EXHIBIT 10.1

LEASE AGREEMENT

(USA PARKWAY DISTRIBUTION CENTER/McCARRAN, NV)

BY AND BETWEEN

US REAL ESTATE LIMITED PARTNERSHIP,

a Texas limited partnership,

as Landlord,

and

ZULILY, INC., a Delaware corporation,

as Tenant

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEMISE OF PREMISES

     1   

1.1

  Premises      1   

1.2

  Delivery by Landlord      1   

1.3

  Re-Measurement of the Premises      2   

ARTICLE II LEASE TERM

     3   

2.1

  Term      3   

2.2

  Extension Options      3   

ARTICLE III RENT

     4   

3.1

  Base Rent      4   

3.2

  Additional Rent      4   

3.3

  Option Term Rent      4   

3.4

  [Intentionally omitted]      4   

3.5

  Interest and Late Charge      4   

ARTICLE IV OPERATING EXPENSES

     5   

4.1

  Operating Expenses      5   

4.2

  Operating Expense Reconciliation      6   

4.3

  Operating Expense Exclusions      6   

4.4

  Budget      8   

4.5

  Audit      8   

ARTICLE V TAXES AND ECONOMIC INCENTIVES

     8   

5.1

  Taxes      8   

5.2

  Incentives Agreements/Declaration      9   

ARTICLE VI INSURANCE

     10   

6.1

  Landlord’s Insurance      10   

6.2

  Tenant’s Insurance      10   

6.3

  Policy Requirements      11   

6.4

  Waiver of Subrogation      11   

ARTICLE VII UTILITIES

     12   

7.1

  Utilities      12   

ARTICLE VIII USE

     12   

8.1

  Use      12   

ARTICLE IX CONDITION, MAINTENANCE AND REPAIRS

     12   

9.1

  Landlord’s Repairs      12   

9.2

  Tenant’s Repairs      13   

9.3

  Compliance with Legal Requirements      14   

9.4    

  Fixtures      14   

 

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9.5

  [Intentionally omitted]      14   

9.6

  Landlord’s Warranties      15   

9.7

  Landlord Indemnity Regarding Warranties      16   

9.8

  Tenant Warranties      16   

9.9

  Tenant Indemnity Regarding Warranty      16   

ARTICLE X TENANT-MADE ALTERATIONS

     17   

10.1

  Alterations      17   

10.2

  Indemnity      18   

ARTICLE XI DAMAGE OR DESTRUCTION

     18   

11.1

  Damage      18   

11.2

  Restoration      19   

11.3

  Casualty During Last Two Lease Years      19   

11.4

  Rent Abatement      19   

ARTICLE XII EMINENT DOMAIN

     20   

12.1

  Condemnation      20   

ARTICLE XIII ASSIGNMENT AND SUBLETTING

     20   

13.1

  Landlord Consent      20   

13.2

  Related Assignment      21   

13.3

  Tenant Notice      21   

13.4

  No Deemed Consent      22   

ARTICLE XIV INDEMNIFICATION

     22   

14.1

  Tenant’s Indemnity      22   

14.2

  Landlord Indemnity      23   

ARTICLE XV LIENS

     23   

15.1

  Lien Claims      23   

15.2

  Landlord’s Right to Cure      24   

15.3

  Waiver of Landlord’s Lien      24   

ARTICLE XVI DEFAULT AND REMEDIES

     24   

16.1

  Tenant’s Default      24   

16.2

  Landlord’s Remedies      25   

16.3

  Reentry to Premises      26   

16.4

  Damages Without Lease Termination      26   

16.5

  Damages Upon Lease Termination      26   

16.6

  Survival of Tenant Obligations      27   

16.7

  Waivers      27   

16.8

  Suits to Recover Damages      27   

16.9

  Cumulative Remedies      28   

16.10

  Landlord’s Right to Perform Tenant’s Obligations      28   

16.11

  Security Deposit      28   

16.12    

  Landlord Costs and Expenses of Litigation      30   

 

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16.13

  Tenant Costs and Expenses of Litigation      30   

16.14

  Remedies Upon Landlord’s Default      30   

ARTICLE XVII QUIET ENJOYMENT

     31   

17.1

  Covenants of Quiet Enjoyment      31   

ARTICLE XVIII SUBORDINATION

     31   

18.1

  Subordination and Attornment      31   

ARTICLE XIX TRANSFERS BY LANDLORD

     32   

19.1

  Transfers of Landlord’s Interest      32   

ARTICLE XX HAZARDOUS SUBSTANCES

     32   

20.1

  Compliance With Environmental Requirements      32   

20.2

  Definitions      33   

20.3

  Storage and Use of Permitted Hazardous Materials      34   

20.4

  Notices      34   

20.5

  Indemnification by Tenant      34   

20.6

  Landlord Indemnity and Remediation      36   

20.7

  Remediation of Third Party Contamination      36   

ARTICLE XXI MEMORANDUM OF LEASE

     37   

21.1

  Memorandum of Lease      37   

ARTICLE XXII SURRENDER

     37   

22.1

  Condition      37   

22.2

  Removal of Tenant’s Fixtures, Equipment and Personality      37   

22.3

  Holdover      38   

ARTICLE XXIII MISCELLANEOUS

     38   

23.1

  Severability      38   

23.2

  Non-Waiver of Default      38   

23.3

  Recording      38   

23.4

  Notice      38   

23.5

  Successors and Assigns      39   

23.6

  Time is of the Essence      39   

23.7

  Partial Invalidity      39   

23.8

  Interpretation      39   

23.9

  Headings, Captions and References      40   

23.10

  Business Days      40   

23.11

  Brokerage Commissions      40   

23.12

  Delinquency Rate      40   

23.13

  Governing Law      40   

23.14

  Relationship of Parties      40   

23.15

  Estoppel Certificates      40   

23.16

  Joint Effort      41   

23.17

  Entire Agreement      41   

23.18

  Landlord Liability      41   

23.19

  Entry by Landlord      41   

23.20    

  Acquisition Contingency      42   

 

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LEASE AGREEMENT

(USA Parkway Distribution Center/McCarran, NV)

THIS LEASE AGREEMENT (this “Lease”) is dated as of January __, 2014 for
reference purposes, but is made and entered into as of the Effective Date (as
hereinafter defined in Section 2.1 below) by and between US REAL ESTATE LIMITED
PARTNERSHIP, a Texas limited partnership, having an address of 9830 Colonnade
Boulevard, Suite 600, San Antonio, Texas 78230-2239 (“Landlord”) and ZULILY,
INC, a Delaware corporation, having an address of 2200 1st Avenue South,
Seattle, Washington 98134, Attention: Bob Spieth and General Counsel (“Tenant”).

ARTICLE I

DEMISE OF PREMISES

1.1 Premises. For and in consideration of the covenants and agreements contained
herein and other valuable consideration, Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord to have and to hold upon the following terms
and conditions, the land, being comprised of approximately 48.08 acres being
more particularly described on Exhibit “A” attached hereto (the “Land”), and all
of the improvements, buildings, pavement, structures, and fixtures now or
hereafter located thereon, including a warehouse/distribution building
containing approximately 707,010 square feet of ground floor (“Building”) area
to be constructed by Landlord on the Land pursuant to the Development Agreement
as hereinafter defined, together with all rights, easements and appurtenances
pertaining thereto, and all trees, bushes, landscaping and foliage thereon, and
having a street address of 3200 USA Parkway, McCarran, Nevada 89434
(collectively, the “Premises”). Tenant hereby accepts the Premises, subject to
Landlord’s completion of the improvements (“Landlord Improvements” or “Initial
Improvements”), required to be constructed by Landlord pursuant to the
Development Agreement by and between Tenant and Landlord of even date herewith
(“Development Agreement”), and subject to the Permitted Exceptions described in
Exhibit “C” attached hereto (the “Permitted Exceptions”), (including but not
limited to that certain Declaration of Covenants, Conditions and Restrictions
for Tahoe-Reno Industrial Center recorded on September 25, 1998, under file
No. 83412, Official Records of Storey County, Nevada (the “Declaration”).
Landlord shall not amend the Declaration or Permitted Exceptions without the
prior consent of the Tenant, which shall not be unreasonably withheld.

1.2 Delivery by Landlord. Landlord agrees to deliver the Premises to Tenant upon
Substantial Completion (as such term is defined in the Development Agreement)
including Substantial Completion of the Initial Improvements in conformance with
the plans and specification described in the Development Agreement (“Approved
Plans”). Notwithstanding the foregoing, Landlord agrees that Tenant may enter
the Premises at any time after the Early Occupancy Date (as defined in the
Development Agreement) for the purpose of completing any improvements to be
constructed by Tenant pursuant to the Development Agreement (“Tenant
Improvements”) and preliminary preparatory tasks of installing Tenant’s
furniture, fixtures, equipment, and systems (collectively, “Tenant’s Property”)
in the Premises, such as installing phone systems, furniture, racking,
telecommunications, and other equipment, and

 

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accepting product; provided, however, that any entry onto the Premises by Tenant
shall be subject to all applicable Legal Requirements governing Tenant’s right
to occupy or perform work in the Premises and all of the terms and provisions of
the Development Agreement and this Lease other than the provision requiring
Tenant to pay Base Rent, which shall not be payable for the period prior to the
Commencement Date; further provided, however, Tenant agrees not to interfere
with the construction of the Initial Improvements to be constructed by Landlord
pursuant to the Development Agreement. In the event that Tenant’s activities in
the Premises prior to Substantial Completion interfere with Landlord’s
construction of the Initial Improvements, if such interfering activity continues
following two (2) business days’ written notice from the Landlord, Landlord
shall deliver written and verbal notice to Tenant, and such activity shall
constitute a “Tenant Delay” as more specifically described in the Development
Agreement.

Notwithstanding the foregoing, if Landlord fails to achieve Substantial
Completion of the Premises and deliver possession of the Premises to Tenant on
or before February 1, 2015, other than due to Tenant Delay or Force Majeure
Delay [Force Majeure Delay not to exceed one hundred twenty (120) days for
purposes of this provision] (all as defined in the Development Agreement),
Tenant shall have the right to terminate the Lease upon thirty (30) days’
written notice to Landlord, unless Substantial Completion is achieved during
such 30-day period. In such event, the Letter of Credit (defined below) shall be
withdrawn and canceled, Landlord shall pay Tenant the accumulated Liquidated
Damages (as defined in the Development Agreement), and, thereafter, neither
party shall have any further obligations to the other under this Lease or the
Development Agreement.

1.3 Re-Measurement of the Premises. The leasable area of the Premises shall be
based on the square footage as determined by certificate of Landlord’s architect
or surveyor upon Substantial Completion of the Premises, but subject to
adjustment in the event that Tenant measures the Premises, as set forth below,
and shall include all the area within the exterior face of the demising walls.
Such square footage shall be used in all calculations based on square footage
throughout this Lease, unless Tenant notifies Landlord of a deviation within
thirty (30) days after the Commencement Date, based on the measurement of an
architect or surveyor. If Tenant so notifies Landlord, and the parties do not
agree upon a determination within thirty (30) days thereafter, the parties shall
promptly appoint a third surveyor or architect acceptable to each, whose
determination shall be conclusive and whose compensation shall be paid by the
party whose determination differed most from that of the appointed surveyor or
architect. If the leasable area so determined varies from the leasable area set
forth in Section 1.1, the Base Rent and all other charges that are based on
leasable area of the Premises shall be adjusted as of the Commencement Date.
Notwithstanding the foregoing, for purposes of such calculations and all other
calculations made pursuant to this Lease that are based on the leasable area of
the Premises, the leasable area of the Premises shall in no event be deemed to
be greater than 707,010 square feet for purposes of calculating Base Rent.

 

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ARTICLE II

LEASE TERM

2.1 Term. The term (the “Term”) of this Lease shall commence on the date that is
the earlier of (x) the date of Substantial Completion as defined in the
Development Agreement or (y) the date Tenant actually commences business
operations from the Premises (the “Commencement Date”). “Commencing business
operations” shall mean shipping product from the Premises and shall not mean
preliminary preparatory tasks, including accepting product, installing phone
systems, furniture, racking and other equipment. The Term shall terminate at the
end of the one hundred forty-fourth (144th) full calendar month following the
Commencement Date, unless extended pursuant to Section 2.2 below or any other
express language in this Lease, or unless sooner terminated as expressly
hereinafter provided in this Lease. Following Substantial Completion of the
Initial Improvements, the parties hereto shall execute a written statement in
the form attached hereto as Exhibit “E”, and by this reference incorporated
herein (the “Lease Confirmation Certificate”) setting forth the Commencement
Date, the Expiration Date and the Base Rent schedule promptly after the same
shall have been determined in accordance with the terms of this Lease, but the
enforceability of this Lease shall not be affected should either party fail or
refuse to execute such statement. For purposes of this Lease, the term “Lease
Year” shall mean a 12-month period, with the first Lease Year commencing upon
the first day of the first full month following the Commencement Date and
including any partial month between the Commencement Date and the first day of
the first full month following the Commencement Date (if the Commencement Date
occurs other than on the first (1st) day of a calendar month), and each
subsequent Lease Year commencing on the one year anniversary of the first Lease
Year. Notwithstanding the foregoing, this Lease shall be effective and bind the
parties hereto, upon the date of last execution of this Lease by either Landlord
or Tenant (hereinafter referred to as the “Effective Date”).

2.2 Extension Options. So long as Tenant is not in default hereunder beyond any
applicable notice and cure period at the time of exercise of the applicable
extension option or at the commencement of the respective Option Term, Tenant
shall have three (3) successive options (each, an “Extension Option”) to extend
the Term of this Lease for five (5) years each (the “Option Terms”), upon the
same terms and conditions then in effect, except that Base Rent (as hereinafter
defined) shall increase as expressly provided herein, exercisable by the
delivery of written notice (each, an “Extension Notice”) to Landlord by Tenant
not less than six (6) months prior to the expiration of the then current Term,
as extended, provided, however, that if Tenant shall fail to give any such
Extension Notice within the aforesaid time limit, Tenant’s right to exercise its
option to extend shall expire and be of no further force or effect, time being
of the essence.

The Option Terms herein granted shall automatically terminate upon the earliest
to occur of (i) the expiration or termination of this Lease, (ii) the
termination of Tenant’s right to possession of the Premises upon Landlord’s
exercise of its remedies set forth in this Lease, or (iii) the failure of Tenant
to timely or properly exercise any of the Option Terms as set forth in the
immediately preceding paragraphs.

 

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ARTICLE III

RENT

3.1 Base Rent. Commencing upon the Commencement Date, Tenant covenants and
agrees to pay Landlord at the address set forth in Section 3.2, or such other
place as Landlord shall designate in writing, rent on the Premises as set forth
on Exhibit “B”, attached hereto and incorporated herein by reference(the “Base
Rent”), provided that Base Rent for the first six (6) months of the Term shall
be abated as set forth on Exhibit “B”. As set forth on Exhibit “B”, Base Rent
shall increase by one and three-fourths percent (1.75%) annually over the Base
Rent in effect during the immediately preceding Lease Year, commencing on the
first day of the thirteenth (13th) full calendar month, and continuing on each
annual anniversary thereafter.

Rent, as defined below, shall be due and payable on the Commencement Date and on
the first (1st) day of the calendar month following the Commencement Date, and
for each calendar month of the Term thereafter in advance, without offset or
deduction. For any fractional period, Rent shall be prorated on a daily basis
based on the number of days in the applicable month.

3.2 Additional Rent. In addition to Base Rent, Tenant shall pay all other
amounts as are herein described as “Additional Rent” in the manner and at the
time specified in this Lease. The term “Rent” when used in this Lease shall
include all Base Rent, as well as the charges described in this Lease as
Additional Rent and all other sums payable by Tenant hereunder. All Rent payable
hereunder shall be payable to Landlord at 9830 Colonnade Boulevard, Suite 600,
San Antonio, Texas 78230, or as Landlord may otherwise from time to time
designate in writing.

3.3 Option Term Rent. In the event that Tenant exercises its right to extend the
Term of this Lease, for each Option Term, Base Rent shall be the greater of
(i) 95% of the Fair Market Rental Value of the Premises calculated in accordance
with Exhibit “B-1”, and (ii) the Base Rent in effect during the Lease Year
immediately preceding the first Lease Year of the applicable Option Term. Base
Rent shall continue to increase by one and three-fourths percent
(1.75%) annually over the Base Rent in effect during the first Lease Year of the
applicable Option Term, commencing on the first day of the second Lease Year of
the applicable Option Term, and thereafter annually during such Option Term.

3.4 [Intentionally omitted].

3.5 Interest and Late Charge. Tenant acknowledges that its late payment of any
Base Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amount of which is extremely difficult
or impractical to fix. Such costs and expenses will include without limitation,
loss of use of money, administrative and collection costs and processing and
accounting expenses. Therefore, if any payment of Base Rent is not received by
Landlord within ten (10) days of when due, Tenant shall immediately pay to
Landlord a late charge equal to One Thousand and No/100 Dollars ($1,000.00)
(“Late Charge”), together with interest on all unpaid Base Rent from the
eleventh (11th) day after the date due through the date paid at the Delinquency
Rate (as defined in Section 23.12 below). Landlord and Tenant agree that the
Late Charge plus such interest payments represents a

 

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reasonable estimate of costs and expenses incurred by Landlord, and is fair
compensation to Landlord for, its loss suffered by such non-payment by Tenant,
provided that such compensation shall be in addition to and not in lieu of any
and all other rights and remedies of Landlord under this Lease for failure of
Tenant to pay Base Rent hereunder.

ARTICLE IV

OPERATING EXPENSES

4.1 Operating Expenses. Tenant shall pay Landlord, as Additional Rent, the
amount of all Operating Expenses incurred during the Term. During each month of
the Term, on the same date that Base Rent is due, Tenant shall pay Landlord an
amount equal to 1/12 of the annual cost, as reasonably estimated by Landlord
(which estimate Landlord may revise not more than once per year), of Operating
Expenses for the Premises (“Estimated Operating Expense Payments”). Payments
thereof for any fractional calendar month shall be prorated. The first month’s
installment of the Estimated Operating Expense Payments shall be due and payable
on the Commencement Date. Landlord shall apply all such Estimated Operating
Expense Payments against Tenant’s obligation to pay Operating Expenses in
accordance with this Lease. The term “Operating Expenses” means (i) all
reasonable costs and expenses for operation, repair, replacement and maintenance
of the Premises (except for the items that are the responsibility of the
Landlord under Section 9.1 or the Tenant under Section 9.2 and that are not
characterized under such sections as constituting a part of Operating Expenses)
and the improvements thereon including without limitation costs of maintaining
the exterior landscaping (replacement of plants, tree, shrubs, etc. shall be
excluded), the driveways and parking areas (including sealing and restriping
when necessary, and trash, snow and ice removal), exterior lighting facilities,
landscaped areas, walkways, exterior painting and caulking, exterior directional
signage, curbs, drainage strips, together with any reasonable common area
maintenance costs under the Declaration and all charges assessed against or
attributed to the Premises pursuant to the Declaration and any applicable
Permitted Exceptions, (ii) the cost of all repair and replacement obligations of
Tenant that are performed by Landlord on behalf of Tenant as set forth in
Section 9.2 of this Lease, (iii) property-management fees not to exceed two
percent (2%) per year of the annual Base Rent and Additional Rent due under this
Lease subject to adjustment pursuant to Section 9.2, (iv) all Taxes (as
hereinafter defined in Section 5.1), and (v) all costs of Insurance paid by
Landlord as provided in Section 6.1. Tenant’s obligation with respect to the
payment of Operating Expenses that constitute capital improvements or capital
additions under generally accepted accounting principles (“Capital Items”) and
that cost in excess of $100,000 (“Major Capital Items”) incurred by Landlord
after the expiration of the warranty period described in Section 9.6 below
(“Major Capital Items Costs”) shall be limited to the portion of such costs as
is allocable to the remaining Term (including any applicable Extension Terms)
and reimbursed by Tenant as follows: Landlord shall amortize such Major Capital
Items Costs (the “Amortized Costs”) on a straight line basis over the useful
life of the applicable Major Capital Item in accordance with generally accepted
accounting principles and accruing interest at an annual rate equal to the
greater of (x) three hundred fifty (350) basis points over the 10 year U.S.
Treasury Rate at the time the applicable Major Capital Items Cost is incurred,
or (y) seven percent (7%) per annum, but not more than ten percent (10%) per
annum, and Tenant shall pay to Landlord as Operating Expenses during the
remainder of the Primary Term and any Extension Terms, the monthly amortization
coming due during such portions of the Term. Notwithstanding the foregoing, for

 

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purposes of calculating Operating Expenses pursuant to this Section 4.1,
Operating Expenses (with the exception of “Uncontrollable Expenses” (defined
below)), shall not exceed for each calendar year following the first calendar
year of the Term, the total amount of such Operating Expenses for the preceding
calendar year plus four percent (4%) (on a cumulative basis, compounded
annually). Any increases in Operating Expenses not recovered by Landlord due to
the foregoing limitation shall be carried forward into all succeeding calendar
years during the Term (subject to the foregoing limitation). In order to bill
any such excess to Tenant in a future year, Landlord shall (i) show a
calculation of the excess in the statement of Operating Expenses for the year in
which the expenses are incurred (and Landlord acknowledges that Tenant may
inspect and audit Landlord’s books and records relating to such amounts as
described in this Lease even though they are not charged in such year); and
(ii) show any such amount carried forward on the statement of Operating Expenses
for each subsequent year until such amounts are billed to Tenant if permitted as
described above. The term “Uncontrollable Expenses” means the Amortized Costs
and the cost of any capital repairs or replacements that are not Major Capital
Items Costs, the cost of Code Modifications as provided in Section 9.3, expenses
relating to the cost of utilities, Insurance, Taxes, fire sprinklers, fire
protection and smoke evacuation systems, and snow and ice removal. On or before
the last month of each calendar year during the Term, Landlord shall estimate
the total amount of Operating Expenses to be paid by Tenant during the following
calendar year and Tenant shall pay to Landlord one-twelfth (1/12) of such sum as
Tenant’s Estimated Operating Expenses Payments on the first day of each calendar
month during each such calendar year, or part thereof, during the Term.

4.2 Operating Expense Reconciliation. On or before ninety (90) days following
each calendar year during the Lease Term, Landlord shall deliver to Tenant a
reasonably detailed reconciliation statement (the “Reconciliation”) showing the
calculation of the actual Operating Expenses for the prior calendar year. If
Tenant’s total payments of Operating Expenses for any year are less than actual
Operating Expenses for such year, then Tenant shall pay the difference to
Landlord within 30 days after demand, and if more, then Landlord shall retain
such excess and credit it against Tenant’s next payments or, if Tenant so
requests, refund it to Tenant, which obligation shall survive the expiration or
termination of the Lease Term. For purposes of calculating Operating Expenses, a
“calendar year” shall mean a full calendar year except the first year, which
shall begin on the Commencement Date, and the last year, which shall end on the
expiration of this Lease.

4.3 Operating Expense Exclusions. Notwithstanding anything to the contrary in
this Lease, in no event shall Tenant have any obligation to perform, pay
directly, or reimburse Landlord for any of the following items: (1) costs
covered by warranties; (2) costs of correcting defects in the design or
construction of the Premises including latent defects or the material used in
the construction of the Premises or building systems during the period of the
applicable Construction Warranties (as defined in the Development Agreement),
provided that for the purposes of this clause conditions (not occasioned by
design or construction defects) resulting from ordinary wear and tear and use or
from the misuse of Tenant or the Tenant Parties (as defined in Section 14.1)
shall not be deemed defects; (3) real estate brokers’ commissions or other costs
incurred for attracting tenants; (4) costs resulting from the gross negligence
or willful misconduct of Landlord or Landlord’s property manager or the default
of Landlord under this Lease or any other agreement affecting Landlord or the
Premises; (5) legal, accounting or professional fees and costs incurred in
connection with lease negotiations, the

 

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audit of any Landlord financial materials and requests related to any assignment
or sublease, provided that the foregoing shall not operate to exclude the
reasonable costs incurred by Landlord in connection with preparing the annual
reconciliation of the Operating Expenses by Landlord’s property manager or a
third-party accounting professional; (6) interest and principal payments or
other amortization or depreciation charges on the Building (including without
limitation the Building systems and equipment) or Premises or the indebtedness
of Landlord (other than Amortized Costs as provided above); (7) overhead and
profit paid to subsidiaries or affiliates of Landlord for management or other
services for supplies or other materials to the extent the amounts incurred are
in excess of those which would have been reasonably incurred if such supplies or
services were obtained from unrelated third parties (but this provision does not
prevent the payment of a management fee to Landlord not exceeding the amount
specified in this Article 4); (8) contributions to any political or charitable
persons or entities; (9) costs for the acquisition of sculpture, paintings or
other art objects; (10) advertising, marketing and promotion costs; (11) costs
associated with the operation of the corporation or other entity which
constitutes the Landlord, as distinguished from costs of operation of the
Building; (12) costs that are actually reimbursed to Landlord by insurance
companies or other third parties; (13) reserves; (14) costs incurred to
investigate, remove, remediate, or respond to any claim related to Hazardous
Materials except Hazardous Materials that are the Tenant’s responsibility under
Section 20); (15) the cost of insurance coverages not generally carried by
landlords of similar buildings in the area or not specified in this Lease;
(16) (a) deductibles in excess of $50,000 for commercial general liability
insurance and property insurance coverages carried by Landlord, per occurrence
and co-insurance payments, (b) deductibles for earthquake and earth movement
coverage in excess of $100,000 or 3% of the insurable value, whichever is
applicable, and (c) deductibles in excess of $100,000 for environmental or
pollution liability coverage and for other insurance coverages required or
permitted to be carried by Landlord under this Lease provided, that at Tenant’s
request, Landlord and Tenant shall confer in good faith to resolve questions or
concerns regarding the costs of the Landlord’s insurance coverage (including
without limitation the amount of insurance premiums, deductible levels selected
by the Landlord, and other aspects of Landlord’s insurance affecting the costs
of such insurance included in Operating Expenses), with the intent to reasonably
minimize the costs of Landlord’s insurance required to be paid by Tenant under
this Lease consistent with the insurance coverage carried by landlords of
similar facilities in McCarran, Nevada, provided that Landlord’s decision
regarding Landlord’s insurance coverage shall be final and binding on the
parties so long as the same is consistent with Landlord’s uniform policies of
providing insurance for similar properties; (17) interest or penalties due to
the late payment of taxes, utility bills or other costs; provided that Tenant is
not in default beyond applicable notice and cure periods under this Lease in
connection with the payment of such costs to Landlord; (18) any cost for
overtime or other expenses to Landlord in curing defaults of Landlord under this
Lease; (19) the costs including fines, penalties, and legal fees incurred due to
violations of law, contracts or title matters by Landlord, its employees,
agents, or contractors or assigns; (20) rent under any ground lease or master
lease; (21) costs incurred in connection with the financing or transfer of the
Premises or any interest therein; (22) the cost of any action that is
specifically Landlord’s sole expense under this Lease; (23) any cost incurred by
Landlord which is reimbursed by third parties; (24) estate, inheritance or
succession taxes imposed on Landlord; and (25) franchise or income taxes imposed
on Landlord except to the extent the same are in substitution of real estate
taxes. Landlord will not collect or be entitled to collect more than one hundred
percent (100%) of the Operating Expenses actually paid by Landlord in connection
with the Premises in any Lease year.

 

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4.4 Budget. Landlord or Landlord’s property manager shall provide Tenant with
the proposed budget for the Operating Expenses for each calendar year (“Budget”)
on or before November 1st of the prior year. Within ten (10) days after Tenant’s
receipt of the Budget for a particular year, Tenant may request to meet with the
Landlord or Landlord’s property manager to discuss any questions or to review
the supporting documentation for the Budget. The meeting shall occur within
thirty (30) days of Tenant’s receipt of the Budget. During that meeting, Tenant
shall have the right to request that the Landlord or its property manager defer
certain work until the following calendar year if feasible and not detrimental
to the Premises or portion thereof or to obtain additional bids from other
licensed qualified providers for a designated contracted service in an effort to
reduce costs. The property manager shall select the lowest, qualified,
responsible bid for each service.

4.5 Audit. Tenant shall have the right to conduct an audit of Operating Expenses
and/or Taxes for any calendar year and other items of Additional Rent, provided
such audit is conducted upon at least fifteen (15) days’ notice, at Tenant’s
expense, during normal business hours, at Landlord’s office and is not conducted
more than once with respect to the period in question, and provided further that
such audit is commenced within one hundred eighty (180) days of Tenant’s receipt
from Landlord of the relevant statement. If such audit reveals that Landlord has
overcharged Tenant for Operating Expenses or Taxes or any other item of
Additional Rent, Landlord shall reimburse Tenant for the amount of such
overcharge (subject to Landlord’s right to contest same) within thirty (30) days
of written notice, and if such overage with respect to any item of Additional
Rent exceeds three percent (3%) of Tenant’s proportionate share of Operating
Expenses or Taxes for any year or three percent (3%) of such other item of
Additional Rent (as the case may be), Landlord shall reimburse Tenant for
Tenant’s out-of-pocket cost of up to $5,000.00 in having such audit performed,
provided that Landlord shall not be obligated to reimburse Tenant for the
transportation and/or lodging expenses of Tenant’s auditor.

ARTICLE V

TAXES AND ECONOMIC INCENTIVES

5.1 Taxes. Landlord shall pay all Taxes that are payable with respect to the
Premises during the Lease Term, which shall be included as part of the Operating
Expenses charged to Tenant. For purposes hereof, “Taxes” means any and all of
the following which may now or hereafter be levied, assessed, imposed upon or
become a lien against or with respect to this Lease, the Premises or any part of
the Premises, or the use or occupancy of the Premises at any time during the
Term: (i) real property ad valorem taxes and assessments; (ii) charges made by
any public or quasi-public authority for improvements or betterments to the
Premises; (iii) sanitary taxes or charges, sewer or water taxes or charges;
(iv) any other governmental or quasi-governmental impositions, charges,
encumbrances, levies, assessments or taxes of any nature whatsoever related to
the Premises, whether general or special, whether ordinary or extraordinary, and
whether foreseen or unforeseen; (v) any charges, assessments or impositions with
respect to the Premises pursuant to the Declaration; (vi) any personal property
taxes imposed upon Tenant’s Property and appurtenances owned or used by Tenant
in connection

 

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with the operation of the Premises, (vii) all rental, sales, use and inventory
taxes or other similar taxes, if any, on the Rent payable by Tenant hereunder
levied or imposed by any city, county, state or other authorized governmental
body, and (viii) any penalties, fines or charges for Tenant’s failure to pay the
amounts described in (i) through (vii) above on a timely basis as required by
this Lease. Landlord shall forward to Tenant a copy of all notices, invoices and
statements relating to Taxes for the Premises. Upon ten (10) days’ prior written
notice to Tenant, Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens thereof. If Landlord
fails to contest the Taxes, Tenant may contest such taxes or may require
Landlord to contest such taxes, at Tenant’s sole cost and expense (including,
without limitation, Landlord’s reasonable attorneys’ fees and reasonable fees
payable to tax consultants and attorneys for consultation and contesting taxes);
provided, however, Tenant’s request of such contesting of Taxes shall be limited
to one request in a calendar year. If Tenant contests the Taxes, Landlord shall
cooperate in the institution and prosecution of any such proceedings of
contesting taxes and will execute any documents reasonably required therefor.
All reductions, refunds, or rebates of Taxes that have been paid or are payable
by Tenant, after Landlord’s recovery of its reasonable costs incurred in
connection with any contest, shall belong to Tenant whether as a consequence of
a Tenant proceeding or otherwise. If any tax for which Tenant is liable
hereunder is levied or assessed directly against Tenant, then Tenant shall be
responsible for and shall pay the same at such times and in such manner as the
taxing authority shall require. Tenant shall be liable for all taxes levied or
assessed against Tenant’s Property and any other personal property of Tenant
placed in the Premises, whether levied or assessed against Landlord or Tenant.
Landlord shall pay any recording fees imposed by any governmental agency or
municipality with respect to the recording of the memorandum of this Lease.
Tenant shall pay any transfer taxes or recording fees with respect to any
transfer by Tenant occurring with regard to this Lease. Landlord shall pay (or
cause a party other than Tenant to pay) any transfer taxes or recording fees
with respect to any transfer by Landlord (other than a transfer to Tenant or its
affiliate) of any interest in the Premises or any direct or indirect interests
in Landlord (and such amounts shall not be included in Operating Expenses).

5.2 Incentives Agreements/Declaration. Landlord acknowledges that Tenant may
desire to seek, at Tenant’s sole cost and expense, certain agreements with
various governmental jurisdictions, entities agencies or similar entities
(“Governmental Entities”) in connection with Tenant’s decision to conduct
business on the Premises, including, without limitation, economic development
grants in amounts computed with reference to incremental property or sales taxes
generated by the Premises (“Incentives Agreements”), and/or consents or
approvals under the Declaration related to Tenant’s use of or improvements to
the Premises permitted by this Lease (“Declaration Approvals”). Landlord agrees
that it will reasonably cooperate with Tenant’s efforts to facilitate the
Incentives Agreements and/or the Declaration Approvals provided that the same do
not impose any cost or liability on Landlord or the Premises that is not
reimbursed promptly by Tenant upon the occurrence thereof. Upon written request
of Tenant, Landlord shall document the costs and expenses incurred by Landlord
in connection with the construction of the Building or such other information or
reports related to the Premises in such manner and in such detail as may be
reasonably requested by Tenant and the Governmental Entities in order to obtain
and maintain the benefits of the Incentives Agreement. It is understood and
agreed that, unless otherwise agreed to in writing, all costs and expenses
payable by either Landlord or Tenant under any Incentives Agreements or related
to any Declaration Approvals, other than nominal administrative costs associated
with Landlord’s satisfaction of reporting requirements, if any, under any such
Incentives Agreements or with the filing of requests pursuant to the
Declaration, shall be the sole obligation of Tenant.

 

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ARTICLE VI

INSURANCE

6.1 Landlord’s Insurance. Landlord shall maintain (i) all risk (also known as
“special form”) property insurance covering the full replacement cost of the
Landlord Improvements constructed by Landlord on the Land pursuant to the
Development Agreement with building laws and ordinance endorsement; commercial
general liability insurance ISO Form CG 00 01, or its equivalent, which shall be
primary and non-contributory, shall provide coverage on an occurrence basis with
a per occurrence limit of not less than $5,000,000 for each policy year, which
limit may be satisfied by any combination of primary and excess or umbrella per
occurrence policies and name Tenant as an additional insured, and meeting the
additional requirements for commercial generally liability insurance set forth
below; and (ii) environmental insurance covering third party contamination of
the Premises with a per occurrence limit of not less than $3,000,000, which
environmental insurance may be maintained under a blanket policy covering
multiple properties of Landlord so long as the Premises are separately
identified and insured therein. Landlord may, but is not obligated to, maintain
such other insurance and additional coverages as it may deem necessary;
provided, that such additional coverages are commercially reasonable and
consistent with buildings of similar, class, quality, age and location. All such
insurance shall be included as part of the Operating Expenses charged to Tenant.
The Premises may be included in a blanket policy (in which case the cost of such
insurance allocable to the Premises will be reasonably determined by Landlord
and agreed upon by Tenant based upon the insurer’s cost calculations). Tenant
shall also reimburse Landlord for any increased premiums or additional insurance
which Landlord reasonably deems necessary as a result of changing market
conditions or Tenant’s use of the Premises.

6.2 Tenant’s Insurance. Tenant, at its expense, shall maintain from and after
the Commencement Date or any earlier date upon which Tenant enters or occupies
the Premises or any portion thereof: all risk (or “special form”) property
insurance covering the full replacement cost of all Tenant Improvements
constructed by Tenant within the Premises, any Tenant-Made Alterations and
Tenant’s Property installed or placed in the Premises by Tenant, such insurance
shall cover all such property, as well as any losses arising from new
construction, alterations, additions, renovations and repairs made by Tenant;
worker’s compensation insurance with no less than the minimum limits required by
law; employer’s liability insurance with such limits as required by law but not
less than $500,000; commercial general liability insurance ISO Form CG 00 01, or
its equivalent covering the Premises and Tenant’s use thereof against claims for
bodily injury or death and property damage occurring upon, in or about the
Premises with limits of not less than $1,000,000 per occurrence; commercial
automobile liability insurance covering all owned, non-owned and hired vehicles
with combined limits of not less than $1,000,000 per occurrence; and commercial
umbrella/excess liability insurance with limits of not less than $10,000,000 per
occurrence and in the aggregate. Tenant’s commercial general liability,
automobile liability and umbrella and excess insurance policies shall name
Landlord, Landlord’s lender (if any) and any other party

 

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reasonably designated by Landlord and agreed upon by Tenant in writing as an
additional insured(s). Landlord may from time-to-time require reasonable
increases in any such limits consistent with the insurance being required by
institutional owners of similar projects in the area, but not more frequently
than once every five (5) years. If Tenant shall fail to carry and maintain the
insurance coverages set forth in this Section 6.2, Landlord may after thirty
(30) days’ written notice to Tenant if Tenant fails to secure such coverage
within such 30-day period (unless such coverages will lapse within such 30-day
period in which event no notice shall be necessary), procure such policies and
Tenant shall promptly reimburse Landlord for the reasonable cost therefor.

6.3 Policy Requirements. The commercial liability policies required of either
party under this Lease shall provide coverage on an occurrence basis and not a
claims-made basis, be issued by insurance companies which are authorized to do
business in the state in which the Premises are located and have an A.M. Best’s
rating not less than A-VII, and provide contractual liability coverage. Each
party will endeavor to give the other party thirty (30) days’ prior written
notice before any cancellation, material change or lapse of such coverage. Each
party shall deliver certificates evidencing such policies to the other, upon the
other party’s request, at the commencement of the Lease Term and thereafter
within ten (10) days prior to the expiration or renewal of each such policy;
provided that if such certificate of insurance is not available at the
expiration of any such insurance, Tenant may, in lieu thereof, deliver to
Landlord (i) at the expiration of any such insurance a letter or email from an
authorized officer or risk manager of Tenant certifying to Landlord that such
insurance has been renewed, and (ii) within five (5) days thereafter evidence of
renewal as required above. Notwithstanding the foregoing, Tenant shall provide
certificates evidencing its insurance to Landlord prior to the earlier of the
Commencement Date or the date upon which Tenant enters and occupies the Premises
pursuant to the Development Agreement. The insurance policies provided by Tenant
for Tenant’s obligations shall be written as primary policies which do not
contribute to and are not in excess of coverage which Landlord may carry.

6.4 Waiver of Subrogation. Notwithstanding any other provision of this Lease,
neither party shall be liable to the other party or to any insurance company (by
way of subrogation or otherwise) for any loss of, or damage to, any of its
property located within the Premises or upon, or constituting a part of, the
Premises, which loss or damage arises from the perils that are insured or could
be insured against under the ISO Causes of Loss-Special Form Coverage, including
deductibles (whether or not the party suffering the loss or damage actually
carries such insurance, recovers under such insurance, or self insures the loss
or damage). Said mutual waivers shall be in addition to, and not in limitation
or derogation of, any other waiver or release contained in this Lease with
respect to any loss of, or damage to, property of the parties hereto. This
waiver applies whether or not the loss is due to the negligent acts or omissions
of Landlord or Tenant, or their respective officers, directors, employees,
agents, contractors, or invitees. If required, each party hereto agrees
immediately to give its insurance company(ies) written notice of the terms of
said mutual waivers and to have its insurance policies properly endorsed, if
necessary, to provide for such waiver of subrogation and to prevent the
invalidation of any coverage by reason of said waivers.

 

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ARTICLE VII

UTILITIES

7.1 Utilities. Tenant shall pay the applicable utility companies or governmental
agencies for all water, gas, electricity, telephone, sewer, sprinkler services,
refuse and trash collection, storm sewer and all other similar charges for and
utilities and services used or consumed on or servicing the Premises during the
Term; provided that, as a part of Landlord’s construction of the Premises,
pursuant to the Development Agreement, any so-called “tap fees”, connection fees
or impact fees in connection with the installation of such utilities shall be
the responsibility of the Landlord. Landlord shall not in any way be liable or
responsible to Tenant for any cost or damage or expense which Tenant may sustain
or incur if either the quality or character of such service is changed or is no
longer available or suitable for Tenant’s requirements except to the extent
caused by the negligence or intentional misconduct of the Landlord or Landlord’s
employees, agents, contractors or invitees. Tenant’s obligations for payment of
utilities shall commence on the Commencement Date.

ARTICLE VIII

USE

8.1 Use. The Premises may be used for the purpose of receiving, storing,
shipping distributing and selling products, materials and merchandise, for
processing customer returns, for light assembly and repairs, general warehouse
use, general office use and other ancillary and related uses. Notwithstanding
the foregoing, Tenant shall not use or permit any use of the Premises that
constitutes a Prohibited Use. For purposes hereof, a “Prohibited Use” is any use
that: (i) violates any certificate of occupancy in force for the Premises;
(ii) involves the storage, maintenance or handling of Hazardous Materials (as
defined in Section 20.2 other than a Permitted Hazardous Material (as defined in
Section 20.1) or not normally associated with a warehouse/distribution facility
of consumer goods; (iii) violates any provision of the Permitted Exceptions, or
(iv) violates any Legal Requirements. For purposes of this Lease, “Legal
Requirements” means all applicable federal, state, county and municipal
statutes, ordinances, codes, rules regulations and requirements affecting the
Premises or Tenant’s use or occupancy thereof.

ARTICLE IX

CONDITION, MAINTENANCE AND REPAIRS

9.1 Landlord’s Repairs. Subject to Articles XI and XII, Landlord shall, at its
sole cost and expense, maintain, repair and/or replace, as necessary, in good
condition, reasonable wear and tear excepted, the structural elements of the
roof, slab, foundation, and exterior walls and frame of the Building. All
maintenance, repairs and replacements to be performed by Landlord pursuant to
the preceding sentence shall comply with all Legal Requirements and any
applicable provisions of the Declaration. In addition, as a part of Operating
Expenses, Landlord shall also maintain, and repair and or replace, as necessary
to maintain the Premises in good condition and repair, (i) the skylights, roof
membrane and utility lines serving the Premises to the point of connection to
the Building, and (ii) such other portions of the Premises that are the
responsibility of Tenant to maintain pursuant to Section 9.2 below and that are
to be maintained by Landlord as an Operating Expense as expressly provided in
Section 9.2

 

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below, until such time, if ever, that Tenant elects to self-maintain as provided
therein. Notwithstanding the foregoing, damage to any such items for which
Landlord is responsible caused by Tenant, or any of its subsidiaries,
affiliates, employees, agents, contractors, licensees or invitees are expressly
excluded from Landlord’s obligation and shall be the responsibility of Tenant.

9.2 Tenant’s Repairs. Commencing on the Commencement Date, Tenant shall maintain
the Premises in good condition, reasonable wear and tear excepted, and shall be
responsible for all repairs and replacements required to be made to the Premises
or any portion thereof, except for those items that are the responsibility of
Landlord under Section 9.1 above. It is the intention of the parties that
following the Commencement Date, except as expressly provided in Sections 9.1,
11.1 and 12.1, any all maintenance, repair, replacement and other work required
with respect to the Premises shall be Tenant’s sole responsibility and Landlord
shall have no obligation or liability with respect thereto. Subject to the
rights of the Tenant to terminate the Lease as provided in Article XI and
Article XII of this Lease, and except as provided in Section 9.1, Tenant shall,
at its sole cost and expense, promptly make all necessary repairs and
replacements, ordinary as well as extraordinary, foreseen as well as unforeseen,
in and to the Premises, including, without limitation, the entire interior and
exterior of the Building, the roof, sidewalks, parking areas, railroad tracks
(if utilized by Tenant), water, sewer, gas and electricity connections, pipes,
mains and all other fixtures, machinery, apparatus, equipment and appurtenances
now or hereafter belonging to, connected with or used in conjunction with the
Premises. All such repairs and replacements shall be of first-class quality and
sufficient for the proper maintenance and operation of the Premises and shall
comply with all Legal Requirements and applicable provisions of the Declaration.
Tenant shall keep and maintain the Premises, including all improvements situated
thereon and all sidewalks, parking areas and areas adjacent thereto, safe,
secure and clean, specifically including, but not by way of limitation, snow and
ice clearance, landscaping and removal of waste and refuse matter. Except as
provided in Sections 9.1, 11.2 and 12.1, Landlord shall not be required to
furnish any services or facilities whatsoever to the Premises. Tenant hereby
assumes full and sole responsibility for condition, operation, repair,
alteration, improvement, replacement, maintenance and management of the
Premises.

Notwithstanding the foregoing, until such time as Tenant may elect to
self-maintain the Premises, Landlord agrees to perform all repairs and
replacements that are the responsibility of Tenant hereunder, the reasonable
cost of all such repairs and replacement to constitute an Operating Expense for
which Tenant is responsible for paying as provided in Section 4.1 above. Tenant
may, upon not less than one hundred twenty (120) days prior written notice to
Landlord, elect to self-maintain the Premises, in which event Landlord shall
cease to perform Tenant’s obligations under this Section 9.2; provided that in
such event Operating Expenses shall include a monthly management fee payable to
Landlord equal to $2,000 per month. Upon Tenant’s election to perform its repair
and replacement obligations under this Section 9.2, Landlord may require that
Tenant maintain throughout the remainder of the Term maintenance contracts with
contractors reasonably acceptable to Landlord covering the maintenance and
repair of the HVAC and other Building systems as may be designated by Landlord
on terms and conditions reasonably acceptable to Landlord; and Tenant shall be
responsible for performing all such maintenance obligations in a manner that
preserves all warranties affecting the Premises.

 

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9.3 Compliance with Legal Requirements. Tenant, at its own cost and expense,
shall promptly comply with any and all Legal Requirements now or hereafter
affecting and applicable to Tenant’s operations at or specific use of the
Premises or any part thereof. The foregoing obligation of Tenant shall include
Tenant’s making, at its expense, any modifications (“Tenant Code Modifications”)
required to make the Premises comply with any and all Legal Requirements, if
such compliance is due to Tenant’s specific use of the Premises or any part
thereof, or the construction of Tenant-Made Alterations. Otherwise, Landlord
shall be responsible for performing any alteration or modification of the
Premises that is made necessary by Legal Requirements of general applicability
as opposed to Tenant’s specific use of the Premises or Tenant-Made Alterations
(a “Code Modification”), and Landlord shall be entitled to reimbursement from
Tenant for the cost of any such Code Modification as an Operating Expense. If as
a result of one or more Legal Requirements it is necessary from time to time
during the Term to perform a Code Modification that (i) would be characterized
as a capital expenditure under generally accepted accounting principles and
(ii) is not made necessary as a result of the specific use being made by Tenant
of the Premises or a Tenant-Made Alteration, then (a) Landlord shall have the
obligation to perform the Code Modification, (b) the cost of such Code
Modification shall be amortized on a straight-line basis over the useful life of
the item in question in accordance with generally accepted accounting principles
at the same interest rate as is specified for Amortized Costs in Section 4.1
above, and (c) Tenant shall be obligated to pay (as Additional Rent, payable in
the same manner and upon the same terms and conditions as the Base Rent reserved
hereunder) for the portion of such amortized costs attributable to the remainder
of the Term, including any extensions thereof which are exercised by Tenant.

9.4 Fixtures. All of Tenant’s Property, including any trade fixtures, furniture,
equipment and other personal property used in connection with the operation of
Tenant’s business on the Premises that Tenant places or installs in the Premises
at its expense prior to or during the Term hereof, shall remain Tenant’s
property and shall be removed by Tenant upon termination of this Lease. Tenant
shall repair any and all damage caused by such removal at its sole cost and
expense. In the event that Tenant fails to remove said items when it vacates the
Premises, said items shall be deemed abandoned and title thereto shall
automatically vest in Landlord; provided, however, that Tenant shall pay
Landlord all reasonable costs and expenses incurred by Landlord in removing said
items from the Premises and disposing of same.

9.5 [Intentionally omitted].

 

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9.6 Landlord’s Warranties. Landlord warrants to Tenant as follows (collectively,
the “Warranties”):

(a) Landlord covenants and agrees to cause the general contractor engaged to
construct the Initial Improvements pursuant to the Development Agreement (the
“General Contractor”) to warrant that all materials and equipment furnished in
connection with the construction of the Initial Improvements, include above and
below ground elements, shall be of good quality and new unless otherwise
specified, that the Initial Improvements shall be of good quality, free from
faults and defects, in good operating condition, and that all materials and the
Initial Improvements shall be in conformance with the Approved Plans and the
terms of this Lease, which warranty shall remain in effect for one (1) year
after Substantial Completion (as defined in the Development Agreement) of the
Initial Improvements.

(b) In addition to the general warranty set forth above, Landlord covenants and
agrees to cause the General Contractor to deliver manufacturer’s warranties with
respect to the Initial Improvements, as set forth in Exhibit “D” attached hereto
and incorporated herein by reference.

(c) The warranties set forth in this Section 9.6 shall exclude damages or
defects caused by casualty or by Tenant, its employees, invitees, licensees,
contractors, subcontractors, and agents, by improper or insufficient
maintenance, by improper operation, or by normal wear and tear.

(d) Further, and not in limitation of the foregoing, to the extent that any
portion or component of the Building or any building systems require repair or
replacement during the Term, and are covered by a warranty (for example, and not
in limitation, the roof warranty), then regardless of any other provision of
this Lease and regardless of the provisions of Section 9.2, upon written request
from Tenant to Landlord, Landlord shall exercise and enforce its rights under
the warranty in question within five (5) business days and prior to expiration
of the applicable warranty period.

(e) Upon satisfaction of the Acquisition Contingency (defined below), Landlord
has fee simple title to the Land subject to no covenant, restrictions, easements
or encumbrances other than the Permitted Exceptions.

(f) The Tenant’s permitted use is an allowed use under the zoning code and other
all applicable codes and regulations of the City of McCarran.

(g) Subject to Tenant’s compliance with Legal Requirements and the Declaration
with respect to the Tenant Improvements (as defined in the Development
Agreement), the Premises shall be in compliance with all applicable Legal
Requirements and any applicable provisions of the Declaration as of the
Commencement Date and the Landlord has completed or complied with all conditions
or obligations imposed, implied or to be undertaken by the Landlord pursuant to
any zoning, subdivision, development laws or agreements with any governmental
entities in connection with the construction of the Initial Improvements.

 

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(h) To Landlord’s current actual knowledge as of the Effective Date, and in
reliance on the geotechnical report prepared for Seefried Industrial Properties,
Inc. by Black Eagle Consulting, Inc. dated December 27, 2013, Project Number
1714-01-1, the conditions of the Land, including without limitation, the soil is
adequate and suitable for construction of the Initial Improvements.

(i) To Landlord’s current actual knowledge as of the Effective Date, and in
reliance on the Phase 1 Environmental Site Assessment prepared by McGinley &
Associates, Inc. for Seefried Industrial Properties, Inc. dated December 10,
2013, for APNS 005-071-06 and 007-071-07, upon delivery to the Tenant, the
Premises shall be free of all Hazardous Materials (defined below).

(j) The individual executing the Lease and the Development Agreement on behalf
of Landlord is duly authorized to do so. Landlord has full right, power and
authority to enter into and perform its obligations under this Lease and the
Development Agreement, including the authority to Lease the Premises to Tenant.
The execution, delivery and performance of this Lease and the Development
Agreement by Landlord have been duly authorized and approved by all requisite
action of Landlord. This Lease and the Development Agreement are binding on and
enforceable against Landlord in accordance with their terms. No action, consent
or approval of any person or entity, including any creditor, investor, judicial
or administrative body, governmental authority, or other governmental body or
agency, or other party to such execution, delivery and performance by Landlord
is required.

9.7 Landlord Indemnity Regarding Warranties. Landlord agrees to hold Tenant
harmless from, and defend against (with legal counsel reasonably acceptable to
Tenant) all claims, losses, liabilities, damages, costs, and expenses,
including, without limitation, reasonable attorneys’ and consultants’ fees,
costs and expenses, but not incidental, special, punitive or consequential
damages, which may arise out of or in any way be connected with the breach or
material inaccuracy of the representation and warranties set forth in
Section 9.6.

9.8 Tenant Warranties. Tenant warrants to Landlord as follows:

(a) The individual executing the Lease and the Development Agreement on behalf
of Tenant is duly authorized to do so. Tenant has full right, power and
authority to enter into and perform its obligations under this Lease and the
Development Agreement, including the authority to Lease the Premises from
Landlord. The execution, delivery and performance of this Lease and the
Development Agreement by Tenant have been duly authorized and approved by all
requisite action of Tenant. This Lease and the Development Agreement are binding
on and enforceable against Tenant in accordance with their terms. No action,
consent or approval of any person or entity, including any creditor, investor,
judicial or administrative body, governmental authority, or other governmental
body or agency, or other party to such execution, delivery and performance by
Tenant is required.

9.9 Tenant Indemnity Regarding Warranty. Tenant agrees to hold Landlord harmless
from, and defend against (with legal counsel reasonably acceptable to Landlord)
all claims, losses, liabilities, damages, costs, and expenses, including,
without limitation, reasonable attorneys’ and consultants’ fees, costs and
expenses, but not incidental, special, punitive or consequential damages, which
may arise out of or in any way be connected with the breach or material
inaccuracy of the representation and warranties set forth in Section 9.8.

 

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ARTICLE X

TENANT-MADE ALTERATIONS

10.1 Alterations. Any alterations, additions, or improvements made by or on
behalf of Tenant to the Premises (“Tenant-Made Alterations”) shall be subject to
Landlord’s prior written consent which shall not be unreasonably withheld,
conditioned or delayed. Installation of Tenant’s furniture, fixtures and
equipment and other of Tenant’s Personal Property shall be governed by the
Development Agreement and shall not be considered Tenant-Made Alterations.
Notwithstanding the foregoing, Landlord’s consent shall not be required for
Tenant-Made Alterations that are non-structural, are made only to the interior
of the Building, do not cost in excess of $100,000 for any one Tenant-Made
Alteration or $300,000 in the aggregate within any single Lease Year and do not
involve building penetrations that adversely affect the Building’s structure or
the Building’s systems (collectively, “Minor Alterations”); provided that prior
to performing any Minor Alterations Tenant shall provide written notice to
Landlord describing in reasonable detail the scope and nature of the work to be
performed, and upon Landlord’s request Tenant shall remove any or all of the
foregoing upon termination of this Lease and repair any damage caused by such
removal. As part of its approval process, Landlord may require that Tenant
submit plans and specifications to Landlord for any Tenant-Made Alterations
requiring Landlord’s approval. Landlord shall respond to all requests by Tenant
for consent to Tenant-Made Alterations within ten (10) Business Days of receipt
of a written request describing in reasonable detail the proposed Tenant-Made
Alteration, together with plans and specifications therefor if required. If
Landlord fails to respond within such ten (10) Business Day period, Tenant may
deliver a second request with a conspicuous notice that failure to respond will
result in a deemed disapproval, and if Landlord does not respond to the second
request within five (5) Business Days, Landlord shall be deemed to have approved
Tenant’s request. In the event that Tenant performs a Tenant-Made Alteration
without Landlord’s prior written consent and it is determined that Landlord’s
consent was actually required under the terms of this Section, Landlord shall
evaluate the completed Tenant-Made Alteration and give or withhold its consent
as described above in this Section. If Landlord withholds its consent, Landlord
may require that Tenant commence removal of the Tenant-Made Alteration and
repair any damage to the Premises resulting from the unauthorized Tenant-Made
Alteration or such removal within one hundred twenty (120) days after receipt of
Landlord’s written disapproval and pursue such removal at Tenant’s sole cost
until it is complete; provided, however, that if, after receipt of Landlord’s
written notice, Tenant fails to commence removal of the Tenant-Made Alteration
within said one hundred twenty day period, or fails to remove the subject
Tenant-Made Alteration and complete any required repairs within a reasonable
time thereafter, in either event, Landlord shall have the right to cause the
removal of the subject Tenant-Made Alteration at Tenant’s reasonable cost.
Tenant shall cause, at its expense, all Tenant-Made Alterations to comply with
Legal Requirements and the Declaration and shall construct at its expense any
alteration or modification required by Legal Requirements and the Declaration as
a result of any Tenant-Made Alterations. All Tenant-Made Alterations shall be
constructed at Tenant’s sole cost in a good and workmanlike manner, in
accordance with all Legal Requirements and any applicable provisions of the
Declaration, and only new materials consistent with the quality of materials
used in the existing improvements shall be used. Landlord may reasonably monitor
construction of the Tenant-Made Alterations that require Landlord’s approval.
Tenant shall reimburse Landlord for any reasonable out-of-pocket costs incurred
by Landlord in connection with review of Tenant’s plans and specifications and

 

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supervising or monitoring the construction; provided, that prior to incurring
any such costs for which Landlord intends to seek reimbursement from Tenant,
Landlord shall provide Tenant with an estimate of the costs and Tenant may elect
not to proceed with the Tenant-Made Alteration if Tenant does not approve of the
cost. Landlord may post on and about the Premises notices of non-responsibility
pursuant to applicable law. At the completion of any Tenant-Made Alterations,
Tenant shall deliver to Landlord final lien waivers from each contractor and
subcontractor who did work on or supplied materials for the Tenant-Made
Alterations that cost in excess of $10,000. At the time Landlord consents to a
Tenant-Made Alteration (or within ten (10) Business Days after a written request
by Tenant if the Tenant-Made Alteration is not one for which consent is
required), Landlord shall notify Tenant whether Tenant shall be required to
remove the Tenant-Made Alteration at the expiration or termination of the Lease
Term, and to restore the Premises to its condition prior to such Tenant-Made
Alteration having been made. Failure of Landlord to notify Tenant that a
Tenant-Made Alteration must be removed shall mean that Tenant may leave or
remove the Tenant-Made Alteration, at its election, provided that if Tenant
removes the Tenant-Made Alteration, it shall repair any damage caused by such
removal. Except as otherwise provided herein, all Tenant-Made Alterations shall
immediately upon completion or installation thereof be and become a part of the
Premises and the property of Landlord without payment therefor by Landlord shall
be surrendered to Landlord upon termination of this Lease.

10.2 Indemnity. Tenant agrees to hold Landlord harmless from, and defend against
(with legal counsel reasonably acceptable to Landlord) all liens, claims and
liabilities of every kind, nature and description (including, without
limitation, attorneys’ fees), which may arise out of or in any way be connected
with any Tenant-Made Alteration, Tenant shall not permit the Premises to become
subject to any mechanics’, laborers’ or materialmen’s lien on account of labor,
material or services furnished to Tenant or claimed to have been furnished to
Tenant in connection with work of any character performed or claimed to have
been performed for the Premises by, or at the direction or sufferance of Tenant.

ARTICLE XI

DAMAGE OR DESTRUCTION

11.1 Damage. If at any time during the Term the Premises are damaged by a fire
or other casualty (excluding a Third Party Contamination as described in
Section 20.7), Landlord shall, within a reasonable time following said casualty,
repair and restore the Premises (but excluding any Tenant Improvements, Tenant’s
Property and Tenant-Made Alterations) at Landlord’s expense to substantially the
same condition as existed immediately before such casualty; provided that
Landlord’s cost to repair and restore the Premises shall be limited to the
amount of insurance coverage available under the property insurance policies
required to be carried by Landlord as provided in Section 6.1 above plus the
amount of any deductible under those policies. Landlord shall notify Tenant
within thirty (30) days after such damage as to the amount of time Landlord
reasonably estimates it will take to restore the Premises (the “Initial
Reconstruction Notice”). Notwithstanding the foregoing, if the restoration time
set in the Initial Reconstruction Notice is estimated by Landlord’s general
contractor to exceed two hundred ten (210) days following the casualty, or if
the cost of restoration exceeds the amount of available insurance coverage plus
the deductible and neither Landlord or Tenant is willing to pay the excess cost,
then either Landlord or Tenant may elect to terminate this Lease, in each case
upon notice to the other party given no later than thirty (30) days after
Landlord’s Initial Reconstruction Notice.

 

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11.2 Restoration. If neither party elects to terminate this Lease or if
Landlord’s general contractor estimates that restoration will take two hundred
ten (210) days or less, then Landlord shall promptly restore the Premises,
including without limitation the Landlord Improvements, as provided in
Section 11.1 above. Any insurance proceeds remaining unused after Landlord
substantially completes its restoration of the Premises shall belong to
Landlord. In addition, Tenant may terminate this Lease upon thirty (30) days’
prior written notice to Landlord, which notice shall have a heading in at least
12-point type, bold and all caps as follows: “FAILURE TO COMPLETE REPAIR WITHIN
THIRTY (30) DAYS SHALL RESULT IN TENANT EXERCISING TERMINATION RIGHTS.” if the
actual restoration is not completed within one (1) month after the end of
Landlord’s general contractor’s estimated restoration period, subject to
extension for Force Majeure and for Tenant Delays (as defined in the Development
Agreement); provided, however, if Landlord completes the restoration in said
thirty (30) day notice period, Tenant’s notice of termination shall be null and
void and this Lease shall continue in full force and effect. Tenant may elect,
in its sole discretion, by written notice to Landlord within ten (10) days
following Tenant’s receipt of the Initial Reconstruction Notice, whether to
restore at its expense, any Tenant-Made Alterations required to be removed at
the end of the Term, provided that if Tenant so elects not to restore any
Tenant-Made Alterations, Landlord shall notify Tenant within five (5) days
following Landlord’s receipt of notice of Tenant’s election not to restore any
Tenant-Made Alterations of the amount of any additional expense to be incurred
by Landlord as a result of such election, and Tenant shall promptly reimburse
Landlord for any additional expense incurred by Landlord in the restoration of
the Premises resulting from such failure to restore.

11.3 Casualty During Last Two Lease Years. Notwithstanding the foregoing, either
Landlord or Tenant may terminate this Lease if the Premises are damaged during
the last twenty four (24) months of the Term and Landlord’s general contractor
reasonably estimates that the time required to repair such damage will take more
than (i) one hundred eighty (180) days, if the casualty occurs when there
remains between twelve (12) and twenty-four (24) months in the Term; and
(ii) sixty (60) days, if the casualty occurs during the last twelve (12) months
of the Term; provided that if Landlord exercises its termination right during
the last twenty four (24) months, Tenant may nullify such termination by
exercising any then-existing Extension Option within twenty (20) days following
Tenant’s receipt of Landlord’s termination notice.

11.4 Rent Abatement. Base Rent shall be abated for the period that the Premises
or any part thereof are unusable by reason of any such damage in the proportion
which the area of the Premises, if any, in which the casualty or related
restoration work materially interferes with Tenant’s operations bears to the
total area of the Premises.

 

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ARTICLE XII

EMINENT DOMAIN

12.1 Condemnation. If all of the Premises should be taken for any public or
quasi-public use under governmental law, ordinance, or regulation, or by right
of eminent domain, or by private purchase in lieu thereof (a “Taking” or
“Taken”), or if any part of the Premises should be Taken and the partial Taking
would prevent or materially interfere with Tenant’s access to or reasonable use
of the Premises, and (i) in the reasonable opinion of Landlord’s general
contractor, the Premises, the Building and/or material access, as applicable,
cannot be repaired, rebuilt or restored within two hundred ten (210) days after
the date of such taking (the “Outside Condemnation Date”), or (ii) Landlord’s
general contractor determines that the same cannot be restored with the proceeds
received by Landlord from such Taking and neither Landlord or Tenant elects not
to fund the cost in excess of the available proceeds from the Taking for the
restoration of the Premises, then Landlord shall give written notice to Tenant
of such determination, and in either such case upon written notice by Landlord
or Tenant to the other given within fifteen (15) days following such notice from
Landlord, this Lease shall terminate on the date title passes and Rent shall be
apportioned as of said date. If part of the Premises shall be Taken, and this
Lease is not terminated as provided above, Landlord shall promptly, at its sole
cost and expense, restore and reconstruct the Premises, and the Base Rent
payable hereunder during the unexpired Lease Term shall be reduced to such
extent as may be fair and reasonable under the circumstances based on the
portion of the Premises Taken. In such event, Landlord shall provide Tenant with
an estimated period for completion of such repairs and/or restoration which
shall be no longer than two hundred ten (210) days after the date of the taking
(“Estimated Restoration Period”). If the actual restoration is not completed
within one (1) month after the end of Landlord’s Estimated Restoration Period,
subject to extension for Force Majeure and for Tenant Delays; Tenant may
terminate this Lease upon thirty (30) days’ prior written notice to Landlord,
which notice shall have a heading in at least 12-point type, bold and all caps
as follows: “FAILURE TO COMPLETE REPAIR WITHIN THIRTY (30) DAYS SHALL RESULT IN
TENANT EXERCISING TERMINATION RIGHTS.” provided, however, if Landlord completes
the restoration in said thirty (30) day notice period, Tenant’s notice of
termination shall be null and void and this Lease shall continue in full force
and effect. Upon any such termination, neither Landlord nor Tenant shall have
any further obligations hereunder except those that would otherwise survive the
termination of this Lease as expressly provided herein. If any Taking occurs,
then Landlord shall receive the entire award or other compensation for the Land,
the Building, and the Premises; and Tenant shall receive the entire award or
other compensation for any Tenant Improvements, Tenant-Made Alterations and
Tenant’s Property. Tenant may elect to separately pursue a claim against the
condemnor for the value of such items, moving costs, loss of business, and other
claims it may have, provided that Tenant may not assert any claim if doing so
would reduce the award payable to Landlord. Without limiting the foregoing, if
the condemning authority specifically designates that a portion of the award is
attributable to (i) the value of Tenant Improvements, Tenant’s Property or
Tenant-Made Alterations, (ii) Tenant’s moving costs, and/or (iii) Tenant’s loss
of business, then Landlord shall promptly pay Tenant such portion of its award
that is attributable to the foregoing.

ARTICLE XIII

ASSIGNMENT AND SUBLETTING

13.1 Landlord Consent. Without Landlord’s prior written consent, which shall not
be unreasonably withheld, conditioned, or delayed, Tenant shall not assign this
Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within the
Premises each of the foregoing, a “Transfer”) to

 

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any person or entity (a “Transferee”) and any attempt to do any of the foregoing
shall be void and of no effect. Except as set forth in Section 13.2, any change
in control of Tenant resulting from a merger, consolidation, stock transfer
(other than arising out of the sale or transfer of Tenant’s stock listed for
trading in public markets) or asset sale shall be considered an assignment or
transfer which requires Landlord’s prior written consent unless the tangible net
worth of the Transferee is equal to or more than $100 million or the Transferee
has an investment grade credit rating of BBB or better, in which case,
Landlord’s consent shall not be required.

13.2 Related Assignment. Tenant shall have the right, upon fifteen (15) days
prior written notice to Landlord (but prior notice shall not be required if
prohibited contractually or by law, but in either such event Tenant shall notify
Landlord of such subletting or assignment promptly after the transaction takes
place) without Landlord’s prior consent, (i) to sublet all or part of the
Premises to Tenant’s parent company (“Parent”), or to any entity which is under
control or common control with Tenant, or to any entity which is a direct or
indirect wholly-owned subsidiary of Tenant or its Parent (any of such entities
being herein called a “Parent Affiliate”); or (ii) to assign this Lease (x) to a
Parent or a Parent Affiliate or to (y) a successor entity into which or with
which Tenant is merged or consolidated or which acquired substantially all of
Tenant’s assets and property (a “Successor Entity”), provided that such
successor entity assumes all of the obligations and liabilities of Tenant under
this Lease. Any sublease or assignment pursuant to and in compliance with this
Section 13.2 shall be referred to herein as a “Related Assignment”. The
provisions of Section 13.3 below shall not apply to any Related Assignment. In
the event of a Related Assignment, no such Related Assignment shall result in a
release of Tenant hereunder.

13.3 Tenant Notice. If Tenant desires to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice no later
than fifteen (15) Business Days in advance of the proposed effective date of any
proposed assignment or sublease, specifying (i) the name and business of the
proposed assignee or sublessee, (ii) the amount and location of the space within
the Premises proposed to be subleased, (iii) the proposed effective date and
duration of the assignment or subletting and (iv) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee. Tenant shall
promptly supply Landlord with financial statements and other information as
Landlord may reasonably request to evaluate the proposed assignment or sublease.
Landlord shall have a period of ten (10) Business Days following receipt of such
notice and other information requested by Landlord within which to notify Tenant
in writing that Landlord elects: (i) to permit Tenant to assign or sublet such
space; provided, however, that, if the rent rate agreed upon between Tenant and
its proposed subtenant is greater than the rent rate that Tenant must pay
Landlord hereunder for that portion of the Premises, or if any consideration
shall be promised to or received by Tenant in connection with such proposed
assignment or sublease (in addition to rent), then one half (1/2) of such excess
rent and other consideration (after payment of brokerage commissions, attorneys’
fees and other disbursements reasonably incurred by Tenant for such assignment
and subletting if acceptable evidence of such disbursements is delivered to
Landlord) shall be considered additional Rent owed by Tenant to Landlord, and
shall be paid by Tenant to Landlord, in the case of excess rent, in the same
manner that Tenant pays Base Rent and, in the case of any other consideration,
within ten (10) Business Days after receipt thereof by Tenant; or (ii) to
refuse, in Landlord’s reasonable discretion, to consent to Tenant’s assignment
or

 

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subleasing of such space and to continue this Lease in full force and effect as
to the entire Premises. If Landlord should fail to notify Tenant in writing of
such election within the ten (10) Business Day period following Landlord’s
receipt of Tenant’s written notice requesting Landlord’s consent and other
information requested by Landlord as provided above, Landlord shall be deemed to
have consented. Tenant agrees to reimburse Landlord for reasonable legal fees
and any other reasonable costs incurred by Landlord in connection with any
requested assignment or subletting (not to exceed One Thousand Five Hundred and
No/100 Dollars ($1,500.00) with respect to any reasonable requests). Tenant
shall deliver to Landlord copies of all documents executed in connection with
any permitted assignment or subletting, which documents shall be in form and
substance reasonably satisfactory to Landlord. In the event Landlord consents to
any assignment or subletting, no such assignment or subletting shall result in a
release of Tenant hereunder.

13.4 No Deemed Consent. No acceptance by Landlord of any rent or any other sum
of money from any assignee, sublessee or other category of transferee shall be
deemed to constitute Landlord’s consent to any assignment, sublease, or
transfer. Permitted assignees shall become liable directly to Landlord for all
obligations of Tenant hereunder. Notwithstanding any provision herein to the
contrary (including, without limitation, the immediately preceding sentence),
Tenant shall not be relieved of any liability hereunder by virtue of any
assignment or subletting and Tenant shall continue to be responsible for
ensuring that any subtenant or assignee observes Tenant’s obligations with
respect to Tenant’s use and occupancy of the Premises. No assignment,
subletting, occupancy or collection shall be deemed the acceptance of the
assignee, tenant or occupant, as Tenant, or a release of Tenant from the further
performance by Tenant of Tenant’s obligations under this Lease. Any assignment
or sublease consented to by Landlord shall not relieve Tenant (or its assignee)
from obtaining Landlord’s consent to any subsequent assignment or sublease if
such consent is otherwise required under this Lease.

ARTICLE XIV

INDEMNIFICATION

14.1 Tenant’s Indemnity. Without limiting Sections 13.1 and 14.4 of the
Development Agreement, and subject to Section 6.4 of this Lease, from and after
the Commencement Date, except to the extent caused by the negligence or willful
misconduct of Landlord or any Landlord Parties (defined below), Tenant agrees to
indemnify, defend and hold harmless Landlord and its affiliates and their
agents, directors, officers and employees (collectively, “Landlord
Indemnitees”), from and against any and all losses, liabilities, damages, costs
and expenses (including reasonable attorneys’ fees) resulting from actual or
threatened claims by third parties occasioned by injuries to any person and
damage to, or theft or loss of, property occurring in or about the Premises to
the extent caused or alleged to be caused by the negligence or willful
misconduct of Tenant or any invitee, licensee, employee, director, officer,
agent, contractor or subcontractor of Tenant (collectively “Tenant Parties”). In
case any action or proceeding is brought against any Landlord Indemnitee and
such claim is a claim from which Tenant is obligated to indemnify Landlord
Indemnitees pursuant to this Section, Tenant, upon notice from Landlord, shall
resist and defend such action or proceeding (by counsel reasonably satisfactory
to Landlord unless Tenant’s insurance company designates counsel) at Tenant’s
expense. The furnishing of insurance required hereunder shall not be deemed to
limit Tenant’s obligations under this Section 14.1.

 

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14.2 Landlord Indemnity. To the extent permitted by law, but subject to
Section 6.4, except to the extent caused by the negligence or willful misconduct
of Tenant or any Tenant Parties, Landlord agrees to indemnify, defend and hold
harmless Tenant and its affiliates and their agents, directors, officers and
employees (collectively, “Tenant Indemnitees”), from and against any and all
losses, liabilities, damages, costs and expenses (including reasonable
attorneys’ fees) resulting from actual or threatened claims by third parties
occasioned by (a) injuries to any person and damage to, or theft or loss of,
property occurring in or about the Premises to the extent caused or alleged to
be caused by the negligence or willful misconduct of Landlord or any invitee,
licensee, employee, director, officer, agent, contractor or subcontractor of
Landlord (collectively “Landlord Parties”), or (b) any actual or alleged breach
of this Lease by Landlord. In case any action or proceeding is brought against
any Tenant Indemnitee and such claim is a claim from which Landlord is obligated
to indemnify Tenant Indemnitees pursuant to this Section, Landlord, upon notice
from Tenant, shall resist and defend such action or proceeding (by counsel
reasonably satisfactory to Tenant unless Landlord’s insurance company designates
counsel) at Landlord’s expense. The furnishing of insurance required hereunder
shall not be deemed to limit Landlord’s obligations under this Section 14.2.

14.3 Neither party shall be liable to the other for special or consequential
damages, except Tenant shall be liable for consequential damages should Tenant
holdover possession of the Premises without the Landlord’s consent following
termination or expiration of the Term of this Lease.

ARTICLE XV

LIENS

15.1 Lien Claims. Tenant shall not do any act which shall in any way encumber
the title of Landlord in and to the Premises, nor shall any interest or estate
of Landlord in the Premises be in any way subject to any claim by way of lien or
encumbrance, whether by operation of law or by virtue of any express or implied
contract by Tenant, and any claim to or lien upon the Premises arising from any
act or omission of Tenant shall accrue only against the leasehold estate of
Tenant and shall in all respects be subject and subordinate to the paramount
title and rights of Landlord in and to the Premises. Tenant will not permit the
Premises to become subject to any mechanics’, laborers’ or materialmen’s lien on
account of labor or material furnished to Tenant or claimed to have been
furnished to Tenant in connection with work of any character performed or
claimed to have been performed on the Premises by or at the direction of
sufferance of Tenant; provided, however that Tenant shall have the right to
contest in good faith and with reasonable diligence, the validity of any such
lien or claimed lien, as long as such liens are removed by bond within thirty
(30) days or Landlord’s interest in the Premises is otherwise protected to the
reasonable satisfaction of Landlord. On any final determination of the lien or
claim for lien, Tenant will immediately pay any judgment rendered, with all
proper costs and charges, and will, at its own expense, have the lien released
and any judgment satisfied.

 

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15.2 Landlord’s Right to Cure. If Tenant shall fail to contest the validity of
any lien or claimed lien or fail to give security to Landlord to insure payment
thereof, or shall fail to prosecute such contest with diligence, or shall fail
to have the same released and satisfy any judgment rendered thereon, then
Landlord may, at its election (but shall not be so required), following a notice
to Tenant and a failure to cure by Tenant as set forth in Section 16 of this
Lease, remove or discharge such lien or claim for lien (with the right, in its
discretion, to settle or compromise the same), and any amounts advanced by
Landlord, including reasonable attorneys’ fees, for such purposes shall be
Additional Rent due from Tenant to Landlord on the first day of the next
calendar month, with interest thereon at an annual interest rate equal to the
Delinquency Rate, as defined in Section 23.12.

15.3 Waiver of Landlord’s Lien. Landlord hereby waives any lien rights which it
may otherwise have concerning Tenant’s Property and the inventory stored within
the Premises, along with any other equipment or supplies utilized by Tenant in
its business operations. Landlord and its mortgagee and/or mortgagees shall
execute and deliver to Tenant, upon request documents which waive any lien of
Landlord and Mortgagee, if any, as to Tenant’s Property leased or financed by
Tenant, and inventory, which waiver shall be effective only during the term of
such encumbrance by Tenant.

ARTICLE XVI

DEFAULT AND REMEDIES

16.1 Tenant’s Default. Tenant agrees that the occurrence of any one or more of
the following events shall be considered an “Event of Default” as said term is
used herein:

(a) Tenant shall file an answer admitting the material allegations of a petition
filed against Tenant in any bankruptcy, reorganization or insolvency proceeding
or under any laws relating to the relief of debtors, readjustment or
indebtedness, reorganization, arrangements, composition or extension; or

(b) Tenant shall make any assignment for the benefit of creditors or shall apply
for or consent to the appointment of a receiver, trustee or liquidator of
Tenant, or any of the assets of Tenant; or

(c) Tenant shall file a voluntary petition in bankruptcy, or shall admit in
writing its inability to pay its debts as they come due, or shall file a
petition or an answer seeking reorganization or arrangement with creditors or
take advantage of any insolvency law; or

(d) A decree or order appointing a receiver of the property of Tenant shall be
made and such decree or order shall not have been vacated within sixty (60) days
from the date of entry or granting thereof; or

(e) Tenant shall default in making any payment of Rent within five (5) days of
when due; provided that for the first two (2) times in each Lease Year of the
Term, Tenant shall have five (5) business days following receipt of Landlord’s
written notice to Tenant of Tenant’s failure to pay said Rent, and Tenant’s
failure to pay shall not be an Event of Default hereunder if Tenant makes said
payment within said five (5) business days following receipt of Landlord’s
written notice; or

 

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(f) If Tenant shall fail to comply with an order of a court of competent
jurisdiction or proper order of a governmental authority, which relate to the
Premises, within the required time period; or

(g) If Tenant shall default in the performance of any covenant, promise or
agreement on the part of Tenant contained in this Lease not otherwise specified
in this Section 16.1 and such default shall continue for thirty (30) days after
notice thereof in writing by Landlord to Tenant, or if such default or condition
which gives rise thereto cannot with due diligence and good faith be cured
within such thirty (30)-day period, if Tenant shall not in good faith and within
the period of thirty (30) days commence the curing of such default and pursue
the curing of such default continuously and diligently and in good faith to the
end that such default shall be cured within such minimum period in excess of
thirty (30) days as may be reasonably necessary to cure such default through
pursuing such cure promptly, diligently, continuously and in good faith.

16.2 Landlord’s Remedies. Upon the occurrence of any Event of Default and at any
time thereafter, Landlord may, at its election, exercise any one or more of the
following described remedies, in addition to all other rights and remedies
provided at law, in equity or elsewhere herein:

(a) Landlord may terminate this Lease by giving to Tenant written notice of
Landlord’s election to do so, in which event the Term and all right, title and
interest and obligations of Tenant hereunder shall end on the date stated in
such notice.

(b) Landlord may terminate the right of Tenant to possession of the Premises
without terminating this Lease, by giving written notice to Tenant that Tenant’s
right of possession shall end on the date stated in such notice, whereupon the
right of Tenant to possession of the Premises or any part thereof shall cease on
the date stated in such notice. In such event, Landlord may reenter and take
possession of the Premises or any part of the Premises, repossess the same,
expel Tenant and those claiming through or under Tenant, and remove the effects
of both or either, without being deemed guilty of any manner of trespass, and
without prejudice to any remedies for Tenant’s failure to pay Rent or other
amounts payable under this Lease or as a result of any other breach of this
Lease.

(c) Landlord may enforce the provisions of this Lease and may enforce and
protect the rights of Landlord by a suit or suits in equity or at law for the
performance of any covenant or agreement herein, and for the enforcement of any
other appropriate legal or equitable remedy, including without limitation
(i) injunctive relief, (ii) recovery of all moneys due or to become due from
Tenant under any of the provisions of this Lease, and (iii) any other damages
incurred by Landlord by reason of Tenant’s default under this Lease.

(d) Landlord shall however use commercially reasonable efforts to relet the
Premises and mitigate damages.

 

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16.3 Reentry to Premises. Should Landlord elect to reenter as provided herein
with or without terminating this Lease, or should Landlord take possession
pursuant to legal proceedings or pursuant to any notice provided by law,
Landlord may, from time to time, without terminating this Lease, rent the
Premises or any part of the Premises, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the Term) and on such conditions and upon such other terms (which may
include alteration and repair of the Premises) as Landlord, in its commercially
reasonable discretion, may determine, and Landlord may collect and receive the
rent due in connection therewith. Landlord shall not be required to accept any
tenant offered by Tenant or any third party or observe any instruction given by
Tenant relative to such reletting. No such reentry or taking possession by
Landlord will be construed as an election on Landlord’s part to terminate this
Lease unless a written notice of such intention is given to Tenant. No written
notice from Landlord under this Article XVI or under a forcible or unlawful
entry and detainer statute or similar law will constitute an election by
Landlord to terminate this Lease unless such notice specifically so states.
Landlord reserves the right following any such reentry or reletting to exercise
its right to terminate this Lease by giving Tenant such written notice, in which
event this Lease will terminate as specified in such notice.

16.4 Damages Without Lease Termination. In the event that Landlord does not
elect to terminate this Lease, but on the contrary elects to take possession of
the Premises, then, in addition to all other rights and remedies of Landlord,
Tenant shall pay to Landlord (i) Rent and other sums as provided in this Lease
that would be payable under this Lease if such repossession had not occurred,
less the net proceeds, if any, of any reletting of the Premises after deducting
all of Landlord’s commercially reasonable expenses in connection with such
reletting, including without limitation all repossession costs, brokerage
commissions, attorneys’ fees, expenses of employees, alteration and repair
costs, and expenses of preparation for such reletting, plus (ii) interest on any
unpaid Rent to accrue at the Delinquency Rate from the date that the Rent is due
until the date it is paid. If, in connection with any reletting, the new lease
term extends beyond the Term, or the Premises covered by such new lease includes
other premises not part of the Premises, a fair apportionment of the rent
received from such reletting will be made in determining the net proceeds from
such reletting. Tenant will pay such Rent and other sums to Landlord monthly on
the day on which such sums would have been payable under this Lease if
possession had not been retaken, and Landlord shall be entitled to receive such
Rent and other sums from Tenant on each such day.

16.5 Damages Upon Lease Termination. If Landlord terminates this Lease,
(i) Tenant shall remain liable to Landlord for all obligations of Tenant under
this Lease arising up to the date of such termination, and Tenant shall
surrender the Premises to Landlord on the date specified in Landlord’s notice of
termination, and (ii) Landlord may recover from Tenant the sum of: all Base
Rent, Additional Rent and all other amounts accrued hereunder to the date of
such termination; and all damages incurred by Landlord arising from such Event
of Default, including but not limited to (A) the cost of reletting the whole or
any part of the Premises, including without limitation brokerage fees and/or
leasing commissions incurred by Landlord (provided that Tenant shall not be
liable for any portion applicable to the period after the scheduled expiration
date of the Term), and costs of removing and storing Tenant’s or any other
occupant’s property, repairing, altering, remodeling, or otherwise putting the
Premises into the condition necessary to rent the Premises at the prevailing
market rate to the extent that

 

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Tenant was required to perform such restoration at the scheduled expiration of
the Term of this Lease, brokerage fees, advertising costs and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys’ fees and court costs; and (B) the excess of the then present value of
the Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the present value
of any net amounts which Landlord can reasonably expect to recover by reletting
the Premises for such period, taking into consideration all relevant factors,
including, but not limited to, (a) the length of time remaining in the remaining
Term, (b) the then current market conditions in the general area in which the
Premises is located, (c) the likelihood of reletting the Premises for a period
of time equal to the remainder of the Term, (d) the net effective rental rates
then being obtained by landlords for similar type space of similar size in
similar type buildings in the general area in which the Premises is located,
(e) the vacancy levels in the general area in which the Premises is located,
(f) current levels of new construction that will be completed during the
remaining Term and how this construction will likely affect vacancy rates and
rental rates, and (g) inflation. Such present values shall be calculated at a
discount rate of five percent (5%) per annum.

16.6 Survival of Tenant Obligations. No termination of this Lease and no taking
possession of and/or reletting the Premises or any part thereof, shall relieve
Tenant of its monetary liabilities and obligations hereunder, except as
specifically provided herein, all of which shall survive such expiration,
termination, repossession or reletting except as otherwise specifically
provided.

16.7 Waivers. To the extent permitted by law, Landlord and Tenant waive and
shall waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant’s use or occupancy of the Premises, or any claim of injury or
damage. No failure by either party to insist upon the strict performance by the
other party of any covenant, agreement, term or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof, and no payment or
acceptance of full or partial Rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such covenant, agreement,
term or condition. No covenant, agreement, term or condition of this Lease to be
performed or completed with by either party, and no breach thereof, shall be
waived, altered or modified except by a written instrument executed by the other
party. No waiver of any breach shall affect or alter this Lease, but each and
every covenant, agreement, term and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof.

16.8 Suits to Recover Damages. Suit or suits for the recovery of damages, or for
a sum equal to any installment or installments of Rent payable hereunder or any
other sums payable by Tenant to Landlord pursuant to this Lease, may be brought
by Landlord at any time and from time to time at Landlord’s election, and
nothing herein contained shall be deemed to require Landlord to await the date
whereon this Lease or the Term would have expired had there been no Event of
Default by Tenant.

 

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16.9 Cumulative Remedies. No remedy contained herein or otherwise conferred upon
or reserved to Landlord, shall be considered exclusive of any other remedy,
unless it so expressly provides, but the same shall be cumulative and shall be
in addition to every other remedy given herein, now or hereafter existing at law
or in equity or by statute, and every power and remedy given by this Lease to
Landlord may be exercised from time to time and as often as occasion may arise
or as may be deemed expedient. No delay or omission of Landlord to exercise any
right or power arising from any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence
therein.

16.10 Landlord’s Right to Perform Tenant’s Obligations. Upon occurrence of an
Event of Default, Landlord may (but shall not be obligated so to do), and
without waiving or releasing Tenant from any obligation of Tenant hereunder,
make any payment or perform any other act which Tenant is obligated to make or
perform under this Lease in such manner and to such extent as Landlord may
reasonably deem necessary; and in so doing Landlord shall also have the right to
enter upon the Premises at reasonable times for any purpose reasonably necessary
in connection therewith and to pay or incur any other necessary and incidental
costs and expenses, including reasonable attorneys’ fees. All sums so paid and
all liabilities reasonably so incurred by Landlord shall be payable to Landlord
upon demand as Additional Rent. Landlord shall use reasonable efforts to give
prior notice of its performance, if reasonably feasible under the circumstances.
The performance of any such obligation by Landlord shall not constitute a waiver
of Tenant’s default in failing to perform the same. Inaction of Landlord shall
never be considered as a waiver of any right accruing to it pursuant to this
Lease. Nothing contained herein shall be construed to require Landlord to
advance monies for any purpose.

16.11 Security Deposit. Tenant shall, within ten (10) business days following
the waiver or satisfaction of the Acquisition Contingency (as defined in
Section 23.20 below) deliver to Landlord the Letter of Credit described below,
at Tenant’s sole cost and expense, as security for Tenant’s performance of all
of Tenant’s covenants and obligations under this Lease, the Development
Agreement and any other document executed in connection with this Lease
(collectively, the “Lease Documents”); provided, however, that neither the
Letter of Credit nor any Letter of Credit proceeds shall be deemed an advance
rent deposit or an advance payment of any kind, or a measure of Landlord’s
damages upon an Event of Default by Tenant. Landlord shall not be required to
segregate the Letter of Credit proceeds from its other funds and no interest
shall accrue or be payable to Tenant with respect thereto. Landlord may (but
shall not be required) to draw upon the Letter of Credit and use all or any
portion of the proceeds (the “Letter of Credit Proceeds”) to cure any Event of
Default or to compensate Landlord for any damages Landlord incurs as a result of
Tenant’s failure to perform any of its obligations under the Lease Documents, it
being understood that any use of the Letter of Credit Proceeds shall not
constitute a bar or defense to any of Landlord’s remedies for an Event of
Default set forth in this Lease, including, without limitation, the right to
terminate this Lease and recover damages. In the event Landlord draws upon the
Letter of Credit and elects not to terminate this Lease, upon written notice
from Landlord to Tenant specifying the amount of the Letter of Credit Proceeds
so drawn by Landlord, Tenant shall deliver to Landlord an amendment to the
Letter of Credit or replacement Letter of Credit in form reasonably acceptable
to Landlord in an amount equal to one hundred percent (100%) of the face amount
of the Letter of Credit existing prior to the draw by Landlord. Tenant’s failure
to deliver such amended or replacement Letter of Credit within five (5) days of
Landlord’s notice or breach of its other obligations under this Section shall
constitute an Event of Default hereunder.

 

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As used herein, “Letter of Credit” shall mean an unconditional, irrevocable,
evergreen stand-by sight draft letter of credit (the “Letter of Credit”) issued
by a major national FDIC insured bank (the “Bank”) with total assets of at least
$50 billion and in form and content reasonably acceptable to Landlord, in the
amount of $3,000,000.00 (subject to adjustment as provided below). The Letter of
Credit shall provide that the Letter of Credit shall expire not earlier than
twelve (12) full calendar months after the delivery thereof to Landlord and
shall provide that same shall be automatically renewed for successive 12-month
periods through a date which is not earlier than one hundred twenty (120) days
following the expiration of the Term of this Lease, or any renewal or extension
thereof, unless written notice of nonrenewal has been given by the Bank to
Landlord and Landlord’s attorney by registered or certified mail, return receipt
requested, at the address set forth in Section 23.4, not less than sixty
(60) days prior to the expiration of the Letter of Credit. If the Bank does not
renew the Letter of Credit, and if Tenant does not deliver a substitute Letter
of Credit at least thirty (30) days prior to the expiration of the Letter of
Credit, then the same shall constitute an Event of Default hereunder and, in
addition to any other rights granted Landlord under this Lease, Landlord shall
have the right to draw on the Letter of Credit. The Letter of Credit shall
further provide (i) that Landlord may draw upon the Letter of Credit up to the
full face amount thereof, and may make partial and multiple draws thereunder, up
to the face amount thereof; (ii) that the Bank will pay to Landlord the amount
of such draw upon receipt by the Bank of a sight draft signed by Landlord and
presentation of the original letter of credit; (iii) that, in the event of
Landlord’s assignment or other transfer of this Lease, the Letter of Credit
shall be freely transferrable by Landlord (without the consent of Tenant or the
Bank) to the assignee or transferee of such interest, without charge and without
recourse to Landlord; and upon request Bank shall confirm the same to Landlord
and such assignee or transferee; and (iv) that the Letter of Credit is subject
to the Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500.

The Letter of Credit shall reduce by $300,000.00 on each anniversary of the
Commencement Date beginning on the first day of Lease Year 2 and continuing
through and including the first day of Lease Year 6 (each such date, a
“Reduction Date”); provided, however, that if on or prior to any Reduction Date,
an Event of Default, or default that subsequently matures into an Event of
Default, by Tenant shall have occurred and be continuing, then the Letter of
Credit amount shall not reduce on such date, the reduction that would otherwise
have occurred on such date shall not occur at any time (even if the conditions
to such reduction are thereafter met), and the Letter of Credit shall not
thereafter reduce. If the Letter of Credit amount is reduced pursuant to the
foregoing, Landlord shall cooperate with Tenant to amend or replace the Letter
of Credit so as to be in the as-reduced amount. In no event shall any such
reduction be construed as an admission by Landlord that Tenant has performed all
of its covenants and obligations hereunder. It is expressly understood and
agreed that the Letter of Credit shall not reduce below $1,500,000.00.
Notwithstanding the foregoing, if at any time during the Term Tenant shall
receive a credit rating by Standard & Poors of BBB-or better and by Moody’s of
Baa or better, and an Event of Default by Tenant is not then existing and no
event or circumstance exists that with the giving of notice or passage of time
would constitute an Event of Default under this Lease, the Letter of Credit
shall be returned to Tenant and Tenant shall no longer be required to maintain a
Letter of Credit with Landlord pursuant to this Section 16.11.

 

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16.12 Landlord Costs and Expenses of Litigation. Tenant agrees to pay, and to
indemnify and defend Landlord against, all costs and expenses (including
reasonable attorney’s fees) incurred by or imposed upon Landlord by or in
connection with any litigation to which Landlord becomes or is made a party
without fault on its part, whether commenced by or against Tenant, or any other
person or entity, or in obtaining possession of the Premises after an Event of
Default hereunder or upon expiration or earlier termination of this Lease. The
foregoing notwithstanding, Tenant’s responsibility under this Section 16.12 to
pay Landlord’s costs and expenses (including reasonable attorneys’ fees) shall
not extend to such costs and expenses incurred in defending an action brought by
Tenant to enforce the terms of this Lease in which there is a court
determination that Landlord failed to perform its obligations under this Lease
or where the Tenant is otherwise the substantially prevailing party. The
provisions of this Section 16.12 shall survive the expiration or earlier
termination of this Lease.

16.13 Tenant Costs and Expenses of Litigation. Landlord agrees to pay, and to
indemnify and defend Tenant against, all costs and expenses (including
reasonable attorney’s fees) incurred by or imposed upon Tenant by or in
connection with any litigation to which Tenant becomes or is made a party
without fault on its part, whether commenced by or against Landlord, or any
other person or entity. The foregoing notwithstanding, Landlord’s responsibility
under this Section 16.13 to pay Tenant’s costs and expenses (including
reasonable attorneys’ fees) shall not extend to such costs and expenses incurred
in defending an action brought by Landlord to enforce the terms of this Lease in
which there is a court determination that Tenant failed to perform its
obligations under this Lease or where the Landlord is otherwise the
substantially prevailing party. The provisions of this Section 16.13 shall
survive the expiration or earlier termination of this Lease.

16.14 Remedies Upon Landlord’s Default. In the event that Landlord shall at any
time be in default in the observance or performance of any of the covenants and
agreements required to be performed and observed by Landlord hereunder and any
such default shall continue for a period of thirty (30) days after written
notice to Landlord and Landlord shall not thereafter cure such default (or if
such default is incapable of being cured in a reasonable manner within thirty
(30) days then, if Landlord has not commenced to cure the same within said
thirty (30) day period and thereafter diligently prosecuted the same to
completion), Tenant shall be entitled at its election, to exercise concurrently
or successively, any one or more of the following rights, in addition to all
remedies otherwise provided in this Lease including its self-help rights and any
other rights otherwise available at law or in equity under the laws of the
United States or the State of Nevada.

(a) to bring suit for the collection of any amounts for which Landlord may be in
default, or injunctive relief for the performance of any other covenant or
agreement devolving upon Landlord, without terminating this Lease. Any suit or
suits for the recovery of damages, or any other sums payable by Landlord to
Tenant pursuant to this Lease, may be brought by Tenant at any time and from
time to time at Tenant’s election, and nothing herein contained shall be deemed
to require Tenant to await the date whereon this Lease or the Term would have
expired had there been no Event of Default by Landlord.

 

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(b) If Landlord is in default under this Lease as described above, Tenant, in
addition to pursuing any or all other remedies at law or in equity, also shall,
(A) upon written notice to Landlord and Landlord’s failure to cure such default
as provided in this Section 16.14 above, (but Tenant may exercise its rights
under this paragraph without prior notice if such prior notice is not reasonably
possible due to an emergency situation that threatens or interrupts Tenant’s use
of the Premises), and (B) if the failure of Landlord to cure is causing imminent
threat of harm to Tenant’s property or bodily harm to persons or the failure of
Landlord interferes with the Tenant’s reasonable use of or access to the
Premises, Tenant, at its election, has the right to take such commercially
reasonable actions as Tenant deems necessary to cure Landlord’s default and, if
Landlord fails to reimburse Tenant for the reasonable costs, fees and expenses
incurred by Tenant in taking such curative actions within thirty (30) days after
demand therefor or if Landlord fails to pay any amount owed to Tenant under this
Lease within thirty (30) days after demand therefor, accompanied by supporting
evidence of the expenses incurred by Tenant where applicable, then Tenant may
bring an action for damages against Landlord to recover such costs, fees and
expenses, together with interest thereon at the rate provided for in
Section 23.12 of the Lease, and reasonable attorney’s fees incurred by Tenant in
bringing such action for damages, and following Tenant’s obtaining a final
judgment against Landlord for such amounts from a court of competent
jurisdiction, Tenant shall have the right to set off such amounts from the Base
Rent payable by Tenant pursuant to this Lease.

ARTICLE XVII

QUIET ENJOYMENT

17.1 Covenants of Quiet Enjoyment. Landlord covenants that Tenant, so long as
Tenant is not in default past applicable cure periods, shall, during the Term,
peaceably and quietly have, hold and enjoy the Premises subject to the terms,
covenants, conditions, provisions and agreement hereof free from hindrance by
Landlord or any person claiming by, through or under Landlord.

ARTICLE XVIII

SUBORDINATION

18.1 Subordination and Attornment.

(a) In all events, notwithstanding anything contained herein to the contrary,
Landlord’s fee simple title shall be superior to any leasehold mortgage on the
Premises, and such leasehold mortgagee shall take subject to same with the
intent of the parties being that a foreclosure of the leasehold mortgage shall
in no event impair or eliminate Landlord’s fee title interest.

(b) Tenant hereby agrees, upon Landlord’s written request, to subordinate this
Lease to any mortgage encumbering the Premises, provided that the holder
(“Mortgagee”), Tenant and Landlord execute a commercially reasonable form of
Subordination, Non-disturbance and Attornment Agreement (“SNDA”) substantially
in the form attached hereto as Exhibit “G” and incorporated herein by this
reference, with such modifications as Mortgagee may reasonably require. The term
“mortgage” whenever used in this Lease shall be deemed to include deeds to
secure debt, deeds of trust, security assignments,

 

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ground leases and any other encumbrances against Landlord’s interest in the
Premises, and any reference to the “Mortgagee” of a mortgage shall be deemed to
include the beneficiary under a deed of trust and the lessor under a ground
lease. Landlord represents to Tenant that as of the Effective Date of this Lease
by Landlord and as of the Commencement Date, there is no mortgage encumbering
the Premises.

(c) Should Landlord sell, convey or transfer its interest in the Premises or
should any Mortgagee succeed to Landlord’s interest through foreclosure or deed
in lieu thereof, then Tenant shall attorn to such succeeding party as its
landlord under this Lease promptly upon any such succession, provided that such
succeeding party assumes all of Landlord’s duties and obligations under this
Lease and agrees not to disturb Tenant’s leasehold interest hereunder in
accordance with the SNDA.

(d) Tenant agrees to give the Mortgagee of any Mortgage simultaneously with
Landlord, by registered or certified mail, a copy of any notice of default
served upon the Landlord by Tenant, provided that prior to such notice Tenant
has received notice (by way of service on Tenant of a copy of an assignment of
rents and leases, or otherwise) of the address of such Mortgagee and containing
a request therefor, and further provided, Tenant shall have no liability to such
Mortgagee in the event Tenant fails to so notify. Tenant further agrees that
Mortgagee shall have a right, simultaneously with Landlord, to cure such
default.

ARTICLE XIX

TRANSFERS BY LANDLORD

19.1 Transfers of Landlord’s Interest. No transfer or sale of Landlord’s
interest hereunder shall release Landlord from any of its obligations or duties
hereunder prior thereto. Landlord shall be released of any ongoing obligations
hereunder and from any obligation arising from and after the date of such
transfer upon the written assumption of all such obligations and duties by the
transferee of Landlord.

ARTICLE XX

HAZARDOUS SUBSTANCES

20.1 Compliance With Environmental Requirements. Except for (i) Hazardous
Materials contained in products used by Tenant in accordance with all applicable
Environmental Laws for ordinary cleaning, landscaping, heating fuel, office and
warehouse maintenance and operations purposes at the Premises, (ii) Hazardous
Materials contained in accordance with all applicable Environmental Laws in
inventory items and merchandise to be stored at the Premises and distributed to
Tenant’s retail outlets for sale to the public, and (iii) batteries associated
with and propane gas used in accordance with all applicable Environmental Laws
to fuel Tenant’s forklifts at the Premises (collectively, the “Permitted
Hazardous Materials”), Tenant shall not knowingly permit or cause any party to
bring any Hazardous Material upon the Premises or transport, store, use, or
release any Hazardous Materials in or about the Premises without Landlord’s
prior written consent. In no event shall Tenant generate or manufacture
Hazardous Materials upon or within the Premises, or store fuel or other
Hazardous Materials in underground containers at the Premises, or permit any
party to do so. Tenant, at its sole cost and expense, shall operate its business
in the Premises in compliance with all Environmental

 

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Laws and shall promptly remediate any Hazardous Materials released on or from
the Premises by Tenant. If the release of any Hazardous Material on the Premises
is caused or permitted by Tenant or any member of the Tenant Parties (as
hereinafter defined) with or without Landlord’s consent, and such release
results in any contamination, damage or injury to the Premises, the environment
or human health, Tenant shall promptly take all actions at its sole expense as
are necessary to return the Premises as near as reasonably practicable to the
condition existing prior to the release of any such Hazardous Material and as
may be required by Environmental Laws; provided that Landlord’s written approval
shall first be obtained in cases where the Premises is to be physically altered.

20.2 Definitions.

(a) “Environmental Law(s)” shall mean any federal, state, or local law, statute,
ordinance, code, rule, regulation, policy, common law, license, authorization,
decision, order, or injunction which pertains to health, safety, any Hazardous
Material, or the environment (including but not limited to ground, air, water,
or noise pollution or contamination, and underground or above-ground tanks) and
shall include, without limitation, the Resource Conservation and Recovery Act,
42 U.S.C. §6901 et seq., the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. §9601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. §1801 et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. §1251 et seq.; the Clean Air Act, 42 U.S.C. §7401 et seq.; the
Toxic Substances Control Act, 15 U.S.C. §2601 et seq.; the Safe Drinking Water
Act, 42 U.S.C. §300f et seq.; the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. 11001 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. 136 to 136y; the Oil Pollution Act, 33 U.S.C. 2701 et seq.; and
the Occupational Safety and Health Act, 29 U.S.C. 651 et seq.; all as have been
amended from time to time, and any other federal, state, or local environmental
requirements, together with all rules, regulations, orders, and decrees now or
hereafter promulgated under any of the foregoing, as any of the foregoing now
exist or may be changed or amended or come into effect in the future.

(b) “Hazardous Material” shall include but shall not be limited to any
substance, material, or waste that is regulated by any Environmental Law or
otherwise regulated by any federal, state, or local governmental authority
because of toxic, flammable, explosive, corrosive, reactive, radioactive or
other properties that may be hazardous to human health or the environment,
including without limitation asbestos and asbestos-containing materials, radon,
petroleum and petroleum products, urea formaldehyde foam insulation, methane,
lead-based paint, polychlorinated biphenyl compounds, hydrocarbons or like
substances and their additives or constituents, pesticides, agricultural
chemicals, and any other special, toxic, or hazardous substances, materials, or
wastes of any kind, including without limitation those now or hereafter defined,
determined, or identified as “hazardous chemicals”, “hazardous substances,”
“hazardous materials,” “toxic substances,” or “hazardous wastes” in any
Environmental Law.

(c) “Environmental Claim” shall mean and include any demand, notice of
violation, inquiry, cause of action, proceeding, or suit for damages (including
reasonable attorneys’, consultants’, and experts’ fees, costs or expenses),
losses, injuries to person or property, damages to natural resources, fines,
penalties, interest, cost recovery, compensation, or contribution resulting from
or in any way arising in connection with any Hazardous Material or

 

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any Environmental Law on the Premises (i) during the Term of this Lease or any
period of Tenant’s occupancy of the Premises, or (ii) as to any period of time
prior to the Term, if arising out of an action of Tenant or Tenant Parties.

20.3 Storage and Use of Permitted Hazardous Materials. Any Permitted Hazardous
Materials on the Premises will be generated, used, received, maintained,
treated, stored or disposed in a manner consistent with good engineering
practice and in compliance with all Environmental Laws.

(a) Tenant shall promptly notify Landlord in writing of any spill, release,
discharge or disposal of any Hazardous Material or Hazardous Materials in, on or
under the Premises which spill, release, discharge, or disposal is required to
be reported to any governmental authority under any Environmental Law, to the
same extent as such reporting is required to the governmental authority. Tenant
shall supply to Landlord within five (5) business days after Tenant first
receives or sends the same, copies of all claims, reports, complaints, notices,
warnings or asserted violations relating in any way to Tenant’s use of the
Premises.

(b) At the expiration or earlier termination of the Lease, Tenant, at its sole
cost and expense, shall remove and dispose off site any drums, containers,
receptacles, structures, or tanks storing or containing Permitted Hazardous
Materials or Hazardous Materials (or which have stored or contained Permitted
Hazardous Materials or Hazardous Materials) and the contents thereof, to the
extent brought onto the Premises by Tenant or Tenant Parties. Such activities
shall be performed in compliance with all Environmental Laws.

20.4 Notices. Tenant shall promptly provide Landlord with copies of all
communications, permits, or agreements with any governmental authority or agency
(federal, state, or local) or any private entity relating in any way to the
violation or alleged violation of any Environmental Laws by Tenant.

20.5 Indemnification by Tenant. Without limiting Sections 13.1 and 14.4 of the
Development Agreement, and subject to Section 6.4 of this Lease, from and after
the Commencement Date, Tenant shall defend, indemnify and hold Landlord free and
harmless from and against any and all Environmental Claims, response costs,
losses, liabilities, damages, costs, and expenses, including, without
limitation, reasonable attorneys’ and consultants’ fees, costs and expenses, but
not incidental, special, punitive or consequential damages, arising out of or in
any way connected with any or all of the following:

(a) any Hazardous Material which is or was actually used, generated, stored,
treated, released, disposed of, or otherwise located on or at the Premises
(regardless of the location at which such Hazardous Material is now or may in
the future be located or disposed of) by Tenant or a member of the Tenant
Parties, including, but not limited to any and all (i) liabilities under any
common law theory of tort, nuisance, strict liability, ultrahazardous activity,
negligence; (ii) obligations to take response, cleanup, or corrective action
pursuant to any Environmental Laws; and (iii) the costs and expenses of
investigation or remediation in connection with the decontamination, removal,
transportation, incineration, or disposal of any of the foregoing; and

 

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(b) any actual or alleged illness, disability, injury, or death of any person,
in any manner arising out of or allegedly arising out of exposure to any
Hazardous Material or other substances or conditions generated, stored, treated,
released, disposed of, or located at the Premises by Tenant or a member of the
Tenant Parties at the Premises (including, but not limited to, ownership,
operation, and disposal of any equipment which generates, creates, or uses
electromagnetic files, x-rays, other forms of radiation and radioactive
materials), regardless of when any such illness, disability, injury, or death
shall have occurred or been incurred or manifested itself; and

(c) any actual or alleged failure of Tenant or any member of the Tenant Parties,
at any time and from time to time, to comply with all applicable Environmental
Laws or any permit issued thereunder;

(d) any failure by Tenant to comply with any obligation under this Article XX;

(e) Tenant’s failure to provide any information, make any submission, and take
any step required by any relevant governmental authorities regarding Hazardous
Materials at the Premises due to Tenant or Tenant Parties;

(f) the imposition of any lien for damages caused by, or the recovery of any
costs for, the remediation or cleanup of any Hazardous Material generated,
stored, treated, released, disposed of, or located at the Premises by Tenant or
a member of the Tenant Parties;

(g) costs of removal of any and all Hazardous Materials generated, stored,
treated, released, disposed of, or located at the Premises by Tenant or a member
of the Tenant Parties, from all or any portion of the Premises;

(h) costs incurred to comply, in connection with all or any portion of the
Premises, with all governmental requirements with respect to any Hazardous
Material on, in, under or affecting the Premises, which were generated, stored,
treated, released, disposed of, or located at the Premises by Tenant or a member
of the Tenant Parties;

(i) any spills, charges, leaks, escapes, releases, dumping, transportation,
storage, treatment, or disposal of any Hazardous Material by Tenant or a member
of the Tenant Parties, but only to the extent that such Hazardous Material
originated from or were or are located on the Premises; and

(j) Notwithstanding anything to the contrary herein, Tenant shall have no
liability of any kind to Landlord as to Hazardous Materials on the Premises,
including, without limitation, the migration or leaching of Hazardous Materials
from outside the Premises onto or under the Premises, which is caused or
permitted by Landlord or Landlord Parties or any other party not within the
control of Tenant.

The obligations of Tenant under this Section 20.5 shall survive any termination
or expiration of this Lease for a period not to exceed twelve (12) months.

 

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20.6 Landlord Indemnity and Remediation. Subject to Section 6.4, Landlord shall
defend, indemnify and hold Tenant free and harmless from and against any and all
Environmental Claims, response costs, losses, liabilities, damages, costs, and
expenses, including, without limitation, reasonable attorneys’ and consultants’
fees, costs and expenses, but not incidental, special, punitive or consequential
damages, arising out of or in any way connected with the use, generation,
storage or disposal of Hazardous Materials by Landlord or any of the employees,
agents and contractors of Landlord. In addition, Landlord shall bear all
responsibility for contamination or presence of Hazardous Materials existing or
created on the Premises prior to the occupancy of the same by Tenant, whenever
discovered. Notwithstanding anything to the contrary herein, except for
Landlord’s remediation obligations set forth in Section 20.7 below, Landlord
shall have no liability of any kind to Tenant as to Hazardous Materials on the
Premises that (i) were not caused or permitted by Landlord or any of its
employees, agents or contractors, and (ii) were not existing or created on the
Premises prior to the Effective Date, including without limitation, the
migration or leaching of Hazardous Materials from outside the Premises onto or
under the Premises following the Effective Date.

20.7 Remediation of Third Party Contamination. In the event of environmental
contamination of the Premises not caused by Landlord or the Landlord Parties or
by Tenant or the Tenant Parties (“Third Party Contamination”), Landlord shall,
within a reasonable time following such event, seek to cause the responsible
third parties to perform the remediation at their expense. To the extent such
responsible third parties do not promptly commence remediation and/or thereafter
diligently and continuously pursue the same to completion, Landlord shall,
within a reasonable time following the Third Party Contamination, perform such
remediation as may be necessary to restore the Premises at Landlord’s expense to
substantially the same condition as existed immediately prior to the Third Party
Contamination; provided that Landlord’s cost to perform such remediation shall
be limited to the amount of insurance coverage available under the environmental
insurance policy required to be carried by Landlord as provided in Section 6.1
above plus the amount of any deductible under that policy. Landlord shall be
deemed to have satisfied its obligation pursuant to the preceding sentence upon
completion of the remediation in accordance with the requirements of the
applicable governmental authority, as evidenced by the issuance of a no further
action letter or similar written confirmation that such requirements have been
satisfied.

In the event of the discovery of Hazardous Materials upon the Premises that were
caused or permitted by Landlord or any of its employees, agents or contractors,
or were existing or created on the Premises prior to the Effective Date, and
which will result in an immediate threat to the health and safety of Tenant, its
employees, agents, or invitees, or the remediation of which unreasonably
interferes with Tenant’s business activities, Tenant may immediately vacate the
Premises and Tenant’s performance and monetary obligations due hereunder shall
abate from the date that is the later of (i) five (5) business days after
written notice to Landlord of the environmental report identifying the Hazardous
Materials and description of threat or interference with Tenant’s business, and
(ii) five (5) business days after Tenant vacates the Premises and provides
written notice to Landlord of same, until the date such Hazardous Materials are
remediated in compliance with all applicable Environmental Laws at Landlord’s
cost. If, however, such remediation is not completed within two hundred ten
(210) days from and after the date Tenant vacates the Premises (“Remediation
Period”), Tenant may terminate this Lease by written notice to that effect
delivered to Landlord at any time following the

 

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expiration of the Remediation Period and prior to the completion of the
remediation. If Tenant elects to terminate this Lease pursuant to this
Section 20.6, this Lease shall terminate without penalty or breach thereof as of
the date of Tenant’s termination notice, and both parties shall be released and
discharged from any further obligation hereunder, other than those obligations
incurred prior to the date of termination.

ARTICLE XXI

MEMORANDUM OF LEASE

21.1 Memorandum of Lease. As a material condition to Tenant’s execution of this
Lease, upon its execution of this Lease, Landlord shall provide Tenant with an
executed Memorandum of Lease (hereinafter referred to as the “Memorandum”) in
the form as Exhibit “F” attached hereto and made a part hereof. Upon execution
by Tenant, Landlord shall promptly record the Memorandum at Landlord’s sole cost
and expense. Upon the expiration or earlier termination of this Lease, Tenant
agrees to execute any documentation reasonably necessary to terminate the
Memorandum of record, which agreement shall survive the expiration or
termination of this Lease.

ARTICLE XXII

SURRENDER

22.1 Condition. Upon the termination of this Lease whether by forfeiture, lapse
of time or otherwise, or upon the termination of Tenant’s right to possession of
the Premises, Tenant will at once surrender and deliver up the Premises to
Landlord, in good order, condition and repair, reasonable wear and tear,
condemnation and casualty excepted. Any damage caused by removal of Tenant from
the Premises, including any damages caused by removal of Tenant’s fixtures,
equipment, and personalty, shall be repaired and paid for by Tenant prior to the
expiration of the Term.

22.2 Removal of Tenant’s Fixtures, Equipment and Personalty. Upon the
termination of this Lease by lapse of time, or otherwise, Tenant shall remove
all of Tenant’s Property, including Tenant’s trade fixtures, equipment and
personalty, from the Premises, and Tenant shall repair any injury or damage to
the Premises which may result from such removal. Any HVAC, plumbing, electrical,
or mechanical fixtures shall remain with the Premises. Any of Tenant’s
equipment, fixtures or personalty that remains on the Premises following Lease
termination or expiration shall be deemed abandoned and shall belong to
Landlord; provided, however, that Tenant shall pay Landlord all reasonable costs
and expenses incurred by Landlord in removing said items from the Premises and
disposing of same. To the extent that Tenant causes alterations to be made to
the Premises, Tenant shall deliver written notice to Landlord prior to
construction with a request that Landlord advise Tenant as to whether or not
Tenant shall be obligated to remove the alterations upon termination of this
Lease. Landlord shall deliver written notice to Tenant within fifteen (15) days
of receipt of Tenant’s notice of any requirement to remove said alteration at
the expiration of the Term. In the event that Landlord either requires removal
or fails to respond to Tenant’s notice within said fifteen days,

 

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then Tenant shall be obligated to remove said alteration at the expiration or
termination of this Lease. If Landlord requires or is deemed to require removal
of said alterations, then upon the termination of this Lease by lapse of time,
or otherwise, Tenant shall remove said alterations and repair any injury or
damage to the Premises which may result from such removal.

22.3 Holdover. If Tenant retains possession of the Premises or any part thereof
after the termination of the Term, by lapse of time and otherwise, then Tenant
shall be a tenant at will and shall pay to Landlord monthly Base Rent, at 110%
the rate payable for the month immediately preceding said holding over for the
first month of holdover, 115% for the second month of holdover and 125% of the
monthly Base Rent thereafter, computed on a per-month basis, for each month or
part thereof prorated for partial months, that Tenant remains in possession. The
provisions of this paragraph do not exclude Landlord’s rights of re-entry or any
other right hereunder. Any such extension or renewal shall be subject to all
other terms and conditions herein contained. Notwithstanding the foregoing, if
Tenant has provided written notice to Landlord at least one hundred eighty
(180) days prior to the expiration date of the Term, and provided a monetary or
material non-monetary Event of Default (beyond applicable notice and cure
periods) does not exist as of the commencement of its holdover under the Lease
when Tenant gives the notice, such notice to include a specific date by which
Tenant will vacate the Premises, such date to be no later than three (3) months
following the scheduled expiration date of the Lease Term, (the “Permissive
Holdover Term”), Tenant shall have the right to holdover possession for the
period of time specified in the notice under the same terms and conditions as
the previous term except that the Base Rent shall increase as provided in the
first sentence of this Section 21.4. Tenant may terminate the Permissive
Holdover Term at any time upon thirty (30) days’ notice to Landlord.

ARTICLE XXIII

MISCELLANEOUS

23.1 Severability. If any covenant, agreement or condition of this Lease or the
application thereof to any person, firm or corporation or to any circumstances,
shall to any extent be invalid or unenforceable, the remainder of this Lease, or
the application of such covenant, agreement or condition to persons, firms or
corporations or to circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby. Each covenant, agreement or
condition of this Lease shall be valid and enforceable to the fullest extent
permitted by law.

23.2 Non-Waiver of Default. No acquiescence by either party to any default by
the other party hereunder shall operate as a waiver of its rights with respect
to any other breach or default, whether of the same or any other covenant or
condition, nor shall the acceptance of Rent by Landlord at any time constitute a
waiver of any rights of Landlord.

23.3 Recording. The Memorandum shall be recorded by Landlord in the real estate
records of Storey County, Nevada.

23.4 Notice. All notices, consents, approvals to or demands upon or by Landlord
or Tenant desired or required to be given under the provisions hereof, shall be
in writing and shall be deemed properly given (i) on the date sent, if delivered
by hand, (ii) on the date received

 

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when such notice is deposited with a nationally recognized overnight delivery
service; (iii) on the date when received with proof of receipt to the party to
whose attention it is directed or when such party refuses to accept receipt the
date when sent, postage prepaid, by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

 

If intended for Landlord:

  

US REAL ESTATE LIMITED

PARTNERSHIP

c/o USAA Real Estate Company

9830 Colonnade Blvd., Suite 600

San Antonio, Texas 78230-2239

Attention: David Buck

with a copy to:

  

USAA Real Estate Company

9830 Colonnade Blvd., Suite 600

San Antonio, Texas 78230-2239

Attention: General Counsel

If intended for Tenant:

  

ZULILY, INC.

2200 1st Ave South

Seattle, WA 98134

Attn: Bob Spieth

with a copy to:

  

Zulily Inc.

2200 1st Ave. South

Seattle, WA 98134

Attn; General Counsel

or at such other address as may be specified from time to time in writing.

23.5 Successors and Assigns. All covenants, promises, conditions,
representations, and agreements herein contained shall be binding upon, apply
and inure to the parties hereto and their respective heirs, executors,
administrators, successors, and permitted assigns.

23.6 Time is of the Essence. The time of the performance of all of the
covenants, conditions, and agreements of this Lease is of the essence.

23.7 Partial Invalidity. If any provision of this Lease or the application
thereof to any person or circumstance shall to any extent be held invalid, then
the remainder of this Lease or the application of such provision to persons or
circumstances other than those as to which it is held invalid shall not be
affected thereby, and each provision of this Lease shall be valid and enforced
to the fullest extent permitted by law.

23.8 Interpretation. In interpreting this Lease in its entirety, the printed
provisions of this Lease and any additions written or typed thereon shall be
given equal weight, and there shall be no interference, by operation of law or
otherwise, that any provision of this Lease shall be construed against either
party hereto.

 

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23.9 Headings, Captions and References. The section captions contained in this
Lease are for convenience only and do not in any way limit or amplify any term
or provision hereof. The use of the terms “hereof,” “hereunder” and “herein”
shall refer to this Lease as a whole, inclusive of the Exhibits, except when
noted otherwise. The use of the masculine or neuter genders herein shall include
the masculine, feminine and neuter genders and the singular form shall include
the plural when the context so requires.

23.10 Business Days. In the event that any of the deadlines set forth in this
Lease end or fall on a Saturday, Sunday or legal holiday, such deadline shall
automatically be extended to the next business day which is not a Saturday,
Sunday or legal holiday.

23.11 Brokerage Commissions. Landlord and Tenant each warrants and represents to
the other that there are no brokers, finders fees or any real estate commissions
due to any broker, agent or other party in connection with the negotiation or
execution of this Lease, other than Reno Property Management, Ltd., in
conjunction with ProVenture LLC, which has represented Tenant and NAI Alliance
(Michael Nevis), which has represented Landlord in connection with this Lease
(collectively, “Brokers”), both of whom will be paid by Landlord pursuant to
separate agreements. Landlord and Tenant hereby agree to indemnify and hold the
other harmless from and against any and all costs, expenses, liabilities, causes
of action, claims or suits by any party, other than Brokers, for compensation,
commissions, fees or other sums claimed to be due or owing with respect to the
representation of Landlord or Tenant, as applicable, in effecting this Lease and
from and against all cost, expense, liability or damage (including without
limitation reasonable attorneys’ and other costs of legal representation)
arising in connection with a breach of the warranty in this Section 23.11.

23.12 Delinquency Rate. The “Delinquency Rate”” shall be defined as that annual
interest rate which is the greater of (a) ten percent (10.0%) per annum, or
(b) that variable rate which is equal to the Prime Rate (as hereinafter defined)
in effect on such date or during such period, plus four percent (4.0%),
compounded monthly from the date so advanced; provided, however, that such rate
shall be in no event higher than the maximum rate which, when compounded
monthly, is prohibited by applicable law. The “Prime Rate” shall mean the rate
per annum as stated in the Money Rates Section in The Wall Street Journal for
the period for which such rate applies.

23.13 Governing Law. This Lease shall be construed under the laws of the State
of Nevada.

23.14 Relationship of Parties. Nothing herein shall be construed so as to
constitute a joint venture or partnership between Landlord and Tenant.

23.15 Estoppel Certificates. Within twenty (20) calendar days after the request
by either party, the other party agrees to deliver to the requesting party and
to any potential mortgagee, assignee or purchaser of the requesting party’s
interest in the Premises an estoppel certificate, in form and substance
substantially in the form attached as Exhibit “H” attached hereto, certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, whether same is in full force and effect as

 

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modified, and stating the modifications), that, to the certifying party’s
reasonable knowledge and belief, there are no defenses or offsets thereto (or
stating those claimed by the certifying party), that there are no defaults by
the certifying party or, to the reasonable knowledge and belief of the
certifying party, on the part of the requesting party (or, if such defaults
exist, stating their nature) and such other matters as the requesting party may
reasonably request; provided, however, that no such estoppel certificate shall
be deemed to amend or modify this Lease.

23.16 Joint Effort. The preparation of this Lease has been a joint effort of the
parties hereto and the resulting documents shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.

23.17 Entire Agreement. It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto are merged in this Lease,
the exhibits annexed hereto and Development Agreement, all of which constitute a
part of this Lease and alone fully and completely express their agreements, and
that no party hereto is relying upon any statement or representation, not
embodied in this Lease, made by the other. Each party expressly acknowledges
that, except as expressly provided in this Lease, the other party and the agents
and representatives of the other party have not made, and the other party is not
liable for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, representations or information
pertaining to the transactions contemplated hereby.

23.18 Landlord Liability. Anything contained herein to the contrary
notwithstanding, the liability of either party to the other (or any person or
entity claiming by, through or under such party) for any default by Landlord
under the terms and provisions of this Lease or any matter arising out of or
relating to the occupancy or use of the Premises shall be limited to Tenant’s
actual direct, but not consequential, special or punitive damages therefor.
Damages recoverable from Landlord shall be enforced only against the Landlord’s
interest in the Premises, including, without limitation, Rent, insurance
proceeds, condemnation proceeds, and sales proceeds, and Landlord (and its
partners, shareholders or members) shall not be personally liable for any
deficiency. Notwithstanding the foregoing, nothing set forth in this
Section 23.18 shall be interpreted to allow Tenant to withhold payments of Rent
to offset any claims made by Tenant against Landlord, prior to Tenant obtaining
a final, non-appealable judgment against Landlord in a court of competent
jurisdiction with respect to any such claim.

23.19 Entry by Landlord. Landlord and its authorized representatives shall have
the right upon reasonable notice (which shall be not less than two (2) business
days except in the case of emergency) to enter the Premises at all reasonable
business hours (and at all other times in the event of an emergency): (a) for
the purpose of inspecting the same or for the purpose of doing any work required
or permitted of Landlord hereunder, and may take all such action thereon as may
be necessary or appropriate for any such purpose (but nothing contained in this
Lease or otherwise shall create or imply any duty upon the part of Landlord to
make any such inspection or do any such work), and (b) for the purpose of
showing the Premises to prospective purchasers and mortgagees and, at any time
within six (6) months prior to the expiration of the Term of this Lease for the
purpose of showing the same to prospective tenants. No such entry shall
constitute an eviction of Tenant, but any such entry shall be done by Landlord
in such reasonable manner as to minimize any disruption of Tenant’s business
operation. Except in the event of an emergency, or following an Event of
Default, which is continuing, Tenant shall have the right to have a
representative accompany Landlord in any such inspections.

 

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23.20 Acquisition Contingency. The force and effect of this Lease is contingent
upon the acquisition of the Land by the Landlord on or before January 30, 2014
(“Acquisition Contingency”). If fee simple title to the Land is not acquired by
the Landlord on or before the expiration of the Acquisition Contingency, this
Lease and the Development Agreement, at the option of either Landlord or Tenant,
shall terminate without penalty or claim of breach upon five (5) business days’
notice to the other party and both parties shall be released and discharged from
any further obligation hereunder; provided that following any such termination
by Landlord it shall not thereafter construct a warehouse distribution center on
the Land for any party other than Tenant without Tenant’s consent, and this
provision shall survive any termination of this Lease by Landlord pursuant to
this Section 23.20.

[SIGNATURES ON THE NEXT PAGE]

 

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IN WITNESS WHEREOF this Lease has been executed by the authorized
representatives of the parties hereto under seal as of the Effective Date.

 

LANDLORD: US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership By:  

USAA REAL ESTATE COMPANY, a

Delaware corporation, its general partner

  By:   /s/ David Buck   Name:   DAVID BUCK   Title:   Executive Managing
Director Date of Execution: 1-24-14

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

TENANT: ZULILY, INC., a Delaware corporation By:     /s/ Darrell Cavens Name:  
  Darrell Cavens Title:     CEO Date of Execution:   24 January 2014

 

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EXHIBIT “A”

THE LAND

LAND DESCRIPTION FOR PARCEL 2007-123A

PROPERTY OWNED BY MEPT RENO INDUSTRIAL CENTER LLC

AND ADJUSTED BY A BOUNDARY LINE ADJUSTMENT

A portion of Parcel 2006-64 as shown on Document No. 105609, recorded on
December 22, 2006, and all of Parcel 2007-123 as shown on Document No. 107549,
recorded on September 10, 2007, Official Records of Storey County, Nevada, being
situated in the South Half of Section 11 and the North Half of Section 14,
Township 19 North, Range 22 East, Mount Diablo Meridian, in Storey County,
Nevada, and being more particularly described as follows:

COMMENCING at a found 5/8” rebar stamped “PLS 10836” at an angle point on the
southwesterly boundary of said Parcel 2007-123, said angle point being
coincident with the easterly right-of-way of Peru Drive and also being the POINT
OF BEGINNING;

THENCE, South 50°00’20” East, a distance of 601.81 feet along said easterly
right-of-way to the northerly right-of-way of West Sydney Drive;

THENCE, North 34°59’29” East, a distance of 653.68 feet along said northerly
right-of-way;

THENCE, North 62°37’ 15” East, a distance of 1052.19 feet along said northerly
right-of-way to the westerly right-of-way of USA Parkway;

THENCE, North 27°22’45” West, a distance of 59.27 feet along said westerly
right-of-way to the northeasterly corner of said Parcel 2007-123;

THENCE, North 27°22’45” West, a distance of 950.73 feet along said westerly
right-of-way;

THENCE, South 62°37’15” West, a distance of 2175.87 feet to the easterly
right-of-way of Peru Drive;

THENCE, along said easterly right-of-way, a distance of 25.09 feet along the arc
of a non-tangent curve to the left, having a radius of 812.00 feet, through a
central angle of 1°46’14”, and a radial line to the beginning of said curve to
the left bearing South 44°15’21” West, to the northwesterly corner of said
Parcel 2007-123;

THENCE, along said easterly right-of-way, a distance of 34.96 feet along the arc
of a tangent curve to the left, having a radius of 812.00 feet, through a
central angle of 2°28’00”;

THENCE, South 49°58’53” East, a distance of 759.77 feet along said easterly
right-of-way to the POINT OF BEGINNING.

 

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Containing an area of 48.09 acres of land, more or less.

BASIS OF BEARING:

Identical to that of Document No. 105609, recorded on December 22, 2006,
Official Records of Storey County, Nevada.

 

Prepared by:

 

Glen C. Armstrong, PLS

Nevada Certificate No. 16451

US Geomatics

227 Vine Street

PO Box 3299

Reno, Nevada 89505

   LOGO [g665486new.jpg]

 

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EXHIBIT “B”

BASE RENT

 

707,010

     SF           

Months

   Escalator     Rent/Term      Rent/Month      Rent PSF  

Mos.1-6

   $ 0      $ 0       $ 0       $ 0   

Mos. 7-12

     0.00 %    $ 1,272,618.00       $ 212,103.00       $ 0.300   

Mos. 13-24

     1.75 %    $ 2,589,777.63       $ 215,814.80       $ 0.305   

Mos. 25-36

     1.75 %    $ 2,635,098.74       $ 219,591.56       $ 0.311   

Mos. 37-48

     1.75 %    $ 2,681,212.97       $ 223,434.41       $ 0.316   

Mos. 49-60

     1.75 %    $ 2,728,134.19       $ 227,344.52       $ 0.322   

Mos. 61-72

     1.75 %    $ 2,775,876.54       $ 231,323.05       $ 0.327   

Mos. 73-84

     1.75 %    $ 2,824,454.38       $ 235,371.20       $ 0.333   

Mos. 85-96

     1.75 %    $ 2,873,882.33       $ 239,490.19       $ 0.339   

Mos. 97-108

     1.75 %    $ 2,924,175.27       $ 243,681.27       $ 0.345   

Mos. 109-120

     1.75 %    $ 2,975,348.34       $ 247,945.70       $ 0.351   

Mos. 121-132

     1.75 %    $ 3,027,416.94       $ 252,284.74       $ 0.357   

Mos. 133-144

     1.75 %    $ 3,080,396.73       $ 256,699.73       $ 0.363   

 

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EXHIBIT “B-1”

FAIR MARKET RENTAL VALUE DETERMINATION

Determination of Fair Market Rental Value. If Tenant delivers an Extension
Notice in accordance with Section 2.2, Tenant and Landlord shall negotiate in
good faith to determine and mutually agree upon the Fair Market Rental Value for
the applicable Extension Term. As used herein “Fair Market Rental Value” shall
mean ninety-five percent (95%) of the then prevailing market rate for tenants of
comparable quality for new leases in buildings of comparable size, age, use
location and quality in the greater Reno, Nevada area, and all other economic
terms then customarily prevailing in such new leases in said marketplace
including any tenant improvement allowance determined to be consistent with the
prevailing market rate, taking into account the size of the Lease, brokerage
commissions, costs of improvements performed by Landlord, moving allowances, and
rent concessions. If Landlord and Tenant agree upon the Fair Market Rental Value
for an Option Term, Landlord and Tenant shall execute an amendment to lease
evidencing the Fair Market Rental Value for the Option Term and the Term of this
Lease shall be extended for five (5) years with the Base Rent being the amount
agreed to by Landlord and Tenant or the Base Rent in effect during the Lease
Year immediately preceding such Option Term as provided in Section 3.3. If
Landlord and Tenant are unable to agree upon the Fair Market Rental Value for
any Option Term, on or before One Hundred Twenty (120) days prior to the
expiration of the primary Term or the Option Term then in effect (the
“Negotiation Period”), then within ten (10) Business Days after the last day of
the Negotiation Period, Tenant may, by written notice to Landlord (the “Notice
of Exercise”), irrevocably elect to exercise such Extension Option. In order for
Tenant to exercise such Extension Option, Tenant shall send the Notice of
Exercise to Landlord stating (i) that Tenant is irrevocably exercising its right
to extend the Term pursuant to section 2.2; and (ii) Landlord and Tenant shall
be irrevocably bound by the determination of Fair Market Rental Value set forth
hereinafter in this Exhibit “B-1”. If Tenant shall fail to deliver the Notice of
Exercise on or before ten (10) Business Days after the last day of the
Negotiation Period, then Tenant shall have waived any right to exercise any
Extension Option. In the event any date referenced in this Exhibit “B-1” falls
on a day other than a Business Day, such date shall be deemed to be the next
following Business Day.

If Tenant timely delivers the Notice of Exercise to Landlord, Landlord and
Tenant shall each simultaneously present to the other party their final
determinations of the Fair Market Rental Value for the Extension Term (the
“Final Offers”) within twenty (20) business days after the last day of the
Negotiation Period. If the Fair Market Rental Value as determined by the lower
of the two (2) proposed Final Offers is not more than ten percent (10%) below
the higher, then the Fair Market Rental Value shall be determined by averaging
the two (2) Final Offers.

If the difference between the lower of the two (2) proposed Final Offers is more
than ten percent (10%) below the higher, then the Market Rate shall be
determined by Baseball Arbitration (as hereinafter defined) in accordance with
the procedure set forth below.

 

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Baseball Arbitration. For all purposes of this Lease, Baseball Arbitration shall
follow the following procedures:

(a) If there is a discrepancy greater than ten percent (10%), within thirty
(30) days after Landlord’s receipt of Tenant’s Notice of Exercise, Tenant and
Landlord shall each select an arbitrator (“Tenant’s Arbitrator” and “Landlord’s
Arbitrator”, respectively) who shall be a qualified and impartial person
licensed in the state in which the Premises is situated as an MAI appraiser with
at least ten (10) years of experience in appraising the type of matters for
which they are called on to appraise hereunder in the greater Reno, Nevada area.

(b) Landlord’s Arbitrator and Tenant’s Arbitrator shall name a third arbitrator,
similarly qualified, within ten (10) days after the appointment of Landlord’s
Arbitrator and Tenant’s Arbitrator.

(c) Said third arbitrator shall, after due consideration of the factors to be
taken into account under the definition of Fair Market Rental Value set forth
above and hearing whatever evidence the arbitrator deems appropriate from
Landlord, Tenant and others, and obtaining any other information the arbitrator
deems necessary, in good faith, make its own determination of the Fair Market
Rental Value for the Premises as of the commencement of the Extension Term (the
“Arbitrator’s Initial Determination”) and thereafter select either Landlord’s
Final Offer or the Tenant’s Final Offer, but no other, whichever is closest to
the Arbitrator’s Initial Determination (the “Final Determination”), such
determination to be made within thirty (30) days after the appointment of the
third arbitrator. The Arbitrator’s Initial Determination, Final Determination
and the market information upon which such determinations are based shall be in
writing and counterparts thereof shall be delivered to Landlord and Tenant
within said thirty (30) day period. The arbitrator shall have no right or
ability to determine the Fair Market Rental Value in any other manner. The Final
Determination shall be binding upon the parties hereto.

(d) The costs and fees of the third arbitrator shall be shared equally by the
Landlord and Tenant.

(e) If Tenant fails to appoint Tenant’s Arbitrator in the manner and within the
time specified in Subparagraph (a), then the Fair Market Rental Value for the
Extension Term shall be the Market Rate contained in the Landlord’s Final Offer.
If Landlord fails to appoint Landlord’s Arbitrator in the manner and within the
time specified in Subparagraph (a) above, then the Fair Market Rental Value for
the Extension Term shall be the Fair Market Rental Value contained in the
Tenant’s Final Offer. If Tenant’s Arbitrator and Landlord’s Arbitrator fail to
appoint the third arbitrator within the time and in the manner prescribed in
herein, then Landlord and Tenant shall jointly and promptly apply to the local
office of the American Arbitration Association for the appointment of the third
arbitrator.

 

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EXHIBIT “C”

PERMITTED EXCEPTIONS

(Parcel 20007-123A of Record of Survey Map No. 119850, filed in the Office of
the County recorded of Storey County, State of Nevada on January 21, 2014, as
file No. 119850, Official Records)

 

1. Water rights, claims or title to water, whether or not shown by the public
records.

 

2. Any taxes that may be due, but not assessed, for new construction which can
be assessed on the unsecured property rolls, in the Office of the Storey County
Assessor.

 

3. Taxes for the fiscal year July 1, 2013 through June 30, 2014, and subsequent
years.

 

4. Taxes and assessments, if any, of the TRI General Improvement District.

 

5. Reservations and provisions as contained in Patent from the United States of
America, recorded October 7, 1957, in Book 64, page 157 of Deeds, as Instrument
No. 24119, and delineated on the ALTA/ACSM Land Title Survey prepared by David
C. Crook, Nevada Professional Land Surveyor Certificate No. 10836, of Tri State
Surveying, Ltd., dated December 17, 2013, last revised January         , 2014,
designated Job No. 3151.01RM, as follows: …subject to any vested and accrued
water right for mining, agricultural, manufacturing, or other purposes and
rights to ditches and reservoirs used in connection with such water rights, as
may be recognized and acknowledged by the local customs, laws, and decisions of
courts, and there is reserved from the lands hereby granted, a right-of-way
thereon for ditches or canals constructed by the authority of the United States.
(Affects portion of Parcel 2007-123A lying within Section 14, Township 19 North,
Range 22 East.)

 

6. Reservation contained in Deed reserved by C-W NEVADA INCORPORATION, a Nevada
corporation, recorded August 18, 1987 in Book 60, page 41 as Document No. 60225,
Official Records of Storey County, Nevada, which provides in part as follows:
“Reserving therefrom to Grantor, its successor and assigns, a production royalty
in the amount of 2% of the Net Smelter Returns as hereinafter defined payable to
Grantor from the sale of gold and silver and all other smelterable metallic
derived from ores and minerals mined and removed from any portion of Exhibit “A”
land whether such minerals are derived from the surface or underground.”

 

7. Covenants, conditions and restrictions in the document recorded September 25,
1998, in Book No. 123, Page 945 as Instrument No. 83412 of Official Records, as
affected by document recorded in Book 126, Page 842, as Instrument No. 84415. A
Declaration of Annexation to said covenants, conditions and restrictions was
recorded January 22, 2008, in Book 245, Page 802 as Instrument No. 108314 of the
Official Records of Storey County, Nevada.

 

8. The terms and provisions of the Development Agreement executed by and between
the County of Storey, a political subdivision of the State of Nevada and
Tahoe-Reno Industrial Center, LLC, et al, a Memorandum of which was recorded
February 28, 2000, in Book No. 133, page 635 as Instrument No. 86804 of Official
Records of Storey County, Nevada.

 

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EXHIBIT “D”

List of Warranties

Extended Warranties:

1. Two (2) year construction warranty on the shell building and interior
improvements from General Contractor and subcontractors.

2. Twenty (20) year roofing material warranty from manufacturer and two (2) year
installation and labor warranty from roofing subcontractor.

3. Mechanical equipment manufacturer warranty (term to be determined, but no
less than two (2) years).

4. Dock leveler equipment manufacturer warranty (term to be determined, but no
less than two (2) years).

 

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EXHIBIT “E”

LEASE CONFIRMATION CERTIFICATE

This LEASE CONFIRMATION CERTIFICATE is executed as of this              day of
            , 20__, by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas
limited partnership (“Landlord”) and ZULILY, INC., a Delaware corporation
(“Tenant”).

WITNESSETH:

WHEREAS, on                             , Landlord and Tenant entered into that
certain Lease (the “Lease”), for the lease of an approximately 707,010 square
foot building (the “Premises”) situated on approximately 48.08 acres of land
located in McCarran, Storey County, Nevada, and being more particularly
described in the Lease. Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Lease; and

WHEREAS, pursuant to Section 2.1 of the Lease, the parties have agreed to
execute a written statement (the “Lease Confirmation Certificate”) setting forth
the Commencement Date.

NOW, THEREFORE, Tenant and Landlord hereby state as follows:

 

  (a) Commencement Date:                                 

Expiration Date of First Lease Year:                       

Date of Expiration of Lease:                                   

 

  (b) Pursuant to Section 3.1 and Exhibit “B” of the Lease, the Base Rent is as
follows:

 

[Lease] Years

   Annual
Rent Amount      Monthly
Rent Amount  

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                 Option Period [if elected]      

 

[Lease] Years

   Annual
Rent Amount      Monthly
Rent Amount  

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

[Lease] Years      -     (_/_/_ - _/_/_)

   $                    $                

 

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(c) Pursuant to Section 2.2 of the Lease, the Option Term notice dates are as
follows:

Option Period:                                              Deadline for
Delivery of Notice to Extend Term:

[Lease] Years      -     (_/_/_ - _/_/_)                        

[Lease] Years      -     (_/_/_ - _/_/_)                        

[Lease] Years      -     (_/_/_ - _/_/_)                        

(d) Building Square Footage: 707,010

(e) Landlord’s Tax I.D.: #                     

This Lease Confirmation Certificate is intended to determine the various dates
and time periods referenced above based on the formulae and other substantive
provisions contained in the Lease in light of the actual attendant facts and
circumstances that have come to pass. In no event is this Lease Confirmation
Certificate intended to modify any substantive provision of the Lease, and in
the event of a conflict between the terms of the Lease and this Lease
Confirmation Certificate, the terms of the Lease shall control.

This Lease Confirmation Certificate may be executed in several counterparts,
each of which may be deemed an original, and all such counterparts together
shall constitute one and the same Lease Confirmation Certificate.

 

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IN WITNESS WHEREOF, the parties have executed this Lease Confirmation
Certificate as of the date and year first above written.

 

    LANDLORD: In the presence of:     US REAL ESTATE LIMITED PARTNERSHIP,
a Texas limited partnership       By:   USAA REAL ESTATE COMPANY, a Delaware
corporation, its general partner Name:           By:             Name:          
  Title:    

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

    TENANT: In the presence of:     ZULILY, INC., a Delaware corporation      
By:     Name:         Name:           Title:    

 

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EXHIBIT “F”

MEMORANDUM OF LEASE

 

STATE OF NEVADA    )       )    COUNTY OF STOREY    )   

MEMORANDUM OF LEASE

THIS MEMORANDUM OF LEASE is made and entered into effect as of the day      of
                    , 20     (the “Effective Date”), by and between US REAL
ESTATE LIMITED PARTNERSHIP, a Texas limited partnership (“Landlord”), and
ZULILY, INC., a Delaware corporation,                                 whose
                            address                          is
                                                                             ,
Attention:                                  (“Tenant”).

1. TERM AND PREMISES. For the term and upon the provisions set forth in that
certain written lease of even date herewith from Landlord to Tenant (“Lease”),
all of which provisions are specifically made a part hereof as fully and
completely as if set out in full herein, Landlord leases to Tenant and Tenant
leases from Landlord that certain real property consisting of land and
improvements (“Premises”) located in the City of McCarran, Storey County, State
of Nevada, described on Exhibit “A”, which exhibit is attached hereto and made a
part hereof, together with all rights of ingress and egress and all other rights
appurtenant to said Premises, including, without limitation, the right to use
the building(s) constructed or to be constructed on the Premises for the
purposes contemplated in the Lease, all of which rights are more particularly
described in the Lease.

2. OPTIONS TO EXTEND TERM. Reference is particularly made to Section 2.2 of the
Lease wherein Tenant is given three (3) successive five (5) year options to
extend the Term of the Lease on the terms and conditions set forth therein.

3. PURPOSE OF MEMORANDUM OF LEASE. This Memorandum of Lease is prepared for the
purposes of recording a notification as to the existence of the Lease but in no
way modifies the express and particular provisions of the Lease.

 

56

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IN WITNESS WHEREOF this Memorandum of Lease has been executed by the authorized
representatives of the parties hereto under seal as of the Effective Date.

 

      LANDLORD: Signed, sealed and delivered in the presence of:       US REAL
ESTATE LIMITED PARTNERSHIP, a Texas limited partnership     By:   USAA REAL
ESTATE COMPANY, a Delaware corporation, its general partner  

 

      By:                                     
                                                 [Witness]      

 

Name:                                                                   
            

Print Name:                                                                     
             

Title:                                                                   
            

 

[Notary Public]

Print Name:                                                                     

    Date of Execution:                                       
                             

 

STATE OF TEXAS    )          )    ACKNOWLEDGMENT    COUNTY OF BEXAR    )      

Personally appeared before me,                     , Notary Public,
                    , with whom I am personally acquainted, and who acknowledged
that he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the                      of USAA Real Estate
Company, which is the general partner of US REAL ESTATE LIMITED PARTNERSHIP, and
is authorized by the Landlord to execute this instrument on behalf of the
Landlord.

WITNESS my hand, at office, this              day of                     ,
20        .

 

 

 

Notary Public in and for the State of Texas

[SIGNATURES CONTINUED ON NEXT PAGE]

 

57

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

      TENANT: Signed, sealed and delivered in the presence of:       ZULILY,
INC., a Delaware corporation  

 

      By:                                     
                                                 [Witness]      

 

Name:                                                                   
            

Print Name:                                                                     
             

Title:                                                                   
            

 

[Notary Public]

Print Name:                                                                     

    Date of Execution:                                       
                             

 

STATE OF                             )          )    ACKNOWLEDGMENT    COUNTY OF
                            )      

Personally appeared before me,                     , Notary Public,
                    , with whom I am personally acquainted, and who acknowledged
that he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the                      of ZULILY, INC., a
Delaware corporation, and is authorized by the Tenant to execute this instrument
on behalf of the Tenant.

WITNESS my hand, at office, this              day of             , 20        .

 

 

 

Notary Public in and for the State of                     

 

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EXHIBIT “G”

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

STATE OF NEVADA    )       )    COUNTY OF MCCARREN    )   

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

THIS AGREEMENT, made and entered into as of this              day of
            , 20        , by and between              (“Lender”) and ZULILY,
INC., a Delaware Corporation, having its principal office at
                                    , Attention:                     
(“Tenant”);

RECITALS

WHEREAS by a Lease dated                     , as evidenced by that certain
Memorandum of Lease, dated             , and recorded in Deed Book             ,
Page             , Storey County, Nevada records (the “Lease”), US REAL ESTATE
LIMITED PARTNERSHIP, a Texas limited partnership (“Landlord”), has leased to
Tenant and Tenant has leased from Landlord all of that certain property in the
County of Storey, State of Nevada, more particularly described in the Lease (the
“Premises”) as the same may have been amended, modified, supplemented, extended
or renewed from time to time;

WHEREAS Lender is the current holder of a mortgage (the “Mortgage”) dated
            , 200            , executed by Landlord securing an indebtedness in
the original principal amount of $            , and recorded             ,
200        , in the Official Records of                     as Instrument No.
                    , which constitutes a lien against the Premises, and;

WHEREAS, Tenant desires that Lender recognize Tenant’s rights under the Lease
and Tenant is willing to attorn to a purchaser at a foreclosure, if any,
pursuant to the Mortgage, if Lender and such purchaser recognize Tenant’s rights
under the Lease;

NOW THEREFORE, in consideration of the sum of $10.00 in hand paid and other good
and valuable consideration, receipt of which are hereby acknowledged, and for
and in consideration of their respective covenants herein made, the parties
agree as follows:

1. The Lease is and shall be subject and subordinate to the lien of the Mortgage
insofar as it affects the real property of which the Premises form a part, to
the full extent of the principal sum secured thereby and interest thereon, and
any other sums secured thereby, except as noted herein.

2. In the event of foreclosure of the Mortgage or transfer of the Premises by
deed in lieu of foreclosure, provided Tenant is not in default under any of the
terms, covenants or conditions of the Lease beyond any applicable notice and
cure period, (a) the Lease shall

 

59

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continue in full force and effect as a direct lease and agreement between the
succeeding owner of the Premises and Tenant upon and subject to all of the
terms, covenants and conditions of the Lease, (b) the rights of Tenant under the
Lease shall not be disturbed or diminished and Tenant shall remain in possession
of the Premises in accordance with the terms and conditions of the Lease, (c) no
term or provision of the Lease shall be altered.

3. Tenant agrees to attorn to and accept any such successor as a result of
foreclosure, or deed in lieu thereof, as landlord under the Lease and to be
bound by and perform all the obligations imposed by the Lease.

4. Lender agrees that the possession of Tenant of the Premises shall not be
disturbed, and that Lender shall be bound by all of the obligations imposed by
the Lease.

5. Tenant shall have the same rights and remedies for a breach of the Lease
against any successor Landlord, including Lender, in the event that Lender shall
succeed to the interest of Landlord under the Lease, that Tenant might have had
under the Lease against Landlord; provided, however, that Lender or any
successor Landlord shall not:

(a) be liable for any prior act or omission of any prior landlord (including the
Landlord) under the Lease, except to the extent that any such act or omission
continues following the date that Lender succeeds to the interest of the
Landlord under the Lease; or

(b) be bound by any Base Rent which Tenant might have paid for more than one
(1) month in advance.

Notwithstanding the foregoing, nothing herein shall excuse Lender or any
successor Landlord from liability or responsibility for, or limit any right or
remedy of Tenant with respect to, any breach or default which continues from and
after the date when Lender or such successor Landlord obtains title to or takes
possession or control of the Premises.

6. This Agreement shall be governed by and construed in accordance with laws of
the State of Nevada.

7. This Agreement shall also bind and benefit the heirs, legal representatives,
successors and assigns of the respective parties hereto, and all covenants,
conditions and agreements herein contained shall be construed as running with
the land.

[SIGNATURES CONTAINED ON FOLLOWING PAGES]

 

60

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first
above written.

 

      TENANT: Signed, sealed and delivered in the presence of:       ZULILY,
INC., a Delaware corporation  

 

      By:                                     
                                                 [Witness]      

 

Name:                                                                   
            

Print Name:                                                                     
             

Title:                                                                   
            

 

[Notary Public]

Print Name:                                                                     

    Date of Execution:                                       
                             

 

STATE OF                 )          )    ACKNOWLEDGMENT    COUNTY OF
                )      

Personally appeared before me,                     , Notary Public,
                    , with whom I am personally acquainted, and who acknowledged
that he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the             of ZULILY, INC., a Delaware
corporation and is authorized to execute this instrument on behalf of the
Tenant.

WITNESS my hand, at office, this              day of             , 20    .

 

 

 

 

Notary Public in and for the State of             

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

      LENDER: Signed, sealed and delivered in the presence of:      
                                                 , a                            
 

 

      By:                                     
                                                

[Witness]

Print Name:                                                                     

      Name:                                
                                                       
Title:                                    
                                                   
Date of Execution:                                 
                                   

[Notary Public]

Print Name:                                                                     

   

 

STATE OF                 )          )    ACKNOWLEDGMENT    COUNTY OF
                )      

Personally appeared before me,                     , Notary Public,
                    , with whom I am personally acquainted, and who acknowledged
that he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the                     of
                     and is authorized to execute this instrument on behalf of
the Lender.

WITNESS my hand, at office, this              day of             , 20        .

 

 

 

Notary Public in and for the State of             

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

      LANDLORD: Signed, sealed and delivered in the presence of:       US REAL
ESTATE LIMITED PARTNERSHIP, a Texas limited partnership     By:   USAA REAL
ESTATE COMPANY, a Delaware corporation, its general partner  

 

      By:                                     
                                                

[Witness]

Print Name:                                                                     

      Name:                                
                                                       

Title:                                                                   
            

 

[Notary Public]

Print Name:                                                                     

    Date of Execution:                                       
                             

 

STATE OF TEXAS    )          )    ACKNOWLEDGMENT    COUNTY OF BEXAR    )      

Personally appeared before me,             , Notary Public,             , with
whom I am personally acquainted, and who acknowledged that he executed the
within instrument for the purposes therein contained, and who further
acknowledged that he is the             of USAA Real Estate Company, which is
the general partner of US REAL ESTATE LIMITED PARTNERSHIP, and is authorized by
the Landlord to execute this instrument on behalf of the Landlord.

WITNESS my hand, at office, this              day of             , 20    .

 

 

 

Notary Public in and for the State of Texas

 

 

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EXHIBIT “H”

ESTOPPEL CERTIFICATE

 

TO:                             

 

RE: Triple Net Lease Agreement, dated             , 20             (“Lease”), by
and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership
(“Landlord”) and ZULILY, INC., a Delaware corporation (“Tenant”) for the
premises located at                                     , as more fully
described in the Lease (the “Premises”).

The undersigned, as Tenant under the above referenced Lease, hereby certifies to
the best of its actual knowledge, as of the date hereof, the following:

1. The undersigned has entered into occupancy of the Premises described in the
Lease;

2. The Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way, except as follows:

3. The Commencement Date of the Lease was                     ;

4. The expiration date of the Lease is                         , however, Tenant
has additional options to extend the term of the Lease as provided therein;

5. Current annual Base Rent is $            ; or, $             per month;

6. All conditions of the Lease to be performed by Landlord and necessary to the
enforceability of the Lease have been satisfied;

7. There are no defaults by either Landlord or Tenant thereunder;

8. No rents have been paid in advance of one (1) month; and

9. There are no existing defenses or offsets which the undersigned has against
the Landlord.

 

--------------------------------------------------------------------------------

This Estoppel Certificate is given solely for the information of the party to
whom it is addressed and may not be relied upon by any other person or entity.

 

ZULILY, INC., a Delaware corporation By:     Name:     Title:     Dated: