance with Section 2.2(d)(ii)(2) above. In addition to the adjustments provided for in Section 2.2(d)(ii) above, the Renewal Rent shall be adjusted on the tenth (10th) anniversary and on the twentieth (20th) anniversary of the first day of the Renewal Period (each a “Renewal Rent Adjustment Date”) to any amount determined using the capitalization rate utilized in an appraisal obtained for such Renewal Rent Adjustment Date and multiplying it by twenty-five percent (25%) of the Appraised Fee Value determined in accordance with Section 2.2(d)(ii)(2) above. Notwithstanding anything to the contrary contained herein, in no event will (i) the initial Renewal Rent be less than the Minimum Rent in effect immediately prior to the expiration of the Initial Term, as adjusted by the percentage increase, if any, in the Index from the date that was one (1) year prior to the date on which the Renewal Term commenced through the date on which the Renewal Term commences or (ii) the Renewal Rent, as adjusted on each Renewal Rent Adjustment Date, be less than the base rent in effect immediately prior to the applicable Renewal Rent Adjustment Date, as adjusted by the percentage increase, if any, in the Index from the date of the immediately preceding increase pursuant to Section 43 through such Renewal Rent Adjustment Date.

(f) Base Rent. Pre-Construction Rent, Construction Rent, Initial Post-Construction Rent, Subsequent Post-Construction Rent, Minimum Rent and Renewal Period Rent are hereinafter collectively referred to as “Base Rent”.

2.3 Percentage Rent.

(a) Calculation of Percentage Rent. If during any calendar year during the Term Percentage Rent is greater than Base Rent, Tenant shall pay to CCSF percentage rent (“Percentage Rent”) in an amount equal the product of (i) fifteen percent (15%) multiplied by (ii) the positive difference between all Gross Revenues during each calendar year period following the Completion Date and the applicable Gross Revenue Threshold during each such twelve (12) month period. For any portion of the Term that is less than a full calendar year, the amounts of Base Rent and of Gross Revenues used to calculate Percentage Rent shall be prorated based upon the number of days in such period as

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compared to 365. As part of the Tenant’s proposal in connection with this Lease, Tenant has provided to Landlord various projections of rental revenue, which is material to CCSF because CCSF has entered into the transaction in material reliance on the prospect of participation in rent. Tenant hereby represents and warrants that all such projections are net of all costs to be deducted from “Gross Revenues” in the definition of such term. The foregoing notwithstanding, Percentage Rent shall not in any event commence until the first anniversary of the earlier of (1) Completion Date, or (ii) the Construction Commencement Deadline.

(b) Payment of Percentage Rent. At least thirty (30) days before the beginning of any calendar year in which Percentage Rent or Projected Percentage Rent is applicable, Tenant shall delver to CCSF an operating budget for such calendar year which will include a projection of Percentage Rent. If Percentage Rent is projected to exceed Base Rent otherwise payable during such period, then during the calendar year Tenant shall pay projected Percentage Rent in lieu of Base Rent on a monthly basis, in arrears, on or before the first day of each month. Tenant shall furnish to CCSF a statement of annual Gross Revenues within sixty (60) days after the close of each calendar year. Such statements shall be in a form reasonably acceptable to CCSF and shall be certified as accurate accounting of Gross Revenues by an authorized representative of Tenant. If the statement of annual Gross Revenues shows that Percentage Rent during the period in question was greater than the Percentage Rent paid, if any, then at the time the annual statement is delivered, Tenant shall also pay to CCSF an amount equal to any Percentage Rent determined to be due and which has not been paid. If such statement shows that the amount of Percentage Rent paid during the period was greater than the amount due, then such overpayment shall be credited against the amount of Base Rent or Percentage Rent next otherwise becoming due.

(c) Tenants’ Records. For a period of five (5) years following the submittal of its certified annual statement for each calendar year, Tenant shall keep and maintain full and accurate books of account and records relative to Gross Revenues from the Premises in accordance with cash accounting principles customarily utilized in the real estate industry consistently applied. The books of account and records kept and maintained by Tenant for audit purposes shall include all records, receipts, journals, ledgers and documents reasonably necessary to enable CCSF or its auditors to perform a complete and accurate audit of Gross Revenues in accordance with generally accepted accounting principles.

(d) Audit. At its option, CCSF may, at any time during the five (5) year period following Tenant's delivery of an annual Gross Revenues statement and upon fifteen (15) days prior notice to Tenant (the "Audit Notice"), cause a complete audit (including a physical inventory) to be made, by an auditor selected by CCSF, of the relevant records and operations of Tenant and/or any party conducting business in or from the Premises relating to the Premises and covering a period not to exceed the prior five (5) years. Tenant shall make available to CCSF's auditor, at the Premises, within fifteen (15) days following the Audit Notice all of the documents which such auditor deems necessary or desirable. If such audit discloses that Gross Revenues, as previously reported for the period audited were understated Tenant shall pay to CCSF, within thirty (30) days: (i) the additional

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Percentage Rent due; and (ii) if such understatement was in excess of five percent (5%) of the actual Gross Revenues as disclosed by such audit, the reasonable cost of such audit plus all accrued interest on the understated amounts calculated at the Default Rate (as hereinafter defined) from the date that the payment would have been due for the period audited. In the event that CCSF's audit discloses that Tenant has overpaid Percentage Rent, then the amount of such overpayment shall be credited towards Tenant's next payment of Base Rent.

2.4 Participations.

(a) Participation in Sales. In addition to Base Rent and Percentage Rent, upon an Equity Sale or a Transfer of the Tenant’s interest in the Project or any portion thereof during the TemTerm of this Lease, Tenant shall pay to CCSF, as additional rent, an amount (the “Sales Participation”) equal to fifteen percent (15%) of the positive difference between (i) the Net Sales Proceeds derived from such sale (net of the commercially reasonable costs incurred by Tenant in connection with such sale) less (ii) the applicable Sales Price Threshold. Each Sales Participation shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) concurrently with the closing of the applicable sale. As used herein, “Equity Sale” refers to a transfer or other exchange, accomplished through a transaction or series of transactions, of any ownership or membership interest in Tenant or any of its constituent entities (at whatever tier of ownership). If less than one hundred percent (100%) of the beneficial ownership of Tenant is transferred, the Sales Participation shall be determined on a pro-rated basis for the portion of Tenant so transferred. Notwithstanding the foregoing, CCSF shall not participate in an Equity Sale taking place prior to the commencementCommencement of Construction to the extent that the Equity Sale proceeds represent an equity investor’s contribution to (i) pay for some or all of the cost of constructing the Improvements, (ii) to reimburse the original members of Tenant for pre-development costs actually paid for by Tenant, (iii) to pay off debt incurred by Tenant to make the Initial Payment and/or to pay for Interim Leasing improvementsImprovements, or (iv) pay not-yet-incurred pre-development expenses. If a member in tenant or a member of a member in tenant is a fund with a more than a small number of investors, then an occasional transfer of a membership interest in such fund for bona fide business reasons unrelated to this Lease shall not constitute an equity sale. Further, in the event of a foreclosure, or deed or assignment of this Lease in lieu of foreclosure, pursuant to or under a Leasehold Mortgage authorized or permitted under Section 37, (A) CCSF shall be entitled to receive Sales Participation, calculated as set forth herein, only to the extent of cash proceeds (if any) received by the Tenant whose interest in the Lease was conveyed in the foreclosure or by deed/assignment in lieu of foreclosure, (B) such Sales Participation shall be sought exclusively from such former Tenant whose interest in the Lease was so conveyed, and (C) no such Sales Participation shall in any event be sought from foreclosing Mortgagee or from any purchaser at the foreclosure sale or in lieu of foreclosure. CCSF’s rights against such Tenant whose interest was conveyed by foreclosure or deed/assignment in lieu of foreclosure shall survive such conveyance by foreclosure or in lieu of foreclosure, be personal to such former Tenant, and shall not be enforced by any remedy affecting this Lease or the leasehold estate of the foreclosure purchaser.

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(b) Participation in Refinancings. In addition to Base Rent and Percentage Rent, in the event that Tenant obtains any Subsequent Financing with respect to the Project or any portion thereof during the Term of this Lease, Tenant shall pay to CCSF, as additional rent, an amount (the “Refinancing Participation” and, together with the Sales Participation, the “Participations”) equal to fifteen percent (15%) of the amount by which the Net Refinancing Proceeds obtained from such Subsequent Financing exceeds the Refinancing Threshold. Each Refinancing Participation shall be payable by Tenant to CCSF without setoff, deduction, prior notice, or demand (except as otherwise provided in this Lease) concurrently with the initial funding of the applicable Subsequent Financing regardless of whether all or only a portion of the Net Refinancing Proceeds from such Subsequent Financing are then advanced. The provisions of this Section 2.4(b) shall apply to each Subsequent Financing, but shall not apply to theany Pre-Construction Financing, Construction Financing, Initial Permanent Financing described in Section 37.4(b). If construction. If Construction is financed with equity and not with a construction loan, this Section 2.4(b) shall not apply to Initial Permanent Financing as described in Section 37.4(b) but shall apply to the first Subsequent Financing.

2.5 Rent.

All amounts payable hereunder, including without limitation, Base Rent, Minimum Rent, Initial Rent, Pre-Construction Rent, Construction Rent, Pre-Stabilization Rent, Post-Stabilization Rent, Renewal Period Rent, Percentage Rent, and Participations shall be deemed “Rent” hereunder.

2.6 Manner of Payment of Rent.

Tenant shall pay all Rent to CCSF in lawful money of the United States of America at the address for notices to CCSF specified in this Lease, or to such other person or at such other place as CCSF may from time to time designate by notice to Tenant. Rent shall be payable at the times specified without prior notice or demand. Rent shall be due and payable at the times otherwise provided in this Lease, provided that if no date for payment is otherwise specified, or if payment is stated to be due “upon demand,” “promptly following notice,” “upon receipt of invoice,” or the like, then such Additional Rent shall be due thirty (30) business days following the giving by CCSF of demand, notice, invoice or the like to Tenant specifying that such sum is presently due and payable.

2.7 No Abatement or Setoff; Rent Credit.

Tenant shall pay all Rent, at the times and in the manner provided in this Lease without any abatement, setoff, deduction, or counterclaim, except for any credit against Rent described in Section 2.3(d) above.

2.8 Interest on Delinquent Rent.

If any amount of Rent is not paid within ten (10) days following the date it is due, or if any Additional Rent is not paid within thirty (30) business days following written demand for payment of such Additional Rent, such unpaid amount shall bear interest from the date due until paid at an annual interest rate (the “Default Rate”) equal to the greater of (i) ten percent (10%) or (ii) five

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percent (5%) in excess of the rate the Federal Reserve Bank of San Francisco charges, as of the date payment is due, on advances to member banks and depository institutions under Sections 13 and 13a of the Federal Reserve Act. However, interest shall not be payable to the extent such payment would violate any applicable usury or similar law. Payment of interest shall not excuse or cure any default by Tenant.

2.9 2.9Late Charges.

Tenant acknowledges and agrees that late payment by Tenant to CCSF of Rent will cause CCSF increased costs not contemplated by this Lease. The exact amount of such costs is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, without limiting any of CCSF’s rights or remedies hereunder and regardless of whether such late payment results in an Event of Default, Tenant shall pay a late charge (the “Late Charge”) equal to five percent (5%) of all Rent or any portion thereof which remains unpaid more than ten (10) days after CCSF’s notice to Tenant of such failure to pay Rent when due, provided, however, that if Tenant fails to pay Rent when due on more than two (2) occurrences in any Lease Year, the Late Charge will be assessed as to any subsequent payments in such Lease Year remaining unpaid more than ten (10) days after they are due, without the requirement that CCSF give any notice of such payment failure. Tenant shall also pay reasonable Attorneys’ Fees and Costs incurred by CCSF by reason of Tenant’s failure to pay any Rent within the time periods described above. The Parties agree that such Late Charge represents a fair and reasonable estimate of the cost which CCSF will incur by reason of a late payment by Tenant.

2.10 Additional Rent.

Except as otherwise provided in this Lease, all costs, fees, interest, charges, expenses, reimbursements and Tenant’s obligations of every kind and nature relating to the Premises that may arise or become due under this Lease (other than Rent), whether foreseen or unforeseen, which are payable by Tenant to CCSF pursuant to this Lease, shall be deemed Additional Rent. CCSF shall have the same rights, powers and remedies, whether provided by law or in this Lease, in the case of non-payment of Additional Rent as in the case of non-payment of Rent.

2.11 Net Lease.

It is the purpose of this Lease and intent of CCSF and Tenant that, except as specifically stated to the contrary in Section 2.4, all Rent shall be absolutely net to CCSF, so that this Lease shall yield to CCSF the full amount of the Rent at all times during the Term, without deduction, abatement or offset. Except as may be provided in this Lease, CCSF shall not be expected or required to incur any expense or make any payment of any kind with respect to this Lease or Tenant’s use or occupancy of the Premises, including any Improvements. Without limiting the foregoing, except as otherwise expressly provided in Section 4.1(c), Tenant shall be solely responsible for paying each item of cost or expense of every kind and nature whatsoever, the payment of which CCSF would otherwise be or become liable by reason of CCSF’s estate or interests in the Premises and any Improvements, any rights or interests of CCSF in or under this Lease, or the ownership, leasing, operation, management, maintenance, repair, rebuilding, remodeling, renovation, use or occupancy of the Premises, any Improvements, or any portion thereof. No occurrence or situation arising during the Term, nor any present or future Law,

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whether foreseen or unforeseen, and however extraordinary, shall relieve Tenant from its liability to pay all of the sums required by any of the provisions of this Lease, or shall otherwise relieve Tenant from any of its obligations under this Lease, or shall give Tenant any right to terminate this Lease in whole or in part. Tenant waives any rights now or hereafter conferred upon it by any existing or future Law to terminate this Lease or to receive any abatement, diminution, reduction or suspension of payment of such sums, on account of any such occurrence or situation, provided that such waiver shall not affect or impair any right or remedy expressly provided Tenant under this Lease.

2.12 Lease Buyout Right.

In the event that (i) Tenant has not obtained Final Discretionary Regulatory Approvals for a Project that is a primarily residential use within five (5) years following the Effective Date hereof (the “Project Approval Deadline”) or (ii) Tenant shall not have commenced Construction within ten (10) years following the Effective Date hereof (the “Construction Commencement Deadline”), then Landlord at any time thereafter shall have the right to terminate this Lease by providing written notice thereof (a “Termination Notice”) to Tenant. Any such Termination Notice shall specify the date on which this Lease shall terminate (the “Early Termination Date”), which Early Termination Date shall be ninety (90) days following the date the Termination Notice is given. If Landlord exercises its right to terminate this Lease in accordance with this Section 2.12, Landlord shall pay on or before the Early Termination Date a lease buyout fee to Tenant in the amount of (a) the sum of any Initial Payment and Subsequent Payment actually made by Tenant, plus (b) the unamortized commercially reasonable hard and soft costs incurred by Tenant in making Interim Leasing Improvements to the Premises. Soft costs shall include design professionals’, other consultants’ and attorneys’ fees and permit application fees but shall not include financing or other carrying costs.

In connection with a Lease Buyout exercised by CCSF after the Construction Commencement Deadline, the lease buyout fee shall also include (in addition to the preceding items (a) and (b)) (i) the unamortized commercially reasonable hard and soft costs incurred by Tenant, during periods following the Project Approval Deadline only, in seeking Regulatory Approvals for, and in subsequent constructing, Commercial Leasing Improvements to the Premises, and (ii) all Pre-Construction Rent actually paid by Tenant after the Construction Commencement Deadline (but excluding any Pre-Construction Rent paid during any periods when CCSF was prohibited from exercising the buyout right due to an event of Force Majeure), less the amount, if any, by which revenue received from Interim Leasing or Commercial Leasing Exceeds debt service actually paid to unaffiliated mortgagees during the corresponding period. In no instance shall the lease buyout fee include costs incurred in connection with the pursuit of Regulatory Approvals for a multifamily residential project.

The Early Termination Date shall thereafter be deemed the effective expiration date of the Term for all purposes under the Lease and Tenant shall vacate the Premises on or before the Early Termination Date and shall deliver possession of the Premises in the condition received with any improvements made by Tenant, subject to wear and tear and damage by casualty and to the rights of possession of any subtenants pursuant to subleases previously approved by CCSF.

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In the event of litigation challenging the project’sProject’s Regulatory Approvals, CCSF may not exercise the buyout right described in this Section 2.12 for the duration of such litigation (not to exceed 36 months from its initiation), provided Tenant is fully funding and diligently contesting such litigation. In no event shall such litigation delay, defer or reduce Tenant’s financial obligations hereunder, including the obligation to pay Rent at amounts otherwise due hereunder; provided, however, that if such Regulatory Approvals are invalidated as a result of such litigation, Minimum Rent shall revert to Two Hundred Thousand Dollars ($200,000) pursuant to Section 2.13(b); provided, however, in such event Tenant shall be entitled to credit against subsequent Minimum Rent payments hereunder the amounts of Minimum Rent previously paid from the Project Approval Deadline through the conclusion of such litigation in excess of Two Hundred Thousand Dollars ($200,000), provided further that such credit shall in no event exceed a total of Three Hundred Thousand Dollars ($300,000) in the aggregate.

2.13 Failure to Exercise Buyout Rights.

(a) (a) In the event that CCSF elects not to exercise its right to terminate the Lease pursuant to Section 2.12 above, this Lease shall remain in full force and effect, including the obligation to pay Minimum Rent pursuant to Section 2.2 hereof, provided, however,

(b) (b) If CCSF does not terminate this Lease for failure of Tenant to obtain Final Discretionary Regulatory Approvals by the Project Approval Deadline, Minimum Rent hereunder shall be increased, effective as of the first day of the sixth (6th) year of the Term, to Two Hundred Thousand Dollars ($200,000) and Tenant shall thereupon have the right to pursue Final Discretionary Regulatory Approvals for a Commercial Leasing use of the Premises, upon. Upon the issuance of whichsuch approvals, (i) Tenant shall pay to CCSF the Subsequent Payment referred to in Section 1.07(c) of the LDDA, and (ii) Minimum Rent shall be increased to the greater of (i) Two Hundred Thousand Dollars ($200,000) or (ii) five percent (5%) of the appraised value of the Premises (which appraised value shall be reduced, for purposes of this calculation, by the sum of any Initial Payment and Subsequent Payment actually made by Tenants pursuant to the LDDA. To make the calculation described in clause (ii), the parties shall cause an appraisal to be performed in accordance with Section 2.2(d)(ii) hereof at such time as Tenant has leased at least 70% of the premises square footage to commercial users (but not later than one year after completion of improvements for the commercial leasing project), with such appraisal to be based on leases then in place.

(c) (c) If CCSF does not terminate this Lease for failure of Tenant to commence construction prior to the Construction Commencement Deadline, Minimum Rent hereunder shall be increased, effective as of the first (1st) day of the tenth (10th) year of the Term to the greater of (i) (A) Four Hundred Thousand Dollars ($400,000) as Indexed from the date Tenant obtains the Final Discretionary Project Approvals (“Deferral Rent”) plus an additional Four Hundred Thousand Dollars ($400,000), which shall be Indexed from the first (1st) day of the eighth (8th) year of the Term or (ii) five percent (5%) of the appraised value of the Premises which appraised value shall be reduced, for purposes of this calculation by the sum of any Initial Payment and Subsequent Payment actually made by Tenant pursuant to the LDDA. If at any time Tenant elects to pay to CCSF the Subsequent Payment, provided however, that from and after Tenant’s payment to CCSF referred to in Section 1.07(c) of the LDDA, Tenant shall no longer be required to pay the Deferral Rent.

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(d) (d) If following obtaining Final Discretionary Regulatory Approvals for commercial use of the Premises, Tenant obtains Final Discretionary Regulatory Approvals for residential use of the Premises, then from and after the first anniversary of the Completion Date of Improvements for such residential use, and the issuance by the City of requisite occupancy permits for such use, the Minimum Rent shall be increased to the Minimum Rent that otherwise would have been payable under Sections 2.2(c) and (d) above, as the same shall be increased pursuant to the definition of Minimum Rent set forth in Section 43 hereof.

SECTION 3. USES

3.1 Permitted Uses Within Premises.

Tenant shall have the right to use and operate the Premises for any lawful purpose substantially in accordance with the project parameters set forth in the Scope of Development attached hereto as Exhibit D and as further required or expressly permitted in this Section 3 (the “Permitted Uses”).

3.2 Prohibited Uses.

Notwithstanding anything to the contrary contained herein, Tenant shall not use or operate the Premises (or any portion thereof), or permit the Premises (or any portion thereof) to be used or operated, (a) as adult movie theater (as such term is commonly interpreted as of the date of this Lease), an adult bookstore (as such term is commonly interpreted as of the date of this Lease), massage parlor, or massage shop, (b) for the sale of narcotics paraphernalia, (c) as a tattoo parlor or fortuneteller, night club, bar, auditorium, meeting hall, church or “flea market,” (d) for the provision of veterinary services and/or overnight stay pet facilities, (e) as a health club (although health and fitness facilities ancillary to a primary Permitted Use shall be permitted), dance hall, billiard or pool hall, video game arcade, bowling alley, skating rink or car wash, (f) for the sale, display, leasing or repair of motor vehicles, (g) for the sale of adult products (as such term is commonly interpreted as of the date of this Lease), (h) as a post-secondary educational or academic facility, (i) the sale of alcohol for offsite consumption, (j) the sale of marijuana or tobacco products, or (k) for a so-called “rave” or other similar nightclub activities. Additionally, Tenant shall not, and shall not permit any other party to, (i) conduct within the Premises any fire, auction, bankruptcy or liquidation sales, (ii) permit any objectionable or unpleasant odors or unreasonable noises to emanate from the Premises, (iii) place or permit any radio, television, loud-speaker, amplifier or other sound broadcasting system on the roof or outside the Premises or where the same can be seen or heard from outside the land constituting the Premises, or (iv) take any other action which in the reasonable judgment of Landlord exercised in good faith would constitute a nuisance or would tend to injure the reputation of the Premises.

3.3 Name.

Tenant shall not have or acquire any property right or interest in the name “City College of San Francisco,” “CCSF” or any permutation thereof which may imply any connection of Tenant or the Project with the City College of San Francisco. Tenant shall not use the name “City College of San Francisco” or “CCSF” without the prior written approval of CCSF.

3.4 California Civil Code Section 1938 Disclosure.

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To CCSF’s actual knowledge, the Property has not undergone inspection by a Certified Access Specialist (“CASp”). Tenant shall promptly notify CCSF if the Property is inspected by a CASp and shall furnish CCSF with copies of the results of any such inspection promptly following receipt thereof by Tenant.

3.5 Temporary Use Authorization.

If, notwithstanding its commercially reasonable efforts to do so in accordance with the Schedule of Performance, Tenant has been unable to obtain a rezoning of the Site to a designation under the City Planning Code other than of “Public”, then within forty five (45) days following Tenant’s request from time to time, not to exceed five (5) times, CCSF shall as an enabling action as referred to in City Planning Code Section 211.1(g) adopt a resolution authorizing and approving the temporary use of the Premises (“Temporary Use Authorization”) for Commercial, General and Nighttime Entertainment, Institutional and Office uses as defined in the City Planning Code, except for the uses prohibited by Section 3.2 hereof (“Permitted Temporary Use”) for a three (3)-year period and shall otherwise cooperate with Tenant in applying for and obtaining City approval of a Temporary Use Authorization for the Permitted Temporary use. IfUse. CCSF shall have adopted the first Temporary Use Authorization prior to or concurrently with the Effective Date. The following shall apply if and only if CCSF does not adopt such resolution for a Temporary Use Authorization with respect to the first three (3) such requests by Tenant, then no Base Rent shall accrue or be payable from the end of such 45-day period until the earlier of the date (a) CCSF adopts such resolution, or (b) the Construction Commencement Deadline. If CCSF does not adopt such resolution with respect to the fourth (4th) or fifth (5th) suchfour (4) subsequent 3-year periods (years 4 – 15) within 90 days after written request by Tenant, then Base Rent shall be reduced by one-half (1/2) from the end of such 45-day period until the date CCSF adopts such resolution (which notice shall be given not sooner than one hundred fifty (150) days prior to the expiration of any immediately prior Temporary Use Authorization). Such rent abatement shall be effective only to the extent that Tenant in fact does not receive rent from Subtenants that it would have received but for CCSF not having adopted such resolution.

(a) If CCSF decides not to adopt the second Temporary Use Authorization Resolution (for years 4-6), CCSF will obligated to pay Tenant, on a monthly basis, eighty five percent (85%) of the fair market rent for the entire existing improved Premises (less Rent owing by Tenant to CCSF under the Ground Lease for the same month), commencing upon the later of (i) ninety (90) days after written request by Tenant for the Temporary Use Authorization, or (ii) the expiration of the immediately preceding Temporary Use Authorization, and continuing such time as (A) CCSF has adopted the Temporary Use Authorization resolution, or (B) the City has re-zoned the property to allow private commercial use (the “TUA Non-Issuance Obligation”).

(b) The foregoing notwithstanding, at CCSF’s election, the TUA Non-Issuance Obligation becoming due during years 4 and 5 shall not be required to be paid currently, but shall accumulate and be deferred (with interest accruing thereon at 5% per annum, compounded monthly).

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(c) Following the fifth (5th) anniversary of the Effective Date, all subsequently accruing TUA Non-Issuance Obligation shall be paid monthly on a current basis by CCSF to Tenant.

(d) If the Premises have not been rezoned and CCSF decides not to adopt any of the third, fourth or fifth TUA resolutions (for years 7-15), the TUA Non-Issuance Obligation shall commence or continue, as applicable, for those years as a current payment obligation of CCSF to Tenant.

(e) Any and all deferred or otherwise unpaid TUA Non-Issuance Obligation (1) shall be added to the lease buyout fee if CCSF exercises its Lease Buyout Right under Section 2.12 of this Lease, and (2) (without duplication of offsetting amounts taken into account in the calculation of the TUA Non-Issuance Obligation) shall serve as a offset against any amounts owed by Tenant to CCSF under the Lease, including but not limited to Rent and the Subsequent Payment.

(f) Any deferred TUA Non-Issuance Obligation remaining outstanding as of the tenth anniversary of the Effective Date shall then become immediately due and payable in full by CCSF to Tenant.

SECTION 4. TAXES AND ASSESSMENTS

4.1 Payment of Possessory Interest Taxes and Other Impositions.

(a) Payment of Possessory Interest Taxes. Tenant shall pay or cause to be paid, prior to delinquency, all possessory interest and property taxes assessed, levied or imposed on the Premises or any of the Improvements or Personal Property (excluding the personal property of any Subtenant whose interest is separately assessed) located on the Premises or Tenant’s leasehold estate (but excluding any such taxes separately assessed, levied or imposed on any Subtenant), to the full extent of installments or amounts payable or arising during the Term (subject to the provisions of Section 4.1(c)). Subject to the provisions of Section 5 hereof, all such taxes shall be paid directly to the City’s Tax Collector or other charging authority prior to delinquency, provided that if applicable Law permits Tenant to pay such taxes in installments, Tenant may elect to do so. In addition, Tenant shall pay any fine, penalty, interest or cost as may be charged or assessed for nonpayment or delinquent payment of such taxes. Tenant shall have the right to contest the validity, applicability or amount of any such taxes in accordance with Section 5. Tenant specifically recognizes and agrees that this Lease creates a possessory interest which is subject to taxation, and that this Lease requires Tenant to pay any and all possessory interest taxes levied upon Tenant’s interest pursuant to an assessment lawfully made by the City’s Assessor.

(b) Other Impositions. Without limiting the provisions of Section 4.1(a), and except as otherwise provided in this Section 4.1(b) and Section 5, Tenant shall pay or cause to be paid all Impositions (as defined below), to the full extent of installments or amounts payable or arising during the Term (subject to the provisions of Section 4.1(c)), which may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon

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the Premises, any Improvements now or hereafter located thereon, any Personal Property now or hereafter located thereon (but excluding the personal property of any Subtenant whose interest is separately assessed), the leasehold estate created hereby, or any subleasehold estate permitted hereunder, including any taxable possessory interest which Tenant, any Subtenant or any other Person may have acquired pursuant to this Lease (but excluding any such Impositions separately assessed, levied or imposed on any Subtenant). Subject to the provisions of Section 5, Tenant shall pay all Impositions directly to the taxing authority, prior to delinquency, provided that if any applicable Law permits Tenant to pay any such Imposition in installments, Tenant may elect to do so. In addition, Tenant shall pay any fine, penalty, interest or cost as may be assessed for nonpayment or delinquent payment of any Imposition. As used herein, “Impositions” means all taxes, assessments, liens, levies, charges or expenses of every description, levied, assessed, confirmed or imposed on the Premises, any of the Improvements or Personal Property located on the Premises, Tenant’s leasehold estate, any subleasehold estate, or any use or occupancy of the Premises hereunder. Impositions shall include all such taxes, assessments, fees and other charges whether general or special, ordinary or extraordinary, foreseen or unforeseen, or hereinafter levied or assessed in lieu of or in substitution of any of the foregoing of every character.

(c) Prorations. All Impositions imposed for the tax year in which the Commencement Date occurs or the tax year in which this Lease terminates shall be apportioned and prorated between Tenant and CCSF on a daily basis.

(d) Proof of Compliance. Within a reasonable time following CCSF’s written request which CCSF may give at any time and from time to time, Tenant shall deliver to CCSF copies of official receipts of the appropriate taxing authorities, or other proof reasonably satisfactory to CCSF, evidencing the timely payment of such Impositions.

4.2 CCSF’s Right to Pay.

Unless Tenant is exercising its right to contest under and in accordance with the provisions of Section 5, if Tenant fails to pay and discharge any Impositions (including without limitation, fines, penalties and interest) prior to delinquency, CCSF, at its sole option, may (but is not obligated to) pay or discharge the same, provided that prior to paying any such delinquent Imposition, CCSF shall give Tenant written notice specifying a date at least ten (10) business days following the date such notice is given after which CCSF intends to pay such Impositions. If Tenant fails, on or before the date specified in such notice, either to pay the delinquent Imposition or to notify CCSF that it is contesting such Imposition pursuant to Section 5, then CCSF may thereafter pay such Imposition, and the amount so paid by CCSF (including any interest and penalties thereon paid by CCSF), together with interest at the Default Rate computed from the date CCSF makes such payment, shall be deemed to be and shall be payable by Tenant as Additional Rent, and Tenant shall reimburse such sums to CCSF within ten (10) business days following demand.

SECTION 5. CONTESTS

5.1 Right of Tenant to Contest Impositions and Liens.

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Tenant shall have the right to contest the amount, validity or applicability, in whole or in part, of any Imposition or other lien, charge or encumbrance against or attaching to the Premises or any portion of, or interest in, the Premises, including any lien, charge or encumbrance arising from work performed or materials provided to Tenant or any Subtenant or other Person to improve the Premises or any portion of the Premises, by appropriate proceedings conducted in good faith and with due diligence, at no cost to CCSF. Tenant shall give notice to CCSF within a reasonable period of time of the commencement of any such contest and of the final determination of such contest. Nothing in this Lease shall require Tenant to pay any Imposition as long as it contests the validity, applicability or amount of such Imposition in good faith, and so long as it does not allow the portion of the Premises affected by such Imposition to be forfeited to the entity levying such Imposition as a result of its nonpayment. If any Law requires, as a condition to such contest, that the disputed amount be paid under protest, or that a bond or similar security be provided, Tenant shall be responsible for complying with such condition as a condition to its right to contest. Tenant shall be responsible for the payment of any interest, penalties or other charges which may accrue as a result of any contest, and Tenant shall provide a statutory lien release bond or other security reasonably satisfactory to CCSF in any instance where CCSF’s interest in the Premises may be subjected to such lien or claim. Tenant shall not be required to pay any Imposition or lien being so contested during the pendency of any such proceedings unless payment is required by the court, quasi-judicial body or administrative agency conducting such proceedings. If CCSF is a necessary party with respect to any such contest, or if any law now or hereafter in effect requires that such proceedings be brought by or in the name of CCSF or any owner of the Property, CCSF, at the request of Tenant and at no cost to CCSF, with counsel selected and engaged by Tenant, subject to CCSF’s reasonable approval, shall join in or initiate, as the case may be, any such proceeding. CCSF, at its own expense and at its sole option, may elect to join in any such proceeding whether or not any law now or hereafter in effect requires that such proceedings be brought by or in the name of CCSF or any owner of the Property. Except as provided in the preceding sentence, CCSF shall not be subjected to any liability for the payment of any fines, penalties, costs, expenses or fees, including Attorneys’ Fees and Costs, in connection with any such proceeding, and without limiting Section 17, Tenant shall Indemnify CCSF for any such fines, penalties, costs, expenses or fees, including Attorneys’ Fees and Costs, which CCSF may be legally obligated to pay.

5.2 CCSF’s Right to Contest Impositions.

At its own cost and after notice to Tenant of its intention to do so, CCSF may but in no event shall be obligated to contest the validity, applicability or the amount of any Impositions, by appropriate proceedings conducted in good faith and with due diligence. Nothing in this Section 5.2 shall require CCSF to pay any Imposition as long as it contests the validity, applicability or amount of such Imposition in good faith, and so long as it does not allow any portion of the Premises to be forfeited to the entity levying such Imposition as a result of its nonpayment, and so long as such activities do not cause a default under any Mortgage in effect at the time as to which CCSF has been given copies of all documents and instruments relating to the loan secured by such Mortgage. CCSF shall give notice to Tenant within a reasonable period of time of the commencement of any such contest and of the final determination of such contest. CCSF shall reimburse Tenant within thirty (30) days after demand from Tenant for any such fines, penalties, costs, interest, expenses or fees, including Attorneys’ Fees and Costs, which Tenant may be legally obligated to pay as a result of CCSF’s contest of such Impositions.

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SECTION 6. COMPLIANCE WITH LAWS

6.1 Compliance with Laws and Other Requirements.

(a) Tenant’s Obligation to Comply. During the Term of this Lease, Tenant shall comply, at no cost to CCSF, (i) with all applicable Laws (including Regulatory Approvals), (ii) with the requirements of all policies of insurance required to be maintained pursuant to Section 17 of this Lease, and (iii) this Lease. In particular, Tenant acknowledges that the Permitted Uses under Section 3.1 do not limit Tenant’s responsibility to obtain Regulatory Approvals for such uses, including but not limited to, building permits. It is understood and agreed that Tenant’s obligation to comply with Laws shall include the obligation to make, at no cost to CCSF, all additions to, modifications of, and installations on the Premises that may be required by any Laws regulating the Premises, subject to the provisions of Section 6.1(b).

(b) Unforeseen Requirements. The Parties acknowledge and agree that Tenant’s obligation under this Section 6.1 to comply with all present or future Laws is a material part of the bargained-for consideration under this Lease. Tenant’s obligation to comply with Laws shall include, without limitation, the obligation to make substantial or structural repairs and alterations to the Premises (including the Improvements), regardless of, among other factors, the relationship of the cost of curative action to the Rent under this Lease, the length of the then remaining Term hereof, the relative benefit of the repairs to Tenant or CCSF, the degree to which curative action may interfere with Tenant’s use or enjoyment of the Premises, the likelihood that the Parties contemplated the particular Law involved, or the relationship between the Law involved and Tenant’s particular use of the Premises. Except as provided in Sections 12 and 13, no occurrence or situation arising during the Term, nor any present or future Law, whether foreseen or unforeseen, and however extraordinary, shall relieve Tenant of its obligations hereunder, nor give Tenant any right to terminate this Lease in whole or in part or to otherwise seek redress against CCSF. Tenant waives any rights now or hereafter conferred upon it by any existing or future Law to terminate this Lease, to receive any abatement, diminution, reduction or suspension of payment of Rent, or to compel CCSF to make any repairs to comply with any such Laws, on account of any such occurrence or situation, except to the extent provided in Section 1.1(c).

(c) Proof of Compliance. Tenant shall promptly upon request provide CCSF with evidence of its compliance with any of its obligations under this Section.

6.2 Regulatory Approvals.

Tenant understands that the Project and Tenant’s contemplated uses and activities on the Premises, any subsequent changes in permitted uses, and any alterations or Subsequent Construction to the Premises, may require that approvals, authorizations or permits be obtained from governmental agencies with jurisdiction. Tenant shall be solely responsible for obtaining Regulatory Approvals as further provided in this Section 6.2. Throughout the process for obtaining Regulatory Approvals, Tenant shall consult and coordinate with CCSF in Tenant’s efforts to obtain such Regulatory Approvals. CCSF shall have no obligation to make expenditures or incur

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expenses with respect thereto. CCSF acknowledges that the entitlements for the Project will entail conditions and restrictions on the use of the Property related to the Project, such as requirements for the provision of affordable housing, which will survive the termination or expiration of the Term. Tenant shall not agree to the imposition of such conditions or restrictions other than (i) customary conditions which are imposed as of the date hereof (which customary conditions as of the date of this Lease are set forth in Exhibit G) and (ii) conditions relating to the provision of affordable housing that are consistent with the requirements of the LDDA, or (iii) conditions that meet all the following criteria: those that are imposed by the City and County of San Francisco, that will not encumber the Property beyond the duration of the applicable entitlements, that will not require the payment of any funds, or the relinquishment of any rights, by CCSF, and that will not affect any other CCSF property or operations, and, subject to the foregoing, Tenant shall not exercise its rights under any other discretionary permit issued in connection with the Project unless CCSF has consented in writing to such conditions and restrictions, which consent may be withheld in CCSF’s absolute discretion, provided that any dispute as to the failure of CCSF to give such consent shall be subject to Expedited Arbitration pursuant to Section 26.3 hereof. No such approval by CCSF shall limit Tenant’s obligation to pay all the costs of complying with such conditions under this Section 6.2. Subject to the conditions of this Section 6.2, CCSF shall join, where required, in any application by Tenant for a required Regulatory Approval. All costs associated with applying for and obtaining any necessary Regulatory Approval, including, without limitation, any costs incurred by CCSF in joining in any application for any Regulatory Approval, shall be borne by Tenant. Tenant shall be responsible for complying, at no cost to CCSF, with any and all conditions imposed by any regulatory agency as part of a Regulatory Approval. Tenant shall have the right to appeal or contest in any manner permitted by law any condition imposed upon any such Regulatory Approval. Tenant shall pay and discharge any fines, penalties or corrective actions imposed as a result of the failure of Tenant to comply with the terms and conditions of any Regulatory Approval and CCSF shall have no liability for such fines and penalties. Without limiting the indemnification provisions of Section 17, Tenant shall Indemnify the Indemnified Parties from and against any and all such fines and penalties, together with Attorneys’ Fees and Costs, for which CCSF may be liable in connection with Tenant’s failure to comply with any Regulatory Approval.

SECTION 7. TENANT’S MANAGEMENT AND OPERATING COVENANTS

7.1 Covenants.

Tenant shall maintain and operate the Premises, or cause the Premises to be maintained and operated, in a manner consistent with commercially reasonable standards for the maintenance and operation of a residential or mixed use project located in San Francisco, subject to the provisions of Sections 12 and 13 relating to damage and destruction and Condemnation, respectively. Tenant shall be exclusively responsible, at no cost to CCSF, for the management and operation of the Improvements. In connection with managing and operating the Project, Tenant shall provide (or require others to provide), such services as may be commercially reasonable and appropriate for a comparable project located in San Francisco, or if the approved uses change in the future, to the uses to which the Improvements are put, including, but not limited to, (a) repair and maintenance of the Improvements, as more fully described in Section 8; (b) utility services; (c) telecommunications services, to the extent, if any, customarily provided by equivalent projects

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located in San Francisco; (d) cleaning, janitorial, extermination, and trash removal; (e) landscaping and groundskeeping; and (f) security services for the Premises.

SECTION 8. REPAIR AND MAINTENANCE

8.1 Covenants to Repair and Maintain the Premises.

(a) Tenant’s Duty to Maintain. Throughout the Term of this Lease, Tenant shall maintain and repair, at no cost to CCSF, the Premises (including, but not limited to, all Improvements), and, in commercially reasonable condition and repair and in compliance with all applicable Laws and the requirements of this Lease. Tenant shall with reasonable promptness make (or cause others to make) all necessary or appropriate repairs, renewals and replacements, whether structural or non-structural, interior or exterior, ordinary or extraordinary, foreseen or unforeseen, except as otherwise provided in Sections 12 and 13. Subject to the requirements of Laws and availability, all replacements made by Tenant shall be at least equivalent in quality, public safety, and durability to and in all respects consistent with the Improvements so replaced.

(b) No Obligation of CCSF; Waiver of Rights. As between CCSF and Tenant, Tenant shall be solely responsible for the condition, operation, repair, maintenance and management of the Premises, including any and all Improvements, from and after the Commencement Date. CCSF shall have no obligation to make repairs or replacements of any kind or maintain the Premises (including any Improvements) or any portion thereof. Tenant waives the benefit of any existing or future law that would permit Tenant to make repairs or replacements at CCSF’s expense, or abate or reduce any of Tenant’s obligations under, or terminate, this Lease, on account of the need for any repairs or replacements. Without limiting the foregoing, Tenant hereby waives any right to make repairs at CCSF’s expense as may be provided by Sections 1932(1), 1941 and 1942 of the California Civil Code, as any such provisions may from time to time be amended, replaced, or restated.

(c) Notice. Tenant shall deliver to CCSF, promptly after receipt, a copy of any notice which Tenant may receive from time to time: (i) from any governmental authority having responsibility for the enforcement of any applicable Laws or Regulatory Approvals (including Disabled Access Laws and Hazardous Materials Laws), asserting that the Project is in violation of such Laws or Regulatory Approvals, as applicable; (ii) from the insurance company issuing or responsible for administering one or more of the insurance policies required to be maintained by Tenant under Section 17, asserting that the requirements of such insurance policy or policies are not being met.

8.2 Capital Reserve Account.

8.2.1 Generally. On the first day of each calendar year following the calendar year in which the first (1st) anniversary of the Commencement Date occurs, Tenant shall deposit into a reserve (the "Capital Reserve"), an amount equal to at least Two Hundred Dollars ($200) per unit, as Indexed, or such larger amount as is required by Tenant’s lender.

8.2.2 Maintenance of Reserve. All funds deposited in the Capital Reserve shall be held in an account owned by Tenant and maintained at a financial institution reasonably

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acceptable to CCSF. Notwithstanding the foregoing, during the last twenty (20) Lease Years of the Initial Term and, if applicable, during the Renewal Period (the “Reserve Control Period”), the Capital Reserve shall be deposited with a financial institution reasonably acceptable to Tenant, in a separate account owned by Tenant but under the control of CCSF under a deposit account control agreement and in accordance with the provisions of this Lease. All interest earned on the Reserve shall belong to and be paid to Tenant. During the Reserve Control Period, all disbursements from the Capital Reserve shall be subject to the prior approval of CCSF, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant hereby grants to CCSF a security interest in all funds so deposited in the Capital Reserve for the purpose of securing Tenant’s repair and maintenance obligations under this Lease.

8.2.3 Mortgagees. Notwithstanding anything to the contrary contained in Section 8.2.2 above, in the event that a reserve account for repair and maintenance expenses at the Project which meets the requirements of Section 8.2.1 above is separately maintained with any Mortgagee of the Project (a “Mortgagee Reserve”), the maintenance of such Mortgagee Reserve shall be deemed to satisfy the requirements of this Section 8.2 regarding the Capital Reserve. Without limiting the foregoing, so long as the Mortgagee Reserve is maintained with the Mortgagee, Tenant shall not be required to deposit the Capital Reserve with CCSF during the Reserve Control Period and disbursements from the Mortgagee Reserve shall not be subject to the prior approval of CCSF.

SECTION 9. IMPROVEMENTS

9.1 Existing Improvements.

As of the Commencement Date, CCSF shall be deemed to have granted and conveyed to tenant ownership of all of the Existing Improvements and all appurtenant fixtures, machinery and equipment then located on the Property.

9.2 Initial Improvements.

The construction of the Initial Improvements shall be governed by the provisions of the LDDA.

9.3 Title to Improvements.

During the Term of this Lease, Tenant shall own all of the Existing Improvements, Initial Improvements, Subsequent Improvements and all appurtenant fixtures, machinery and equipment installed at the Property after the Commencement Date (except for trade fixtures and other personal property of Subtenants), subject to a reversion in CCSF upon termination or expiration of this Lease. At the expiration or earlier termination of this Lease, title to all Improvements, including appurtenant fixtures (but excluding trade fixtures and other personal property of Tenant and its Subtenants), shall vest in CCSF without further action of any Party, and without compensation or payment to Tenant. Because of the reversionary interest of CCSF in the Improvements, Tenant shall hold less than a fee interest therein.

SECTION 10. SUBSEQUENT CONSTRUCTION

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10.1 10.1CCSF’s Right to Approve Subsequent Improvement Construction.

(a) Construction Requiring Approval. Tenant shall have the right, from time to time during the Term, to perform Subsequent Construction in accordance with the provisions of this Section 10, provided that Tenant shall not, without CCSF’s prior written approval (which approval shall not unreasonably be withheld or delayed by CCSF):

(i) Except in accordance with the Scope of Development attached hereto as Exhibit D, construct additional buildings or other additional structures, other than to replace or Restore those previously existing;

(ii) Increase the height of any Improvements beyond the height approved for the same; or

(iii) Decrease or increase either the building area or the rentable area of the Premises after Completion by more than fifteen thousand (15,000) square feet.

(b) Notice by Tenant. At least thirty (30) days before commencing any Subsequent Construction costing Four Hundred Thousand and No/100 Dollars ($400,000.00), as Indexed, or more, Tenant shall notify CCSF of such planned Subsequent Construction. Such notice shall be accompanied by reasonably detailed schematic drawings for such Subsequent Construction if such Subsequent Construction is of the type requiring Landlord’s approval hereunder. Within twenty one (21) days after receipt of such notice from Tenant, CCSF shall have the right to object to any such Subsequent Construction, to the extent that such Subsequent Construction requires CCSF’s approval. If CCSF does not give notice of objection, with detailed reasons therefor, within such 21-day period and then does not give such notice of objection within two (2) business days following the giving of an additional written request by Tenant, CCSF shall be deemed to have approved of the Subsequent Construction but only if it is substantially in accordance with the improvements as shown in the schematic drawings approved or deemed approved by CCSF.

(c) Permits. Tenant acknowledges that the provisions of this section are subject to Sections 6.1(a) and 10.7(a)(ii). In particular, Tenant acknowledges that CCSF’s approval of Subsequent Construction (or the fact that Tenant is not required to obtain CCSF’s approval) does not alter Tenant’s obligation to obtain all Regulatory Approvals and all permits required by applicable Law to be obtained from governmental agencies having jurisdiction.

10.2 10.2Minor Alterations.

Unless otherwise required under Section 10.1(a)(i)-(iii), CCSF’s approval hereunder shall not be required for (a) the installation, repair or replacement of furnishings, fixtures, equipment or improvements which do not materially affect the structural integrity of the Improvements, (b) recarpeting, repainting of the Premises, landscaping, or similar alterations, (c) any other single work of Subsequent Construction costing Four Hundred Thousand and no/100 Dollars

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($400,000.00) or less, as Indexed (collectively, “Minor Alterations”), or (d) any Subsequent Construction not discussed in Section 10.1(a)(i)-(iii).

10.3 10.3Tenant Occupancy Improvements.

Except as otherwise required under Section 10.1(a) hereof, CCSF’s approval hereunder shall not be required for the installation of tenant improvements and finishes to prepare portions of the Premises for occupancy or use by Subtenants, provided that the foregoing shall not alter Tenant’s obligation to obtain any required Regulatory Approvals and permits.

10.4 Construction Documents in Connection with Subsequent Construction.

(a) Preparation, Review and Approval of Construction Documents. With regard to any Subsequent Construction that requires CCSF’s approval under this Section 10, Tenant shall prepare and submit to CCSF, for review and written approval or deemed approval hereunder, reasonably detailed schematic drawings, and following CCSF’s approval of such schematic drawings, final construction documents which are consistent with the approved schematic drawings (collectively, schematic drawings and final construction documents are referred to as “Construction Documents”). CCSF may waive the submittal requirement of schematic drawings if it determines in its reasonable discretion that the scope of the Subsequent Construction does not warrant such initial review. If required by law, Construction Documents shall be prepared by a qualified architect or structural engineer duly licensed in California. CCSF shall approve Construction Documents that are substantially consistent with any schematic drawings previously approved or deemed approved by CCSF and approve or disapprove Construction Documents submitted to it for approval within twenty-one (21) days after submission. Any disapproval shall state in writing the reasons for disapproval. If CCSF deems the Construction Documents incomplete, CCSF shall notify Tenant of such fact within twenty-one (21) days after submission and shall indicate which portions of the Construction Documents it deems to be incomplete. If CCSF notifies Tenant that the Construction Documents are incomplete, such notification shall constitute a disapproval of such Construction Documents. If CCSF disapproves Construction Documents, and Tenant revises or supplements, as the case may be, and resubmits such Construction Documents in accordance with the provisions of Section 10.5, CCSF shall review the revised or supplemented Construction Documents to determine whether the revisions satisfy the objections or deficiencies cited in CCSF’s previous notice of rejection, and CCSF shall approve or disapprove the revisions to the Construction Documents within fifteen (15) days after resubmission. If CCSF fails to approve or disapprove Construction Documents (including Construction Documents which have been revised or supplemented and resubmitted) within the times specified within this Section 10.4, such failure shall not constitute a default under this Lease on the part of CCSF, but such Construction Documents shall be deemed approved, provided that Tenant first provides CCSF with at least five (5) business days prior written notice that such Construction Documents shall be deemed approved unless disapproved in accordance with the provisions of this Section.

(b) Progress Meetings; Coordination. From time to time at the request of either Party during the preparation of Construction Documents, CCSF and Tenant shall

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hold regular progress meetings to coordinate the preparation, review and approval of the Construction Documents. CCSF and Tenant shall communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any Construction Documents to CCSF can receive prompt and speedy consideration.

10.5 CCSF’s Approval of Changes to Construction Documents.

If Tenant desires to make any substantial and material change in the Construction Documents after CCSF has approved or was deemed to have approved them, then Tenant shall submit the proposed change to CCSF for its reasonable approval. CCSF shall notify Tenant in writing of its approval or disapproval within fifteen (15) days after submission to CCSF. Any disapproval shall state, in writing, the reasons therefor, and shall be made within such fifteen (15)-day period and; provided that failure of CCSF to respond within such 15-day period and failure to respond with two (2) business days following a second request by Tenant, shall be deemed to constitute approval by CCSF.

10.6 Construction Schedule.

(a) Performance. Tenant shall prosecute all Subsequent Construction with reasonable diligence, subject to Force Majeure.

(b) Reports and Information. During periods of construction, with respect to any Subsequent Construction that requires CCSF’s approval, Tenant shall submit to CCSF written progress reports when and as reasonably requested by CCSF, but not more frequently than once per month.

10.7 Construction.

(a) Commencement of Subsequent Construction. Tenant shall not commence any Subsequent Construction until the following conditions have been satisfied or waived by CCSF:

(i) (i)For any construction for which CCSF has an approval right under Section 10.1, CCSF shall have approved the Final Construction Documents (or those aspects of the Final Construction Documents as to which CCSF has an approval right under Section 10.1);

(ii) Tenant shall have obtained all permits and other Regulatory Approvals necessary to commence such construction in accordance with Section 6;

(iii) Tenant shall have provided at least ten (10) days advance written notice of Subsequent Construction. Upon receipt of such notice, CCSF shall have the right to post a notice of non-responsibility on the Premises.

(b) Construction Standards. All Subsequent Construction shall be accomplished expeditiously, diligently and in accordance with good construction and engineering practices and applicable Laws. Tenant shall undertake commercially reasonable measures to minimize damage, disruption or inconvenience caused by such

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work and to make adequate provision for the safety and convenience of all persons affected by such work. Dust, noise and other effects of such work shall be controlled using commercially-accepted methods customarily used to control deleterious effects associated with construction projects in populated or developed urban areas. Tenant shall erect, to the extent reasonably possible, construction barricades substantially enclosing the area of such construction and maintain them until the Subsequent Construction has been substantially completed, to the extent reasonably necessary to minimize the risk of hazardous construction conditions.

(c) Costs of Construction. CCSF shall have no responsibility for costs of any Subsequent Construction. Tenant shall pay (or cause to be paid) all such costs.

(d) Rights of Access. During any period of Subsequent Construction, CCSF and its Agents shall have the right to enter areas in which Subsequent Construction is being performed, on reasonable prior written notice during customary construction hours, subject to all rights of Subtenants, Tenant’s and its contractors’ safety and security restrictions and requirements and to Tenant’s right of quiet enjoyment under this Lease, to inspect the progress of the work, provided, however, that CCSF and its Agents shall conduct their activities in such a way to minimize interference with Tenant and its operations to the extent feasible. Tenant may accompany CCSF on any such entry. Nothing in this Lease, however, shall be interpreted to impose an obligation upon CCSF to conduct such inspections or any liability in connection therewith other than liability for injury, death or property damage to the extent arising out of the gross negligence or wrongful acts of CCSF and its Agents in conduction such inspections.

10.8 Safety Matters.

Tenant, while performing any Subsequent Construction or maintenance or repair of the Improvements (for purposes of this Section 10.8 only, “Work”), shall undertake commercially reasonable measures in accordance with good construction practices to minimize the risk of injury or damage to adjoining portions of the Premises and Improvements and the surrounding property, or the risk of injury to members of the public, caused by or resulting from the performance of its Work.

10.9 As-Built Plans and Specifications.

With respect to any Subsequent Construction costing Four Hundred Thousand and No/100 Dollars ($400,000.00) as Indexed, or more, Tenant shall furnish to CCSF one set of as-built plans and specifications with respect to such Subsequent Construction (in a commonly used electronic or other form) within one hundred twenty (120) days following completion. If Tenant fails to provide such as-built plans and specifications to CCSF within the time period specified herein, and such failure continues for an additional thirty (30) days following written request from CCSF, CCSF will thereafter have the right to cause an architect or surveyor selected by CCSF to prepare as-built plans and specifications showing such Subsequent Construction, and the reasonable cost of preparing such plans and specifications shall be reimbursed by Tenant to CCSF as Additional Rent.

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SECTION 11. UTILITY SERVICES

11.1 Utility Services.

(a) Provision of Services. CCSF, in its proprietary capacity as owner of the Property and landlord under this Lease, shall not be required to provide any utility services to the Premises or any portion of the Premises. Tenant and its Subtenants shall be responsible for contracting with, and obtaining, all necessary utility and other services, as may be necessary and appropriate to the uses to which the Premises are put. Tenant shall give preference to the use of utility services provided by the City’s Public Utilities Commission if and to the extent that such services are provided on a competitive basis. Tenant will pay or cause to be paid as the same become due all deposits, charges, meter installation fees, connection fees and other costs for all public or private utility services at any time rendered to the Premises or any part of the Premises, and will do all other things required for the maintenance and continuance of all such services. Further, Tenant covenants not to raise as a defense to its obligations under this Lease, or assert as a counterclaim or cross-claim in any litigation or arbitration between Tenant and CCSF relating to this Lease, any Losses arising from or in connection with City’s provision (or failure to provide) public utility services. The foregoing shall not constitute a waiver by Tenant of any claim it may now or in the future have (or claim to have) against any such public utility provider relating to the provision of (or failure to provide) utilities to the Premises.

SECTION 12. DAMAGE OR DESTRUCTION

12.1 General; Notice; Waiver.

(a) General. If at any time during the Term any damage or destruction occurs to all or any portion of the Premises, including the Improvements thereon, and including, but not limited to, any Major Damage and Destruction, the rights and obligations of the Parties shall be as set forth in this Section 12.

(b) Notice. If there is any damage to or destruction of the Premises or of the Improvements thereon or any part thereof, which (i) could materially impair use or operation of any portion of the Improvements for their intended purposes for a period of thirty (30) days or longer, or (ii) the estimated cost of repair or restoration exceeds in an individual instance One Million Dollars ($1,000,000), as Indexed (which amount includes both hard and soft costs of a Restoration, including without limitation, architectural fees, permit and financing costs), Tenant shall promptly, but not more than ten (10) days after the occurrence of any such damage or destruction, give written notice thereof to CCSF describing with as much specificity as is reasonable, given the ten-day time constraint, the nature and extent of such damage or destruction; provided, however, that Tenant shall provide CCSF with a supplemental and more detailed written report describing such matters with specificity within ninety (90) days after the occurrence of the damage or destruction.

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(c) Waiver. The Parties intend that this Lease fully govern all of their rights and obligations in the event of any damage or destruction of the Premises. Accordingly, CCSF and Tenant each hereby waive the provisions of Sections 1932(2) and 1933(4) of the California Civil Code, as such sections may from time to time be amended, replaced, or restated.

12.2 Rent after Damage or Destruction.

If there is any damage to or destruction of the Premises, including the Improvements thereon, this Lease shall not terminate except as otherwise specifically provided in Section 12.4. In the event of any damage or destruction to the Improvements that does not result in a termination of this Lease, and at all times before completion of Restoration, Tenant shall pay to CCSF all Rent at the times and in the manner described in this Lease.

12.3 Tenant’s Obligation to Restore.

If all or any portion of the Improvements are damaged or destroyed by an event not constituting an Uninsured Casualty or Major Damage or Destruction for which Tenant elects to terminate this Lease under Section 12.4, then Tenant shall, subject to Section 12.4 hereof, within a reasonable period of time (allowing for securing necessary Regulatory Approvals), commence and diligently, Restore the Improvements to the condition they were in immediately before such damage or destruction, to the extent possible in accordance with then applicable Laws (including, but not limited to, any required code upgrades), without regard to the amount or availability of insurance proceeds. All Restoration performed by Tenant shall be in accordance with the procedures set forth in Section 10 relating to Subsequent Construction and shall be at Tenant’s sole expense. If insurance proceeds are available for such Restoration and Tenant is obligated under this Section 12.3 to Restore, or elects to Restore in accordance with the provisions of Section 12.4, then, subject to the rights of any Mortgagee under any Mortgage approved in accordance with Section 37 hereunder, Tenant shall have the sole right to negotiate an insurance settlement in an amount of sixty percent (60%) or less of the replacement cost of the improvements on the Premises, provided however, that Tenant shall use commercially reasonable efforts to insure that such settlement does not materially interfere with or delay Tenant’s obligation and ability to pay Rent to CCSF or otherwise meet its obligations hereunder. CCSF and Tenant shall have the right to participate jointly in the settlement or compromise of any insurance claims in excess of sixty percent (60%) of the replacement cost of the improvements on the Premises.

12.4 Major Damage and Destruction or Uninsured Casualty.

(a) Tenant’s Election to Restore or Terminate.

(i) Uninsured Casualty or Major Damage or Destruction. If an event of Major Damage or Destruction occurs during the last ten (10) years of the Term, or if an event of Uninsured Casualty occurs at any time during the Term, then at the time Tenant provides CCSF with the ninety (90) day report described in Section 12.1(b) above, Tenant shall also provide CCSF with written notice (the “Casualty Notice”) either (1) electing to commence and complete Restoration of the Improvements; or (2) electing to terminate this Lease (subject to Section

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12.4(b)). For purposes hereof, “Uninsured Casualty” will mean an event of damage or destruction occurring at any time during the Term for which the costs of Restoration (including the cost of any required code upgrades) exceeds Five Million Dollars ($5,000,000), as Indexed, plus the amount of any applicable policy deductible, and which is not covered by available insurance proceeds payable under the policies of insurance that Tenant is required to carry under Section 17 hereof payable (or those insurance proceeds which would have been payable but for Tenant’s default in its obligation to maintain insurance required to be maintained hereunder). Notwithstanding Section 12.1(b), Tenant shall provide CCSF with the Casualty Notice no later than the earlier to occur of the date that is (x) thirty (30) days following receipt of an initial written demand for reconstruction from any Non-Affiliate Mortgagee or (y) ninety (90) days following the occurrence of such Major Damage or Destruction or Uninsured Casualty. If Tenant elects to Restore the Improvements, all of the provisions of Section 10 that are applicable to Subsequent Construction of the Improvements shall apply to such Restoration of the Improvements to the condition they were in prior to such Major Damage or Destruction as if such Restoration were Subsequent Construction.

(ii) Other Circumstances Allowing Termination. Notwithstanding the foregoing or subsequent provisions of this Section 12, Tenant shall not be required to Restore the Improvements and may elect to terminate this Lease in accordance with this Section 12 if the then existing Laws would not allow Tenant to Restore the Improvements to an extent and condition substantially similar to that existing before such damage or destruction, or, in the case of Major Damage and Destruction occurring prior to the last ten (10) years of the Term, if Tenant reasonably anticipates, based upon a schedule of performance for such Restoration prepared with due diligence by Tenant in consultation with CCSF and a licensed general construction contractor experienced in the relevant type of construction project in San Francisco that at the time of completion of the Restoration, less than ten (10) years would remain in the Term. If Tenant elects to terminate based on either of the immediately foregoing determinations and CCSF reasonably disputes Tenant’s determination, CCSF may submit the matter to arbitration, as set forth in Section 12.9 hereof.

(b) Conditions to Termination. As a condition precedent to Tenant’s right to terminate the Lease upon the occurrence of either of the events set forth in Section 12.4(a) above, Tenant shall do all of the following:

(i) Tenant in its election to terminate described in Section 12.4(a) shall state the cost of Restoration, and the amount by which the cost of Restoration plus the amount of any applicable policy deductible exceeds insurance proceeds payable (or those insurance proceeds which would have been payable but for Tenant’s default in its obligation to maintain insurance required to be maintained hereunder); and

(ii) Tenant shall pay or cause to be paid the following amounts from casualty insurance proceeds upon the later of making the election to terminate

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or promptly following receipt of such proceeds upon or immediately following termination in the following order of priority:

(1) first, to CCSF (or Tenant, if such work is performed by, or on account of, Tenant at its cost) for the actual costs incurred for any work required to alleviate any conditions caused by such event of damage or destruction that could cause an immediate or imminent threat to the public safety and welfare or damage to the environment, including without limitation, any demolition or hauling of rubble or debris;

(2) second, to CCSF, which portion is an amount equal to all accrued and unpaid Rent and Additional Rent owed by Tenant to CCSF under this Lease as of the date of the occurrence of the event of damage or destruction;

(3) third, to the extent of available insurance proceeds, to each Non-Affiliate Mortgagee demanding payment thereof in accordance with its Non-Affiliate Mortgage and applicable Law (in order of lien priority and not prorata), that portion of the remaining casualty insurance proceeds arising out of or in connection with the casualty causing such Major Damage or Destruction in an amount not to exceed the aggregate amounts then owed to the Non-Affiliate Mortgagee and secured by all Non-Affiliate Mortgages under the loan documents therefor;

(4) fourth, to CCSF in the amount owed to CCSF, if any, by Tenant on account of Tenant’s obligations hereunder as of the date of the event of damage or destruction not otherwise paid to CCSF under Section 12.4(b)(ii)(2); and

(5) fifth, the balance of any insurance proceeds shall be divided proportionately between CCSF, for the value of CCSF’s reversionary interest in the Property and Improvements (in their condition immediately prior to the event of damage or destruction) as of the date the Term would have expired but for the event of damage or destruction, and Tenant, for the value of the Improvements for the remaining unexpired portion of the Term (in their condition immediately prior to the event of damage or destruction) less any proceeds distributed in repayment of any Mortgages as provided in Section 12.4(b)(ii)(3).

(iii) upon termination, Tenant shall deliver possession of the Premises to CCSF and quitclaim to CCSF all right, title and interest in the Premises and any remaining Improvements.

(c) CCSF’s Election Upon Notice of Termination. Notwithstanding the foregoing, if Tenant elects to terminate this Lease solely due to an Uninsured Casualty under circumstances permitted by Section 12.4(a), then CCSF may, in the first sixty (60) years of the Term, by notice in writing given to Tenant within sixty (60) days after Tenant’s

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Casualty Notice, elect any of the following: (i) terminate the Lease and accept the surrender of the Premises in its then-existing condition, or (ii) in the event of an Uninsured Casualty, continue the Lease in effect, and pay the amount by which the cost of Restoration (including the cost of any required code upgrades) will exceed the net proceeds of any insurance payable under the policies of insurance that Tenant is required to carry under Section 18 hereof (or which would have been payable but for Tenant’s default in its obligation to maintain such insurance) by more than Five Million Dollars ($5,000,000), as Indexed, plus the amount of any applicable policy deductible and require Tenant to Restore the Premises in accordance with Section 12.4(b). In the last fifteen (15) years of the Term, CCSF will not have the right to elect to pay the incremental cost and cause Tenant to Restore unless Tenant agrees to do so, in its sole discretion.

12.5 Effect of Termination.

If Tenant elects to terminate the Lease under Section 12.4(a) above, and CCSF elects not to continue the Lease in effect if allowed under Section 12.4(c), then, on the date that Tenant shall have fully complied with all other provisions of Section 12.4(b) to the satisfaction of CCSF, this Lease shall terminate. Upon such termination, the Parties shall be released thereby without further obligations to the other Party as of the effective date of such termination, subject to payment to CCSF of accrued and unpaid Rent, through the date of the event of damage or destruction to the extent not paid out of insurance proceeds; provided, however, that the indemnification provisions hereof shall survive any such termination with respect to matters arising before the date of any such termination. In addition, termination of this Lease under this Section 12 shall not limit the right of a Mortgagee to a New Lease under Section 37 unless such Mortgagee has agreed otherwise. The rights of any Mortgagee hereunder, and any rights of Tenant or CCSF to receive insurance proceeds in accordance with the provisions of this Lease will survive the termination of this Lease. At CCSF’s request following any termination, Tenant shall deliver to CCSF a duly executed and acknowledged quitclaim deed suitable for recordation and in form and content satisfactory to CCSF.

12.6 Distribution Upon Lease Termination.

If Tenant is obligated to and fails to Restore the Improvements as provided herein and this Lease is terminated, all insurance proceeds held by CCSF, Tenant and, subject to Section 37, any Mortgagee or not yet collected, shall be paid to and retained by CCSF; subject to the rights of a Mortgagee, if any, under a Mortgage to perform the Restoration using the insurance proceeds.

12.7 Use of Insurance Proceeds.

(a) Restoration. Except in the event of termination of this Lease, all all-risk coverage insurance proceeds, boiler and machinery insurance proceeds, and any other insurance proceeds paid to CCSF or Tenant by reason of damage to or destruction of any Improvements, if any (other than business or rental interruption insurance), must be used by Tenant for the repair or rebuilding of such Improvements except as specifically provided to the contrary in this Section 12.

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(b) Payment to Insurance Trustee. Except as otherwise expressly provided to the contrary in this Section 12, and if Tenant Restores the Improvements and there is a Mortgage encumbering the Lease, then any insurer paying compensation in excess of One Million Dollars ($1,000,000), as Indexed, under any all-risk policy required to be carried hereunder shall pay such proceeds to the Mortgagee that is the holder of any Mortgage which is the most senior lien against the Improvements or an insurance trustee reasonably acceptable to CCSF designated by such Mortgagee, in accordance with the Mortgage loan documents. If there is no Mortgage encumbering the Lease, then the insurance proceeds shall be paid to a trustee (which shall be a bank or trust company) designated by CCSF within twenty (20) days after written request by Tenant, having an office in San Francisco. Unless agreed otherwise by the Parties, and subject to the requirements of any Mortgagee, the insurer shall pay insurance proceeds of One Million Dollars ($1,000,000), as Indexed, or less directly to Tenant for purposes of Restoration in accordance with this Lease. If the funds are paid to a trustee in accordance herewith, the trustee shall hold all insurance proceeds in an interest-bearing federally insured account (with interest added to the proceeds). However, such trustee or Mortgagee shall pay to Tenant, from time to time as the work of rebuilding, Restoration and repair shall progress, in amounts designated by certification, by architects licensed to do business in the State, showing the application of such amounts as payment for such repairs, rebuilding and Restoration. If there is no Mortgage encumbering the Lease and a trustee is holding the proceeds, CCSF shall instruct the trustee to pay Tenant the cost of any emergency repairs and site protection necessitated by the event of damage or destruction in advance of the actual Restoration within thirty (30) days of such request. The trustee or Mortgagee, as the case may be, shall be required to make such payments upon receipt by the trustee of such information reasonably satisfactory to the trustee that any funds necessary to provide for Restoration or repair of any buildings and other Improvements destroyed or damaged, which may exceed the amount received upon such policies, are available for such purposes and that the application of such funds for such purposes is assured. Payment to Tenant shall not be construed as relieving the Tenant from the necessity of repairing such damage promptly in accordance with the terms of this Lease. Tenant shall pay all reasonable fees of the trustee, bank or trust company for its services. Provided that no uncured Event of Default (or unmatured Event of Default) that has not been waived by CCSF shall exist on the date such damage is repaired, the Improvements shall have been Restored in accordance with the provisions of this Section 12 and all sums due under this Lease shall have then been paid in full, any excess of monies received from insurance remaining with the trustee or Mortgagee after the Restoration or repair of the Improvements as required by this Section shall be paid to Tenant.

12.8 No Release of Tenant’s Obligations.

No damage to or destruction of the Premises or Improvements or any part thereof for fire or any other cause shall permit Tenant to surrender this Lease or relieve Tenant from any obligations, including, but not limited to, the obligation to pay Rent and Additional Rent, except as otherwise expressly provided herein.

12.9 Arbitration of Disputes.

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(a) Estimators. In the event CCSF and Tenant cannot mutually agree upon the cost of Restoration or the cost of replacing the Improvements under Section 12.4(a)(i) or if CCSF disputes Tenant’s determination allowing for termination under Section 12.4(a)(ii), such disputes shall be determined in the manner provided in this Section 12.9. Either Party may invoke the provisions of this Section 12.9 at any time that a dispute as to any such amount exists, by delivering written notice to the other Party. Within twenty (20) business days after delivery of notice invoking the provisions of this Section 12.9, each Party shall designate, by written notice to the other Party, a licensed general contractor having at least ten (10) years’ experience in estimating construction costs of major construction projects in the City to estimate the cost or amount in dispute, and for disputes regarding time to complete Restoration under Section 12.4(a)(ii), a general contractor or other person having at least the equivalent amount of experience in commercial real estate development matters. Each such estimator shall be competent, licensed, qualified by training and experience in the City, disinterested and independent. Each estimator (or if either Party fails to appoint its estimator within such twenty (20) business day period, the estimator appointed by the other Party) shall make an independent determination of the disputed amount or time for completion of Restoration, as the case may be, in accordance with the provisions hereof. The estimators may share and have access to objective information in preparing their estimates, but they will otherwise act independently. Each estimator shall complete, sign and submit its written estimate of the disputed construction, replacement cost, or time for completion of Restoration, as the case may be, within fifteen (15) business days after the appointment of both estimators, unless the Parties agree to permit a longer period of time. If the higher number estimating the cost or number of days for completion of Restoration is not more than one hundred ten percent (110%) of the lower estimate, the disputed amount shall be determined for purposes of this Lease to equal the average of the two (2) estimates.

(b) Arbitration. If the higher number estimating the cost or number of days for completion of Restoration is more than one hundred ten percent (110%) of the lower estimate, the Parties shall agree upon and appoint an independent arbitrator within thirty (30) days after the first two (2) estimates have been submitted to the Parties. The arbitrator shall have the minimum qualifications required of an estimator pursuant to subsection (a) above, and shall also have experience acting as an arbitrator of disputes involving construction costs or construction disputes. If the Parties do not appoint such arbitrator within such thirty (30) day period, then either Party may apply to the Superior Court of the State of California in and for the County of San Francisco for appointment of an arbitrator meeting the foregoing qualifications. If the court denies or otherwise refuses to act upon such application, either Party may apply to the American Arbitration Association, or any similar provider of professional commercial arbitration services, for appointment in accordance with the rules and procedures of such organization of an independent arbitrator meeting the foregoing qualifications. The arbitrator shall consider the estimates submitted by the Parties as well as any other relevant written evidence which the Parties may choose to submit. If a Party chooses to submit any such evidence, it shall deliver a complete and accurate copy to the other Party at the same time it submits the same to the arbitrator. Neither Party shall conduct ex parte communications with the arbitrator regarding the subject matter of the arbitration. Within fifteen (15) business days after his or her appointment, the arbitrator shall conduct a hearing, at which CCSF and Tenant may

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each make supplemental oral and/or written presentations, with an opportunity for testimony by the estimators and questioning by the Parties and the arbitrator. Within ten (10) business days following the hearing, the arbitrator shall select the estimate submitted by one or the other of the first two (2) estimators, as the more accurate estimate of the disputed amount or time, as applicable, in the opinion of the arbitrator. The determination of the arbitrator shall be limited solely to the issue of deciding which of the estimates is closest to the actual disputed value or amount of time, as applicable. The arbitrator shall have no right to propose a middle ground or to modify either of the two estimates, or to modify any provision of this Lease.

(c) Conclusive Determination. Except as provided in California Code of Civil Procedure Section 1286.2 (as the same may be amended from time to time), the determination by the estimators or the arbitrator, as applicable, shall be conclusive, final and binding on the Parties. Neither the estimators nor the arbitrator shall have any power to modify any of the provisions of this Lease. Subject to the provisions of this Section 12.9, the Parties will cooperate to provide all appropriate information to the estimators and the arbitrator. The estimators and the arbitrator will each report their respective determinations in writing, supported by the reasons for the determination.

(d) Conduct of Arbitration Proceeding. Any arbitration proceeding under this Section 12.9 shall be subject to California Code of Civil Procedure Sections 1280 to 1294.2 (but excluding Section 1283.05 with respect to discovery), or successor California laws then in effect relating to arbitration generally. Any such proceeding shall be conducted in the City of San Francisco.

(e) Fees and Costs; Waiver. Each Party shall bear the fees, costs and expenses of the estimator it selects. The fees, costs and expenses of the arbitrator and the costs and expenses of the arbitration proceeding, if any, shall be shared equally by CCSF and Tenant. The Parties waive any claims against the estimator appointed by the other Party, and against the arbitrator, for negligence, malpractice, or similar claims in the performance of the estimates or arbitration contemplated by this Section.

(f) Arbitration of Disputes. With respect to the arbitration provided for in this Section 12.9, the Parties agree as follows:

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISIONS IN THIS LEASE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF

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CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

CCSF’s Initials Tenant’s Initials

Any judgment upon the award rendered by the arbitration may be entered in any court having jurisdiction of such arbitration in accordance with the terms of this Lease. This arbitration provision does not affect the rights of either Party to seek confirmation, correction or vacation of the arbitration award pursuant to California Code of Civil Procedure Section 1285, et. seq.

SECTION 13. CONDEMNATION

13.1 General; Notice; Waiver.

(a) General. If, at any time during the Term, there is any Condemnation of all or any part of the Premises, including any of the Improvements, the rights and obligations of the Parties shall be determined pursuant to this Section 13.

(b) Notice. In case of the commencement of any proceedings or negotiations which might result in a Condemnation of all or any portion of the Premises during the Term, the Party learning of such proceedings shall promptly give written notice of such proceedings or negotiations to the other Party. Such notice shall describe with as much specificity as is reasonable, the nature and extent of such Condemnation or the nature of such proceedings or negotiations and of the Condemnation which might result therefrom, as the case may be.

(c) Waiver. Except as otherwise provided in this Section 13, the Parties intend that the provisions of this Lease shall govern their respective rights and obligations in the event of a Condemnation. Accordingly, but without limiting any right to terminate this Lease given Tenant in this Section 13, Tenant waives any right to terminate this Lease upon the occurrence of a Partial Condemnation under Sections 1265.120 and 1265.130 of the California Code of Civil Procedure, as such section may from time to time be amended, replaced or restated.

13.2 Total Condemnation.

If there is a Condemnation of the entire Premises or Tenant’s leasehold interest therein (a “Total Condemnation”), this Lease shall terminate as of the Condemnation Date.

13.3 Substantial Condemnation, Partial Condemnation.

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If there is a Condemnation of any portion but less than all of the Premises, the rights and obligations of the Parties shall be as follows:

(a) Substantial Condemnation. If there is a Substantial Condemnation of a portion of the Premises or Tenant’s leasehold estate, this Lease shall terminate, at Tenant’s option, as of the Condemnation Date, as further provided below. For purposes of this Section 13, “Substantial Condemnation” is a Condemnation that results in any substantial reduction in the rental and other revenues generated from leases and other agreements pertaining to the occupancy or use of any portion of the Premises or that renders the Project untenantable, unsuitable or economically infeasible for its intended use of the Premises consistent with this Lease, and includes a Condemnation of property located outside the Premises that substantially and materially eliminates access to the Premises where no alternative access can be constructed or made available. Upon or following a Substantial Condemnation, Tenant may terminate this Lease, at Tenant’s option, which shall be exercised, if at all, at any time within ninety (90) days after the Condemnation Date by delivering written notice of termination to CCSF. Notwithstanding the foregoing, Tenant shall have no right to terminate this Lease under this Section 13 if (1) the Condemnation is of the Tenant’s leasehold estate for less than one year (unless such Condemnation occurs during the last five (5) years of the Term) and Tenant receives an award at least equal to the loss of gross revenues resulting from such Condemnation, or (2) if the condition rendering the Project unsuitable, untenantable, or economically unfeasible for its intended use of the Premises consistent with this Lease, as the case may be: (x) can be cured by the performance of Restoration (unless such Condemnation occurs during the last ten (10) years of the Term or if Tenant reasonably anticipates, based upon a schedule of performance for such Restoration prepared with due diligence by Tenant in consultation with CCSF and a licensed general construction contractor experienced in relevant construction projects in San Francisco that at the time of completion of the Restoration, less than ten (10) years would remain in the Term), and (y) the cost of such Restoration does not exceed by at least One Hundred Thousand and No/100 Dollars ($100,000.00), as Indexed, the portion of the Award allocable to severance damages suffered by Tenant, unless CCSF (in its sole and absolute discretion and without any obligation to do so) gives written notice to Tenant within thirty (30) days (subject to extension as provided below) after receipt of Tenant’s termination notice that CCSF agrees, at its cost and expense, to pay any amount by which the cost of such Restoration exceeds by at least One Hundred Thousand and No/100 Dollars ($100,000.00), as Indexed, the amount of the Tenant’s severance damages. In either such case, this Lease shall not terminate, and, upon a determination that the Lease will continue based upon the availability and amount of Award or CCSF’s election to pay the deficient Award amount, Tenant shall commence and complete such Restoration as promptly as reasonably practicable by using commercially reasonable diligence and pursuant to the provisions of Sections 10 and 13.4. In addition, CCSF may extend the 30-day period for CCSF to deliver notice under clause (2) above, for up to sixty (60) additional days, by giving notice of such extension to Tenant within the original 30-day period following receipt of Tenant’s termination notice. CCSF’s right to exercise the option described in clause (2) above shall be conditioned upon CCSF and Tenant reaching an agreement, with respect to the schedule for performance of required work, the timing of payments of CCSF’s contribution to the costs of such work (to the extent not available from CCSF’s share of the Award), and any other related issues which

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may be necessary or appropriate for resolution in connection with such work and the payment for such work. If no satisfactory agreement is reached within such period, CCSF shall have no right to exercise such right, and such Condemnation shall be deemed a Substantial Condemnation.

(b) Partial Condemnation. If there is a Condemnation of any portion of the Premises or Tenant’s leasehold estate which does not result in a termination of this Lease under Section 13.2 or Section 13.3(a) (a “Partial Condemnation”), this Lease shall terminate only as to the portion of the Premises taken in such Partial Condemnation, effective as of the Condemnation Date. In the case of a Partial Condemnation, this Lease shall remain in full force and effect as to the portion of the Premises (or of Tenant’s leasehold estate) remaining immediately after such Condemnation, and Tenant shall promptly commence and complete, any necessary Restoration of the remaining portion of the Premises, at no cost to CCSF. Any such Restoration shall be performed in accordance with the provisions of Section 10.

13.4 Awards.

Except as provided in Section 13.1(a) and in Sections 13.5 and 13.6, Awards and other payments to either CCSF or Tenant on account of a Condemnation, less costs, fees and expenses of either CCSF or Tenant (including, without limitation, reasonable Attorneys’ Fees and Costs) incurred in the collection thereof (“Net Awards and Payments”) shall be allocated between CCSF and Tenant as follows:

(a) In the event of a Partial Condemnation, first, to pay costs of Restoration incurred by Tenant, in which case, the portion of the Net Awards and Payments allocable to Restoration shall be payable to Tenant, a Mortgagee, or trustee in accordance with the requirements governing payment of insurance proceeds set forth in Section 12.7(b);

(b) Second, to CCSF for the value of the condemned land only, considered as unimproved and encumbered by this Lease (notwithstanding any termination of this Lease that may have occurred, or may in the future occur, for any reason, including but not limited to a termination as the result of such Condemnation) and subject to the particular uses of the Premises existing immediately prior to the date of the Condemnation, and without reference to, or inclusion of, CCSF’s reversionary interest in the value of the Improvements (the “Condemned Land Value”).

(c) Third, to any Mortgagee pursuant to a Mortgage as and to the extent provided therein, for payment of all sums secured by its Mortgage that remain outstanding, together with its reasonable out of pocket expenses and charges in collecting the Net Award and Payment, including without limitation, its reasonable attorneys’ fees incurred in the Condemnation.

(d) Fourth, if no Mortgagee has received a portion of the Award pursuant to subparagraph (c) above, then:

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(i) Tenant shall receive an amount equal to the value of Tenant’s leasehold interest in this Lease, not including the value of the Improvements on the Premises, for the remaining unexpired portion of the Term to the original scheduled Expiration Date, and

(ii) The balance of the Net Payment and Award shall be divided proportionately between CCSF, for the value of CCSF’s reversionary interest in the Improvements (based on the date the Term would have expired but for the event of Condemnation), and Tenant, for the value of the Improvements for the remaining unexpired portion of the Term to the original scheduled Expiration Date.

(e) IfAlternatively, if a Mortgagee has received a portion of the Award pursuant to subparagraph (bc) above, then the balance of the Net Payment and Award shall be divided proportionately between CCSF, for the value of CCSF’s reversionary interest in the Improvements (based on the date the Term would have expired but for the event of Condemnation), and Tenant, for the value of its leasehold interest and the Improvements for the remaining unexpired portion of the Term to the original scheduled Expiration Date, less any proceeds distributed in repayment of any Mortgages as provided in Section 13.4(c).

(e) (f) Notwithstanding anything to the contrary set forth above, any portion of the Net Awards and Payments which has been specifically designated by the condemning authority or in the judgment of any court to be payable to CCSF or Tenant on account of any interest in the Premises or the Improvements separate and apart from the Condemned Land Value, the value of CCSF’s reversionary interest in the Improvements, Tenant’s leasehold interest in this Lease, or the value of the Improvements on the Premises for the remaining unexpired portion of the Term of this Lease, shall be paid to CCSF or Tenant, as applicable, as so designated by the condemning authority or judgment.

(f) If CCSF or any other assignee of the landlord’s interest in this Lease is condemning authority in connection with a total taking or a partial taking that results in the termination of the Lease, and the taking pertains to only Lessee’s interest, then Lessee shall be entitled to the entire amount of any Net Awards and Payments.

13.5 Temporary Condemnation.

If there is a Condemnation of all or any portion of the Premises for a temporary period lasting less than the remaining Term of this Lease, other than in connection with a Substantial Condemnation or a Partial Condemnation of a portion of the Premises for the remainder of the Term, this Lease shall remain in full force and effect, there shall be no abatement of Rent, and the entire Award shall be payable to Tenant.

13.6 Relocation Benefits, Personal Property.

Notwithstanding Section 13.4, CCSF shall not be entitled to any portion of any Net Awards and Payments payable in connection with the Condemnation of the Personal Property of Tenant or any of its Subtenants.

13.7 Reduction in Base Rent.

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If there is a Partial Condemnation, then as of the date of such Condemnation, Base Rent shall be reduced in proportion to the reduction in the value of Tenant’s leasehold interest in this Lease and in the value of the Improvements on the Premises for the remaining unexpired portion of the Term of this Lease resulting from such Partial Condemnation.

SECTION 14. LIENS

14.1 Liens.

Tenant shall not create or permit the attachment of, and shall promptly following notice, discharge at no cost to CCSF, any lien, security interest, or encumbrance on the Premises or Tenant’s leasehold estate, other than (i) this Lease, other permitted Subleases and Permitted Title Exceptions, (ii) liens for non-delinquent Impositions (excluding Impositions which may be separately assessed against the interests of Subtenants), except only for Impositions being contested as permitted by Section 5, (iii) Mortgages permitted under Section 37, and (iv) liens of mechanics, material suppliers or vendors, or rights thereto, for sums which under the terms of the related contracts are not at the time due or which are being contested as permitted by Section 5. The provisions of this Section 14.1 do not apply to liens created by Tenant on its Personal Property.

14.2 Mechanics’ Liens.

Nothing in this Lease shall be deemed or construed in any way as constituting the request of CCSF, express or implied, for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of or to the Premises or the Improvements, or any part thereof. Tenant agrees that at all times when the same may be necessary or desirable, Tenant shall take such action as may be reasonably required by CCSF or under any Law in existence or hereafter enacted which will prevent the enforcement of any mechanics’ or similar liens against the Premises, Tenant’s leasehold interest, or CCSF’s fee interest in the Premises for or on account of labor, services or materials furnished to Tenant, or furnished at Tenant’s request. Tenant shall provide such advance written notice of any Subsequent Construction such as shall allow CCSF from time to time to post a notice of non-responsibility on the Premises. If Tenant does not, within sixty (60) days following the Tenant’s receipt of notice of the imposition of any such lien, cause the same to be released of record or post a bond or take such other action reasonably acceptable to CCSF, it shall be a material default under this Lease, and CCSF shall have, in addition to all other remedies provided by this Lease or by Law, the right but not the obligation to cause the same to be released by such means as it shall deem proper, including without limitation, payment of the claim giving rise to such lien. All sums paid by CCSF for such purpose and all reasonable expenses incurred by CCSF in connection therewith shall be payable to CCSF by Tenant within thirty (30) days following written demand by CCSF with supporting invoices.

SECTION 15. ASSIGNMENT AND SUBLETTING

15.1 Assignment.

(a) Consent of CCSF. Except as otherwise expressly permitted in Sections 15.1(b) and (c), Tenant, its successors and permitted assigns shall not (i) suffer or permit any Significant Change to occur, or (ii) Transfer or assign any interest in this Lease

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either voluntarily or by operation of law, other than to the Guarantor upon its notice to CCSF that it is proceeding to cause the Completion of the Improvements pursuant to the Guaranty, without the prior written consent of CCSF, which consent may be withheld in CCSF’s sole and absolute discretion prior to Stabilization and shall not be withheld or delayed commercially unreasonably or conditioned by CCSF following Stabilization so long as at the time of such transfer or assignment there is no uncured Event of Default. Any dispute as to the failure of CCSF to grant its consent to assignment hereunder shall be the subject to Expedited Arbitration pursuant to Section 26.3 hereof.

(b) Mortgaging of Leasehold. Notwithstanding anything herein to the contrary, at any time during the Term of this Lease, Tenant shall have the right, without CCSF’s consent, to sell, assign, encumber or transfer its interest in this Lease to a Mortgagee or other purchaser at a foreclosure sale under the provisions of a Mortgage, subject to the limitations, rights and conditions set forth in Section 37 hereof.

(c) Conditions. Any transfer of the Lease described in Section 15.1(a) is further subject to the satisfaction of the following conditions precedent, each of which is hereby agreed to be reasonable as of the date hereof:

(i) any proposed transferee, by instrument in writing, for itself and its successors and assigns, and expressly for the benefit of CCSF, must agree to be subject to all of the conditions and restrictions to which Tenant is subject and must expressly assume all of the obligations of Tenant and its Affiliates, arising from and after the effective date of the Transfer, under this Lease and any other agreements or documents entered into by and between CCSF and Tenant relating to the Project. The obligations and liabilities set forth herein are hereinafter collectively referred to as the “Assignee’s Assumption Obligations.” It is the intent of this Lease, to the fullest extent permitted by law and equity and excepting only in the manner and to the extent specifically provided otherwise in this Lease, that no transfer of this Lease, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, may operate, legally or practically, to deprive or limit CCSF of or with respect to any rights or remedies or controls provided in or resulting from this Lease with respect to the Premises that CCSF would have had, had there been no such transfer or change;

(ii) the document effecting the transfer shall have been submitted to CCSF for review and CCSF shall have approved such document which approval shall not be unreasonably withheld or delayed; provided that CCSF shall have the right to review the economic terms of the transfer for any purpose, including calculation of Participation Rent, but CCSF’s scope of approval of such document shall be limited to confirmation that the transfer has assumed the Assignee’s Assumption Obligations and that such transfer is otherwise in compliance with this Lease.

(iii) Tenant shall have complied with the provisions of Section 15.1(d) below;

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(iv) there shall be no Event of Default or unmatured Event of Default on the part of Tenant under this Lease or any of the other documents or obligations to be assigned to the proposed transferee, or if not cured, Tenant or the proposed transferee have made provisions to cure of the Event of Default, which provisions are satisfactory to CCSF in its sole discretion;

(v) the proposed transferee (A) has demonstrated to CCSF’s reasonable satisfaction that it is capable, financially and otherwise, of performing each of Tenant’s obligations under this Lease, and (B) is subject to the jurisdiction of the courts of the State of California;

(vi) prior to the Completion Date, the proposed transfer is not in connection with any transaction for the purposes of syndicating the Lease, such as a security, bond or certificate of participation financing as determined by CCSF in its sole discretion (but expressly excluding trading of shares on the open market;) and

(vii) Tenant deposits sufficient funds to reimburse CCSF for its reasonable legal expenses to review the proposed assignment.

(d) Delivery of Executed Assignment. No assignment of any interest in this Lease made with CCSF’s consent, or as herein otherwise permitted, will be effective unless and until there has been delivered to CCSF, within thirty (30) days after Tenant entered into such assignment, an executed counterpart of such assignment containing an agreement, in recordable form, executed by Tenant and the transferee, wherein and whereby such transferee assumes performance of all of the Assignee’s Assumption Obligations unless released (provided, however, that the failure of any transferee to assume this Lease, or to assume one or more of Tenant’s obligations under this Lease, will not relieve such transferee from such obligations or limit CCSF’s rights or remedies under this Lease or under applicable Law). The form of such instrument of assignment shall be subject to CCSF’s approval, which approval shall not be unreasonably withheld or delayed and shall be deemed given as described in Section 15.1(a).

(e) No Release of Tenant’s Pre-Transfer Liability or Waiver by Virtue of Consent. The consent by CCSF to an assignment hereunder is not in any way to be construed to (i) from and after the date of such assignment, relieve Tenant of any liability arising out of or with regard to the performance of any covenants or obligations to be performed by Tenant hereunder prior to the effective date of such Transfer, or (ii) relieve any transferee of Tenant from its obligation, if required under this Section 15.1, to obtain the express consent in writing of CCSF to any further assignment or to any Significant Change, provided, however, if CCSF consents to such Transfer pursuant to this Section 15, Tenant and its Affiliates shall be relieved of all liabilities arising from and after the effective date of such Transfer under this Lease and any other agreements or documents entered into by and between CCSF and Tenant relating to the Project.

(f) Notice of Significant Changes; Reports to CCSF. Tenant shall promptly notify CCSF of any and all Significant Changes. At such time or times as CCSF

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may reasonably request, Tenant must furnish CCSF with a statement, certified as true and correct by an officer of Tenant, identifying the beneficial owner(s), if any, of more than a fifty percent (50%) interest in Tenant.

(g) Determination of Whether Consent is Required. At any time Tenant may submit a request to CCSF for the approval of the terms of an assignment, transfer, sublease or encumbrance of this Lease or of a Significant Change (all of the foregoing being collectively referred to herein as a “proposed transfer”) or for a decision by CCSF as to whether in its opinion a proposed transfer requires CCSF’s consent under the provisions of this Section 15. Within thirty (30) days of the making of such a request and the furnishing by Tenant to CCSF of all documents and instruments with respect thereto as shall be reasonably requested by CCSF, CCSF must notify Tenant in writing of CCSF’s reasonable business grounds for its approval or disapproval of the proposed transfer or of CCSF’s determination that the proposed transfer does not require CCSF’s consent. If CCSF disapproves the proposed transfer, or determines that it requires the consent of CCSF, as applicable, it must specify in writing the grounds for its disapproval, its reason that consent is required, or both, as applicable.

(h) Scope of Prohibitions on Assignment. The prohibitions provided in this Section 15.1 will not be deemed to prevent (i) the granting of subleases so long as such subletting is done in accordance with Section 15.3, or (ii) the granting of any Mortgage expressly permitted by this Lease, subject to compliance with Section 37 and other applicable terms of this Lease.

15.2 Assignment of Rents.

(a) Tenant hereby assigns to CCSF all rents and other payments of any kind, due or to become due from any or present or future Subtenant as security for Tenant’s obligations hereunder prior to actual receipt thereof by Tenant; provided, however, the foregoing assignment shall be subject and subordinate to any assignment made to a Mortgagee under Section 37 until such time as CCSF has terminated this Lease (subject to CCSF’s agreement to enter into a New Lease with Mortgagee and all other provisions of this Lease protecting Mortgagee’s interests in this Lease), at which time the rights of CCSF in all rents and other payments assigned pursuant to this Section 15.2 shall become prior and superior in right. Such subordination shall be self-operative. However, in confirmation thereof, CCSF shall, upon the request of each Mortgagee, execute a subordination agreement in form and substance reasonably satisfactory to such Mortgagee and to CCSF.

(b) Notwithstanding the foregoing, if this Lease terminates by reason of an Event of Default, any Mortgagee which actually collected any rents from any Subtenants pursuant to any assignment of rents or subleases made in its favor shall promptly remit to CCSF the rents so collected (less the actual cost of collection and less amounts previously paid by the Mortgagee to CCSF as Rent) to the extent necessary to pay CCSF any Rent, including any and all Additional Rent, through the date of termination of this Lease. Such assignment shall be subject to the right of Tenant to collect such rents except during the happening of any Event of Default under the provisions of this Lease. CCSF shall apply

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any net amount collected by it from such Subtenants to the payment of Rent due under this Lease, and remit any balance to Tenant except in the event of an Event of Default.

15.3 Subletting by Tenant.

(a) Except as otherwise expressly permitted in this Sections 15.3(b), Tenant, its successors and permitted assigns shall not Sublease all or any portion of the Premises without the prior written consent of CCSF, which consent shall not commercially unreasonably be withheld or delayed.

(b) Notwithstanding the foregoing, but subject to the remainder of this Section 15.3, the conditions and provisions of which are hereby agreed to be reasonable as of the date hereof, Tenant shall have the right to sublet portions of the Premises by written Space Subleases from time to time that, by their terms, are subject to and in compliance with the provisions of this Lease without the necessity of obtaining the consent of CCSF, to such persons or entities and upon such terms and conditions which are consistent with the provisions of this Lease as Tenant may deem to be fit and proper. Notwithstanding the foregoing, Space Subtenants need not be obligated for Restoration, and, provided further that Space Subtenants need not be obligated for any obligations not related to the Subleased Spaces, or to undertake any obligations with respect to the Subleased Space that is Tenant’s obligation under such Space Sublease. In no event may the term of any such Space Sublease extend beyond the Term of this Lease without the prior written consent of CCSF, not to be commercially unreasonably withheld, provided, further, that upon expiration of the Term, any such Space Sublease shall become a direct lease with CCSF. Tenant shall use commercially reasonable efforts to cause available Subtenant Spaces to be leased or re-leased on terms and conditions consistent in all respects with the provisions of this Lease. In the event of any termination of this Lease, CCSF shall not terminate or otherwise disturb the rights of subtenants under any Space Sublease, but shall instead honor such Sublease as if such agreement has been entered into directly between CCSF and Subtenant, except that (i) CCSF shall not be liable to the subtenant for any security deposit previously paid by such subtenant to Tenant unless such deposits are transferred to CCSF, (ii) the term of the Space Sublease, including options, does not extend beyond the scheduled Term, and (iii) the Subtenant attorns to CCSF. Until completion of thea multi-family Project, Tenant shall not enter into any Space Sublease for a Permitted Temporary Use pursuant to Section 3.5 hereof with a term in excess of three (3) years, or at any time upon terms that do not reflect fair market value for the space leased.

SECTION 16. INDEMNIFICATION OF CCSF

16.1 Indemnification of CCSF.

Tenant agrees to and shall Indemnify the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any such Indemnified Party, the Premises or CCSF’s interest therein, in connection with the occurrence or existence of any of the following: (i) any accident, injury to or death of Persons or loss of or damage to property occurring on the Premises or any part thereof; (ii) any accident, injury to or death of Persons or loss or damage to property occurring on the Premises, which is caused directly or indirectly by Tenant or any of its

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Agents, Invitees or Subtenants; (iii) any use, possession, occupation, operation, maintenance, or management of the Premises, or any part thereof by Tenant or any of its Agents, Invitees, or Subtenants; (iv) any use of property immediately adjacent to the Premises by Tenant or any of its Agents; (v) any design, construction or structural defect arising as a result of any Subsequent Improvements constructed by or on behalf of Tenant, and any other matters relating to the condition of the Premises caused by Tenant or any of its Agents, or Subtenants; (vi) any failure on the part of Tenant or its Agents or Subtenants, as applicable, to perform or comply with any of the terms of this Lease or with applicable Laws, rules or regulations, or permits; (vii) performance of any labor or services or the furnishing of any materials or other property in respect of the Premises, or any part thereof by Tenant or any of its Agents or Subtenants; (viii) any civil rights actions or other legal actions or suits initiated by any user or occupant of the Premises to the extent it relates to such use or occupancy. Notwithstanding the foregoing, the foregoing indemnity shall not apply to any and all Losses to the extent arising out of the gross negligence or willful misconduct of CCSF, its Agents, employees, or invitees. If any action, suit or proceeding is brought against any Indemnified Party by reason of any occurrence for which Tenant is obliged to Indemnify such Indemnified Party, such Indemnified Party will notify Tenant of such action, suit or proceeding. Tenant may, and upon the request of such Indemnified Party will, at Tenant’s sole expense, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended by counsel designated by Tenant and reasonably approved by such Indemnified Party in writing.

16.2 Immediate Obligation to Defend.

Tenant specifically acknowledges that it has an immediate and independent obligation to defend the Indemnified Parties from any claim which is within the scope of the indemnity provision of Section 16.1 or any other indemnity provision under this Lease, and such obligation arises at the time such claim is tendered to Tenant by an Indemnified Party and continues at all times thereafter; provided, however, that in the event of a final judgment or arbitration decision determining that all or a portion of the claim fell outside the scope of the indemnity, CCSF shall reimburse Tenant for that portion of costs, fees and expenses expended by Tenant hereunder that was determined to be outside the scope of this indemnity.

16.3 Not Limited by Insurance.

The insurance requirements and other provisions of this Lease shall not limit Tenant’s indemnification obligations under Section 16.1 or any other indemnification provision of this Lease as to any events occurring prior to such expiration or termination.

16.4 Survival.

Tenant’s obligations under this Section 16 and any other indemnity in this Lease shall survive the expiration or sooner termination of this Lease.

16.5 Other Obligations.

The agreements to Indemnify set forth in Section 16 and elsewhere in this Lease are in addition to, and in no way shall be construed to limit or replace, any other obligations or liabilities which Tenant may have to CCSF in this Lease, at common law or otherwise.

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16.6 Defense.

Tenant shall, at its option and subject to the reasonable consent and approval of CCSF with respect to any settlement or judgment that might impose liability on CCSF, be entitled to control the defense, compromise, or settlement of any such matter through counsel of Tenant’s own choice; provided, however, in all cases CCSF shall be entitled to participate in such defense, compromise, or settlement at its own expense. If Tenant shall fail, however, in CCSF’s reasonable judgment, within a reasonable time following notice from CCSF alleging such failure, to take reasonable and appropriate action to defend, compromise, or settle such suit or claim that might otherwise result in liability of CCSF, CCSF shall have the right promptly to use in-house counsel or hire outside counsel, at Tenant’s sole expense, to carry out such defense, compromise, or settlement, and reasonable expenses paid by CCSF shall be due and payable to CCSF thirty (30) days after receipt by Tenant of an invoice therefor.

16.7 Release of Claims Against CCSF.

Tenant, as a material part of the consideration of this Lease, hereby waives and releases any and all claims against the Indemnified Parties from any Losses, including damages to goods, wares, goodwill, merchandise, equipment or business opportunities and by Persons in, upon or about the Premises for any cause arising at any time, including, without limitation, all claims arising from the joint or concurrent negligence of CCSF or the other Indemnified Parties, but excluding any gross negligence or willful misconduct of the Indemnified Parties, or claims for which CCSF has otherwise agreed to indemnify Tenant hereunder, and further excluding any claims, demands, or causes of action Tenant may now or hereafter have against CCSF for rights of contribution or equitable indemnity under applicable Laws and except for third party claims, including those arising under any leases at the Premises, relating to the period prior to the Effective Date of this Lease.

SECTION 17. INSURANCE

17.1 Property and Liability Coverage.

(a) Required Types and Amounts of Insurance. Tenant shall, at no cost to CCSF, obtain, maintain and cause to be in effect at all times from the Commencement Date to the later of (i) the last day of the Term, or (ii) the last day Tenant (A) is in possession of the Premises or (B) has the right of possession of the Premises (except as otherwise specified in this Section 17.1(a)), the following types and amounts of insurance:

(i) Builders Risk Insurance. During any period of Subsequent Construction, Tenant shall maintain, on a form reasonably approved by CCSF, builders’ risk insurance in the amount of 100% of the completed value of all new construction, insuring all new construction, including all materials and equipment incorporated in, on or about the Premises, and in transit or storage off-site, against all risk or “special form” hazards, water damage (including, if appropriate and if available at commercially reasonable rates, groundwater damage and water damage resulting from backed up sewers and drains), including as loss payees, as their interest may appear, CCSF, Tenant and Tenant’s contractors and subcontractors

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with any deductible not to exceed One Hundred Thousand Dollars ($100,000), as Indexed.

(ii) Property Insurance. Tenant shall maintain property insurance policies with coverage at least as broad as Insurance Services Office form CP 10 30 06 95 (“Causes of Loss - Special Form”) (or its replacements), in an amount not less than 100% of the then-current full replacement cost of the Improvements and other property being insured pursuant thereto (including building code upgrade coverage) with any deductible not to exceed One Hundred Thousand Dollars ($100,000), as Indexed. In addition to the foregoing, Tenant may insure its Personal Property in such amounts as Tenant deems appropriate, and CCSF shall have no interest in the proceeds of such Personal Property insurance, nor shall the proceeds of such insurance be subject to the provisions of Section 12.

(iii) Commercial General Liability Insurance. Tenant shall maintain “Commercial General Liability” insurance policies with coverage at least as broad as Insurance Services Office form CG 00 01 10 93 (or its replacements) insuring against claims for bodily injury (including death), property damage, personal injury and advertising injury occurring upon the Premises (including the Improvements), and operations incidental or necessary thereto occurring on the Premises or any part of the Premises, such insurance to afford protection in an amount not less than Two Million Dollars ($2,000,000), as Indexed, each occurrence and annual aggregate covering bodily injury and broad form property damage including contractual liability (which to the extent possible under the above-referenced policy form) includes coverage of the indemnity obligations in Section 16.1(i)), independent contractors, explosion, collapse, underground (XCU), and products and completed operations coverage. Such insurance may be provided on a combination of primary and umbrella excess policies. If commercially necessary, Tenant may provide such coverage under policies with a “claims made” trigger of coverage.

(iv) Workers’ Compensation Insurance. During any period in which Tenant has employees as defined in the California Labor Code, Tenant shall maintain workers’ compensation insurance, and also employer’s liability coverage with limits not less than One Million Dollars ($1,000,000), as Indexed, each accident for employer’s liability covering all persons employed by Tenant in connection with the use, operation and maintenance of the Premises and the Improvements.

(v) Boiler and Machinery Insurance. Tenant shall maintain boiler and machinery insurance covering damage to or destruction of machinery and equipment located on the Premises or in the Improvements that is used by Tenant for heating, ventilating, air-conditioning, power generation and similar purposes, in an amount not less than one hundred percent (100%) of the actual replacement value of such machinery and equipment.

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(vi) Business Automobile Insurance. Tenant shall maintain policies of business automobile liability insurance covering all owned, non-owned or hired motor vehicles to be used by Tenant and its Agents in connection with Tenant’s use and occupancy of the Premises, affording protection for bodily injury (including death) and property damage in the form of Combined Single Limit Bodily Injury and Property Damage policy with limits of not less than One Million Dollars ($1,000,000), as Indexed, per accident.

(vii) Business Interruption Insurance. Tenant shall maintain business interruption insurance for loss caused by any of the perils or hazards set forth in and required to be insured pursuant to Sections 17.1(a)(i), (ii) and (v) covering the period of construction of any Subsequent Improvements, and also covering a period of not less than one (1) year following Completion, with a limit of not less than twelve (12) months’ anticipated revenues.

(viii) Environmental Liability Insurance. During the course of any Hazardous Materials Remediation activities, Tenant shall maintain, or cause its contractor or consultant to maintain, environmental pollution or contamination liability insurance, on a claims made basis, with limits of not less than One Million Dollars ($1,000,000) each occurrence combined single liability for Bodily Injury and Property Damage or, with the prior written approval of CCSF (such approval not to be unreasonably withheld, conditioned or delayed), such coverage may be provided with a lower limit.

(ix) Professional Liability. If and when Tenant obtains the services of a design professional to provide services related to the Premises for which a license is required under applicable law, Tenant shall require such design professional to maintain professional liability insurance in appropriate amounts and with customary deductibles with respect to such services.

(x) Other Insurance. Tenant shall obtain such other insurance as is reasonably requested by CCSF’s Risk Manager to the extent such insurance is customary in San Francisco for improvements of the type that exist from time to time on the Premises, as determined by an independent insurance broker, mutually selected by CCSF and Tenant and which determination is reasonably acceptable to the Risk Manager.

(b) General Requirements. All insurance provided for pursuant to this Section 17.1:

(i) Shall be carried under a valid and enforceable policy or policies issued by insurers of recognized responsibility that are rated Best A-VIII or better (or a comparable successor rating) and legally authorized to sell such insurance within the State of California;

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(ii) As to property insurance, shall name CCSF as loss payee as its interest may appear, and as to liability insurance, shall name CCSF as additional insured.

(iii) Shall be evaluated by CCSF and Tenant for adequacy not more frequently than every five (5) years. Tenant and CCSF shall consult upon not less than ninety (90) days prior written notice by CCSF, and, Tenant shall promptly thereafter increase the insurance limits for all or any of its general liability policies if, in the reasonable judgment of CCSF’s Risk Manager and an independent insurance broker mutually selected by CCSF and Tenant, it is the general commercial practice in San Francisco to carry insurance for facilities similar to the Premises in amounts substantially greater than the amounts carried by Tenant with respect to risks comparable to those associated with use of the Premises. If CCSF’s Risk Manager and an independent insurance broker mutually selected by CCSF and Tenant mutually determine that insurance limits required under this Section 17.1 may be decreased in light of such commercial practice and the risks associated with use of the Premises, CCSF shall notify Tenant of such determination, and Tenant shall have the right to decrease the insurance coverage required under this Lease accordingly. In such event, Tenant shall promptly deliver to CCSF a certificate evidencing such new insurance amounts.

(iv) Shall, if available from the insurer at no or nominal expense, provide that no cancellation, material modification or termination of such insurance for any reason shall be effective until at least thirty (30) days after mailing or otherwise sending written notice of such cancellation, modification or termination to CCSF, or ten (10) days’ notice for non-payment of premiums;

(v) As to Commercial General Liability only, shall provide that it constitutes primary insurance to any other insurance available to any additional insured, with respect to claims insured by such policy, and that insurance applies separately to each insured against whom claim is made or suit is brought;

(vi) Shall provide for waivers of any right of subrogation that the insurer of such party may acquire against each party hereto with respect to any losses and damages that are of the type covered under the policies required by Sections 17.1(a)(i), (ii) and (v);

(vii) Shall be subject to the approval of CCSF, which approval shall be limited to whether or not such insurance meets the terms of this Lease;

(viii) If any of the insurance required hereunder is provided under a claims-made form of policy, Tenant shall maintain such coverage continuously throughout the Term, and following the expiration or termination of the Term, Tenant shall maintain, without lapse for a period of two (2) years beyond the expiration or termination of this Lease, coverage with respect to occurrences during the Term that give rise to claims made after expiration or termination of this Lease;

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(ix) Shall, for property insurance only, provide (if an endorsement to such effect is available at a commercially reasonable cost) that all losses payable under all such policies that are payable to CCSF shall be payable notwithstanding any act or negligence of Tenant in compliance with the terms of the insurance policy; and

(x) May be carried as part of a blanket policy maintained by any constituent partner or member of Tenant or any affiliate of any constituent partner or member of Tenant.

(c) Certificates of Insurance; Right of CCSF to Maintain Insurance. Tenant shall furnish CCSF certificates with respect to the policies required under this Section 17.1, and, upon CCSF’s request, shall also provide CCSF with copies of each such policy or shall otherwise make such policy available to CCSF for its review and evidence of payment of premiums, within thirty (30) days after the Commencement Date and, with respect to renewal policies, at least ten (10) business days after the expiration date of each such policy. If at any time Tenant fails to maintain the insurance required pursuant to Section 17.1, or fails to deliver certificates or policies as required pursuant to this Section 17.1(c), then, upon five (5) business days’ written notice to Tenant, CCSF may obtain and cause to be maintained in effect such insurance by taking out policies with companies satisfactory to CCSF. Within ten (10) business days following demand, Tenant shall reimburse CCSF for all amounts so paid by CCSF, together with all costs and expenses in connection therewith and interest thereon at the Default Rate.

(d) Insurance of Others. If Tenant requires liability insurance policies to be maintained by Subtenants other than Space Subtenants, contractors, subcontractors or others in connection with their use or occupancy of, or their activities on, the Premises, Tenant shall require that such policies include Tenant and CCSF as additional insureds, as their respective interests may appear.

17.2 CCSF Entitled to Participate.

Subject to the rights of any Mortgagees under its Mortgages, CCSF shall be entitled to participate in and consent to any settlement, compromise or agreement with respect to any claim for any loss in excess of sixty percent (60%) of CCSF’s reasonable estimate of the replacement cost of the improvements then-existing on the Premises, covered by the insurance required to be carried hereunder; provided, however, that (i) CCSF’s consent shall not be unreasonably withheld, and (ii) except as otherwise provided in Section 12.3 hereof, no consent of CCSF shall be required in connection with any such settlement, compromise or agreement concerning damage to all or any portion of the Improvements if Tenant shall have agreed in writing to commence and complete Restoration.

17.3 Release and Waiver.

Each Party hereby waives all rights of recovery and causes of action, and releases each other Party from any liability, losses and damages occasioned to the property of each such Party,

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which losses and damages are of the type covered under the property policies required by Sections 17.1(a)(i), (ii) or (v) to the extent that such loss is reimbursed by an insurer.

SECTION 18. HAZARDOUS MATERIALS

18.1 Hazardous Materials Compliance.

(a) Compliance with Hazardous Materials Laws. Tenant shall comply and cause (i) its Agents, (ii) all Persons under any Sublease, (iii) to the extent reasonably controllable by Tenant, all Invitees or other Persons entering upon the Premises, and (iv) the Premises and the Improvements, to comply with all Hazardous Materials Laws and any deed restrictions, deed notices, soils management plans or certification reports required in connection with the approvals of any regulatory agencies in connection with the Project. Without limiting the generality of the foregoing, Tenant covenants and agrees that it will not, without the prior written consent of CCSF, which may be given or withheld in CCSF’s sole discretion, Handle, nor will it permit the Handling of Hazardous Materials on, under or about the Premises, except for (A) standard building materials and equipment that do not contain asbestos or asbestos-containing materials, lead or polychlorinated biphenyl (PCBs), (B) gasoline and other fuel products used to transport and operate vehicles and equipment, (C) any Hazardous Materials which do not require a permit or license from, or that need not be reported to, a governmental agency, which Hazardous Materials are used in the construction of the Subsequent Improvements, and which are reported to, and approved by CCSF prior to any such Handling and, in any case, are used in strict compliance with all applicable Laws, (D) office and residential supplies or materials in such limited amounts as are customarily used for general residential, office or commercial purposes so long as such Handling is at all times in full compliance with all Environmental Laws, (E) pre-existing Hazardous Materials that are required by Law or prudent business practices to be Handled for Remediation purposes.

(b) Notice. Except for Hazardous Materials permitted by Subsection 18.1(a) above, Tenant and CCSF shall advise the other in writing promptly (but in any event within five (5) business days) upon learning or receiving notice of (i) the presence of any Hazardous Materials on, under or about the Premises, (ii) any action taken by Tenant or CCSF in response to any (A) Hazardous Materials on, under or about the Premises or (B) Hazardous Materials Claims, and (iii) Tenant’s or CCSF’s discovery of the presence of Hazardous Materials on, under or about any real property adjoining the Premises. Tenant and CCSF shall inform the other orally as soon as possible of any emergency or non-emergency regarding a Release or discovery of Hazardous Materials. In addition, Tenant and CCSF shall provide each other with copies of all communications with federal, state and local governments or agencies relating to Hazardous Materials Laws (other than privileged communication, so long as any non-disclosure of such privileged communication does not otherwise result in any non-compliance by Tenant with the terms and provisions of this Section 18) and all communication with any Person relating to Hazardous Materials Claims (other than privileged communications; provided, however, such non-disclosure of such privileged communication shall not limit or impair Tenant’s obligation to otherwise comply with each of the terms and provisions of this Lease, including without limitation, this Section 18).

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(c) CCSF’s Approval of Remediation. Except as required by Law or to respond to an emergency, Tenant shall not take any Remediation in response to the presence, Handling, transportation or Release of any Hazardous Materials on, under or about the Premises unless Tenant shall have first submitted to CCSF for CCSF’s approval, which approval shall not be unreasonably withheld, conditioned or delayed, a written Hazardous Materials Remediation plan and the name of the proposed contractor which will perform the work. CCSF shall approve or disapprove of such Hazardous Materials Remediation plan and the proposed contractor promptly, but in any event within thirty (30) days after receipt thereof. If CCSF fails to respond within such thirty (30)-day period, it shall be deemed to have disapproved such Hazardous Materials Remediation Plan, provided that if following CCSF’s failure to respond, Tenant gives a second request for approval and CCSF fails to respond within two (2) business days, the proposed Hazardous Materials Remediation plan shall be deemed approved.. If CCSF disapproves of any such Hazardous Materials Remediation plan, CCSF shall specify in writing the reasons for its disapproval. Any such Remediation undertaken by Tenant shall be done in a manner so as to minimize any impairment to the Premises to the extent reasonably possible. In the event Tenant undertakes any Remediation with respect to any Hazardous Materials on, under or about the Premises, Tenant shall conduct and complete such Remediation (x) in compliance with all applicable Hazardous Materials Laws, and (y) in accordance with the orders and directives of all federal, state and local governmental authorities.

18.2 Hazardous Materials Indemnity.

Without limiting the indemnity in Section 16.1, Tenant shall Indemnify the Indemnified Parties from and against any and all Losses which arise out of or relate in any way to any use, Handling, production, transportation, disposal, storage or Release of any Hazardous Materials in or on the Premises at any time during the Term of the Lease and before the surrender of the Premises by Tenant, whether by Tenant, any Subtenants or any other Person (other than CCSF and its Agents and Invitees) directly or indirectly arising out of (A) the Handling, transportation or Release of Hazardous Materials by Tenant, its Agents, Invitees or any Subtenants or any Person on or in the Premises, other than CCSF and its Agents and Invitees) excepting therefrom Hazardous Materials located in, on or under the Premises as of the Effective Date of this Lease except to the extent that Tenant or its Agents disturbs or exacerbates such pre-existing conditions or to the extent that the Handling or Remediation of such pre-existing Hazardous Materials is required by Regulatory Agencies having jurisdiction as a result of activities or uses of the Premises permitted or conducted by Tenant, its Subtenants, Agents or Invitees, (B) any failure by Tenant, its Agents, Invitees or Subtenants (other than CCSF and its Agents and Invitees) to comply with Hazardous Materials Laws, or (C) any failure by Tenant to comply with the obligations contained in Section 18.1. All such Losses within the scope of this Section 18.2 shall constitute Additional Rent owing from Tenant to CCSF hereunder and shall be due and payable from time to time immediately upon CCSF’s request, as incurred. Tenant understands and agrees that its liability to the Indemnified Parties shall arise upon the earlier to occur of (i) discovery of any such Hazardous Materials on, under or about the Premises or the discovery of the disturbance or exacerbation of the pre-existing condition, or (ii) the institution of any Hazardous Materials Claim with respect to such Hazardous Materials, and not upon the realization of loss or damage.

SECTION 19. DELAY DUE TO FORCE MAJEURE

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19.1 Delay Due to Force Majeure.

For all purposes of this Lease, a Party whose performance of its obligations hereunder is hindered or affected by events of Force Majeure shall not be considered in breach of or in default in its obligations hereunder to the extent of any delay resulting from Force Majeure, provided, however, that the provisions of this Section 19.1 shall not apply to Tenant’s obligation to pay Rent, including Additional Rent. A Party seeking an extension of time pursuant to the provisions of this Section 19.1 shall give notice to the other Party describing with reasonable particularity (to the extent known) the facts and circumstances constituting Force Majeure within the earlier of (a) a reasonable time (but not more than thirty (30) days unless the other Party’s rights are not prejudiced by such delinquent notice) after knowledge of the beginning of such enforced delay or (b) promptly after the other Party’s demand for performance.

SECTION 20. CCSF’S RIGHT TO PERFORM TENANT’S COVENANTS

20.1 CCSF May Perform in Emergency.

Without limiting any other provision of this Lease, and in addition to any other rights or remedies available to CCSF for any default on the part of Tenant under this Lease, if Tenant fails to perform any maintenance or repairs required to be performed by Tenant hereunder within the time provided for such performance, which failure gives rise to an emergency which creates an imminent danger to public health or safety, as reasonably determined by CCSF, CCSF may at its sole option, but shall not be obligated to, perform such obligation for and on behalf of Tenant, provided that, if there is time, CCSF first gives Tenant such notice and opportunity to take corrective action as is reasonable under the circumstances.

20.2 CCSF May Perform Following Tenant’s Failure to Perform.

Without limiting any other provision of this Lease, and in addition to any other rights or remedies available to CCSF for any default on the part of Tenant under this Lease, if at any time Tenant fails to pay any sum required to be paid by Tenant pursuant to this Lease to any Person other than CCSF (other than any Imposition, with respect to which the provisions of Section 4.2 shall apply), or if Tenant fails to perform any obligation on Tenant’s part to be performed under this Lease, which failure continues without cure following written notice from CCSF for a period of thirty (30) days (or, if Section 17.1(c) is applicable, which failure continues for five (5) business days after written notice from CCSF), and is not the subject of a contest under Section 5, then, CCSF may, at its sole option, but shall not be obligated to, pay such sum or perform such obligation for and on behalf of Tenant. Notwithstanding the foregoing, however, if within such period Tenant gives notice to CCSF that such failure is the subject of a contest under Section 5, or that cure of such failure cannot reasonably be completed within such period, then CCSF will not pay such sum or perform such obligation during the continuation of such contest for so long thereafter as Tenant continues diligently to prosecute such contest or cure.

20.3 Tenant’s Obligation to Reimburse CCSF.

If pursuant to the provisions of Sections 17.1(c), 20.1, or 20.2, CCSF pays any sum or performs any obligation required to be paid or performed by Tenant hereunder, Tenant shall reimburse CCSF within thirty (30) business days following demand, as Additional Rent, the sum

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so paid, or the reasonable expense incurred by CCSF in performing such obligation, together with interest thereon at the Default Rate, if such payment is not made within such period, computed from the date of CCSF’s demand until payment is made. CCSF’s rights under this Section 20 shall be in addition to its rights under any other provision of this Lease or under applicable Laws.

SECTION 21. EVENTS OF DEFAULT; TERMINATION

21.1 Events of Default.

Subject to the provisions of Section 21.2, only the occurrence of any one or more of the following events which remain uncured after the passage of time as set forth pursuant to this Section 22 shall constitute an “Event of Default” under the terms of this Lease:

(a) Tenant fails to pay any Rent to CCSF when due, which failure continues for twenty (20) days or fails to pay any Additional Rent to CCSF when due, which failure continues for ten (10) days following written notice from CCSF (it being understood and agreed that the notice required to be given by CCSF under this Section 12.1(a) shall also constitute the notice required under Section 1161 of the California Code of Civil Procedures or its successor, and shall satisfy the requirements that notice be given pursuant to such section);

(b) Tenant files a petition for relief, or an order for relief is entered against Tenant, in any case under applicable bankruptcy or insolvency Law, or any comparable law that is now or hereafter may be in effect, whether for liquidation or reorganization, which proceedings if filed against Tenant are not dismissed or stayed within one hundred twenty (120) days;

(c) A writ of execution is levied on the leasehold estate which is not released within one hundred twenty (120) days, or a receiver, trustee or custodian is appointed to take custody of all or any material part of the property of Tenant, which appointment is not dismissed within one hundred twenty (120) days;

(d) Tenant makes a general assignment for the benefit of its creditors;

(e) Tenant abandons the Premises, within the meaning of California Civil Code Section 1951.2 (or its successor), which abandonment is not cured within fifteen (15) days after notice of belief of abandonment from CCSF;

(f) Tenant fails to maintain any insurance required to be maintained by Tenant under this Lease, which failure continues without cure for five (5) business days after written notice from CCSF, or, if such cure cannot be reasonably completed within such five (5) business day period, if Tenant does not within such five (5) business day period commence such cure, or having so commenced, does not prosecute such cure with diligence and dispatch to completion within a reasonable time thereafter;

(g) Tenant violates any other covenant, or fails to perform any other obligation to be performed by Tenant under this Lease or under the LDDA at the time such performance is due, and such violation or failure continues without cure for more than

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thirty (30) days after written notice from CCSF specifying the nature of such violation or failure, or, if such cure cannot reasonably be completed within such thirty (30)-day period, if Tenant does not within such thirty (30)-day period commence such cure, or having so commenced, does not prosecute such cure with diligence and dispatch to completion within a reasonable time thereafter;

(h) Tenant suffers or permits an assignment of this Lease or any interest therein to occur in violation of this Lease or suffers or permits a Significant Change to occur in violation of this Lease, which Event of Default is not cured within thirty (30) days after written notice from CCSF by an effective rescission of the assignment or Significant Change or through CCSF’s consent, which may be given or withheld in CCSF’s sole and absolute discretion; provided, however, that if the assignment or Significant Change is the result of a willful, knowing and deliberate action on the part of Tenant to make an assignment, sublease or Significant Change with the intent of violating Section 15, the thirty (30) day cure period will not apply.

(i) During the time that the Guaranty is required under the LDDA (the "Guaranty Period") the Guarantor fails to maintain a net worth equal to that required under Section 5.15;

(j) During the Guaranty Period, the Guarantor files a petition for relief, or an order for relief is entered against the Guarantor, in any case under applicable bankruptcy or insolvency law, or any comparable law that is now or hereafter may be in effect, whether for liquidation or reorganization, which proceedings if filed against the Guarantor are not dismissed or stayed within one hundred twenty (120) days, and a substitute Person does not assume the obligations of the Guarantor under the Guaranty which Person is approved by Landlord, which approval shall not unreasonably be withheld;

(k) During the Guaranty Period, a writ of execution is levied on the Guaranty which is not released within sixty (60) days, or a receiver, trustee or custodian is appointed to take custody of all or substantially all of the property of the Guarantor, which appointment is not dismissed within one hundred twenty (120) days; and

(l) During the Guaranty Period, the Guarantor makes a general assignment for the benefit of its creditors

(m) Notwithstanding the provisions of paragraphs (i) through (l) of Section 21.1, upon any of such events, and there is not otherwise an Event of Default, Tenant may cure any of such events that would otherwise constitute an Event of Default by having one or more substitute guarantors which has provided evidence reasonably acceptable to Landlord that such substitute guarantor meets or exceeds the financial qualifications of the Guarantor as set forth in Section 5.15 of the LDDA execute and deliver a Guaranty of Completion within sixty (60) days following the first to occur (without taking into consideration any specified cure periods) of any of the events described in paragraphs (i) through (l).

21.2 Special Provisions Concerning Mortgagees and Events of Default.

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Notwithstanding anything in this Lease to the contrary, the exercise by a Mortgagee of any of its remedies under its Mortgage shall not, in and of itself, constitute a default under this Lease.

SECTION 22. REMEDIES

22.1 CCSF’s Remedies Generally.

Upon the occurrence and during the continuance of an Event of Default under this Lease (but without obligation on the part of CCSF following the occurrence of an Event of Default to accept a cure of such Event of Default other than as required by law or the terms of this Lease), CCSF shall have all rights and remedies provided in this Lease or available at law or equity. All of CCSF’s rights and remedies shall be cumulative, and except as may be otherwise provided by applicable Law, the exercise of any one or more rights shall not preclude the exercise of any others.

22.2 Right to Keep Lease in Effect.

(a) Continuation of Lease. Upon the occurrence of an Event of Default hereunder, CCSF may continue this Lease in full force and effect, as permitted by California Civil Code Section 1951.4 (or any successor provisions). Specifically, CCSF has the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations). In the event CCSF elects this remedy, CCSF shall have the right to enforce by suit or otherwise, all covenants and conditions hereof to be performed or complied with by Tenant and exercise all of CCSF’s rights, including the right to collect Rent, including any and all Additional Rent, when and as such sums become due, even though Tenant has breached this Lease and is no longer in possession of the Premises or actively managing or operating the Premises. If Tenant abandons the Premises in violation of this Lease, CCSF may (i) enter the Premises and relet the Premises, or any part thereof, to third Persons for Tenant’s account without notice to Tenant, Tenant hereby waiving rights, if any, to any such notice under any applicable Law, and (ii) alter, install or modify the Improvements or any portion thereof. Tenant shall be liable immediately to CCSF for all costs CCSF incurs in enforcing this Lease, whether or not any action or proceeding is commenced, including, without limitation, reasonable Attorneys’ Fees and Costs, brokers’ fees or commissions, the costs of removing and storing the Personal Property of Tenant, costs incurred by CCSF in connection with reletting the Premises, or any portion thereof, and altering, installing, modifying and constructing tenant improvements required for a new tenant, and the costs of Restoration and of repairing, securing, servicing, maintaining and preserving the Premises or the Improvements, or any portion thereof. Reletting may be for a period equal to, shorter or longer than the remaining Term of this Lease, provided Tenant’s obligations shall in no event extend beyond the Term.

(b) No Termination. No act by CCSF allowed by this Section 22.2, nor any appointment of a receiver upon CCSF’s initiative to protect its interest under this Lease, nor any withholding of consent to an assignment or termination of an assignment in accordance herewith, shall terminate this Lease, unless and until CCSF notifies Tenant in writing that CCSF elects to terminate this Lease.

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(c) Application of Proceeds of Reletting. If CCSF elects to relet the Premises as provided hereinabove in Section 22.2(a), the rent that CCSF receives from reletting shall be applied to the payment of:

(i) First, all costs incurred by CCSF in enforcing this Lease, whether or not any action or proceeding is commenced, including, without limitation, reasonable Attorneys’ Fees and Costs, brokers’ fees or commissions, the costs of removing and storing the Personal Property of Tenant, costs incurred by CCSF in connection with reletting the Premises, or any portion thereof, and altering, installing, modifying and constructing tenant improvements required for a new tenant, and the costs of repairing, securing and maintaining the Premises or any portion thereof;

(ii) Second, the satisfaction of all obligations of Tenant hereunder (other than the payment of Rent) including, without limitation, the payment of all Impositions or other items of Additional Rent owed from Tenant to CCSF, in addition to or other than Rent due from Tenant;

(iii) Third, Rent, including any and all Additional Rent, due and unpaid under this Lease;

(iv) After deducting the payments referred to in this Section 22.2(c), any sum remaining from the rent CCSF receives from reletting shall be held by CCSF and applied to monthly installments of Rent as such amounts become due under this Lease. In no event shall Tenant be entitled to any excess rent received by CCSF. If, on a date Rent or other amount is due under this Lease, the rent received as of such date from the reletting is less than the Rent or other amount due on that date, or if any costs, including those for maintenance which CCSF incurred in reletting, remain after applying the rent received from the reletting as provided in Section 22.2(c)(ii), Tenant shall pay to CCSF, upon demand, in addition to the remaining Rent or other amounts due, all such costs.

(d) Payment of Rent. Tenant shall pay to CCSF the Rent and Additional Rent due under this Lease on the dates the Rent and Additional Rent is due, less the rent CCSF has received from any reletting which exceeds all costs and expenses of CCSF incurred in connection with Tenant’s default and the reletting of all or any portion of the Premises.

22.3 Right to Terminate Lease.

(a) Damages. CCSF may terminate this Lease at any time after the occurrence (and during the continuation) of an Event of a Default by giving written notice of such termination. Termination of this Lease shall thereafter occur on the date set forth in such notice. Acts of maintenance or preservation, and any appointment of a receiver upon CCSF’s initiative to protect its interest hereunder shall not in any such instance constitute a termination of Tenant’s right to possession. No act by CCSF other than giving notice of termination to Tenant in writing shall terminate this Lease. On termination of

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this Lease CCSF shall have the right to recover from Tenant all sums allowed under California Civil Code Section 1951.2, including, without limitation, the following:

(i) The worth at the time of the award of the unpaid Rent which had been earned at the time of termination of this Lease;

(ii) The worth at the time of the award of the amount by which the unpaid Rent which would have been earned after the date of termination of this Lease until the time of the award exceeds the amount of the loss of Rent that Tenant proves could have been reasonably avoided;

(iii) The worth at the time of the award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of the loss of Rent that Tenant proves could have been reasonably avoided;

(iv) Any other amount necessary to compensate CCSF for all detriment proximately caused by the default of Tenant, or which in the ordinary course of things would be likely to result therefrom; and

(v) “The worth at the time of the award”, as used in Section 2.3(a)(i) and (ii) shall be computed by allowing interest at a rate per annum equal to the Default Rate. “The worth at the time of the award”, as used in Section 2.3(a)(iii), shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%).

(b) Interest. Rent not paid when due shall bear interest from the date due until paid at the Default Rate.

(c) Waiver of Rights to Recover Possession. In the event CCSF terminates Tenant’s right to possession of the Premises pursuant to this Section 22.3, Tenant hereby waives any rights to recover or regain possession of the Premises under any rights of redemption to which it may be entitled by or under any present or future Law, including, without limitation, California Code of Civil Procedure Sections 1174 and 1179 or any successor provisions.

(d) No Rights to Assign. Upon the occurrence of an Event of Default, notwithstanding Section 15 hereof, Tenant shall have no right to assign its interest in the Premises or this Lease without CCSF’s written consent, which may be given or withheld in CCSF’s sole and absolute discretion, subject to the rights of Mortgagees as set forth in Section 37.

22.4 Continuation of Subleases and Other Agreements.

CCSF shall have the right, at its sole option, to assume any and all Subleases and agreements by Tenant for the maintenance or operation of the Premises. Tenant hereby further covenants that, upon request of CCSF following an Event of Default and termination of Tenant’s interest in this Lease, Tenant shall execute, acknowledge and deliver to CCSF such further

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instruments as may be necessary or desirable to vest or confirm or ratify vesting in CCSF the then existing Subleases and other agreements then in force, as above specified.

SECTION 23. EQUITABLE RELIEF

23.1 CCSF’S Equitable Relief.

In addition to the other remedies provided in this Lease, CCSF shall be entitled at any time after a default or threatened default by Tenant to seek injunctive relief or an order for specific performance, where appropriate to the circumstances of such default. In addition, after the occurrence of an Event of Default, CCSF shall be entitled to any other equitable relief which may be appropriate to the circumstances of such Event of Default.

23.2 Nonliability of Tenant’s Members, Partners, Shareholders, Directors, Officers and Employees.

No member, manager, officer, partner, shareholder, director, agent, or employee of Tenant will be personally liable to CCSF, in an Event of Default by Tenant or for any amount which may become due to CCSF or on any obligations under the terms of this Lease.

SECTION 24. NO WAIVER

24.1 No Waiver by CCSF or Tenant.

No failure by CCSF or Tenant to insist upon the strict performance of any term of this Lease or to exercise any right, power or remedy consequent upon a breach of any such term, shall be deemed to imply any waiver of any such breach or of any such term unless clearly expressed in writing by the Party against which waiver is being asserted. No waiver of any breach shall affect or alter this Lease, which shall continue in full force and effect, or the respective rights of CCSF or Tenant with respect to any other then existing or subsequent breach.

24.2 No Accord or Satisfaction.

No submission by Tenant or acceptance by CCSF of full or partial Rent or other sums during the continuance of any failure by Tenant to perform its obligations hereunder shall waive any of CCSF’s rights or remedies hereunder or constitute an accord or satisfaction, whether or not CCSF had knowledge of any such failure, except with respect to the Rent so paid. No endorsement or statement on any check or remittance by or for Tenant or in any communication accompanying or relating to such payment shall operate as a compromise or accord or satisfaction unless the same is approved as such in writing by CCSF. CCSF may accept such check, remittance or payment and retain the proceeds thereof, without prejudice to its rights to recover the balance of any Rent, including any and all Additional Rent, due from Tenant and to pursue any right or remedy provided for or permitted under this Lease or in law or at equity. No payment by Tenant of any amount claimed by CCSF to be due as Rent hereunder (including any amount claimed to be due as Additional Rent) shall be deemed to waive any claim which Tenant may be entitled to assert with regard to the making of such payment or the amount thereof, and all such payments shall be without prejudice to any rights Tenant may have with respect thereto, whether or not such payment is identified as having been made “under protest” (or words of similar import).

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SECTION 25. DEFAULT BY CCSF; TENANT’S REMEDIES

25.1 Default by CCSF; Tenant’s Exclusive Remedies.

CCSF shall be deemed to be in default hereunder only if CCSF shall fail to perform or comply with any obligation on its part hereunder and (i) such failure shall continue for more than the time of any cure period provided herein, or, (ii) if no cure period is provided herein, for more than thirty (30) days after written notice thereof from Tenant (provided, that, CCSF shall use reasonable efforts to cure such default within a thirty (30) day period), or, (iii) if such default cannot reasonably be cured within such thirty (30)-day period, CCSF shall not within such period commence with due diligence and dispatch the curing of such default, or, having so commenced, shall thereafter fail or neglect to prosecute or complete with diligence and dispatch the curing of such default. Upon the occurrence of default by CCSF described above, Tenant shall have the exclusive right (a) to offset or deduct only from the Rent becoming due hereunder the amount of all actual damages incurred by Tenant as a direct result of CCSF’s default, pursuant to a final, unappealable judgment in a court of competent jurisdiction for such damages in accordance with applicable Law and the provisions of this Lease and, if all Rent then due under Section 2.2 has been paid in full, to bring an action against CCSF for all actual damages incurred by Tenant as a direct result of CCSF’s default but shall not be entitled to recover an amount in excess of the limitations otherwise set forth herein; and (b) to seek equitable relief in accordance with applicable Laws and the provisions of this Lease where appropriate and where such relief does not impose personal liability on CCSF or its Agents, provided, however, (i) in no event shall Tenant be entitled to offset from all or any portion of the Rent becoming due hereunder or to otherwise recover or obtain from CCSF or its Agents any damages (including, without limitation, any consequential, incidental, punitive or other damages proximately arising out of a default by CCSF hereunder) or Losses other than Tenant’s actual damages as described in the foregoing clause (a); (ii) Tenant agrees that, notwithstanding anything to the contrary herein or pursuant to any applicable Laws, Tenant’s remedies hereunder shall constitute Tenant’s sole and absolute right and remedy for a default by CCSF hereunder, and (iii) Tenant shall have no remedy of self-help all rights and remedies that may be available at law or in equity.

SECTION 26. TENANT’S RECOURSE AGAINST CCSF

26.1 No Recourse Beyond Value of Property Except as Specified.

Tenant agrees that except as otherwise specified in this Section 26.1, Tenant will have no recourse with respect to, and CCSF shall not be liable for, any obligation of CCSF under this Lease, or for any claim based upon this Lease, except to the extent of the fair market value of CCSF’s fee interest in the Premises (as encumbered by this Lease) plus the proceeds of any insurance available to CCSF to respond to such claim. By Tenant’s execution and delivery hereof and as part of the consideration for CCSF’s obligations hereunder, Tenant expressly waives all such claims for liability in excess of the foregoing limits.

26.2 No Recourse Against Specified Persons.

No commissioner, trustee, officer, employee or agent of CCSF will be personally liable to Tenant, or any successor in interest, for any Event of Default by CCSF, and Tenant agrees that it

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will have no recourse with respect to any obligation of CCSF under this Lease, or for any amount which may become due Tenant or any successor or for any obligation or claim based upon this Lease, against any such Person.

26.3 Arbitration of Certain Matters.

If a dispute arises with regard to whether a Transfer or Mortgage is permitted (or should be approved by CCSF) under the terms of this Lease, Tenant may submit the matter to arbitration in accordance with the dispute resolution provisions set forth herein. If a dispute arises as to the selection of comparable multi-family properties pursuant to Section 39 or under any other provision of this Lease providing for arbitration, either Tenant or CCSF may submit the matter to arbitration in accordance with the dispute resolution provisions set forth herein as administered by JAMS/Endispute or its successor as an independent dispute resolution administration service in San Francisco. Within twenty (20) business days after delivery of notice invoking the provisions of this Section 26.3, each Party shall designate, by written notice to the other Party, a person having at least twenty (20) years’ experience in managing and developing commercial real estate projects in San Francisco, including residential or office projects comparable to the Project. Each such person shall be competent, qualified by training and experience, disinterested and independent. Within ten (10) business days of their appointment, the persons selected by each Party shall choose a third person meeting the foregoing qualifications, or if they cannot agree within such time then either party, on behalf of both, may request that appointment of an arbitrator be designated by JAMS/Endispute or its successor as an independent dispute resolution administration service in San Francisco, California, and the other party shall not raise any questions as to such person’s full power and jurisdiction to entertain the application for and make the appointment. If either Party fails to appoint such person within such twenty (20) business day period, the person appointed by the other Party shall be the Arbiter for purposes hereof. For purposes of this Section 26.3, the arbiter appointed by the two persons selected by the Parties (or, if the other party fails to appoint such person, then the person appointed by the other Party) shall be referred to as the “Arbiter.”

(i) Each party initially shall advance 50% of the required arbitration fee of any dispute resolution administering the process. Within fifteen (15) days following written notice to the Arbiter or the appointment of the arbitrator (as the case may be), each party shall state in writing the reasons it believes that the Transfer or Mortgage is permitted or should be approved, the list of three comparable properties to the Premises, or the names of an independent consultant pursuant to Section 39.1(b) or a statement describing the basis for the party’s position in the dispute, and attach such supporting statements and materials as it shall deem appropriate, and deliver such statement with attachments to the Arbiter and to the other Party. If a Party does not so deliver such statement or if a party fails to appear at the hearing, the Arbiter may enter a default award against such party, provided said party received actual notice of the hearing if one is requested by the Arbitrator. In order to obtain a default award, the complaining party need not first seek or obtain an order to arbitrate the controversy pursuant to Code of Civil Procedure § 1281.2.

(ii) The Arbiter shall issue its opinion within ten (10) business days after his or her receipt of the statements. In any dispute other than the list of

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comparable properties or the names of independent consultants, the unsuccessful party shall pay the legal fees of the prevailing party (as the prevailing party is determined by the arbitrator or arbitration), the arbitrator’s fees and related costs of arbitration. If the dispute is over the list of three comparable properties to the Premises, or the names of an independent consultant, each party shall bear the fees, costs and expenses of the person it selects, and the fees, costs and expenses of the arbitrator and the costs and expenses of the arbitration proceeding, if any, shall be shared equally by CCSF and Tenant. If the Arbiter refuses to or fails to act within such time, JAMS/Endispute or its successor as an independent dispute resolution service shall appoint a successor arbitrator. Except as otherwise provided, the Arbiter shall have no power to add to, subtract from, disregard, modify or otherwise alter the terms of the this Lease, or any other agreement between CCSF and Tenant, or to negotiate new agreements or provisions between the Parties. A decision of the Arbiter issued hereunder shall be final and binding upon CCSF and Tenant.

(iii) In the event a dispute arises with regard to (a) CCSF’s failure to consent to certain regulatory conditions and restrictions pursuant to Section 6.2 hereof, or (b) CCSF’s failure to consent to an Assignment, Transfer or Significant Change pursuant to Section 15.1(a), either Tenant or CCSF may submit the matter to arbitration under this Section 26.3; provided, however, that the process shall be subject to expedited procedure of JAMS/Endispute or the applicable dispute resolution administrative service, if it has such an expedited procedure and, if not, then each of the time periods referred to above shall be reduced by fifty percent (50%). (“Expedited Arbitration”).

(iv) California law, including the California Arbitration Act, Code of Civil Procedure §§ 1280 through 1294.2 to the extent not superseded by the dispute resolution rules and procedures of JAMS/Endispute or the applicable dispute resolution administrative shall govern all arbitration proceedings.

SECTION 27. LIMITATIONS ON LIABILITY

27.1 Waiver of Consequential Damages.

As a material part of the consideration for this Lease, neither party shall be liable for, and each party hereby waives any claims against the other for, any consequential damages arising out of any such party’s default..

27.2 Limitation on Parties’ Liability Upon Transfer.

In the event of any transfer of CCSF’s or Tenant’s interest in and to the Premises, CCSF or Tenant, as the case may be, subject to the provisions hereof, (and in case of any subsequent transfers, the then transferor) will automatically be relieved from and after the date of such transfer of all liability with regard to the performance of any covenants or obligations contained in this Lease thereafter to be performed on the part of CCSF or Tenant, as the case may be (or such transferor, as the case may be), but not from liability incurred by CCSF or Tenant, as the case may be (or such transferor, as the case may be) on account of covenants or obligations to be performed

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by CCSF or Tenant, as the case may be (or such transferor, as the case may be) hereunder before the date of such transfer; provided, however, that CCSF or Tenant, as the case may be (or such subsequent transferor) has transferred to the transferee any funds in CCSF’s or Tenant’s possession (or in the possession of such subsequent transferor) in which CCSF’s or Tenant (or such subsequent transferor) has an interest, in trust, for application pursuant to the provisions hereof, and such transferee has assumed all liability for all such funds so received by such transferee from CCSF or Tenant as the case may be (or such subsequent transferor).

SECTION 28. ESTOPPEL CERTIFICATES BY TENANT

28.1 Estoppel Certificate by Tenant.

Tenant shall execute, acknowledge and deliver to CCSF (or at CCSF’s request, to a prospective purchaser or mortgagee of CCSF’s interest in the Property), within fifteen (15) business days after a request, a certificate stating to the best of Tenant’s knowledge after diligent inquiry (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the modifications or, if this Lease is not in full force and effect, so stating), (b) the dates, if any, to which any Rent and other sums payable hereunder have been paid, (c) that no notice has been received by Tenant of any default hereunder which has not been cured, except as to defaults specified in such certificate and (d) any other matter actually known to Tenant, directly related to this Lease and reasonably requested by CCSF. In addition, if requested, Tenant shall attach to such certificate a copy of this Lease, and any amendments thereto, and include in such certificate a statement by Tenant that, to the best of its knowledge, such attachment is a true, correct and complete copy of this Lease, as applicable, including all modifications thereto. Any such certificate may be relied upon by any CCSF, any successor agency, and any prospective purchaser or mortgagee of the Premises or any part of CCSF’s interest therein.

SECTION 29. ESTOPPEL CERTIFICATES BY CCSF

29.1 Estoppel Certificate by CCSF.

CCSF shall execute, acknowledge and deliver to Tenant (or at Tenant’s request, to any prospective Mortgagee, or other prospective transferee of Tenant’s interest under this Lease), within fifteen (15) business days after a request, a certificate stating to the best of CCSF’s knowledge after diligent inquiry (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified, and stating the modifications or if this Lease is not in full force and effect, so stating), (b) the dates, if any, to which Rent and other sums payable hereunder have been paid, (c) whether or not, to the knowledge of CCSF, there are then existing any defaults under this Lease (and if so, specifying the same) and (d) any other matter actually known to CCSF, directly related to this Lease and reasonably requested by the requesting Party or customarily included in estoppel certificates for the transaction in question. In addition, if requested, CCSF shall attach to such certificate a copy of this Lease and any amendments thereto, and include in such certificate a statement by CCSF that, to the best of its knowledge, such attachment is a true, correct and complete copy of this Lease, including all modifications thereto. Any such certificate may be relied upon by Tenant or prospective Mortgagee, or other prospective transferee of Tenant’s interest under this Lease.

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SECTION 30. APPROVALS BY CCSF

30.1 Fees for Review.

Within thirty (30) days after CCSF’s written request, Tenant shall pay CCSF, as Additional Rent, CCSF’s reasonable costs, including, without limitation, Attorneys’ Fees and Costs incurred in connection with the review, investigation, processing, documentation and/or approval of any proposed assignment under Section 15, Mortgage under Section 37, and Subsequent Construction under Section 10. Tenant shall pay such reasonable costs regardless of whether or not CCSF consents to such proposal, except only in any instance where CCSF has wrongfully withheld, delayed or conditioned its consent in violation of this Lease.

SECTION 31. NO MERGER OF TITLE

31.1 No Merger of Title.

There shall be no merger of the leasehold estate with the fee estate in the Premises by reason of the fact that the same Person may own or hold (a) the leasehold estate or any interest in such leasehold estate, and (b) any interest in such fee estate. No such merger shall occur unless and until all Persons having any interest in the leasehold estate and the fee estate in the Premises shall join in and record a written instrument effecting such merger.

SECTION 32. QUIET ENJOYMENT

32.1 Quiet Enjoyment.

Subject to the Permitted Title Exceptions, the terms and conditions of this Lease and applicable Laws, CCSF agrees that Tenant, provided that there is no on-going Event of Default on the part of Tenant, shall lawfully and quietly hold, occupy and enjoy the Premises during the Term of this Lease without hindrance or molestation of anyone claiming by, through or under CCSF. Notwithstanding the foregoing, CCSF shall have no liability to Tenant in the event any defect exists in the title of CCSF as of the Commencement Date, whether or not such defect affects Tenant’s rights of quiet enjoyment (unless such defect is due to CCSF’s willful misconduct) and, except as otherwise expressly provided for under the terms and provisions of this Lease, no such defect shall be grounds for a termination of this Lease by Tenant. Tenant’s sole remedy with respect to any such existing title defect shall be to obtain compensation by pursuing its rights against any title insurance company or companies issuing title insurance policies to Tenant.

SECTION 33. SURRENDER OF PREMISES

33.1 End of Lease Term.

(a) Conditions of Premises. Upon the expiration or other termination of the Term of this Lease, Tenant shall quit and surrender to CCSF the Premises in good order and condition, reasonable wear and tear and damage by casualty excepted to the extent the same is consistent with maintenance of the Premises in the condition required hereunder. The Premises shall be surrendered with all Improvements, repairs, alterations, additions, substitutions and replacements thereto. Tenant hereby agrees to execute all

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reasonable documents as CCSF reasonably may deem necessary to evidence or confirm any such other termination.

(b) Subleases. Upon any termination of this Lease, CCSF shall have the right to terminate all Subleases hereunder except for those which CCSF has agreed to assume pursuant to Section 15.3 or Section 22.4.

SECTION 34. HOLD OVER

34.1 Hold Over.

Any holding over by Tenant after the expiration or termination of this Lease shall not constitute a renewal hereof or give Tenant any rights hereunder or in the Premises, except with the written consent of CCSF. In any such event, at CCSF’s option, such holdover shall constitute (a) a tenancy at sufferance, or (b) a month-to-month tenancy, terminable on thirty (30) days’ written notice by either party to the other, subject to all of the terms, covenants, and conditions of this Lease, provided that, during such period, Tenant shall pay, in addition to all other amounts due under this Lease (including, without limitation, Percentage Rent and Additional Rent), base rent equal to two hundred percent (200%) of the Base Rent that is in effect immediately prior to the expiration or termination of this Lease.

SECTION 35. NOTICES

35.1 Notices.

All notices, demands, consents, and requests which may or are to be given by any Party to the other shall be in writing, except as otherwise provided herein. All notices, demands, consents and requests to be provided hereunder shall be deemed to have been properly given on the date of receipt if served personally on a day that is a business day (or on the next business day if served personally on a day that is not a business day), or, if mailed, on the date that is three days after the date when deposited with the U.S. Postal Service for delivery by United States registered or certified mail, postage prepaid, or on the next business day if sent by nationally recognized overnight courier, in each case, addressed as follows:

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To CCSF: City College of San Francisco _____________________________ _____________________________ Attn: ________________________ With a copy to:

Sheppard Mullin Richter & Hampton LLP Four Embarcadero, 17th Floor San Francisco, CA 94111 Attn: Robert A. Thompson Telephone (415) 434-9100 Fax: (415) 434-3947

To Tenant: Integral Commercial Real Estate Attn: Christopher H. Martorella, President 191 Peachtree Street, Suite 4100 Atlanta, GA 30305 Telephone (404) 224-1903 Fax: (404) 224-1898

With a copy to:

Equity Community Builders Attn: John Clawson, Principal 38 Keyes Avenue, Suite 201 San Francisco, CA 94129 Telephone (415) 561-6200 ext 201 Fax: (415)-561-6210

or at such other place or places in the United States as each such Party may from time to time designate by written notice to the other in accordance with the provisions hereof. For convenience of the Parties, copies of notices may also be given by telefacsimile to the facsimile number set forth above or such other number as may be provided from time to time by notice given in the manner required hereunder; however, neither Party may give official or binding notice by telefacsimile.

35.2 Form and Effect of Notice.

Every notice given to a Party or other Person under this Section 35 must state (or shall be accompanied by a cover letter that states):

(a) the section of this Lease pursuant to which the notice is given and the action or response required, if any;

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(b) if applicable, the period of time within which the recipient of the notice must respond thereto; and

(c) if applicable, that the failure to object to the notice within a stated time period will be deemed to be the equivalent of the recipient’s approval of or consent to the subject matter of the notice.

In no event shall a recipient’s approval of or consent to the subject matter of a notice be deemed to have been given by its failure to object thereto if such notice (or the accompanying cover letter) does not comply with the requirements of this Section 35.2.

SECTION 36. INSPECTION OF PREMISES BY CCSF

36.1 Entry.

Subject to the rights of Subtenants, Tenant shall permit CCSF and its Agents to enter the Premises during regular business hours upon reasonable prior notice (and at any time in the event of an emergency which poses an imminent danger to public health or safety) for the purpose of (i) inspecting the same for compliance with any of the provisions of this Lease, (ii) performing any work therein that CCSF may have a right to perform under Section 20, or (iii) inspecting, sampling, testing and monitoring the Premises or the Improvements or any portion thereof, including buildings, grounds and subsurface areas, as CCSF reasonably deems necessary or appropriate for evaluation of Hazardous Materials or other environmental conditions. Nothing herein shall imply any duty upon the part of CCSF to perform any work which under any provision of this Lease Tenant may be required to perform, nor to place upon CCSF any obligation, or liability, for the care, supervision or repair of the Premises; provided, however, CCSF agrees to minimize interference with the activities and tenancies of Tenant, Subtenants and their respective Invitees. If CCSF elects to perform work on the Premises pursuant to Section 20, CCSF shall not be liable for inconvenience, loss of business or other damage to Tenant by reason of the performance of such work on the Premises, or on account of bringing necessary materials, supplies and equipment into or through the Premises during the course thereof, provided CCSF uses reasonable diligence to minimize the interference any such work may cause with the activities of Tenant, its Subtenants, and their respective Invitees. Otherwise, CCSF shall Indemnify Tenant, its Subtenants, and their respective Invitees from and against any and all Losses imposed upon or incurred by or asserted against any such Persons, the Premises or their respective interests in the Premises, in connection with the occurrence or existence of any accident, injury to or death of Persons or loss of or damage to property occurring on the Premises or any part thereof to the extent the same is caused by the gross negligence or wrongful acts of CCSF or any of its Agents. CCSF and its Agents shall not damage the Premises or interfere with or disturb Tenant, Subtenants or their respective Invitees.

36.2 Exhibit for Lease.

Subject to the rights of Subtenants, Tenant shall permit CCSF and its Agents to enter the Premises during regular business hours upon reasonable prior notice (i) to exhibit the same in a reasonable manner in connection with any sale, transfer or other conveyance of CCSF’s interest in the Premises, and (ii) during the last eighteen (18) months of the Term, for the purpose of leasing the Premises.

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36.3 Notice, Right to Accompany.

CCSF agrees to give Tenant reasonable prior notice of CCSF’s entering on the Premises except in an emergency for the purposes set forth in Sections 36.1 and 36.2. Such notice shall be not less than forty-eight (48) hours prior notice. Tenant shall have the right to have a representative of Tenant accompany CCSF or its Agents on any entry into the Premises. Notwithstanding the foregoing, no notice shall be required for CCSF’s entry onto public areas of the Premises during regular business hours unless such entry is for the purposes set forth in Sections 36.1 and 36.2.

SECTION 37. MORTGAGES

37.1 No Mortgage Except as Set Forth Herein.

(a) Restrictions on Financing. Except as expressly permitted in this Section 37, Tenant shall not:

(i) engage in any financing or other transaction creating any mortgage, deed of trust or similar security instrument upon Tenant’s leasehold estate in the Premises or Tenant’s interest in the Improvements under this Lease; or

(ii) place or suffer to be placed upon Tenant’s leasehold estate in the Premises or interest in the Improvements hereunder any lien or other encumbrances other than as permitted by Section 14.1.

(b) No Subordination of Fee Interest or Rent. Under no circumstance whatsoever shall Tenant place or suffer to be placed any lien or encumbrance on CCSF’s fee interest in the Land in connection with any financing permitted hereunder, or otherwise. CCSF shall not be obligated to subordinate its interest in the Premises, nor its right to receive Rent, to any Mortgagee of Tenant.

(c) Violation of Covenant. Any mortgage, deed of trust, encumbrance or lien not permitted by this Section 37 shall be deemed to be a violation of this covenant on the date of its execution or filing of record regardless of whether or when it is foreclosed or otherwise enforced.

37.2 Leasehold Liens.

(a) Tenant’s Right to Mortgage Leasehold. At any time and from time to time during the Term, Tenant shall have the right to assign, mortgage, or encumber Tenant’s leasehold estate created by this Lease by way of leasehold mortgages, deeds of trust or other security instruments of any kind to the extent permitted hereby.

(b) Leasehold Mortgages Subject to this Lease. With the exception of the rights expressly granted to Mortgagees in this Lease, the execution and delivery of a Mortgage shall not give or be deemed to give a Mortgagee any greater rights than those granted to Tenant hereunder.

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(c) Limitation of Number of Leasehold Mortgagees Entitled to Protection Provisions. Notwithstanding anything to the contrary set forth herein, any rights given hereunder to Mortgagees shall only apply to the most senior Mortgagee, unless such Mortgagee elects not to exercise its rights thereunder in which event such rights will apply to the next most senior Mortgagee and except to the extent that the senior Mortgagee agrees to permit a junior lender or lenders to exercise some or all of the senior Mortgagee’s rights.

37.3 Notice of Liens.

Tenant shall notify CCSF promptly of any lien or encumbrance other than the Permitted Title Exceptions of which Tenant has knowledge and which has been recorded against or attached to the Improvements or Tenant’s leasehold estate hereunder whether by act of Tenant or otherwise.

37.4 Purpose of Mortgage.

(a) Pre-Construction Financing. Prior to obtaining Construction Financing, as set for the in subsection (b), Tenant shall have the right, subject to Landlord’s consent, which consent shall not be commercially unreasonably withheld, and review and approval of loan documents by Landlord, to encumber Tenant’s leaseholder estate with Mortgages securing loans which shall meet the debt service coverage requirements set forth elsewhere in this Section 37.4 for the Initial Payment, Interim Leasing Improvements, Interim Leasing costs, property maintenance, and other expenses of Property management, maintenance and Leasing with respect to the Existing Improvements (“Pre-Construction Financing”), provided Tenant furnishes Landlord with notice of such Mortgage and copies of the documentation in connection therewith so that Landlord may confirm compliance herewith.

(b) (a) Construction Financing. Prior to the Completion Date, Tenant shall have the right to encumber Tenant’s leasehold estate with Mortgages securing construction financing entered into by Tenant for the construction of the Project (“Construction Financing”) without the consent of CCSFLandlord, provided Tenant furnishes CCSFLandlord with notice of such Mortgage and copies of the documentation in connection therewith so that CCSFLandlord may confirm compliance, and provided further that such Mortgages comply with the following:

(i) The total amount of any such construction financing which is secured by Tenant’s leasehold interest in the Premises does not exceed seventy-five percent (75%) of costs to Complete the Project as set forth in the budget approved by the Mortgagee.

(ii) The Debt Service Coverage Ratio for the sum of all notes secured by Tenant’s leasehold interest in the Premises doesshall not exceedbe less than 1.20:1.00, based on projected Stabilization. If the note being originated bears a variable rate of interest, the coverage ratio would be computed assuming (a) the interest rate cap required by the lender or, if no cap is required, (b) the interest rate on three (3) year fixed rate construction loans for similar properties.

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(c) (b) Initial Permanent Financing. Upon Completion of the Project, Tenant shall have the right to encumber Tenant’s leasehold estate with Mortgages securing initial permanent financing for the Project (“Initial Permanent Financing”) without the consent of CCSFLandlord, provided Tenant furnishes CCSFLandlord with notice of such Mortgage and copies of the documentation in connection therewith so that CCSFLandlord may confirm compliance, and provided further that such Mortgages comply with the following:

(i) The total amount of any such initial permanent financingInitial Permanent Financing which is secured by Tenant’s leasehold interest in the Premises does not exceed seventy-five percent (75%) of market value of the leasehold interest in the Premises, which market value shall be determined by an appraisal performed by an appraiser meeting the Qualifications set forth in Section 2.2(d) above, that is used by the Mortgagee.

(ii) The Debt Service Coverage Ratio for the sum of all notes secured by Tenant’s leasehold interest in the Premises doesshall not exceedbe less than 1.15:1.00 as of Stabilization. If the note being originated bears a variable rate of interest, the coverage ratio would be computed assuming (a) the interest rate cap required by the lender or, if no cap is required, (b) the interest rate on five (5) year fixed rate permanent loans for similar properties..

(d) (c) Subsequent Financing. Tenant shall have the right to encumber Tenant’s leasehold estate, with Mortgages securing financing other than as described in Sections 37.4(a) and 37.4, (b) and (c) above (“Subsequent Financing”), without the consent of CCSFLandlord, provided that (i) Tenant furnishes CCSFLandlord with notice of such Mortgages and copies of the documentation in connection therewith so that CCSFLandlord may confirm compliance, (ii) the total amount of any financing which is secured by Tenant’s leasehold interest in the Premises does not exceed seventy-five percent (75%) of the market value of its leasehold interest in the Premises, which market value shall be determined by an appraisal performed by an appraiser meeting the Qualifications set forth in Section 2.2(d) above, that is used by the Mortgagee, and (iii) the Debt Service Coverage Ratio for the sum of all notes secured by Tenant’s leasehold interest in the Premises does not exceed 1.15:1.00, with the further qualification that, if the note being originated bears a variable rate of interest, the coverage ratio would be computed as provided in Section 37.4(b)(ii) above.

(e) (d) Statement. CCSFLandlord agrees within ten (10) business days after request by Tenant to give to any holder or proposed holder of a leasehold mortgage, deed of trust, or other security instrument a statement in recordable form as to whether such mortgage, deed of trust, or other security instrument is permitted hereunder to secure all of the advances and indebtedness stated by the terms of the applicable financing documents. Except as set forth in such statement, such a statement shall estop CCSFLandlord from asserting, against either Tenant or such prospective Mortgagee, that such mortgage, deed of trust, or other security instrument (if done in the way described in the statement) is not permitted hereunder, but shall create no liability on CCSFLandlord, and shall conclusively establish that such mortgage, deed of trust or other security instrument is permitted

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hereunder and does not constitute a default by Tenant. In making a request for such statement, Tenant shall furnish CCSFLandlord true, accurate and complete copies of such of the financing documents as are required reasonably by CCSFLandlord to permit CCSFLandlord to make the determination whether such security instrument is permitted hereby. In no event, however, shall any failure by Tenant or other party to comply with the terms of any Mortgage, including without limitation the use of any proceeds of any debt, the repayment of which secured by a Mortgage, be deemed to invalidate the lien of a Mortgage. CCSFLandlord shall provide such statement to Tenant and to such prospective Mortgagee on the Form of Ground Lessor’s Estoppel Statement specified by Section 29.1 hereof and attached hereto as Exhibit E, with such modifications or additions as such prospective Mortgagee may reasonably request.

37.5 Interest Covered by Mortgage.

A Mortgage may attach to any or all of the following interests in the Premises: (i) Tenant’s leasehold interest in the Premises created hereby and Tenant’s interest in the Improvements or some portion thereof granted hereunder, (ii) Tenant’s interest in any permitted Subleases thereon, (iii) any Personal Property of Tenant, (iv) products and proceeds of the foregoing, and (v) any other rights and interests of Tenant arising under this Lease. As provided in Section 37.1(b) no Mortgage may encumber CCSF’sLandlord’s interest in or under this Lease or CCSF’sLandlord’s fee simple interest in the Property or CCSF’sLandlord’s personal and other property in, on or around the Property.

37.6 Institutional Lender; Other Permitted Mortgagees.

A Mortgage may be given only to (i) a Bona Fide Institutional Lender, or (ii) any other lender which shall have been approved by CCSFLandlord in its sole and absolute discretion. In any instances in which CCSF’sLandlord’s consent is so required, CCSFLandlord shall be deemed to have approved such other lender if the written notice from Tenant of the identity of such other lender specifies that no notification of disapproval within thirty (30) days after the delivery of such written notice constitutes approval, and CCSFLandlord sends no notification of disapproval within such period.

37.7 Rights Subject to Lease.

(a) Subject to Lease. Except as otherwise expressly provided herein, all rights acquired by a Mortgagee under any Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease and to all rights of CCSFLandlord hereunder. None of such covenants, conditions and restrictions is or shall be waived by CCSFLandlord by reason of the giving of such Mortgage, except as expressly provided in this Lease or otherwise specifically waived by CCSFLandlord in writing.

(b) Construction and Restoration Obligations. Notwithstanding any provision of this Lease to the contrary, including, but not limited to, those representing covenants running with the land, no Mortgagee, including any such Mortgagee who obtains title to the leasehold or any part thereof as a result of foreclosure proceedings or action in lieu thereof, but excluding (i) any other Person who thereafter obtains title to the leasehold

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or any interest therein from or through such Mortgagee, or (ii) any other purchaser at foreclosure sale (other than a Mortgagee), shall be obligated by the provisions of this Lease to Restore any damage or destruction to the Improvements, subject to Section 37.10(c); provided, however, (i) that nothing in this Section 37.7 or any other sections or provisions of this Lease shall be deemed or construed to permit or authorize any such holder to devote the Premises or any part thereof to any uses, or to construct any improvements thereon, other than those uses or Improvements provided or authorized herein, and (ii) in the event that a Mortgagee obtains title to the leasehold and chooses not to complete or Restore the Improvements, it shall so notify CCSFLandlord in writing of its election within ninety (90) days following its acquisition of the tenancy interest in this Lease and shall use commercially reasonable efforts to sell its tenancy interest with reasonable diligence to a purchaser that shall be obligated to Restore the Improvements to the extent this Lease obligates the Tenant to so Restore. Mortgagee shall use good faith efforts to cause such sale to occur within six (6) months following the Mortgagee’s written notice to CCSFLandlord of its election not to Restore. In the event Mortgagee agrees to Restore the Improvements, all such work shall be performed in accordance with all the requirements set forth in this Lease, and Mortgagee must submit evidence reasonably satisfactory to CCSFLandlord that it has the qualifications and financial responsibility necessary to perform such obligations. Notwithstanding anything in this Lease to the contrary, if a Mortgagee becomes the owner of a leasehold estate hereunder or under a new leaseNew Lease as described in Section 37.10(d), (i) except to the extent further limited by other provisions hereof, such Mortgagee shall be liable to CCSFLandlord for the obligations of Tenant hereunder only to the extent such obligations arise during the period that such Mortgagee remains the owner of the leasehold estate, and (ii) in no event will Mortgagee have personal liability under this Lease or such new leaseNew Lease greater than Mortgagee’s interest in this Lease or such new leaseNew Lease, and CCSFLandlord will have no recourse against Mortgagee’s assets other than its interest herein or therein.

37.8 Required Provisions of Any Mortgage.

Tenant agrees to have any Mortgage provide: (a) that the Mortgagee shall by registered or certified mail give written notice to CCSF of the occurrence of anyin accordance with the provisions of this Lease to Landlord which is a copy of any notice given to Tenant of an event of default as defined under the Mortgage;, (b) that CCSFLandlord shall be given notice at the time anythe Mortgagee initiates any foreclosure action; and (c) that the disposition and application of insurance and condemnation awards shall be consistent with the provisions of this Lease.

37.9 Notices to Mortgagee.

(a) Copies of Notices. CCSFLandlord shall give a copy of each notice CCSFLandlord gives to Tenant from time to time of the occurrence of a default or an Event of Default, or of CCSF’sincluding any default or event of default under the LDDA, or of Landlord’s consent to an assignment of any interest in this Lease or to a Significant Change, to any Mortgagee that has given to CCSFLandlord written notice substantially in the form provided in Section 37.9(b). Copies of such notices shall be given to Mortgagees at the same time as notices are given to Tenant by CCSFLandlord, addressed to such Mortgagee at the address last furnished to CCSF. CCSFLandlord. Landlord shall acknowledge in

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writing its receipt of the name and address of a Mortgagee so delivered to CCSF. CCSF’sLandlord. Landlord’s failure to give such notice to a Mortgagee shall not be deemed to constitute a default by CCSFLandlord under this Lease, but no such notice by CCSFLandlord shall be deemed to have been given to Tenant unless and until a copy thereof shall have been so given to Mortgagee. Any such notices to Mortgagee shall be given in the same manner as provided in Section 35.

(b) Notice From Mortgagee to CCSFLandlord. The Mortgagee under any Mortgage shall be entitled to receive notices from time to time given to Tenant by CCSFLandlord under this Lease and the LDDA in accordance with Section 37.9(a) above provided such Mortgagee shall have delivered a notice to CCSFLandlord in substantially the following form:

“The undersigned does hereby certify that it is a Mortgagee, as such term is defined in that certain Lease entered into by and between CCSFLandlord, as landlord, and ________________________________, as Tenant (the “Lease”), of Tenant’s interest in the Lease demising the parcels, a legal description of which is attached hereto as Exhibit A and made a part hereof by this reference. The undersigned hereby requests that copies of any and all notices from time to time given under the Lease to Tenant by CCSFLandlord be sent to the undersigned at the following address: __________________________.”

37.10 Mortgagee’s Right to Cure.

If Tenant, or Tenant’s successors or assigns, shall mortgage this Lease in compliance with the provisions of this Section 37, then, so long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply:

(a) Cure Periods. Each Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Lease and and without payment of any penalty, to pay the Rent and Additional Rent due hereunder, to effect any insurance, to pay taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Tenant hereunder or under the LDDA, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Lease; provided, however, that no such action shall constitute an assumption by such Mortgagee of the obligations of Tenant under this Lease or the LDDA. Each Mortgagee and its agents and contractors shall have full access to the Premises for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Mortgagee shall be as effective to prevent a termination of this Lease as the same would have been if done by Tenant. In the case of any notice of default given by CCSFLandlord to Tenant, the Mortgagee shall have the same concurrent cure periods as are given Tenant under this Lease for remedying a default or causing it to be remedied, plus, in each case, an additional period of thirtysixty (3060) days after the later to occur of (i) the expiration of such cure period, or (ii) the date that CCSFLandlord has served such notice of default upon Mortgagee, and CCSFLandlord shall accept such performance by or at the instance of the Mortgagee as if the same had been made by Tenant.

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(b) Foreclosure. Anything contained in this Lease to the contrary notwithstanding, upon the occurrence of an Event of Default, other than an Event of Default due to a default in the payment of money or other default reasonably susceptible of being cured prior to Mortgagee obtaining possession, CCSFLandlord shall take no action to effect a termination of this Lease or LDDA if, within thirty (30) days after notice of such Event of Default is given to each Mortgagee, a Mortgagee shall have (x) obtained possession of the Premises (including possession by a receiver if Mortgagee deems it advisable), or (y) notified CCSFLandlord of its intention to institute foreclosure proceedings (or to commence actions to obtain possession of the Premises through appointment of a receiver or otherwise) or otherwise acquire ownership interests in Tenant or Tenant’s interest under the Lease, and thereafter promptly commences and prosecutes such proceedings with diligence and dispatch subject to normal and customary postponements and compliance with any judicial orders relating to the timing of or the right to conduct such proceedings, Force Majeure, and Foreclosure Prohibitions. The period from the date Mortgagee so notifies CCSFLandlord until a Mortgagee acquires and succeeds to the interest of Tenant under this Lease or some other party acquires such interest through Foreclosure is herein called the “Foreclosure Period.” A Mortgagee, upon acquiring Tenant’s interest under this Lease, shall be required promptly to cure all monetary defaults and all other defaults then reasonably susceptible of being cured by such Mortgagee to the extent not cured prior to Foreclosure. The foregoing provisions of this Section 37.10(b) are subject to the following: (i) no Mortgagee shall be obligated to continue possession or to continue Foreclosure after the defaults or Events of Default hereunder referred to shall have been cured (and CCSFLandlord shall accept such cure or performance of such obligation by any party, including Tenant); (ii) nothing herein contained shall preclude CCSFLandlord, subject to the provisions of this Section 37.10, from exercising any rights or remedies under this Lease (other than a termination of this Lease to the extent otherwise permitted hereunder) with respect to any other Event of Default by Tenant during the pendency of such foreclosure proceedings; and (iii) such Mortgagee shall agree with CCSFLandlord in writing to comply during the Foreclosure Period with such of the terms, conditions and covenants of this Lease as are reasonably susceptible of being complied with by such Mortgagee (except to the extent related to Hazardous Materials or Restoration), including but not limited to the payment of all sums due and owing hereunder (except for monetary obligations related to Hazardous Materials or Restoration) and the use restrictions set forth in Section 3.1 but excluding the operating covenants in Section 7.1. Notwithstanding anything to the contrary, including an agreement by Mortgagee given under clause (iii) of the preceding sentence, Mortgagee shall have the right at any time to notify CCSFLandlord that it has relinquished possession of the Premises or that it will not institute Foreclosure or, if such Foreclosure has commenced, that it has discontinued them, and, in such event, the Mortgagee shall have no further liability under such agreement under subpart (iii) above from and after the date it delivers such notice to CCSFLandlord, and, thereupon, CCSFLandlord shall be entitled to seek the termination of this Lease and/or any other available remedy as provided in this Lease unless such Event of Default has been cured. Upon any such termination, the provisions of this Section 37.10(d) shall apply. If Mortgagee is prohibited by any process or injunction issued by any court having jurisdiction of any bankruptcy or insolvency proceedings involving Tenant from commencing or prosecuting foreclosure or other

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appropriate proceedings in the nature thereof, the times specified above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition, provided that Mortgagee shall (i) have fully cured any Event of Default due to a default in the payment of money, except for monetary obligations related to Restoration or Hazardous Materials (ii) continue to pay currently such monetary obligations as and when the same become due, and (iii) perform all other obligations of Tenant under this Lease to the extent that they are susceptible of being performed by Mortgagee.

(c) Construction.

(i) Subject to Section 37.7(b), if an Event of Default of Tenant occurs (i) following any damage or destruction but prior to Restoration of the Improvements, Mortgagee, either before or after foreclosure or action in lieu thereof, shall not be obligated to Restore the Improvements beyond the extent necessary to preserve or protect the Improvements or construction already made, unless such Mortgagee expressly assumes Tenant’s obligations to CCSFLandlord by written agreement reasonably satisfactory to CCSFLandlord, to Restore in the manner provided in this Lease, the Improvements on the Premises or the part thereof to which the lien or title of such Mortgagee relates, and submitted evidence reasonably satisfactory to CCSFLandlord that it has the qualifications and financial responsibility necessary to perform such obligation, or, if determined not to be qualified, engages a qualified party to perform such obligation.

(ii) Upon obtaining possession and assuming Tenant’s obligations to Restore Improvements in accordance with Section 37.10 (c)(i) above, Mortgagee or any transferee of Mortgagee shall not be required to adhere to the existing construction schedule, but instead all dates set forth in this Lease for such Restoration or otherwise agreed to shall be extended for the period of delay from the date of Tenant stopped work on the Restoration to the date of such possession and assumption plus an additional one hundred twenty (120) days.

(d) New Lease. In the event of the termination of this Lease before the expiration of the Term, including, without limitation, the termination of this Lease by CCSFLandlord on account of an Event of Default or the rejection of this Lease by a trustee of Tenant in bankruptcy (whether or not such rejection is treated as a termination by a bankruptcy court) or by Tenant as a debtor-in-possession, except (i) by Total Condemnation, or (ii) subject to Section 12.5 and subject to Section 37.10(h) below, as the result of damage or destruction as provided in Section 12. CCSF, Landlord shall serve upon the Mortgagee written notice that this Lease has been terminated, together with a statement of any and all sums which would at that time be due under this Lease but for such termination, and of all other defaults, if any, under this Lease then known to CCSFLandlord. The Mortgagee shall thereupon have the option to obtain a new Lease in accordance with and upon the following terms and conditions:

(i) Upon the written request of the Mortgagee, made within sixty (60) days after service of such notice that this Lease has been terminated,

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CCSFLandlord shall enter into a new lease of the Premises with (i) the most senior Mortgagee, giving notice within such period or its designee, provided that the Mortgagee, or affiliate thereof, assumes Tenant’s obligations as Sublandlord under any Subleases then in effect (unless CCSFLandlord entered into such Sublease in violation of Section 37.10(f) below) to the extent such assumption is necessary in order to continue such Subleases in effect, and Landlord shall honor Subleases in accordance with Section 15.3(b) hereof; and

(ii) Such new Lease shall be entered into at the reasonable cost of the Mortgagee thereunder, shall be effective as of the date of termination of this Lease, and shall be for the remainder of the Term of this Lease and at the Rent and upon all the agreements, terms, covenants and conditions hereof, including any applicable rights of renewal and in substantially the same form as this Lease (except for any requirements or conditions which Tenant has satisfied prior to the termination). Such new lease shall have the same priority as this Lease, including priority over any mortgage or other lien, charge or encumbrance on the title to the Premises. Such new Lease shall require the Mortgagee to perform any unfulfilled monetary obligation of Tenant under this Lease that would, at the time of the execution of the new lease, be due under this Lease if this Lease had not been terminated and to perform as soon as reasonably practicable and any unfulfilled non-monetary obligation which is reasonably susceptible of being performed by such Mortgagee, which obligations shall be performed by Mortgagee in accordance with Section 37.10(c). Upon the execution of such new Lease, the Mortgagee shall pay any and all sums which would at the time of the execution thereof be due under this Lease but for such termination, and shall pay all expenses, including reasonable Attorneys’ Fees and Costs incurred by CCSFLandlord in connection with such defaults and termination, the recovery of possession of the Premises, and the preparation, execution and delivery of such new Lease. The provisions of this Section 37.10(d) shall survive any termination of this Lease (except as otherwise expressly set out in the first sentence of Section 37.10(d)), and shall constitute a separate agreement by CCSFLandlord for the benefit of and enforceable by the Mortgagee.

(iii) Simultaneously with the execution and delivery of the new Lease, CCSFLandlord shall cause any monetary liens on its interest in the Property to be subordinated to the new Lease and shall confirm and acknowledge that Lender has title to the Subsequent Improvements for the term of the new Lease by such means as is customary or may be reasonably required by a reputable title insurance company to insure the leasehold estate created by the new lease.

(e) in the event that CCSF (or any other landlord holding the interests of Landlord under this Lease) becomes the subject of a case under the Bankruptcy Code (or any other or successor law providing similar relief), and Landlord, such other landlord, or any trustee of Landlord or such other landlord rejects or seeks authority to reject this Lease under 11 U.S.C. § 365 (or any other or successor provision permitting any similar relief): (i) Tenant shall elect, and hereby does elect, without further act, unless all Tenant’s Mortgagees consent in writing to any other election, to remain in possession for the balance

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of the Term of the Lease, pursuant to 11 U.S.C. § 365(h) (and any other or successor provision permitting a similar election); (ii) any purported election by Tenant to treat this Lease as terminated shall be void and of no effect, unless all Tenant’s Mortgagees consent in writing thereto; and (iii) the lien of the Mortgage of any Mortgagee shall not be impaired by such rejection.

(f) (e) Nominee. Any rights of a Mortgagee under this Section 37.10 and Section 37.11, as amended hereby, may be exercised by or through its nominee or designee (other than Tenant) which is an Affiliate of Mortgagee; provided, however, no Mortgagee shall acquire title to the Lease through a nominee or designee which is not a Person otherwise permitted to become Tenant hereunder; provided, further that a Mortgagee may acquire title to the Lease through a wholly owned (directly or indirectly) subsidiary of Mortgagee.

(g) (f) Subleases. Effective upon the commencement of the term of any newNew Lease executed pursuant to Section 37.10(d), any Sublease then in effect shall be assigned and transferred without recourse by CCSFLandlord to Mortgagee and all monies collected by or for the benefit of CCSFLandlord from the Sublessees shall be paid to Mortgagee. Between the date of termination of this Lease and commencement of the term of the newNew Lease, CCSFLandlord shall not (1) enter into any new subleases, management agreements or agreements for the maintenance of the Premises or the supplies therefor which would be binding upon Mortgagee if Mortgagee enters into a newNew Lease, (2) cancel or materially modify any of the existing subleases, management agreements or agreements for the maintenance of the Premises or the supplies therefor or any other agreements affecting the Premises, or (3) accept any cancellation, termination or surrender of any of the above without the written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed. Effective upon the commencement of the term of the newNew Lease, CCSFLandlord shall also transfer to Mortgagee, its designee or nominee (other than Tenant), without recourse, all Personal Property.

(h) (g) Limited to Permitted Mortgagees. Anything herein contained to the contrary notwithstanding, the provisions of this Section 37 shall inure only to the benefit of the holders of the Mortgages which are permitted hereunder.

(i) (h) Consent of Mortgagee. No modification, termination or cancellation of this Lease shall be effective as against a Mortgagee unless a copy of the proposed change shall have been delivered to such Mortgagee and such Mortgagee shall have approved the change in writing. No merger of this Lease and the fee estate in the Premises shall occur on account of the acquisition by the same or related parties of the leasehold estate created by this Lease and the fee estate in the Premises without the prior written consent of Mortgagee.

(j) (i) Limitation on Liability of Mortgagee. Anything contained in this Lease to the contrary notwithstanding, no Mortgagee, or its designee or nominee, shall become liable under the provisions of this Lease, unless and until such time as it becomes the owner of the leasehold estate created hereby, and then only for so long as it remains the

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owner of the leasehold estate and only with respect to the obligations arising during such period of ownership.

(k) (j) Limitation on Obligation to Cure. Anything herein contained to the contrary notwithstanding, a Mortgagee, and its designee or nominee (other than Tenant), shall have no obligation to cure (i) any Event of Default by Tenant under this Lease or the LDDA occurring pursuant to Section 21.1(b), (c), (d), or (e), or (ii) any other non-monetary Event of Default by Tenant under this Lease or the LDDA which is not reasonably susceptible of being cured; provided, however, such provisions of this Lease shall apply to and remain effective on a prospective basis notwithstanding Mortgagee’s inability to cure such previous Events of Default. All of the defaults listed in Section 21.1(h) hereof shall be deemed defaults not “reasonably susceptible of being complied with” or “not reasonably susceptible of being cured” for purposes of Sections 37.10(b) and (c).

37.11 Assignment by Mortgagee.

Foreclosure of any Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Mortgage, or any conveyance of the leasehold estate hereunder from Tenant to any Mortgagee or its designee through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of CCSFLandlord or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance CCSFLandlord shall recognize the Mortgagee or other transferee in connection therewith as the Tenant hereunder. The right of such transferee or the right of the transferee of such Mortgagee (but not the right of the Mortgagee) thereafter to assign or transfer this Lease or such newNew Lease shall be subject to the restrictions of Section 15. In the event Mortgagee or nominee or affiliate of such Mortgagee subsequently assigns or transfers its interest under this Lease after acquiring the same by foreclosure or deed in lieu of foreclosure or subsequently assigns or transfers its interest under any new leaseNew Lease obtained pursuant to Section 37.10(d), and in connection with any such assignment or transfer, Mortgagee, its nominee or affiliate takes back a mortgage or deed of trust encumbering such leasehold interest to secure a portion of the purchase price given to Mortgagee for such assignment of transfer, then such mortgage or deed of trust shall be considered a permitted Mortgage, and Mortgagee shall be entitled to receive the benefit and enforce the provisions of this Section 37 and any other provisions of this Lease intended for the benefit of a permitted Mortgagee who holds a permitted Mortgage.

37.12 Transfer of Mortgage.

CCSFLandlord hereby consents to a transfer or encumbrance by Mortgagee, absolutely or as collateral security for performance of its obligations, of its Mortgage or any interest therein, provided such transfer is to a Bona Fide Institutional Lender and otherwise satisfies the requirements of this Lease, and in the event of any such transfer the new holder or pledgee of the Mortgage shall have all the rights of its predecessor Mortgagee hereunder until such time as the Mortgage is further transferred or released from the leasehold estate.

37.13 Appointment of Receiver.

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In the event of any default under a Mortgage, the holder of the Mortgage shall be entitled to have a receiver appointed, irrespective of whether such Mortgagee accelerates the maturity of all indebtedness secured by its Mortgage.

37.14 [Intentionally Deleted]

37.15 Fee Mortgages.

Any mortgage or deed of trust encumbering Landlord’s fee interest in the Premises (a “Fee Mortgage”) shall be subject and subordinate to, and shall not encumber: (1) this Lease or the leasehold estate hereunder, (2) any New Lease entered into under Section 37.10(d) above; and (3) Tenant’s and any Leasehold Mortgagee’s rights and remedies under this Lease. Any Fee Mortgagee, and in the event of a foreclosure of a Fee Mortgage or delivery of a deed in lieu of such foreclosure, the Fee Mortgagee or grantee or successful bidder at the foreclosure sale, shall succeed only to the underlying or reversionary fee estate in the Premises, so long as this Lease or any such New Lease has not been terminated. The foregoing notwithstanding, no foreclosure of a Leasehold Mortgage shall defeat the lien of a Fee Mortgage against the underlying or reversionary fee estate in the Premises.

SECTION 38. NO JOINT VENTURE

38.1 No Joint Venture.

Nothing contained in this Lease shall be deemed or construed as creating a partnership or joint venture between CCSFLandlord and Tenant or between CCSFLandlord and any other Person, or cause CCSFLandlord to be responsible in any way for the debts or obligations of Tenant. The subject of this Lease is a lease with neither Party acting as the agent of the other Party in any respect except as may be expressly provided for in this Lease.

SECTION 39. ECONOMIC ACCESS

39.1 End of Term.

Commencing 110 months (nine years and two months) prior to the last day of the Term, Tenant and CCSFLandlord shall undertake the following process to assure the reasonable condition of the improvements at the expiration of this Lease.

(a) Tenant and CCSFLandlord shall agree on three properties in San Francisco comparable to the improvements then on the Premises in age and quality of improvements. If the parties have not reached such an agreement by 110 months prior to the expiration date of the Lease, either party shall have the right to submit the selection of the properties to binding arbitration pursuant to Section 26.3.

(b) Within sixty (60) days of the selection of the three comparable properties, Tenant and CCSFLandlord shall jointly commission an independent property condition survey consultant to (i) assess the condition of the Premises in comparison to the condition of the three comparable properties; (ii) prepare a list of deferred maintenance items to be corrected over the eight years prior to Lease expiration intended to cause the

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Premises to be, at expiration of the Ground Lease, in a condition comparable to the three comparable properties; (iii) prepare a budget (the “Replacement Reserves Budget”) for the full funding of the repair and replacement of any items that constitute deferred maintenance, repair or replacement as of the date of such report for capital repair and replacement reserves (including a reasonable contingency) for components of the improvements to be repaired or replaced prior to expiration of the Term based upon the useful life, as generally accepted at such time, of such components. If Tenant and CCSFLandlord are unable to agree on the identity of the independent consultant to conduct the study, the consultant will be selected pursuant to Section 26.3. Within sixty (60) days following delivery of the list and budget, Tenant shall establish a trust account and deposit monthly into the account an amount sufficient to fund the cost of the maintenance, repair or replacement of each component that is scheduled to be repaired or replaced before the expiration of the Term as set forth in the Replacement Reserves Budget. Tenant shall cause the repair or replacement of components as described and scheduled in the Replacement Reserves Budget, funded from the trust account. CCSFLandlord shall have reasonable rights of approval of draws from the trust account, such approval being deemed given if not denied with detailed reasons for such denial, by notice to Tenant given within ten (10) days following Tenant’s request for consent to a draw; and rights of inspection of all of such work as it is undertaken. Funds remaining in the trust account at expiration of the Lease shall be paid to Tenant, providing all work identified in the Replacement Reserves Budget have been completed, and shall be paid to CCSFLandlord to the extent such work has not been undertaken.

SECTION 40. REPRESENTATIONS AND WARRANTIES

40.1 Representations and Warranties of Tenant.

Tenant represents, warrants and covenants to CCSFLandlord as follows, as of the date hereof and as of the Commencement Date:

(a) Valid Existence; Good Standing. Tenant is a limited liability company duly organized and validly existing under the laws of the State of Delaware and is qualified to do business in the State of California. Tenant has the requisite power and authority to own its property and conduct its business as presently conducted. Tenant is in good standing in the state of Delaware and the State of California.

(b) Authority. Tenant has the requisite power and authority to execute and deliver this Lease and the agreements contemplated hereby and to carry out and perform all of the terms and covenants of this Lease and the agreements contemplated hereby to be performed by Tenant.

(c) No Limitation on Ability to Perform. Neither Tenant’s articles of organization or operating agreement, nor any applicable Law, prohibits Tenant’s entry into this Lease or its performance hereunder. No consent, authorization or approval of, and no notice to or filing with, any governmental authority, regulatory body or other Person is required for the due execution and delivery of this Lease by Tenant and Tenant’s performance hereunder, except for consents, authorizations and approvals which have

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already been obtained, notices which have already been given and filings which have already been made. Except as may otherwise have been disclosed to CCSFLandlord in writing, there are no undischarged judgments pending against Tenant, and Tenant has not received notice of the filing of any pending suit or proceedings against Tenant before any court, governmental agency, or arbitrator, which might materially adversely affect the enforceability of this Lease or the business, operations, assets or condition of Tenant.

(d) Valid Execution. The execution and delivery of this Lease and the performance by Tenant hereunder have been duly and validly authorized. When executed and delivered by CCSFLandlord and Tenant, this Lease will be a legal, valid and binding obligation of Tenant.

(e) Defaults. The execution, delivery and performance of this Lease (i) do not and will not violate or result in a violation of, contravene or conflict with, or constitute a default by Tenant under (A) any agreement, document or instrument to which Tenant is a party or by which Tenant is bound, (B) any law, statute, ordinance, or regulation applicable to Tenant or its business, or (C) the articles of organization or the operating agreement of Tenant, and (ii) do not result in the creation or imposition of any lien or other encumbrance upon the assets of Tenant, except as contemplated hereby.

(f) Financial Matters. Except to the extent disclosed to CCSFLandlord in writing, (i) Tenant is not in default under, and has not received notice asserting that it is in default under, any agreement for borrowed money, (ii) Tenant has not filed a petition for relief under any chapter of the U.S. Bankruptcy Code, (iii) there has been no event that has materially adversely affected Tenant’s ability to meet its Lease obligations hereunder, and (iii)¬ to Tenant’s knowledge, no involuntary petition naming Tenant as debtor has been filed under any chapter of the U.S. Bankruptcy Code.

The representations and warranties herein shall survive any termination of this Lease to the extent specified in this Lease.

SECTION 41. SPECIAL PROVISIONS

41.1 Mitigation Measures.

In order to mitigate significant environmental impacts of development of the Site, Tenant agrees that the construction of the Project will be in accordance with all of the Mitigation Measures, which Tenant shall perform at no cost to CCSFLandlord. As appropriate, Tenant shall incorporate such Mitigation Measures into any contract for the construction or operation of the Project.

41.2 Waiver of Relocation Assistance Rights.

If Tenant holds over in possession of the Premises following the expiration of this Lease under Section 34.1, Tenant shall not be entitled, during the period of any such holdover, to rights, benefits or privileges under the California Relocation Assistance Law, California Government Code Section 7260, et. seq., or the Uniform Relocation Assistance and Real Property Acquisition Policies Act, 42 U.S.C. Section 4601, et. seq., or under any similar law, statute or ordinance now

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or hereafter in effect, except as provided in Section 13 relating to Condemnation, and Tenant hereby waives any entitlement to any such rights, benefits and privileges with respect to any such holdover period.

41.3 Tenant’s Obligations.

(a) Discrimination. Tenant shall not discriminate against any Subtenant because of race, color, marital status, age, religion, sex, sexual orientation, handicap or national origin.

(b) Affirmative Action. Tenant shall take affirmative action to ensure that all subtenants are treated by Tenant without regard to race, color, marital status, age, religion, sex, sexual orientation, handicap or national origin.

SECTION 42. GENERAL

42.1 Time of Performance.

(a) Expiration. All performance dates (including cure dates) expire at 5:00 p.m., San Francisco, California time, on the performance or cure date.

(b) Weekend or Holiday. A performance date which falls on a Saturday, Sunday or City holiday is deemed extended to 5:00 p.m. the next working day.

(c) Days for Performance. All periods for performance or notices specified herein in terms of days shall be calendar days, and not business days, unless otherwise provided herein.

(d) Time of the Essence. Time is of the essence with respect to each provision of this Lease, including, but not limited, the provisions for the exercise of any option on the part of Tenant hereunder and the provisions for the payment of Rent and any other sums due hereunder.

42.2 Interpretation of Agreement.

(a) Exhibits. Whenever an “Exhibit” is referenced, it means an attachment to this Lease unless otherwise specifically identified. All such Exhibits are incorporated herein by reference.

(b) Captions. Whenever a section, article or paragraph is referenced, it refers to this Lease unless otherwise specifically identified. The captions preceding the articles and sections of this Lease and in the table of contents have been inserted for convenience of reference only. Such captions shall define or limit the scope or intent of any provision of this Lease.

(c) Words of Inclusion. The use of the term “including,” “such as” or words of similar import when following any general term, statement or matter shall not be construed to limit such term, statement or matter to the specific items or matters, whether

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or not language of non-limitation is used with reference thereto. Rather, such terms shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such statement, term or matter.

(d) No Presumption Against Drafter. This Lease has been negotiated at arm’s length and between persons sophisticated and knowledgeable in the matters dealt with herein. In addition, each Party has been represented by experienced and knowledgeable legal counsel. Accordingly, this Lease shall be interpreted to achieve the intents and purposes of the Parties, without any presumption against the Party responsible for drafting any part of this Lease (including, but not limited to, California Civil Code Section 1654).

(e) Fees and Costs. The Party on which any obligation is imposed in this Lease shall be solely responsible for paying all costs and expenses incurred in the performance thereof, unless the provision imposing such obligation specifically provides to the contrary.

(f) Lease References. Wherever reference is made to any provision, term or matter “in this Lease,” “herein” or “hereof” or words of similar import, the reference shall be deemed to refer to any and all provisions of this Lease reasonably related thereto in the context of such reference, unless such reference refers solely to a specific numbered or lettered section or paragraph of this Lease or any specific subdivision thereof.

(g) Approvals. Unless otherwise specifically stated in this Lease, wherever a Party hereto has a right of approval or consent, such approval or consent shall not be unreasonably withheld, conditioned or delayed.

42.3 Successors and Assigns.

This Lease is binding upon and will inure to the benefit of the successors and assigns of CCSFLandlord, Tenant and any Mortgagee. Where the term “Tenant,” “CCSF” or “Mortgagee” is used in this Lease, it means and includes their respective successors and assigns, including, as to any Mortgagee, any transferee and any successor or assign of such transferee. Whenever this Lease specifies or implies CCSF as a Party or the holder of the right or obligation to give approvals or consents, if CCSF or a comparable public body which has succeeded to CCSF’s rights and obligations no longer exists, then the City, in its proprietary and not regulatory role, will be deemed to be the successor and assign of CCSF for purposes of this Lease.

42.4 No Third Party Beneficiaries.

This Lease is for the exclusive benefit of the Parties hereto and not for the benefit of any other Person and shall not be deemed to have conferred any rights, express or implied, upon any other Person, except as provided in Section 37 with regard to Mortgagees.

42.5 Real Estate Commissions.

CCSF represents and warrants to Tenant that it has not dealt with any brokers or finders in connection with the consummation of this Lease other than CBRE (the “Broker”). Tenant

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represents and warrants to CCSF that it has not dealt with any brokers or finders in connection with the consummation of this Lease. CCSF shall pay a commission due to the Broker pursuant to and in accordance with the terms and provisions of a separate agreement between CCSF and the Broker. In the event any broker, agent or finder other than the Broker makes a claim, the Party through whom such claim is made agrees to Indemnify the other Party from any Losses arising out of such claim.

42.6 Counterparts.

This Lease may be executed in counterparts, each of which is deemed to be an original, and all such counterparts constitute one and the same instrument.

42.7 Entire Agreement.

This Lease (including the Exhibits) constitutes the entire agreement between the Parties with respect to the subject matter set forth therein, and supersede all negotiations or previous agreements between the Parties with respect to all or any part of the terms and conditions mentioned herein or incidental hereto. No parol evidence of any prior or other agreement shall be permitted to contradict or vary the terms of this Lease.

42.8 Amendment.

Neither this Lease nor any of the terms hereof may be terminated, amended or modified except by a written instrument executed by the Parties.

42.9 Governing Law; Selection of Forum.

This Lease shall be governed by, and interpreted in accordance with, the laws of the State of California. The Parties agree that all actions or proceedings arising directly or indirectly under this Lease shall be litigated in courts having sites within the State of California, and each Party consents to the jurisdiction of any state or federal court in California, and consents that any service of process in such action or proceeding may be made by personal service upon the Party wherever the Party may then be located, or by certified or registered mail directed to the Party at the address set forth herein for the delivery of notices.

42.10 Recordation.

This Lease will not be recorded by either Party. The Parties agree to execute and record in the Official Records a Memorandum of Lease in the form attached hereto as Exhibit F. Promptly upon CCSF’s request following the expiration of the Term or any other termination of this Lease, Tenant shall deliver to CCSF a duly executed and acknowledged quitclaim deed suitable for recordation in the Official Records and in form and content satisfactory to CCSF, for the purpose of evidencing in the public records the termination of Tenant’s interest under this Lease. CCSF may record such quitclaim deed at any time on or after the termination of this Lease, without the need for any approval or further act of Tenant.

42.11 Extensions by CCSF.

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Upon the request of Tenant, CCSF may, by written instrument, extend the time for Tenant’s performance of any term, covenant or condition of this Lease or permit the curing of any default upon such terms and conditions as it determines appropriate, including but not limited to, the time within which Tenant must agree to such terms and/or conditions, provided, however, that any such extension or permissive curing of any particular default will not operate to release any of Tenant’s obligations nor constitute a waiver of CCSF’s rights with respect to any other term, covenant or condition of this Lease or any other default in, or breach of, this Lease or otherwise effect the time of the essence provisions with respect to the extended date or other dates for performance hereunder.

42.12 Further Assurances.

The Parties hereto agree to execute and acknowledge such other and further documents as may be necessary or reasonably required to express the intent of the Parties or otherwise effectuate the terms of this Lease.

42.13 Attorneys’ Fees.

Except as provided in Section 12.9 with regard to an arbitration proceeding, if either Party hereto fails to perform any of its respective obligations under this Lease or if any dispute arises between the Parties hereto concerning the meaning or interpretation of any provision of this Lease, then the defaulting Party or the Party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other Party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, reasonable Attorneys’ Fees and Costs. Any such Attorneys’ Fees and Costs incurred by either Party in enforcing a judgment in its favor under this Lease shall be recoverable separately from and in addition to any other amount included in such judgment, and such Attorneys’ Fees and Costs obligation is intended to be severable from the other provisions of this Lease and to survive and not be merged into any such judgment. For purposes of this Lease, the reasonable fees of attorneys of CCSF’s Office of the General Counsel shall be based on the fees regularly charged by private attorneys with the equivalent number of years of experience in the subject matter area of the law for which the attorney’s services were rendered who practice in the City of San Francisco in law firms with approximately the same number of attorneys as employed by CCSF’s Office of the General Counsel.

42.14 Effective Date.

This Lease shall become effective on the date (the “Effective Date”) the Parties duly execute and deliver this Lease. The Effective Date will be inserted by CCSF on the cover page and on page 1 hereof, provided, however, that CCSF’s failure to insert the Effective Date shall not invalidate this Lease. Where used in this Lease or in any of its exhibits, references to “the date of this Lease,” the “reference date of this Lease,” “Lease Date” or “Effective Date” will mean the Effective Date determined as set forth above and shown on the first page hereof.

42.15 Severability.

If any provision of this Lease, or its application to any Person or circumstance, is held invalid by any court, the invalidity or inapplicability of such provision shall not affect any other

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provision of this Lease or the application of such provision to any other Person or circumstance, and the remaining portions of this Lease shall continue in full force and effect, unless enforcement of this Lease as so modified by and in response to such invalidation would be grossly inequitable under all of the circumstances, or would frustrate the fundamental purposes of this Lease.

42.16 Joint and Several Liability.

If more than one individual or entity comprises Tenant, the obligations imposed on each individual or entity that comprises Tenant under this Lease shall be joint and several.

42.17 Non Discrimination.

(a) Covenant Not to Discriminate. Tenant covenants for itself, its heirs, executors, administrators and assigns and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, sexual preference, marital status, ancestry, national origin, AIDS or AIDS-related complex, or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Premises nor shall Tenant or any person claiming under or through Tenant establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Premises.

(b) Subleases and Other Subcontracts. Tenant shall include in all Subleases and other contracts relating to the Premises to which Tenant is a signing party a non-discrimination clause applicable to such Subtenant or other subcontractor in substantially the form of Section 42.17(a) above, enforceable by CCSF. Tenant's failure to comply with the obligations in this subsection shall constitute a material breach of this Lease.

SECTION 43. DEFINITION OF CERTAIN TERMS

For purposes of this Lease, initially capitalized terms shall have the meanings ascribed to them in this Section:

Additional Rent means any and all sums (other than Rent) that may become due or be payable by Tenant under this Lease.

Adjustment Date means the fifth (5th) anniversary of the Completion Date and each subsequent fifth (5th) year anniversary of the Completion Date occurring thereafter.

Affiliate means any Person directly or indirectly Controlling, Controlled by or under Common Control with the other Person in question.

Agents means, when used with reference to either Party to this Lease, the managers, members, officers, directors, commissioners, employees, agents and contractors of such Party, and their respective heirs, legal representatives, successors and assigns.

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Appraisal Date means (i) the twentieth (20th) anniversary of the Rent Commencement Date and each tenth (10th) anniversary of the Rent Commencement Date occurring thereafter during the Initial Term and (ii) the tenth (10th) and twentieth (20th) anniversaries of the first day of the Renewal Period.

Appraised Fee Value as defined in Section 2.2(d)(ii).

Arbiter as defined in Section 26.3.

Assignee Assumption Obligations as defined in Section 15.1(c)(i).

Attorneys’ Fees and Costs means reasonable attorneys’ fees, costs, expenses and disbursements, including, but not limited to, expert witness fees and costs, travel time and associated costs, transcript preparation fees and costs, document copying, exhibit preparation, courier, postage, facsimile, long-distance and communications expenses, court costs and other reasonable costs and fees associated with any other legal, administrative or alternative dispute resolution proceeding, including such fees and costs associated with execution upon any judgment or order, and costs on appeal.

Award means all compensation, sums or value paid, awarded or received for a Condemnation, whether pursuant to judgment, agreement, settlement or otherwise.

Bona Fide Institutional Lender means any one or more of the following, whether acting in its own interest and capacity or in a fiduciary capacity for one or more Persons none of which need be Bona Fide Institutional Lenders: (i) a savings bank, a savings and loan association, a commercial bank or trust company or branch thereof, an insurance company, a governmental agency, a real estate investment trust, a religious, educational or charitable institution, an employees’ welfare, benefit, pension or retirement trust, fund or system, an investment banking, merchant banking or brokerage firm, or any other Person or group of Persons which, at the time of a Mortgage is recorded in favor of such Person or Persons, has (or is Specially Controlled by a Person having) assets of at least $500 million in the aggregate (or the equivalent in foreign currency), and in the case of any Person or group of Persons none of whom is a savings bank, a savings and loan association, a commercial bank or trust company, an insurance company, a governmental agency, or a real estate investment trust, is regularly engaged in the financial services business, or (ii) any special account, managed fund, department, agency or Special Affiliate of any of the foregoing, or (iii) any person acting in a fiduciary capacity for any of the foregoing. For purposes hereof, (1) acting in a “fiduciary capacity” shall be deemed to include acting as a trustee, agent, or in a similar capacity under a mortgage, loan agreement, indenture or other loan document, (2) a lender, even if not a Bona Fide Institutional Lender, shall be deemed to be a Bona Fide Institutional Lender if promptly after such loan is consummated the note(s) or other evidence of indebtedness or the collateral securing the same are assigned to one or more persons then qualifying as a Bona Fide Institutional Lender, and (3) “Special Affiliate” means any Person directly or indirectly Specially Controlling, Specially Controlled by, or under common Special Control, through one or more other persons, with the person in question.

Capital Grants means all grants of funds or other consideration received by Tenant to pay any portion of items that would be part of Net Completed Development Costs;, provided, however,

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that Capital Grants shall not include equity investments by investors in anticipation of financial return.

Casualty Notice as defined in Section 12.4(a)(i).

City means the City and County of San Francisco, a municipal corporation.

Commencement Date as defined in Section 1.2.

Commencement of Construction means commencement of construction of the building foundation, if the Project requires demolition of the existing improvementsExisting Improvements, or commencement of demolition in connection with alterations to the existing improvementsExisting Improvements (other than for purposes of Interim Leasing), if the Project is re-use and alter the existing improvementsalteration of the Existing Improvements. Selective demolition and test borings in connection with exploration of existing conditions or to allow for a lease of the existing improvementsExisting Improvements, or the installation or construction of Interim Leasing Improvements, prior to the completion of processing of the application forreceipt of Regulatory Approvals or the erection of site protectionfor the Project shall not be deemed the Commencement of Construction.

Commercial Leasing means leasing by Tenant to non-residential occupants of the Premises following, and pursuant to, Tenant’s receipt of Regulatory Approvals to use the Premises for long-term commercial use (i.e., not pursuant to any interim zoning approval). For purposes of this Lease, Interim Leasing shall not be considered a Commercial Leasing Project, even if commercial in nature or use.

Completion means completion of construction the improvements constructed by Tenant on the Premises as part of the Project. The fact of Completion for portions of the Project intended for residential use shall be conclusively evidenced by the issuance by the City Department of Building Inspection of a permit that permits the occupancy of substantially all of the Improvements intended for residential use and, if the Project is primarily intended for non-residential use, the issuance of a temporary or other certificate of occupancy of any portion of such improvements consisting of at least ten thousand (10,000) square feet of rentable space.

Completion Date means the date on which Completion occurs.

Condemnation means the taking or damaging, including severance damage, of all or any part of any property, or the right of possession thereof, by eminent domain, inverse condemnation, or for any public or quasi-public use under the law. Condemnation may occur pursuant to the recording of a final order of condemnation, or by a voluntary sale of all or any part of any property to any Person having the power of eminent domain (or to a designee of any such Person), provided that the property or such part thereof is then under the threat of condemnation or such sale occurs by way of settlement of a condemnation action.

Condemnation Date means the earlier of: (a) the date when the right of possession of the condemned property is taken by the condemning authority; or (b) the date when title to the condemned property (or any part thereof) vests in the condemning authority.

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Condemned Land Value as defined in Section 13.4(bc).

Construction Commencement Date means the date on which Commencement of Construction occurs.

Construction Loan Closing Date means the date on which the documentation for construction financing is recorded in the Official Records of the City and County of San Francisco.

Construction Period as defined in Section 2.2(c).

Construction Rent as defined in Section 2.2(c).

Control means the power to direct the day-to-day activities and decisions of another Person, and Controlled and Controlling have correlative meanings. Common Control means that two Persons are both Controlled by the same other Person.

Debt Service shall mean debt services on any loans obtained by Tenant from non-Affiliates and secured in whole or in part by this Lease (“Leasehold Loans”), including, without limitation, interest, amortization of principal, and all financing costs, points and fees actually paid by Tenant during such period.

Debt Service Coverage Ratio shall mean, for the period of time for which calculation is being made, the ratio of annualized Net Operating Income to annualized Debt Service.

Default Rate as defined in Section 2.5.

Disabled Access Laws means all Laws related to access for persons with disabilities including, without limitation, the Americans with Disabilities Act, 42 U.S.C.S. Section 12101, et seq.

Effective Date as defined in Section 42.14 and as set forth on the cover page and page 1 hereof.

Event of Default as defined in Section 21.1.

Existing Improvements means all buildings, structures, fixtures and other improvements existing upon or within the Property as of the Commencement Date, including, without limitation, that certain building comprised of approximately 49,000 square feet.

Fair Market Value means, with respect to the Project, the price which would be obtained in an arm’s-length transaction between an informed and willing buyer and an informed and willing seller, in either case under no compulsion to buy or sell, as the case may be, and neither of which is related to Tenant or CCSF, for the sale or purchase of the fee simple interest in the Project, (i) assuming that the Project is in the condition and repair required to be maintained pursuant to this Lease, and (ii) taking into account the current status of any entitlements or other development approvals pertaining to the Premises and otherwise assuming that the Project will be used for its highest and best use. There shall be no adjustment for the fact that Tenant holds a leasehold interest in the Project rather than a fee interest.

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Final Discretionary Project Approvals means all final discretionary (as opposed to ministerial) authorizations, approvals and permits required to develop the Project by any governmental agency having jurisdiction over the Premises or the Improvements that are not subject to further administrative appeal or review.

Force Majeure means events which result in delays in a Party’s performance of its obligations hereunder due to causes beyond such Party’s reasonable control, including, but not restricted to, acts of God or of the public enemy, acts of the government, acts of the other Party, fires, floods, earthquakes, tidal waves, strikes, freight embargoes, delays of subcontractors, delays by governmental entities in the issuance of governmental permits (exclusive of litigation challenging Regulatory Approvals) or the performance by governmental entities of their functions related to the Project and unusually severe weather. Force Majeure does not include failure to obtain financing or have adequate funds.

Foreclosure means a foreclosure of a Mortgage or other proceedings in the nature of foreclosure (whether conducted pursuant to court order or pursuant to a power of sale contained in the Mortgage), deed or voluntary assignment or other conveyance in lieu thereof.

Gross Revenues means all money generated by all of the Tenant’s operations at the Project, including any revenue from leasing the Premises after the Construction Commencement Deadline but prior to the Construction Commencement Date and including any revenue derived from the Commercial Leasing Project regardless of timing, but excluding insurance proceeds (other than business or rental interruption insurance), security deposits (unless applied to rent), the proceeds from the sale of personal property of Tenant, the proceeds from sale of Tenant’s interest in this Lease and operating expense, tax and other reimbursements from commercial and retail tenants on the ground floor only, and not from residential Subtenants; provided, however, that amounts billed to individual residential Subtenants pursuant to occupancy tenant reimbursements for water, gas, electricity, refuse collection or recycling only shall also be excluded from Gross Revenues.

Gross Revenue Threshold means an amount equal to seven percent (7%) of the Net Completed Development Cost. The Gross Revenue Threshold shall be adjusted on each Adjustment Date by adding an amount equal to the dollar amount that is the lesser of (i) the Gross Revenue Threshold Indexed from the previous Adjustment Date or (ii) fifteen percent (15%) thereof and shall be further increased from time to time by the costs incurred by Tenant in connection with capital improvements to the Premises.

Handle when used with reference to Hazardous Materials means to use, generate, manufacture, process, produce, package, treat, transport, store, emit, discharge or dispose of any Hazardous Material (“Handling” will have a correlative meaning).

Hazardous Material means any material that, because of its quantity, concentration or physical or chemical characteristics, is deemed by any federal, state or local governmental authority to pose a present or potential hazard to human health or safety or to the environment. Hazardous Material includes, without limitation, any material or substance defined as a “hazardous substance,” or “pollutant” or “contaminant” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”, also commonly known as the “Superfund” law), as amended, (42 U.S.C. Section 9601, et. seq.) or under Section 25281 or Section 25316 of

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the California Health & Safety Code; any “hazardous waste” as defined in Section 25117 or listed under Section 25140 of the California Health & Safety Code; any asbestos and asbestos containing materials whether or not such materials are part of the structure of any Existing Improvements on the Premises, any Subsequent Improvements to be constructed on the Premises by or on behalf of Tenant, or are naturally occurring substances on, in or about the Premises and petroleum, including crude oil or any fraction, and natural gas or natural gas liquids.

Hazardous Material Claims means any and all enforcement, Investigation, Remediation or other governmental or regulatory actions, agreements or orders instituted or completed under any Environmental Laws, together with any and all Losses made by any third party against City, including CCSF, their Agents, or the Premises or any Improvements, relating to damage, contribution, cost recovery compensation, loss or injury resulting from the presence, release or discharge of any Hazardous Materials, including, without limitation, Losses based in common law. Hazardous Material Claims include, without limitation, Investigation and Remediation costs, fines, natural resource damages, damages for decrease in value of the Premises or any Improvements, the loss or restriction of the use or any amenity of the Premises or any Improvements, and attorneys’ fees and consultants’ fees and experts’ fees and costs.

Hazardous Materials Laws means any present or future federal, state or local Laws relating to Hazardous Material (including, without limitation, its Handling, transportation or Release) or to human health and safety, industrial hygiene or environmental conditions in, on, under or about the Premises (including the Improvements), including, without limitation, soil, air, air quality, water, water quality and groundwater conditions. Hazardous Materials Laws include, but are not limited to, the City’s Pesticide Ordinance (Chapter 39 of the San Francisco Administrative Code), to the extent applicable to tenants of City property on the effective date of the LDDA, and Article 20 of the San Francisco Public Works Code (“Analyzing Soils for Hazardous Waste”).

Impositions as defined in Section 4.1(b).

Improvements means the Existing Improvements, the Initial Improvements and all Subsequent Improvements.

Indemnified Parties means CCSF, and all of its heirs, legal representatives, successors and assigns, and each of them.

Indemnify means indemnify, protect and hold harmless.

Index means the Consumer Price Index for All Urban Consumers (base years 1982-1984 = 100) for the San Francisco-Oakland-San Jose area, published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is modified during the Term hereof, the modified Index shall be used in place of the original Index. If compilation or publication of the Index is discontinued during the Term, CCSF shall select another similar published index, generally reflective of increases in the cost of living, subject to Tenant’s approval, which shall not be unreasonably withheld or delayed, in order to obtain substantially the same result as would be obtained if the Index had not been discontinued.

Initial Improvements means the Improvements as defined in the LDDA.

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Initial Payment means the non-refundable fee in the amount of Six Million Dollars ($6,000,000.00) paid by Tenant to CCSF pursuant to Section 1.07(b) of the LDDA.

Initial Post-Construction Period as defined in Section 2.2(c).

Initial Post-Construction Rent as defined in Section 2.2(c).

Initial Rent as defined in Section 2.2(a).

Interim Leasing means Tenant’s leasing of the Premises to non-residential users prior to Tenant’s receipt of Regulatory Approvals for Commercial Leasing or for a multi-family projectProject.

Interim Leasing Improvements means tenant improvements and upgrades made to the Existing Improvements for purposes of Interim Leasing of the Existing Improvement prior to or pending Commencement of Construction of Improvements for the Project, as defined herein.

Investigate or Investigation when used with reference to Hazardous Material means any activity undertaken to determine the nature and extent of Hazardous Material that may be located in, on, under or about the Premises, any Improvements or any portion of the site or the Improvements or which have been, are being, or threaten to be Released into the environment. Investigation shall include, without limitation, preparation of site history reports and sampling and analysis of environmental conditions in, on, under or about the Premises or any Improvements.

Invitees when used with respect to Tenant means the customers, patrons, invitees, guests, members, licensees, assignees and Subtenants of Tenant and the customers, patrons, invitees, guests, members, licensees, assignees and sub-tenants of Subtenants, but excluding CCSF Invitees.

Late Charge as defined in Section 2.8.

Law or Laws means any one or more present and future laws, ordinances, rules, regulations, permits, authorizations, orders and requirements, to the extent applicable to the Premises or to the Parties’ use of the Premises or any portion thereof, whether or not in the present contemplation of the Parties, including, without limitation, all consents or approvals (including Regulatory Approvals) required to be obtained from, and all rules and regulations of, and all building and zoning laws of, all federal, state, county and municipal governments, the departments, bureaus, agencies or commissions thereof, authorities, boards of officers, any national or local board of fire underwriters, or any other body or bodies exercising similar functions, having or acquiring jurisdiction of, or which may affect or be applicable to, the Premises or any part thereof, including, without limitation, any subsurface area, the use thereof and of the buildings and Improvements thereon.

LDDA as defined in Recital E.

Lease means this Ground Lease, as it may be amended from time to time.

Lease Year means a calendar year.

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Leasehold Estate means Tenant’s leasehold estate created by this Lease.

Leasehold Loans as defined in the definition of Debt Service.

Loss or Losses when used with reference to any Indemnity means any and all third party claims, demands, losses, liabilities, damages (excluding consequential damages), liens, obligations, interest, injuries, penalties, fines, lawsuits and other proceedings, judgments and awards and costs and expenses, (including, without limitation, reasonable Attorneys’ Fees and Costs and consultants’ fees and costs) of whatever kind or nature, known or unknown, contingent or otherwise.

Major Damage or Destruction means damage to or destruction of all or any portion of the Improvements to the extent that all costs of Restoration will exceed sixty percent (60%) of the hard costs to replace such Improvements in their entirety or such Restoration cannot reasonably be anticipated to be Completed within one (1) year following the event of damage or destruction, except that during the last five (5) years of the Term, the percentage figure shall be (1) in the fifth remaining year of the Term: 25%; (2) in the fourth through the second remaining years of the Term: 10%; and (3) in the final year of the Term: 5%. The calculation of such percentage shall be based upon replacement costs and requirements of applicable Laws in effect as of the date of the event causing such Major Damage or Destruction.

Minimum Rent means Four Hundred Thousand and No/100 Dollars ($400,000.00) per year or such other higher Base Rent as may then be in effect; provided, however, that Minimum Rent shall be increased on each Adjustment Date by an amount equal to the product obtained by multiplying (i) the Minimum Rent then in effect times (ii) for the first Adjustment Date, the percentage increase in the Index from the Post Construction Date through the first Adjustment Date, and thereafter, the percentage increase in the Index from the immediately prior Adjustment Date to the then current Adjustment Date. In no event shall the Minimum Rent in effect immediately prior to any Adjustment Date be decreased, or shall Tenant be entitled to any credit because of any decrease in the Index.

Minor Alterations as defined in Section 10.2.

Mitigation Measures means the mitigation measures relating to construction of the Project, if any, imposed by any governmental or quasi-governmental agency.

Mortgage means a mortgage, deed of trust, assignment of rents, fixture filing, security agreement or similar security instrument or assignment of Tenant’s leasehold interest under this Lease that is recorded in the Official Records.

Mortgagee means the holder or holders of a Mortgage and, if the Mortgage is held by or for the benefit of a trustee, agent or representative of one or more financial institutions, the financial institutions on whose behalf the Mortgage is being held. Multiple financial institutions participating in a single financing secured by a single Mortgage shall be deemed a single Mortgagee for purposes of this Lease. In addition to the Mortgagee named in the Mortgage as the holder of the security interest, the term “Mortgagee” shall also include all subsequent assignees of the Mortgage held by the named Mortgagee.

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Net Awards and Payments as defined in Section 13.4.

Net Completed Development Cost means the sum of the Initial Payment and the Subsequent Payment plus the costs incurred by Tenant, including, without limitation, the following:

1. Hard Costs: the final construction cost; plus

2. Soft Costs, consisting of:

(a) (a) Architects and Other Consultants Fees: Fees and expenses of architects, engineers, attorneys, expediters and other consultants engaged by Tenant in connection with the obtaining of Regulatory Approvals and the design and construction of the Improvements;

(b) (b) City Fees and Permits: Fees payable to the City for planning, development, permits and inspections, including fees of third party planning and plan check services, impact fees and exactions and fees of other governmental entities pertaining to the design, construction and occupancy of the Improvements;

(c) (c) Utilities: Water, sewer, gas, electricity and telephone connection fees and connection costs required for the construction of the Improvements including, without limitation, the cost of any improvements required to obtain such connections;

(d) (d) Construction Financing: mortgage brokerage and loan fees, legal fees, servicer’s and other lenders’ consultants’ fees and interest on the construction loan for permanent Improvements;

(e) (e) Carrying Costs: Construction period builder’s risk, liability and other insurance, real property taxes and assessments and Rent paid during the period from the Commencement of Construction until the Completion of Construction; and

(f) (f) Development Management Fee: A development and construction management fixed fee not in excess of three percent (3%) of the foregoing items in subparagraphs (a) through (e).

Net Completed Development Cost shall be reduced by all Capital Grants and by the Tax Benefits Value, unless and to the extent the parties have reached a contrary agreement pursuant to Section 5.18 of the LDDA.

Net Refinancing Proceeds means the original principal amount of the Subsequent Financing less the sum of (i) any costs paid by Tenant in connection with the Subsequent Financing including loan and brokerage fees, breakage fees and any prepayment penalties, as set forth in the final closing statement for such Subsequent Financing, and (ii) cost of any capital improvements to be made to the Premises following the prior Subsequent Financing except to the extent that such costs were charged against the principal of amount of the prior Subsequent Financing, and (iii) the cost of any capital improvements to be made to the Premises using the proceeds from such Subsequent Financing, to the extent such proceeds are actually used to pay the cost of such capital improvements within twenty four (24) months following closing of the refinancing.

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Net Operating Income means the amount by which Gross Revenues exceed Operating Expenses.

Net Sales Proceeds means the proceeds from the sale of Tenant’s interest in this Lease after subtracting all commercially reasonable costs incurred in connection with such sale such as brokers’ commissions, loan breakage costs and prepayment penalties, transfer and other taxes and other closing costs.

Non-Affiliate Mortgage means a Mortgage that is held by a Non-Affiliate Mortgagee.

Non-Affiliate Mortgagee means the holder of a Mortgage, which holder (A) is not an Affiliate of Tenant, or (B) is a Bona Fide Institutional Lender.

Official Records means, with respect to the recordation of Mortgages and other documents and instruments, the Official Records of the City and County of San Francisco.

Operating Expenses for any period shall mean all expenses, fees and costs of any kind of nature whatsoever, without duplication, incurred in connection with the operation, management, and any other amounts paid or incurred during such period by Tenant in connection with the ownership and operation of the Improvements and/or the Premises other than Rent, determined on an accrual or modified accrual basis; provided, however, that for purposes of calculating the Debt Service Coverage Ratio for any period, Operating Expenses shall exclude (i) Debt Service, (ii) capital expenditures, (iii) tenant improvement costs, (iv) leasing commissions for non-residential portions of the Improvements, (v) any expenses, fees and costs which are paid from deposits to cash reserves where such deposits were previously included as Operating Expenses, (vi) any payment or expense for which Tenant was or is to be reimbursed from proceeds of any loan or insurance or by any third party, (vii) any non-cash charges such as depreciation and amortization and (viii) federal, state or local income taxes and provided further that any management fee or other expense payable to Tenant or to an Affiliate of Tenant shall be included as an Operating Expense only to the extent commercially reasonable.

Partial Condemnation as defined in Section 13.3(b).

Participations as defined in Section 2.4(b).

Party means CCSF or Tenant, as a party to this Lease; Parties means both CCSF and Tenant, as Parties to this Lease.

Percentage Rent means 15% of Gross Revenue in excess of a Gross Revenue Threshold.

Permitted Title Exceptions as defined in Section 1.1(b).

Permitted Uses as defined in Section 3.1.

Person means any individual, partnership, corporation (including, but not limited to, any business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or any other entity or association, the United States, or a federal, state or political subdivision thereof.

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Personal Property means all fixtures, furniture, furnishings, equipment, machinery, supplies, software and other tangible personal property that is incident to the ownership, development or operation of the Improvements and/or the Premises, whether now or hereafter located in, upon or about the Premises, belonging to Tenant and/or in which Tenant has or may hereafter acquire an ownership interest, together with all present and future attachments, accessions, replacements, substitutions and additions thereto or therefor.

Pre-Construction Period as defined in Section 2.2(b).

Pre-Construction Rent as defined in Section 2.2(b).

Premises as defined in Section 1.1.

Project as defined in Recital E.

Projected Percentage Rent means a commercially reasonable projection of the Percentage Rent for the twelve (12) month period commencing on the first anniversary of the Completion Date for the Project set forth in the construction schedule in effect at Project commencement or, if no such schedule is applicable as of the Construction Commencement Deadline because Commencement of Construction of the Project has not yet commenced, then the Percentage Rent, if any, as projected as of the first anniversary of the Construction Commencement Deadline. For purposes of determining “Projected Percentage Rent” for periods prior to the first anniversary of the Completion Date for the Project, Tenant shall submit to CCSF, immediately prior to the start of construction and again three (3) months prior to the expected Completion Date, a projection of post-Stabilization Percentage Rent using the then-budgeted (or known, as the case may be) Net Completed Development Cost and rent projections based on comparable market rents at the time, trended during the period until expected Stabilization at a rate consistent with San Francisco residential rent growth over the preceding ten (10) years. If Commencement of the Project will not occur by the Construction Commencement Deadline, then Tenant’s submission of the foregoing projections shall be made three (3) months before the Construction Commencement Deadline. In the event that Landlord and Tenant are unable to agree on the determination of “Projected Percentage Rent” for a particular period, each Party shall, within ten (10) days of receipt of written notice from either Party that such Party desires to invoke the procedure set forth herein, separately designate to the other in writing an appraiser to determine the Projected Percentage Rent for the applicable period. Each appraiser designated shall meet the Qualifications set forth in Section 2.2(d)(ii)(2) of the Lease. The failure of either Party to appoint an appraiser meeting the Qualifications within the time allowed shall be deemed equivalent to appointing the appraiser appointed by the other Party, who shall then determine the Projected Percentage Rent for the applicable period which determination shall thereafter be the Projected Percentage Rent for the applicable period. Within five (5) business days of their appointment, the two designated appraisers shall jointly designate a third appraiser with the foregoing Qualifications. Within thirty (30) days after their appointment, each of the two appointed appraisers shall submit to the third appraiser a sealed envelope containing such appointed appraiser's good faith determination of the Projected Percentage Rent for the applicable period; concurrently with such delivery, each such appraiser shall deliver a copy of his or her determination to the other appraiser. If the highest of the two determinations of the appraisers is no greater than one hundred and five percent (105%) of the lowest of the two such determinations, the determinations of the two appraisers shall be

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averaged and the result shall be the Projected Percentage Rent for the applicable period. If the highest of the two determinations of the appraisers is greater than one hundred and five percent (105%) of the lowest of the two such determinations, the third appraiser shall, within ten (10) days following receipt of such submissions, then determine which of the two appraisers' determinations most closely reflects the Projected Percentage Rent for the applicable period. The third appraiser shall have no rights to adjust, amend or otherwise alter the determinations made by the appraisers selected by the Parties, but must select one or the other of such appraisers' submissions. The determination by such third appraiser shall be final and binding upon the Parties. Said third appraiser shall, upon selecting the determination which most closely resembles the Projected Percentage Rent for the applicable period, concurrently notify both Parties hereto and the “Projected Percentage Rent” for the applicable period shall be the Projected Percentage Rent so selected by such third appraiser. The Parties shall share the appraisal expenses equally.

Property as defined in Section 1.1.

Qualifications as defined in Section 2.2(d)(ii)(2).

Refinancing Participations as defined in Section 2.4(b).

Refinancing Threshold means an amount equal to (i) one hundred twenty-five percent (125%) of the outstanding principal amount from time to time under any loan secured by a first priority MortgageeMortgage encumbering Tenant’s leasehold interest in the Project plus (ii) (a) the cost of capital improvements to the Property budgeted to be paid with the proceeds of a Subsequent Financing and (b) the cost of capital improvements to the Property made subsequent to the previous Subsequent Financing, less the then current balance of the loan being refinanced..

Regulatory Approval means any authorization, approval or permit required for any construction, improvement, repair, maintenance, use or occupancy of the Premises by any governmental agency having jurisdiction over the Premises.

Release when used with respect to Hazardous Material means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into or inside any existing improvements or any Improvements constructed under this Lease by or on behalf of Tenant, or in, on, under or about the Premises or any portion thereof.

Remediate or Remediation when used with reference to Hazardous Materials means any activities undertaken to clean up, remove, transport, dispose, contain, treat, stabilize, monitor or otherwise control Hazardous Materials located in, on, under or about the Premises or which have been, are being, or threaten to be Released into the environment. Remediation includes, without limitation, those actions included within the definition of “remedy” or “remedial action” in California Health and Safety Code Section 25322 and “remove” or “removal” in California Health and Safety Code Section 25323.

Renewal Rent as defined in Section 2.2(e).

Renewal Rent Adjustment Date as defined in Section 2.2(e).

Rent as defined in Section 2.5.

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Rent Commencement Date means the earlier of (i) the date on which the Regulatory Approvals pertaining to the Project have been finally issued or (ii) the third (3rd) anniversary of the Effective Date.

Restoration means the restoration, replacement, or rebuilding of the Existing Improvements or, for purposes of Section 37 hereof, the original construction of the Subsequent Improvements as part of the Tenant’s completion of the Project, in accordance with all Laws then applicable (including code upgrades) to substantially the same condition they were in immediately before an event of damage or destruction or, in the case of Condemnation, the restoration, replacement, or rebuilding of the Initial Improvements to an architectural whole. All Restoration shall be conducted in accordance with the provisions of Section 10. (“Restore” and “Restored” shall have correlative meanings.). Notwithstanding the foregoing, in the event of a Major Damage or Destruction occurring at any time during the Term, then Tenant shall not be required to Restore the Improvements to the identical size or configuration as existed before the event giving rise to the Restoration so long as the Improvements as Restored constitute a commercially reasonable investment property. In connection with any such Restoration after an event of Major Damage or Destruction, the Project and the other Improvements may be redesigned, made larger or smaller, reconfigured, or otherwise modified, provided that the Project as so redesigned is a commercially reasonable investment property, subject to the provisions of Section 12 relating to Subsequent Construction.

Sales Participations as defined in Section 2.4(a).

Sales Price Threshold means an amount equal to the sum of (a) one hundred twenty-five percent (125%) of the Net Completed Development Cost of the Project (the “Development Cost Basis”) as such Development Cost Basis shall be increased on each Adjustment Date by adding an amount equal to the product obtained by multiplying (i) the Development Cost Basis then in effect times (ii) for the first Adjustment Date, the percentage increase in the Index from the Completion Date through the first Adjustment Date, and thereafter, the percentage increase in the Index from the immediately prior Adjustment Date to the then current Adjustment Date; plus (b) in the case of a sale by the initial Tenant under this Lease, the cost of capital improvements made by Tenant after Completion of Construction. Upon each subsequent sale of the Project by a purchaser of the Project, the Sales Price Threshold shall be the sum of (c) the applicable purchase price paid by the purchaser plus (d) the cost of capital improvements made during its ownership of the leasehold interest and the Improvements.

Significant Change means (a) any dissolution, merger, consolidation or other reorganization, or any issuance or transfer of beneficial interests in Tenant, directly or indirectly, in one or more transactions, that results in a change in the identity of the Persons Controlling Tenant, or (b) the sale or transfer of more than twenty-five percent (25%) of Tenant’s assets, or more than twenty-five percent (25%) of Tenant, other than a sale to an Affiliate or the sale or transfer of ownership by any upper tier entity in the chain of ownership of Tenant, provided that a Significant Change will not include any change in the identity of Persons Controlling Tenant or sale of twenty-five percent (25%) or more of assets as a result of (i) the sale or transfer of shares of a publicly traded company; or (ii) the merger, consolidation or other reorganization of a Person Controlling Tenant or the sale of all or substantially all of the assets of a Person Controlling Tenant. Notwithstanding the foregoing, CCSF'sLandlord's consent shall not be required for a change in

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ownership of membership interests that would otherwise be a Significant Change to the extent that the proceeds of such change in ownership represents an equity investor’s contribution to (i) pay for some or all of the cost of constructing the Improvements, (ii) to reimburse the original members of Tenant for pre-development costs actually paid for by Tenant, (iii) to pay off debt incurred by Tenant to make the Initial Payment and/or to pay for Interim Leasing improvementsImprovements, or (iv) pay not-yet-incurred pre-development expenses.

Space Sublease means a Sublease entered into by Tenant with a Space Subtenant in the ordinary course of business with respect to a Subtenant Space as well as any Sublease permitted as a Permitted Temporary Use referred to in Section 3.5 hereof.

Space Subtenant means any Subtenant under a Space Sublease.

Special Control means the power to direct the affairs or management of another Person, whether by contract, operation of Law or otherwise (and Specially Controlling and Specially Controlled shall have correlative meanings).

Stabilization means that the Project has achieved at least eighty-five percent (85%) occupancy for a trailing three (3)-month period.

Sublease means any lease, sublease, license, concession or other agreement by which Tenant leases, subleases, demises, licenses or otherwise grants to any Person in conformity with the provisions of this Lease, the right to occupy or use any portion of the Premises (whether in common with or to the exclusion of other Persons).

Subsequent Construction means all repairs to and reconstruction, replacement, addition, expansion, Restoration, alteration or modification of any Initial Improvements, or any construction of Subsequent Improvements.

Subsequent Financing as defined in Section 37.4(c).

Subsequent Improvements means all buildings, structures, fixtures and other improvements erected, built, placed, installed or constructed upon or within the Property after the completion of the Initial Improvements, including, without limitation, all renovation and rehabilitation work on the Initial Improvements.

Subsequent Post-Construction Period as defined in Section 2.2(d)(iii).

Subsequent Post-Construction Rent as defined in Section 2.2(d)(iii).

Substantial Condemnation as defined in Section 13.3(a).

Subtenant means any Person leasing, occupying or having the right to occupy any portion of the Premises under and by virtue of a Sublease.

Subtenant Spaces means the residential units located within the Project and any commercial, office and/or retail unit located within the Project.

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Tax Benefits Value means the amount of Low Income New Market, Historic or other Tax Credits (together “Tax Credits”) received by Tenant; provided, however, that in the event that any portion of Credits are allocated to an investor, then the term “Tax Benefits Value” shall mean the sum of (i) the amount of received Tax Benefits that are not allocated to an investor (if any), and (ii) the total amount of money or the fair market value of other property contributed by any investor, minus the net present value, using a discount rate of five percent (5%) per year, of (A) all actual or projected cash flow distributions to the investor in connection with the premises during the 60 months following the completion of construction, (B) any actual or projected residual payment to the investor in connection with a sale by the investor of its interest in the Premises (or in Tenant), and (C) any tax benefits (at 35%) to be allocated to the investor during the recapture period.

Tenant means 33 Gough LLC, a Delaware limited liability company, and its permitted successors and assigns.

Term as defined in Section 1.2.

Total Condemnation as defined in Section 13.2.

Transfer means the sale, assignment or transfer of all or any portion of Tenant’s interest in this Lease.

Treasury Rate shall mean the yield to maturity of the most recently issued ten year U.S. Treasury Security as quoted in the Wall Street Journal on the date immediately preceding the Further Rent Payment Date. If the date immediately preceding the Further Rent Payment Date is not a business day, then the quote shall be obtained on the business day immediately preceding the Further Rent Payment Date. If the Wall Street Journal (i) quotes more than one such ten year U.S. Treasury Security, the highest of such quotes shall apply, or (ii) ceases to publish such quotes, the ten year U.S. Treasury Security shall be determined from such comparable substitute financial reporting service or source as CCSF in its reasonable discretion shall determine.

Uninsured Casualty as defined in Section 12.4(a).

Work as defined in Section 10.8.

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

CCSF

THE CITY COLLEGE OF SAN FRANCISCO

By Name_____________________________________ Its

TENANT

33 GOUGH, LLC a Delaware limited liability company

By: Integral 33 Gough, LLC a Georgia limited liability company Manager

By: _________________________________ Christopher H. Martorella, Manager

By: 33 Gough Manager, LLC, a California limited liability company Manager By: _________________________________ John Clawson, Manager

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EXHIBIT A

Description of Property

Real property in the City and County of San Francisco, State of California, described as follows:

Beginning at a point on the Northerly line of McCoppin Street, distant thereon 232.667 feet Easterly from the Easterly line of Valencia Street; running thence at a right angle to the said Northerly line of McCoppin Street Northerly 225.229 feet to Southwesterly terminus of Stevenson Street, as established by Resolution No. 8325 of the Board of Supervisors of the City and County of San Francisco, approved by the Mayor on February 2, 1949, closing and abandoning a portion of Stevenson Street; thence Southeasterly along said terminus line 6 feet, more or less, to a point on the Southeasterly line of Stevenson Street; thence Northeasterly along said Southeasterly line of Stevenson Street 69 feet, more or less, to the Southwesterly line of Gough Street, as shown on the Map entitled, "Map showing the opening of Gough Street from Market Street to Otis & McCoppin Streets and the portion of Crocker Street, the name of which is changed to Gough Street", filed July 13, 1950, in the Office of the Recorder of the City and County of San Francisco, State of California, in Book "R" of Maps, at Page 5; thence Southeasterly along said Southwesterly line of Gough Street, as shown on said map 361.664 feet to the Northerly line of McCoppin Street; thence Westerly along said Northerly line of McCoppin Street 285.3005 feet to the point of beginning.

Being a portion of Mission Block No. 14.

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EXHIBIT B

Site Plan

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EXHIBIT C

Permitted Exceptions

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EXHIBIT D

Scope of Development

33 Gough Scope of Development

The Developer intends to develop a residential project on the Premises, consisting of between 150 and 425 multi-family units and between 5,000 and 10,000 square feet of ground floor retail/commercial uses (the “Residential Mixed-Use Project”). The ultimate scope will be dependent on the Final Discretionary Regulatory Approvals and project economics prevailing at the time that Developer is prepared to commence construction, but if Developer wishes to pursue development of a project that consists of less than 150 or more than 425 multi-family units, it will require CCSF’s written approval. The scenarios for new development for commercial use or rehabilitation of the existing building will only be considered if, by the Project Approval Deadline (i.e., five years following the Effective Date) Developer is unable to obtain Final Discretionary Regulatory Approvals for a financially viable Residential Mixed-Use Project.

Residential Mixed-Use Project

Developer and CCSF have agreed that the Residential Mixed-Use project may include multiple buildings and/or phases, but will not include a separate building that includes only Affordable units, a minimum of thirty-three percent (33%) of the multi-family residential units shall be “Affordable,” as more particularly described in Article 11 below, provided that Developer shall have the right, in its sole discretion, to increase the number of affordable units in the Project above thirty-three percent (33%).

Commercial Use Project

As noted above, a commercial project will only be pursued if Developer is unable to obtain Final Discretionary Regulatory Approvals for a financially viable Residential Mixed-Use Project by the Project Approval Deadline.

The Commercial Project will consist of the greatest rentable area and broadest range of uses allowed under either the then-current zoning or any revised to zoning that is approved at the time through the process of Developer seeking alternate Final Discretionary Regulatory Approvals, subject to the requirements and restrictions of the LDDA and Ground Lease (ie, excluding the Prohibited Uses).

Rehabilitation and/or Adaptive Re-Use Project

If, by the Project Approval Deadline, Developer is unable to obtain Regulatory Approvals for the Residential Mixed-Use Project, CCSF fails to exercise its buyback right, and Developer subsequently fails to obtain Final Discretionary Regulatory Approvals for either the Commercial Use Project or a Residential Mixed-Use Project, Developer may rehabilitate the existing building on the Property for any use not a Prohibited Use.

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EXHIBIT E

Form of Ground Lessor Estoppel Certificate

GROUND LESSOR ESTOPPEL

TO: Attn: Re: Building located at 33 Gough Street, San Francisco, California (hereinafter referred to as

the “Premises”); Ground Lease Agreement dated , between the undersigned (hereinafter referred to as “Lessor”) and 33 Gough Street, a Delaware limited liability company (hereinafter referred to as the “Tenant”), as the same may have been modified, amended, supplemented or assigned, as set forth on Schedule A attached hereto and incorporated herein by reference (the “Ground Lease”) [and Lease Disposition and Development Agreement dated __________________, 2016 between Lessor and Tenant, as the same may have been modified, amended, supplemented or assigned, as set forth on Schedule C attached hereto and incorporated herein by reference (the “LDDA”)]

Dear Sirs/Madams:

Tenant and _________________ (“Mortgagee”) have requested certain certifications by Lessor as set forth herein upon which Mortgagee will rely in connection with a loan (the “Loan”) from Mortgagee in the aggregate principal amount of approximately [$___________], the proceeds of which shall be used and applied in accordance with the loan documents in connection with the [construction][refinancing] and operation of the Premises, pursuant to that certain Loan Agreement, (the “Loan Agreement”) dated [__________, ____] between Tenant, the lender or lenders party thereto which constitute Mortgagee and shall be secured by, among other things, that certain [Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing], given by Tenant in favor of [______________ (“Agent”) for the benefit of] Mortgagee (the “Leasehold Mortgage”), encumbering all of Tenant's right, title and interest under the Ground Lease, as well as all related permits, approvals and other rights and interests. Each reference herein to “Loan Documents” shall mean and refer to the Loan Agreement, the Leasehold Mortgage, and each and every other document, instrument and agreement executed from time to time by Tenant with or in favor of Mortgagee or its agent in connection with the Loan. [Agent is functioning as the administrative agent for a consortium of lenders and other financing sources to provide financing to Tenant under a single Leasehold Mortgage.]

Accordingly, in this instrument (this “Estoppel”), Lessor, as lessor under the Ground Lease, does hereby certify to Mortgagee, and its successors and assigns, that as of the date hereof:

1. The Ground Lease, a true and correct copy (including all modifications, amendments, supplements and assignments) of which is attached hereto as Schedule A, is in full force

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and effect, and has not been modified, amended, supplemented or assigned in any respect as of the date hereof, either orally or in writing, except as indicated in Schedule A [or Schedule C], The Ground Lease [and the LDDA} represent[s] the entire agreement between Lessor and Tenant with respect to the subject matter thereof and the Premises and the obligations of Lessor thereunder are valid and binding.

2. The 75-year term of the Ground Lease commenced on ______________, 201, and will expire on ________________ (the “Term”). The Ground Lease provides for one renewal option for an additional 25-year extension of the Term.

[If the LDDA has been terminated, substitute the following for references to the LDDA: The LDDA has been terminated in accordance with its terms and is no longer in effect.]

3. To Lessor’s knowledge, as of the date hereof: (i) there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default by either party under the Ground Lease [or the LDDA]; (ii) there are no existing claims, defenses or offsets by either party under the Ground Lease [or the LDDA]; and (iii) Tenant has performed all of its obligations under the Ground Lease [and the LDDA] pursuant to and in compliance with the terms thereof which are required to have been performed as of the date hereof.

4. Annual Rent under the Ground Lease is determined pursuant to Section 2 of the Ground Lease.

5. There are no provisions for, and Lessor has no rights with respect to, terminating the Term or increasing the rent payable under the Ground Lease except as expressly set forth in the Ground Lease.

6. Lessor does not hold any option, right of first refusal or right of first offer to purchase Tenant’s interest in the Ground Lease.

7. Lessor’s current address for notice under the Ground Lease is provided on Schedule B attached hereto and made a part hereof for all purposes.

8. Lessor acknowledges that Mortgagee shall be deemed for all purposes to be a “Mortgagee” and its Leasehold Mortgage a “Mortgage” under the Ground Lease. Mortgagee is entitled to all rights, privileges, and protections of a Mortgagee under the Ground Lease. Those rights, privileges, and protections shall survive any termination of the Ground Lease to the extent any such rights, privileges, and protections survive the termination of the Ground Lease in accordance with the terms of the Ground Lease.

9. Lessor confirms that all notices which a “Mortgagee” is entitled to receive under the terms of the Ground Lease shall be sent to Mortgagee at the address contained in this Paragraph 10.

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Attention: This Estoppel may not be changed, waived or discharged orally, but only by an agreement in writing.

10. This Estoppel may be executed in two or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute but one and the same instrument.

Very truly yours, [signature block and authorized signatory for Lessor]

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Exhibit A

EXHIBIT F

[attach Ground Lease and all amendments]

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Exhibit B

Lessor’s address for Notices

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Exhibit C

[attach LDDA and all amendments]

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EXHIBIT F

Form of Memorandum of Ground Lease

Form of Memorandum of Ground Lease

RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:

_________________________________ _________________________________ _________________________________ _________________________________

THIS SPACE ABOVE FOR RECORDER’S USE Pursuant to Section 11929 of the California Revenue & Taxation Code, this conveyance is exempt from any documentary transfer tax.

33 GOUGH STREET MEMORANDUM OF GROUND LEASE

THIS MEMORANDUM OF GROUND LEASE (“Memorandum”), dated October ____, 2016 (the “Effective Date”), is made by and between CITY COLLEGE OF SAN FRANCISCO (“CCSF”), and 33 GOUGH, LLC, a Delaware limited liability company (“Tenant”).

1. Lease. Pursuant to that certain Ground Lease dated of even date herewith (the “Lease”), which is incorporated by this reference, Lessor leases to Lessee, and Lessee leases from Lessor, at the rent and on all the terms and conditions set forth in the Lease, that certain real property located in the City and County of San Francisco, California, as more particularly described in Exhibit “A” attached hereto and incorporated by this reference (the “Leased Land”). Capitalized terms used but not defined herein shall have the meanings set forth in the Lease.

2. Term. Pursuant to the terms and conditions of the Lease, Tenant may have and hold the Leased Land for a term commencing on the Effective Date and terminating at 12:00 midnight of the date that is seventy-five (75) years thereafter (the “Initial Term”), which may be extended by Tenant for an additional period of twenty- five (25) years (the “Renewal Period”), unless the Lease is sooner terminated pursuant to the Early Termination or Event of Default provisions of the Lease.

3. Purpose and Intention. This Memorandum is executed for the purpose of being recorded in the land records of the City and County of San Francisco, California, to provide notice of the Lease and its contents to third parties. It is not intended, and shall not be construed, to define, limit or modify the Lease.

Cancellation of Memorandum of Lease. Unless sooner terminated by specific written agreement of Lessor and Lessee, this Memorandum shall expire and be of no further force or

effect immediately, and without further action, upon the expiration or earlier termination of the Lease.

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5. Lease Controls. This Memorandum is subject to the Lease and any amendments, modifications, alterations, renewals, and extensions of the Lease. In the event of any inconsistency between the terms and conditions of this Memorandum and the terms and conditions of the Lease, the terms and conditions of the Lease will govern and control.

6. Applicable Law. This Memorandum shall be governed, construed, performed and enforced in accordance with the laws of the State of California (excluding principles of conflict of law).

7. Counterparts. This Memorandum may be executed simultaneously in two or more counterparts, each of which shall be deemed original and all of which, when taken together, shall constitute one in the same document. The signature of any party to any counterpart shall be deemed a signature too, and may be appended to, any other counterpart.

[signature page follows] [The remainder of this page intentionally left blank]

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

CCSF

THE CITY COLLEGE OF SAN FRANCISCO

By Name_____________________________________ Its

TENANT

33 GOUGH, LLC a Delaware limited liability company

By: Integral 33 Gough, LLC a Georgia limited liability company Manager

By: _________________________________ Christopher H. Martorella, Manager

By: 33 Gough Manager, LLC, a California limited liability company Manager By: _________________________________ John Clawson, Manager

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EXHIBIT A

Description of Property

Real property in the City and County of San Francisco, State of California, described as follows:

Beginning at a point on the Northerly line of McCoppin Street, distant thereon 232.667 feet Easterly from the Easterly line of Valencia Street; running thence at a right angle to the said Northerly line of McCoppin Street Northerly 225.229 feet to Southwesterly terminus of Stevenson Street, as established by Resolution No. 8325 of the Board of Supervisors of the City and County of San Francisco, approved by the Mayor on February 2, 1949, closing and abandoning a portion of Stevenson Street; thence Southeasterly along said terminus line 6 feet, more or less, to a point on the Southeasterly line of Stevenson Street; thence Northeasterly along said Southeasterly line of Stevenson Street 69 feet, more or less, to the Southwesterly line of Gough Street, as shown on the Map entitled, "Map showing the opening of Gough Street from Market Street to Otis & McCoppin Streets and the portion of Crocker Street, the name of which is changed to Gough Street", filed July 13, 1950, in the Office of the Recorder of the City and County of San Francisco, State of California, in Book "R" of Maps, at Page 5; thence Southeasterly along said Southwesterly line of Gough Street, as shown on said map 361.664 feet to the Northerly line of McCoppin Street; thence Westerly along said Northerly line of McCoppin Street 285.3005 feet to the point of beginning.

Being a portion of Mission Block No. 14. A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California ) County of San Francisco )

On ____________________, before me, ____________________________, a Notary Public, personally appeared _______________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature

SMRH:480760344.1 -3- OLD: 479473041.1 012317 NEW: 480382513.6

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California ) County of San Francisco )

On ____________________, before me, ____________________________, a Notary Public, personally appeared _______________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature

SMRH:480760344.1 -1- OLD: 479473041.1 012317 NEW: 480382513.6

SMRH:480760344.1 G-F-1 OLD: 479473041.1 012317 NEW: 480382513.6

EXHIBIT G

Standard Discretionary Regulatory Conditions

SMRH:480760344.1 -2- OLD: 479473041.1 012317 NEW: 480382513.6

Summary report: Litéra® Change-Pro TDC 10.0.0.27 Document comparison done on

1/23/2017 10:34:01 AM Style name: SMRH Standard Intelligent Table Comparison: Active Original DMS: iw://DMS_PHX/WEST/479473041/1 Modified DMS: iw://DMS_PHX/WEST/480382513/6 Changes: Add 415 Delete 473 Move From 0 Move To 0 Table Insert 13 Table Delete 32 Table moves to 0 Table moves from 0 Embedded Graphics (Visio, ChemDraw, Images etc.) 2 Embedded Excel 0 Format changes 0 Total Changes: 935