Built-to-Suit Lease

BUILD-TO-SUIT LEASE



Landlord: Britannia Hacienda V Limited Partnership



Tenant: ProBusiness, Inc.



Date: September 27, 1996



TABLE OF CONTENTS



1. PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Premises . . . . . . . . . . . . . . . . . 1

1.2 Landlord's Reserved Rights . . . . . . . . 1

1.3 First Refusal Right . . . . . . . . . . . . 2



2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 Term . . . . . . . . . . . . . . . . . . . 3

2.2. Early Possession . . . . . . . . . . . . . 3

2.3. Delay In Possession . . . . . . . . . . . . 4

2.4. Construction . . . . . . . . . . . . . . . 4

2.5 Acknowledgement Of Lease Commencement . . . 5

2.6 Holding Over . . . . . . . . . . . . . . . 5

2.7 Option To Extend Term . . . . . . . . . . . 6



3. RENTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.1. Minimum Rental . . . . . . . . . . . . . . 6

3.2. Late Charge . . . . . . . . . . . . . . . . 9



4 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.1. Personal Property. . . . . . . . . . . . . 10

4.2. Real Property . . . . . . . . . . . . . . . 10



5. OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 10

5.1. Payment Of Operating Expenses . . . . . . . 10

5.2. Definition Of Operating Expenses . . . . . 11

5.3. Determination Of Operating Expenses . . . . 13

5.4. Final Accounting For Lease Year . . . . . . 13

5.5. Proration . . . . . . . . . . . . . . . . . 14



6. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6.1. Payment . . . . . . . . . . . . . . . . . . 14

6.2. Interruption . . . . . . . . . . . . . . . 14



7. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7.1. Right To Make Alterations . . . . . . . . . 14

7.2. Title To Alterations . . . . . . . . . . . 15

7.3. Tenant Fixtures . . . . . . . . . . . . . . 15

7.4. No Liens . . . . . . . . . . . . . . . . . 15



8. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . 15

8.1. Landlord's Work . . . . . . . . . . . . . . 15

8.2. Tenant's Obligation For Maintenance . . . . 16

(a) Good Order, Condition And Repair . . . 16

(b) Landlord's Remedy . . . . . . . . . . . 16

(c) Condition Upon Surrender . . . . . . . 16



9. USE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . 17

9.1. Permitted Use . . . . . . . . . . . . . . . 17

9.2. [Omitted.] . . . . . . . . . . . . . . . . 17

9.3. No Nuisance . . . . . . . . . . . . . . . . 17

9.4. Compliance With Laws . . . . . . . . . . . 17





9.5. Liquidation Sales . . . . . . . . . . . . . 17

9.6. Environmental Matters . . . . . . . . . . . 17



10. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . 18

10.1. Insurance . . . . . . . . . . . . . . . . . 18

10.2. Quality Of Policies And Certificates . . . 18

10.3. Workers' Compensation . . . . . . . . . . . 19

10.4. Waiver Of Subrogation . . . . . . . . . . . 19

10.5. Increase In Premiums . . . . . . . . . . . 19

10.6. Indemnification . . . . . . . . . . . . . . 19

10.7. Blanket Policy . . . . . . . . . . . . . . 20



11. SUBLEASEAND ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . 20

11.1. Assignment And Sublease Of Premises . . . . 20

11.2. Rights Of Landlord . . . . . . . . . . . . 20



12. RIGHT OF ENTRY AND QUIET ENJOYMENT . . . . . . . . . . . . . . 21

12.1. Right Of Entry . . . . . . . . . . . . . . 21

12.2. Quiet Enjoyment. . . . . . . . . . . . . . 21



13. CASUALTY AND TAKING . . . . . . . . . . . . . . . . . . . . . . 21

13.1. Termination Or Reconstruction . . . . . . . 21

13.2. Tenant's Rights . . . . . . . . . . . . . . 22

13.3. Lease To Remain In Effect . . . . . . . . . 22

13.4. Reservation Of Compensation . . . . . . . . 23

13.5. Restoration Of Fixtures . . . . . . . . . . 23



14. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

14.1. Events Of Default . . . . . . . . . . . . . 23

(a) Abandonment . . . . . . . . . . . . . . 23

(b) Nonpayment . . . . . . . . . . . . . . 23

(c) Other Obligations . . . . . . . . . . . 23

(d) General Assignment . . . . . . . . . . 23

(e) Bankruptcy . . . . . . . . . . . . . . 24

(f) Receivership . . . . . . . . . . . . . 24

(g) Attachment . . . . . . . . . . . . . . 24

(h) Insolvency . . . . . . . . . . . . . . 24

14.2. Remedies Upon Tenant's Default . . . . . . 24

14.3. Remedies Cumulative . . . . . . . . . . . . 25



15. SUBORDINATION, ATTORNMENT AND SALE . . . . . . . . . . . . . . 25

15.1. Subordination To Mortgage . . . . . . . . . 25

15.2. Sale Of Landlord's Interest . . . . . . . . 25

15.3. Estoppel Certificates . . . . . . . . . . . 26

15.4. Subordination to CC&R's . . . . . . . . . . 26



16. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

16.1. Deposit . . . . . . . . . . . . . . . . . . 26



17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27

17.1. Notices . . . . . . . . . . . . . . . . . . 27

17.2. Successors And Assigns . . . . . . . . . . 28

17.3. No Waiver . . . . . . . . . . . . . . . . . 28

17.4. Severability . . . . . . . . . . . . . . . 28

17.5. Litigation Between Parties . . . . . . . . 28

17.6. Surrender . . . . . . . . . . . . . . . . . 28

17.7. Interpretation . . . . . . . . . . . . . . 28

17.8. Entire Agreement . . . . . . . . . . . . . 28

17.9. Governing Law . . . . . . . . . . . . . . . 28

17.10. No Partnership . . . . . . . . . . . . . . 28

17.11. Financial Information . . . . . . . . . . . 28







-ii- 17.12. [Omitted.] . . . . . . . . . . . . . . . . 29

17.13. Time . . . . . . . . . . . . . . . . . . . 29

17.14. Rules And Regulations . . . . . . . . . . . 29

17.15. Brokers . . . . . . . . . . . . . . . . . . 29

17.16. Memorandum Of Lease . . . . . . . . . . . . 29

17.17. Corporate Authority . . . . . . . . . . . . 29

17.18. Execution and Delivery . . . . . . . . . . 30

17.19. Stock Warrants . . . . . . . . . . . . . . 30

17.20. Survival . . . . . . . . . . . . . . . . . 30

17.21. Consents . . . . . . . . . . . . . . . . . 30

17.22. Landlord Defaults . . . . . . . . . . . . . 30











EXHIBIT A Real Property Description



EXHIBIT B Site Plan



EXHIBIT C Construction

C-1: First Floor Plan

C-2: Second Floor Plan

C-3: Finish Specifications



EXHIBIT D Construction Timeline



EXHIBIT E Acknowledgement of Lease Commencement





















-iii-

BUILD-TO-SUIT LEASE





THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of the 27th day of September, 1996, by and between BRITANNIA HACIENDA V LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter called "Landlord") and PROBUSINESS, INC., a California corporation (hereinafter called "Tenant").



THE PARTIES AGREE AS FOLLOWS:



1. PREMISES



1.1 Premises.



(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the premises (the "Premises") consisting of a building, of approximately 129,322 square feet (the "Building") to be constructed by Landlord pursuant to the terms of this Lease on a portion of the real property described in Exhibit A attached hereto (the "Property"). The approximate location of the Building on the Property and the approximate layout of the other site improvements to be constructed by Landlord on the Property are depicted in the site plan attached hereto as Exhibit B (the "Site Plan"). The parking areas, driveways, sidewalks, landscaped areas and other portions of the Property that lie outside the exterior walls of the Building (excluding any additional buildings depicted on the Site Plan or otherwise constructed on the Property by Landlord from time to time), as depicted on the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the "Common Areas"; provided, however, that the Common Areas shall not be construed to include any part of the portion of the Property designated as Phase V or Phase VII on the Site Plan until such time as (x) the construction of the Common Area improvements contemplated for and located on such Phase has been completed in all material respects and such improvements are ready and available for use, and (y) the construction of the building(s) contemplated for and located on such Phase is substantially complete (except for "punch list" items which do not materially impair or interfere with the use of such building(s)).



(b) As an appurtenance to Tenant's leasing of the Premises pursuant to Section 1.1 (a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas (as they exist from time to time) and all easements, access rights and similar rights and privileges relating to or appurtenant to the Property and created or existing from time to time under any easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Property, subject however to any limitations applicable to such rights and privileges under applicable law and/or under the written agreements creating such rights and privileges.



1.2. Landlord's Reserved Rights. Landlord reserves, in addition to the right of entry set forth in Section 12.1 hereof, the following rights, exercisable from time to time in Landlord's discretion: (i) to install, use, maintain, repair and replace pipes, ducts, conduits, wires and appurtenant meters and other equipment above the ceiling surfaces, below the floor surfaces or within the walls of the Building in locations which will not materially interfere with Tenant's use thereof; (ii) to relocate any pipes, ducts, conduits, wires and appurtenant meters and equipment located within or outside the Building; (iii) to construct, alter or add to other buildings or improvements on the Property; (iv) to build adjoining to the Property; (v) to lease any part of the Property for the construction of improvements or buildings; (vi) to make changes to the Common Areas, including (but not limited to) changes in the location, size or shape of any portion of the Common Areas, and to relocate parking spaces on the Property; (vii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes, provided that reasonable parking and reasonable access to the Building remain available; (viii) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Property or any











portion thereof; and (ix) to do and perform such other acts with respect to the Common Areas and the Property as may be necessary or appropriate; provided, however, that the exercise by Landlord of its rights under this Section 1.2 shall not, without Tenant's prior written consent, (x) materially reduce the parking ratio for the Property below that shown on the Site Plan, nor (y) reduce the number of parking spaces on the portion of the Property designated as Phase VI on the Site Plan (other than on a temporary basis incidental to construction or maintenance activities of Landlord on the Property, in which event Landlord shall exercise reasonable efforts to minimize the number of parking spaces affected by such temporary activities), nor (z) make any other change in the Site Plan that would have a material adverse effect on Tenant's use of the Premises. Moreover, Landlord shall not exercise rights reserved to it pursuant to this Section 1.2 in such a manner as to materially impair Tenant's ability to conduct its activities in the normal manner, or in such a manner as to cause any material diminution of Tenant's rights or any material increase in Tenant's obligations under this Lease; provided, however, that the foregoing shall not limit or restrict Landlord's right to undertake reasonable construction activity and Tenant's use of the Premises shall be subject to reasonable temporary disruption incidental to such activity diligently prosecuted.



1.3 First Refusal Right.



(a) Beginning on the date on which Tenant takes occupancy of the entire Premises (including the second phase of approximately 40,000 square feet as described in Exhibit C) and continuing for the remaining term of this Lease (including any duly exercised extended terms), Landlord shall not lease any space in any building(s) existing or to be built from time to time on the portion of the Property designated as Phase V on the Site Plan, except in compliance with this Section 1.3; and beginning on the date of this Lease and continuing for the remaining term of this Lease (including any duly exercised extended terms), Landlord shall not lease any space in any building(s) existing or to be built from time to time on the portion of the Property designated as Phase VII on the Site Plan, except in compliance with this Section 1.3; provided, however, that the foregoing restrictions shall not apply during any period in which Tenant is in default under this Lease in any material respect.



(b) If Landlord intends, during any applicable period described in Section 1.3(a), to lease any space in any of the buildings existing or to be built on Phase V or Phase VII of the Property from time to time, and if Tenant is not then in default under this Lease in any material respect, Landlord shall give written notice of such intention to Tenant, specifying the material terms on which Landlord proposes to lease such space (the "Offered Space"), and shall offer to Tenant the opportunity to lease the Offered Space on the terms specified in Landlord's notice. Landlord shall not need to have a bona fide written offer from a prospective tenant in order to give such a notice, and such notice may, in Landlord's discretion, identify a range of sizes, durations, rental rates, tenant improvement allowances and other material terms on which Landlord is willing to lease the Offered Space. Tenant shall have ten (10) business days after receipt of such notice from Landlord in which to accept such offer by written notice to Landlord; if Landlord's notice designated alternative terms or a range of terms, Tenant's acceptance shall specify which alternative, within the offered range, is being accepted by Tenant. Upon such acceptance by Tenant, the Offered Space (or applicable portion thereof) shall be leased to Tenant on the terms set forth in Landlord's notice and elected by Tenant (subject to the provisions of Section 1.3)(c)) and on the additional terms and provisions set forth herein (except to the extent inconsistent with the terms set forth in Landlord's said notice) and the parties shall promptly execute an amendment to this Lease adding the Offered Space to the Premises and making any appropriate amendments to provisions of this Lease to reflect different rent and other obligations applicable to the Offered Space under the terms of Landlord's said notice and Tenant's acceptance. If Tenant does not accept Landlord's offer within the allotted time, Landlord shall thereafter have the right to lease the Offered Space or any portion thereof to a third party, at any time within one hundred eighty (180) days after Tenant's failure to accept Landlord's offer, at a minimum rental and on other terms and conditions not more favorable to the lessee than the minimum rental and other terms offered to Tenant in Landlord's said notice. If Tenant does not accept Landlord's offer, then to the extent Landlord does not lease the Offered Space to a third party within such 180-day period, Landlord shall again be required to comply with the provisions of this Section 1.3 prior to any further leasing of the Offered Space or any portion thereof.











(c) Notwithstanding any other provisions of this Section 1.3, if the terms (or range of terms) offered by Landlord to Tenant with respect to the Offered Space do not include an expiration date which is coterminous with the then current term of this Lease, then Tenant's acceptance (if any) of Landlord's offer may take any of the following three forms: (i) Tenant may accept the terms (or an alternative within the range of terms, if applicable) offered by Landlord, without regard to the non-coterminous nature of the respective lease terms for the Offered Space and for the initial Premises hereunder; or (ii) Tenant may accept the terms (or an alternative within the range of terms, if applicable) offered by Landlord with respect to the Offered Space and concurrently extend the then current term of this Lease with respect to the initial Premises to terminate concurrently with the lease term for the Offered Space, in which event such extension by Tenant shall be deemed to be a permissible early exercise of the extension option set forth in Section 2.7 hereof, without regard to the time limits set forth therein, and the rent for the initial Premises for such extended term shall be determined in accordance with Section 3.1(e) hereof for any portion of such extended term falling within the First five (5) years after the original expiration date of this Lease, and shall be determined in accordance with Section 3.1(f) hereof for any portion of such extended term falling more than five (5) years after the original expiration date of this Lease; or (iii) Tenant may elect to lease the Offered Space for a term coterminous with the then remaining term of this Lease with respect to the initial Premises, in which event (x) Landlord shall have no obligation to improve the Offered Space or provide any tenant improvement allowance for the Offered Space, regardless of any contrary terms set forth in Landlord's original notice to Tenant, (y) the "minimum rent" for the Offered Space shall be the fair market rental value thereof, in the then existing condition of such space, which fair market rental value shall be determined promptly in accordance with the procedure described in Section 3.1(e) hereof (but at 100% of fair market rental value rather than 95%), and (z) Tenant's lease of the Offered Space shall otherwise be on the terms set forth in Landlord's notice and on the additional terms and provisions set forth herein (except to the extent inconsistent with the terms set forth in Landlord's said notice).



(d) To the extent Tenant elects, pursuant to clause (ii) of Section 1.3(c) hereof, an early exercise of one or both extended terms under Section 2.7 hereof in whole or in part, then (A) the determination of the rent for the initial Premises for the applicable extended term (or portion thereof) shall be made during the period commencing six (6) months before the commencement of the applicable extended term, pursuant to the procedure in Section 3.1(e) or 3.1(f) hereof, as applicable, and (B) to the extent Tenant has exercised its option as to only a portion of either extended term, then the unexercised portion of such extended term shall be deemed to remain subject to a continuing extension option by Tenant, which remaining option shall be exercisable in accordance with Section 2.7 hereof not more than eight (8) months and not less than six (6) months prior to the expiration of the initial portion of such extended term already elected by Tenant under clause (ii) of Section 1.3(c) hereof.



2. TERM



2.1. Term. The term of this Lease shall commence on the earlier to occur of (i) the date which is five (5) days after the date Landlord notifies Tenant that Landlord's work pursuant to Section 2.4 and Exhibit C on the Building shell and core and on the first phase (approximately 90,000 square feet) of interior improvements is substantially complete and such work is in fact substantially complete (but in no event earlier than July 1, 1997), or (ii) the date Tenant takes occupancy of the Premises (except as otherwise provided in Section 2.2), the earlier of such dates being herein called the "Commencement Date," and shall end on the day immediately preceding the date eleven (11) years thereafter, unless sooner terminated or extended as hereinafter provided. Assuming execution of this Lease by October 1, 1996 and approval of full plans, specifications and working drawings by December 1, 1996, the parties presently estimate that the Commencement Date will be no later than September 1, 1997. For purposes of this Section 2.1, Landlord's work shall be deemed to be "substantially complete" when all of the following have occurred: (A) all improvements to be constructed by Landlord as part of the Building shell and core and the first phase (approximately 90,000 square feet) of interior improvements, pursuant to Exhibit C, have been completed except for "punch list" items which do not materially, interfere with Tenant's ability to utilize the First phase (approximately 90,000 square feet) of the Premises for their intended purpose; (B) the City of Pleasanton has issued a certificate of occupancy for the first phase (approximately 90,000 square feet) of the Premises; (C) all utilities reasonably











necessary for Tenant's use of the first phase approximately, 90,000 square feet) of the Premises for their intended purpose are connected and available for use at the Premises; and (D) all improvements to be constructed by Landlord as part of the Common Areas contemplated for and located on Phase VI of the Property as shown on the Site Plan have been completed, except for "punch list" items which do not materially interfere with Tenant's ability to utilize the Premises for their intended purpose, and are available for use by Tenant.



2.2. Early Possession. If Landlord permits Tenant to occupy, use or take possession of the Premises prior to the Commencement Date determined under Section 2.1, such occupancy, use or possession shall be subject to and upon all of the terms and conditions of this Lease, including the obligation to pay rent and other charges, unless Landlord and Tenant agree otherwise; provided, however, that such early possession shall not advance or otherwise affect the Commencement Date or termination date determined under Section 2.1; provided further, that if Tenant takes such early possession solely for the purpose of installing fixtures, equipment, furniture and furnishings and other similar work preparatory to the commencement of business in the Premises (which early possession Landlord shall be required to offer to Tenant at least three (3) weeks prior to the estimated date for substantial completion of Landlord's work as contemplated in Section 2.1 hereof), Tenant shall not be required to pay rent or Operating Expenses by reason of such possession until the Commencement Date otherwise occurs; and provided further, that Tenant shall not interfere with or delay Landlord's contractors by such early possession and shall indemnify, defend and hold harmless Landlord and its agents and employees from and against any and all claims, demands, liabilities, actions, losses, costs and expenses, including (but not limited to) reasonable attorneys' fees, arising out of or in connection with Tenant's early entry upon the Premises hereunder.



2.3 Delay In Possession. Landlord agrees to use its best reasonable efforts to pursue and complete the work described in Section 2.4 and Exhibit C promptly, diligently, and within the respective time periods set forth in the construction timeline attached hereto as Exhibit D and incorporated herein by this reference, as such timeline may be modified from time to time by mutual agreement of Landlord and Tenant, and subject to the effects of any delays caused by or attributable to Tenant or any other circumstances beyond Landlord's reasonable control (excluding any Financial inability); provided, however, that except to the extent caused by a material default by Landlord of its obligations set forth in this Lease (including, but not limited to, its obligations set forth in this Section 2.3 and in Section 2.4 and Exhibit C), Landlord shall not be liable for any damages caused by any delay in the completion of such work, nor shall any such delay affect the validity of this Lease or the obligations of Tenant hereunder.



2.4. Construction.



(a) The obligation of Landlord to construct and improve the Premises for occupancy by Tenant hereunder, and to construct related site improvements in the Common Areas for use by Tenant, is set forth in Exhibit C attached hereto and incorporated herein by this reference. Except as set forth in this Section 2.4 and in Exhibit C, Landlord shall have no responsibilities ...