Exhibit 10.3

LEASE AGREEMENT

Dated as of December 17, 2013

Between

DC-7337 Trade Street LLC, as Lessor

and

AT&T Services, Inc.,

as Lessee

and

AT&T Teleholdings, Inc., a

Delaware corporation, as Guarantor

 

 

7337 Trade Street, San Diego, California

The mailing, delivery or negotiation of this Lease by Lessee or its agent or
attorney shall not be deemed an offer by Lessee to enter into this Lease or to
enter into any other relationship with Lessor, whether on the terms contained
herein or on any other terms. This Lease shall not be binding upon Lessee, and
Lessee shall not have any obligations or liabilities or Lessor any rights with
respect thereto, or with respect to the Property, unless and until Lessee has
executed and delivered this Lease. Until such execution and delivery of this
Lease, Lessee may terminate all negotiation and discussion of the subject matter
hereof, without cause and for any reason, without recourse or liability.

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ARTICLE 1.      DEFINITIONS

     1   

Section 1.1.

 

Definitions

     1   

ARTICLE 2.      LEASE OF PROPERTY

     1   

Section 2.1.

 

Demise and Lease

     1   

ARTICLE 3.      RENT

     3   

Section 3.1.

 

Base Rent

     3   

Section 3.2.

 

Supplemental Rent

     3   

Section 3.3.

 

Method of Payment

     3   

Section 3.4.

 

Late Payment

     3   

Section 3.5.

 

No Setoff

     3   

Section 3.6.

 

True Lease

     3   

ARTICLE 4.      RIGHT OF FIRST OPPORTUNITY

     4   

Section 4.1.

 

Right of First Opportunity

     4   

Section 4.2.

 

Non-Applicability of Section 4.1

     4   

Section 4.3.

 

Miscellaneous

     5   

ARTICLE 5.      RENEWAL OPTIONS

     5   

Section 5.1.

 

Renewal

     5   

Section 5.2.

 

Lease Provisions Applicable During Renewal

     6   

ARTICLE 6.      ENFORCEMENT OF WARRANTIES

     6   

Section 6.1.

 

Assignment of Warranties

     6   

ARTICLE 7.      LIENS

     7   

Section 7.1.

 

Liens

     7   

ARTICLE 8.      USE, MAINTENANCE, CAPITAL REPAIR, ETC.

     7   

Section 8.1.

 

Use

     7   

Section 8.2.

 

Maintenance and Repair

     7   

Section 8.3.

 

Property Assessment Reports

     9   

Section 8.4.

 

Alterations

     9   

Section 8.5.

 

Compliance with Law; Environmental Compliance

     11   

Section 8.6.

 

Payment of Impositions

     12   

Section 8.7.

 

Adjustment of Impositions

     12   

Section 8.8.

 

Utility Charges

     13   

Section 8.9.

 

Litigation; Zoning; Joint Assessment

     13   

 

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ARTICLE 9.      INSURANCE

     14   

Section 9.1.

 

Coverage

     14   

Section 9.2

 

Self Insure

     15   

ARTICLE 10.    RETURN OF PROPERTY TO LESSOR

     16   

Section 10.1.

 

Return of Property to Lessor

     16   

ARTICLE 11.    ASSIGNMENT BY LESSEE

     17   

Section 11.1.

 

Assignment by Lessee

     17   

Section 11.2

 

Use by Other Persons

     17   

Section 11.3

 

Notice to Lessor

     17   

Section 11.4

 

Prohibited Assignments/Subleases

     17   

Section 11.5

 

Lessor’s Right to Collect Sublease Rents upon Lease Event of Default

     17   

Section 11.6

 

Sale of Property

     17   

ARTICLE 12.    LOSS; DESTRUCTION; CONDEMNATION OR DAMAGE

     18   

Section 12.1.

 

Destruction of the Building

     18   

Section 12.2.

 

Lessee’s Right to Terminate

     19   

Section 12.3.

 

Condemnation

     20   

ARTICLE 13.    REDUCTION OF RENT

     21   

Section 13.1.

 

Reduction of Rent

     21   

ARTICLE 14.    SUBLEASE

     22   

Section 14.1.

 

Subleasing Permitted; Lessee Remains Obligated

     22   

Section 14.2.

 

Service Providers

     22   

ARTICLE 15.    INSPECTION

     22   

Section 15.1.

 

Inspection

     22   

ARTICLE 16.    LEASE EVENTS OF DEFAULT

     23   

Section 16.1.

 

Lease Events of Default

     23   

ARTICLE 17.    ENFORCEMENT

     25   

Section 17.1.

 

Lessor Remedies

     25   

Section 17.2.

 

Survival of Lessee’s Obligations

     26   

Section 17.3.

 

Remedies Cumulative; No Waiver; Consents; Mitigation of Damages

     27   

 

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ARTICLE 18.    RIGHTS TO PERFORM FOR LESSEE AND LESSOR

     27   

Section 18.1.

 

Lessor’s Right to Perform for Lessee

     27   

Section 18.2.

 

Lessee’s Right to Perform for Lessor

     28   

ARTICLE 19.    INDEMNITIES

     28   

Section 19.1.

 

General Indemnification

     28   

Section 19.2.

 

No Third Party Environmental Indemnification

     29   

Section 19.3.

 

Drainage Easement Indemnification

     29   

ARTICLE 20.    LESSEE REPRESENTATIONS AND COVENANTS

     30   

Section 20.1.

 

Representations and Warranties

     30   

ARTICLE 21.    [INTENTIONALLY DELETED]

     31   

ARTICLE 22.    BROKERAGE

     31   

Section 22.1

 

Brokers

     31   

ARTICLE 23.    TRANSFER OF LESSOR’S INTEREST

     31   

Section 23.1.

 

Permitted Transfer

     31   

Section 23.2.

 

Effects of Transfer

     31   

ARTICLE 24.    PERMITTED FINANCING

     32   

Section 24.1.

 

Financing During Lease Term

     32   

Section 24.2.

 

Lessee’s Consent to Assignment for Indebtedness

     32   

ARTICLE 25.    MISCELLANEOUS

     32   

Section 25.1.

 

Binding Effect; Successors and Assigns; Survival

     32   

Section 25.2.

 

Quiet Enjoyment

     33   

Section 25.3.

 

Notices

     33   

Section 25.4.

 

Severability

     33   

Section 25.5.

 

Amendments, Complete Agreements

     33   

Section 25.6.

 

Headings

     34   

Section 25.7.

 

Counterparts

     34   

Section 25.8.

 

Governing Law

     34   

Section 25.9.

 

Memorandum

     34   

Section 25.10.

 

Estoppel Certificates

     34   

Section 25.11.

 

Lessee Easements

     34   

Section 25.12.

 

No Joint Venture

     35   

Section 25.13.

 

No Accord and Satisfaction

     35   

 

Appendix

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Section 25.14.

 

No Merger

     35   

Section 25.15.

 

Lessor Bankruptcy

     36   

Section 25.16.

 

Naming and Signage of the Property

     36   

Section 25.17.

 

Expenses

     36   

Section 25.18.

 

Additional Parking

     37   

Section 25.19.

 

Further Assurances

     37   

Section 25.20.

 

OFAC Representation

     37   

Section 25.21.

 

REIT Status

     37   

Section 25.22.

 

Lessor Exculpation

     38   

Section 25.23.

 

Remedies Cumulative

     38   

Section 25.24.

 

Holding Over

     38   

Section 25.25.

 

Survival

     38   

Section 25.26.

 

Financial Statements

     39   

Section 25.27.

 

Relationship of Lease and Mortgage

     39   

Section 25.28.

 

Lessor Representations

     39   

Section 25.29

 

Rooftop Rights

     39   

Section 25.30

 

Authorized Representative

     41   

Section 25.31

 

Confidentiality

     41   

Section 25.32

 

Guaranty

     42   

ARTICLE 26.    FORCE MAJEURE

     42   

Section 26.1

 

Force Majeure

     42   

ARTICLE 27.    DISPUTE RESOLUTION

     42   

Section 27.1

 

Negotiation

     42   

 

Appendix A   Definitions Schedule 3.1   Rent Schedule Schedule 9.1   Insurance
Requirements Exhibit A   Legal Description of Property Exhibit B   Memorandum of
Lease Exhibit C   Form of Estoppel Agreement Exhibit D   Form of Subordination,
Nondisturbance and Attornment Agreement Exhibit E   Property Condition Report
Exhibit F   Guaranty Exhibit G   Repair Items per Section 8.2

 

Appendix

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This LEASE AGREEMENT (this “Lease”) is made and entered into as of December
    , 2013 by and between DC-7337 Trade Street LLC, a Delaware limited liability
company, as Lessor (“Lessor”), and AT&T Services, Inc., a Delaware corporation,
as Lessee (“Lessee”).

RECITALS

Lessor desires to lease to Lessee and Lessee desires to lease from Lessor the
Property, (as more specifically defined in the Definitions set forth in Appendix
A as the “Property”) upon the terms and conditions set forth in this Lease; and

In connection therewith, Lessor desires to grant and delegate to Lessee, and
Lessee desires to accept and assume from Lessor, all of the rights, duties and
obligations associated with the ownership, maintenance, repair and replacement
of the Property, as further described in this Lease.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows.

TERMS

ARTICLE 1.

DEFINITIONS

Section 1.1. Definitions. All capitalized terms used but not otherwise defined
herein shall have the meanings set forth in Appendix A attached hereto and made
a part hereof.

ARTICLE 2.

LEASE OF PROPERTY

Section 2.1. Demise and Lease. (a) Lessor hereby demises and leases the Property
to Lessee, and Lessee does hereby rent and lease the Property from Lessor, for
the Base Term. The Building at the Property consists of approximately Four
Hundred Ninety Nine Thousand Four Hundred and Two (499,402) rentable square
feet, situated on approximately Sixteen and 86/100 (16.86) acres.

(b) Lessee may from time to time own or hold under lease or license from Persons
other than Lessor, Lessee’s Equipment and Personalty, located on or about the
Property, which shall not be subject to this Lease. Lessor shall from time to
time, upon the reasonable request of Lessee, promptly acknowledge in writing to
Lessee or other Persons that Lessor does not own or, except as provided in
Article 10, have any other right or interest in or to such furniture, equipment
and personal property, including Lessee’s Equipment and Personalty, whether now
owned or hereafter acquired, and Lessor hereby waives any such right, title or
interest. In addition, the Bloom Cells and Solar Panels at the Property under
license with Pacific Bell, as assigned to Lessee upon sale of the Property to
Lessor, shall be assigned by Lessee to Lessor at the termination of this Lease,
or if Lessor desires, terminated as the same pertain to the Property.

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Section 2.2 Net Lease; Non-Terminable. (a) This is a net lease and Base Rent,
Supplemental Rent and all other sums payable hereunder by Lessee shall be paid,
except as otherwise expressly set forth in this Lease, without notice, demand,
setoff, counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense.

(b) Except as otherwise expressly provided in this Lease, this Lease shall not
terminate, and Lessee shall not have any right to terminate this Lease, during
the Term. This Lease is the absolute and unconditional obligation of Lessee.
Lessee shall not be entitled to any setoff right, any Lien against Lessor or its
property, or except as otherwise provided herein, any counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense of
or to Base Rent, Supplemental Rent or any other sums payable under this Lease.
Lessee hereby waives all rights which are not expressly stated in this Lease but
which may now or hereafter otherwise be conferred by law (i) to quit, terminate
or surrender this Lease or any of the Property, (ii) to any setoff, counterclaim
(except to the extent a mandatory counterclaim for damages, injunctive or other
similar equitable relief as set forth below), recoupment, abatement, suspension,
deferment, diminution, deduction, reduction or defense (provided that Lessee
shall not be deemed to have waived any defense in the context of litigation
commenced by Lessor) of or to Base Rent, Supplemental Rent or any other sums
payable under this Lease, except as otherwise expressly provided in this Lease,
and (iii) for any statutory Lien or offset right against Lessor or its property.
This waiver by Lessee of any such rights shall not be a waiver of its right to
seek damages, injunctive or other equitable relief by commencing litigation
against Lessor and to recover such damages as provided under Applicable Law. The
obligations of Lessee to pay Base Rent and Supplemental Rent under this Lease
shall not be affected by any interference with Lessee’s use of any of the
Property for any reason, including but not limited to the following: (i) any
damage to or destruction of any of the Property by any cause whatsoever,
(ii) any Condemnation, (iii) the prohibition, limitation or restriction of use
of the Property except to the extent the use is not a Permitted Use of any of
the Property unless intentionally and directly caused by Lessor, other than by
its due exercise of its rights under this Lease, (iv) any eviction by paramount
title or otherwise (not constituting an intentional and direct breach by Lessor
of this Lease, (v) any default on the part of Lessor under this Lease or under
any other agreement, (vi) any latent or other defect in, or any theft or loss of
any of, the Property, (vii) the breach of any warranty of any seller or
manufacturer of any of the fixtures within the Building, or (viii) any other
cause, whether similar or dissimilar to the foregoing, any Applicable Law to the
contrary notwithstanding, other than on account of an intentional and direct
breach by Lessor of this Lease. It is the intention of the parties hereto that
the obligations of Lessee under this Lease shall be separate and independent
covenants and agreements, and that Base Rent and Supplemental Rent shall
continue to be payable in all events and that the obligations of Lessee under
this Lease shall continue unaffected, unless this Lease shall have been
terminated pursuant to an express provision of this Lease.

(c) Lessee agrees that it shall remain obligated under this Lease in accordance
with its provisions and that Lessee shall not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding-up
or other proceeding affecting Lessor, (ii) the exercise of any remedy, including
foreclosure, under any mortgage affecting the Property, or (iii) any action with
respect to this Lease (including the disaffirmance hereof) which may be taken by
Lessor under the Federal Bankruptcy Code or by any trustee, receiver or
liquidator of Lessor or by any court under the Federal Bankruptcy Code or
otherwise.

 

2

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ARTICLE 3.

RENT

Section 3.1. Base Rent. Lessee shall pay to Lessor Base Rent on each Rent
Payment Date during the Base Term in the amount set forth on Schedule 3.1
attached hereto and incorporated herein. Each installment of Base Rent is
payable monthly in advance.

Section 3.2. Supplemental Rent. Lessee shall pay to Lessor, or to such other
Person as shall be entitled thereto in the manner contemplated herein or as
otherwise required by Lessor, any and all Supplemental Rent as the same shall
become due and payable. In the event of Lessee’s failure to pay when due and
payable any Supplemental Rent, Lessor shall have all rights, powers and remedies
provided for herein.

Section 3.3. Method of Payment. All Base Rent shall be paid to Lessor, or to
such other account in the continental United States as Lessor may from time to
time designate (on at least twenty (20) Business Days’ prior written notice) to
Lessee. Lessee shall make each payment of Base Rent by wire or other transfer of
immediately available funds consisting of lawful currency of the United States
of America.

Section 3.4. Late Payment. If, during any Lease Year, Lessee shall make any
payment of Base Rent more than ten (10) days after such payment is due under
Section 3.3, Lessor shall notify Lessee in writing that such payment is late and
Lessee shall pay interest on such late payments from the due date of such
payments to the date of receipt of such payments by Lessor at a rate per annum
equal to the Default Rate, provided that if Lessor shall fail to notify Lessee
of any such late payment within three (3) months after the due date thereof,
Lessee shall not be obligated to pay interest on such late payment.

Section 3.5. No Setoff. It is agreed and intended that, except as otherwise
specifically provided in this Lease, Base Rent, Supplemental Rent and any other
amounts payable hereunder by Lessee shall be paid without notice, demand or
setoff.

Section 3.6. True Lease. It is the intent of Lessor and Lessee and the parties
agree that this Lease is an absolute true net net net lease (commonly referred
to as a “bond” lease) and that this Lease does not represent a financing
agreement, capital lease or other financing or trust arrangement, and the
economic realities of this Lease are those of a true lease. Each party shall
reflect the transaction represented hereby in all applicable books, records and
reports (including income tax filings and financial reports) in a manner
consistent with “true lease” treatment rather than “financing” treatment.

For purposes of clarity, the parties confirm that during the Lease term, as
extended, no license or other fees shall be payable by Lessee (or its Affiliates
or Assigns) to Lessor with respect to Lessee’s ownership and/or operation of any
part of the Property as a data center, nor as to access or use of any of the
mechanical, electrical or plumbing building systems which are a part of the
Property, except as are expressly stated in this Lease.

 

3

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ARTICLE 4.

RIGHT OF FIRST OPPORTUNITY

Section 4.1. Right of First Opportunity. (a) Subject to the terms of this
Article 4, Lessee shall have a right of first offer as described in this Article
4 with respect to any sale of the Property or a portion thereof. If Lessor or
any controlling members, shareholders or partners of Lessor or its Affiliates
(the “Offeror”), determines that it desires to sell the Property or portion
thereof (other than to an Affiliate of such Offeror), then it shall first offer
the same to Lessee by delivering to Lessee a notice (constituting an offer)
stating the sales price and all other material terms for the sale of the
Property or other interest that Offeror would accept (the “First Offer Notice”).
Lessee shall have twenty (20) days from its receipt of the First Offer Notice to
accept the offer set forth in the First Offer Notice (the “Terms”). For purposes
hereof, the twenty (20) day period is referred to as the “Applicable Period”. A
First Offer Notice may be accepted by Lessee or its designee. The Offeror shall
not be permitted to revoke the First Offer Notice during the Applicable Period,
but the First Offer Notice shall be deemed to be revoked during the Applicable
Period if Offeror and Lessee or Lessee’s designee enter into a purchase
agreement with a purchase price or other economic terms which are materially
different than the Terms. The Terms may be rejected by Lessee at any time.

(b) If Lessee desires to accept the Terms for the Property, Lessee must accept
the Terms within the Applicable Period, whereupon the Lessee shall enter into a
purchase agreement with the Offeror for the purchase and sale of the Property or
portion thereof, as applicable, in a mutually agreeable form reflecting the
Terms within fifteen (15) days after Lessee has irrevocably accepted the Terms.
The purchase agreement for the sale of the Property or portion thereof, as
applicable, shall provide for a closing on the terms set forth in the Terms.
Lessor (on behalf of the Offeror) and Lessee agree to negotiate any purchase
agreement in good faith, subject to Section 4.3.

(c) If Lessee (or its designee) rejects the Terms, the Offeror shall either
(i) execute a purchase agreement on the Terms and close (absent a default by the
buyer) or (ii) if the Terms were contained in an executed agreement with a
buyer, close on the Terms therein (absent a default by the buyer) except that
the purchase prices may be no less than ninety percent (90%) of the purchaser
price offered to Lessee, in each case within one hundred eighty (180) days from
(y) the expiration of the Applicable Period or (z) the date Lessee rejects the
Terms, whichever is earlier. This Lease shall survive any sale or transfer
described herein. If the closing does not occur within such period, the Offeror
shall be required to repeat the procedure set forth in Section 4.1(a) each time
that it desires to sell the Property or offered interests.

Section 4.2. Non-Applicability of Section 4.1. (a) Section 4.1 shall not apply
to a conveyance or assignment to an Affiliate of Lessor, to Lender or an
Affiliate of or successor to Lender, to the purchaser at a foreclosure sale in
connection with the foreclosure, or to Lender or any Affiliate or designee in
connection with a deed in lieu of foreclosure of the Mortgage. Lessee’s rights
hereunder shall survive any sale or transfer described above.

(b) Any purchase of the Property under this Article 4 will be subject to this
Lease and the Mortgage, unless the indebtedness secured by the Mortgage is
repaid in full. If Lessee or its Affiliate is the purchaser of the Property
there shall be no merger of the fee and the leasehold.

 

4

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Section 4.3. Miscellaneous. (a) Lessee’s failure to elect to purchase the
Property shall not constitute a waiver on the part of Lessee of its rights under
this Article 4 with respect to any other proposed sale, assignment, transfer,
conveyance or other disposition.

(b) The First Offer Notice and the Terms must cover only the Property and not
any other property owned by Lessor or an affiliate of Lessor.

(c) The First Offer Notice and the Terms must cover the entire Property. Lessor
may not sell, or offer to sell, or transfer, or offer to transfer, any interest,
the result of which would be a sale or transfer of less than the entirety of the
Property. Lessee’s failure to exercise its right of first offer in this
situation shall not constitute a waiver on the part of Lessee of its rights
under this Article 4 with respect to any other proposed sale, assignment,
transfer, conveyance or other disposition. This right of first offer shall also
be triggered and the rights of Lessee hereunder vested in the event the Property
is included in a sale or transfer of an interest in real estate of which the
Property is a part.

(d) The controlling member, shareholder or partner of Lessor may not transfer or
assign its interest in Lessor so that it is no longer a controlling member,
controlling shareholder or controlling partner of Lessor (other than in
connection with a corporate transaction involving the transfer of all or
substantially all of the assets of the controlling member, shareholder or
partner of Lessor at a time when such assets include significant assets other
than such party’s interest in Lessor) unless it first complies with the
provisions of Section 4.1 and (i) neither the transferee nor any Affiliate
thereof is a Significant Competitor, directly or indirectly, of Lessee or any
Affiliate thereof, and (ii) such transfer or assignment shall not result in a
violation of Applicable Laws, including the Securities Act of 1933, as amended,
any other applicable securities law or ERISA or accounting requirements for
treatment of this Lease by Lessee as an operating lease.

ARTICLE 5.

RENEWAL OPTIONS

Section 5.1. Renewal. Provided that Lessee is not in default under the Lease and
Lessee has not assigned the Lease, Lessee may at its option extend the Term of
this Lease for four (4) additional periods of five (5) years each (each a
“Renewal Option”). Such periods are called the Renewal Term(s). The Renewal
Term(s) shall be on the same terms contained in this Lease except for Base Rent
during the Renewal Term; and any reference in this Lease to the “Term” of the
Lease shall be deemed to include any Renewal Term and apply thereto, unless it
is expressly provided otherwise. The Base Rent during the Renewal Term shall be
the lesser of i) 95% of then Fair Market Rent; or ii) one hundred three percent
(103%) of the Base Rent for the last year of the Term; with Base Rent increasing
by three percent (3%) each year thereafter during the Renewal Term. The Renewal
Option may be exercised only with

 

5

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respect to the entire Property. The Renewal Option shall be exercisable by
written notice (the “Renewal Notice”) to Lessor given not earlier than
twenty-four (24) months, nor later than twelve (12) months (time being of the
essence), prior to the expiration date of the Term or Renewal Term (as
applicable).

Notwithstanding the foregoing, Lessee shall also have the right (the “Extension
Right”) to extend the Base Term for a period of up to one (1) year (the
“Extension Period”), subject to the following terms and conditions. The
Extension Right shall be exercised by Lessee delivering written notice to Lessor
at least twenty (20) months prior to the expiration of the Base Term. The
Extension Period shall be subject to all of the terms and conditions of the
Lease and each monthly installment of Base Rent shall equal to one hundred
twenty percent (120%) of the monthly installment of Base Rent in effect during
the last month of the Term prior to the Extension Period.

Section 5.2. Lease Provisions Applicable During Renewal. All the provisions of
this Lease shall be applicable during each Renewal Term and the number of
Renewal Terms shall be correspondingly reduced.

ARTICLE 6.

ENFORCEMENT OF WARRANTIES

Section 6.1. Assignment of Warranties. (a) Lessor hereby assigns and sets over
to Lessee, and Lessee hereby accepts the assignment of, for the period of the
Lease Term and on a nonexclusive basis, all of Lessor’s right, title, interest
and estate in, to and under any and all warranties and other claims against
dealers, manufacturers, vendors, contractors and subcontractors relating to the
construction, use and maintenance of the Property or any portion thereof now
existing or hereafter acquired (excluding from such assignment any such
warranties and claims which by their terms are not assignable by Lessor without
loss of some or all of the benefits of such warranties or claims) (collectively
“Warranty Claims”). Lessor shall have no obligations under, or liabilities with
respect to, any such warranties and claims. Lessee shall at its sole cost pursue
all Warranty Claims in order to effect any repair or replacement of which Lessee
is aware and which is covered by such Warranty Claims. The assignment of such
warranties to Lessee shall automatically terminate upon the termination of this
Lease.

(b) Lessor authorizes Lessee (directly or through agents) at Lessee’s expense to
assert during the Lease Term, all of Lessor’s rights (if any) under any
applicable warranty and any other Warranty Claims that Lessee or Lessor may have
against any dealer, vendor, manufacturer, contractor or subcontractor with
respect to the Property or any portion thereof.

(c) Lessor agrees, at Lessee’s expense, to cooperate with Lessee and take all
other action necessary as specifically requested by Lessee to enable Lessee to
enforce all of Lessee’s rights (if any) under this Section 6.1, such rights of
enforcement to be exclusive to Lessee, and Lessor will not, during the Lease
Term, amend, modify or waive, or take any action under, any applicable warranty
or other claim that Lessee may have under this Section 6.1 without Lessee’s
prior written consent.

 

6

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ARTICLE 7.

LIENS

Section 7.1. Liens. Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien (other than Permitted Liens) on or with
respect to (a) all or any part of the Property, title thereto or any interest
therein; (b) this Lease or the leasehold interest created hereby; (c) the Rent,
title thereto or interest therein; or (d) the rentals payable with respect to
the subletting of the Property. Except with respect to, and to the extent of,
such Liens the imposition of which resulted from the actions or inactions of
Lessor, Lessee shall promptly, but not later than forty (40) days after receipt
of notice of the filing thereof, at its own expense, take such action as may be
necessary duly to discharge or eliminate or bond in a manner reasonably
satisfactory to Lessor any such Lien (other than Permitted Liens); provided,
however, that Lessee may contest any such Lien in good faith, upon satisfaction
of the conditions contained in Section 8.6(c) (excluding clause (vii) thereof)
with respect to Lessee’s right to contest Impositions. During the course of any
such contest, Lessee need not discharge or bond such Lien provided that no
action to foreclose the Lien has been brought in any judicial or quasi-judicial
action and no Lease Event of Default is then continuing and Lessor shall not
incur any penalties or fines nor may the Property be subject to any liens or
forfeiture as a result of such contest.

Prior to the commencement of any work that could give rise to a Lien, Lessor
shall have the right to enter upon the Property to post notices of
non-responsibility as provided in Section 8444 of the California Civil Code.

ARTICLE 8.

USE; MAINTENANCE AND CAPITAL REPAIR; ALTERATIONS; COMPLIANCE WITH LAWS;
IMPOSITIONS AND OTHER CHARGES; LITIGATION

Section 8.1. Use. The Property may be used for any lawful purpose other than
(a) any use that would constitute a public nuisance, (b) any use that would make
it impossible to obtain or would invalidate any insurance policy with respect to
the Property that is required to be maintained hereunder, (c) any use that would
involve the mining for or removal of any oil, gas or minerals on the Property or
(d) any use that involves the storage, handling or processing of Hazardous
Materials in violation of Applicable Law; (“Permitted Use”). Lessee is not
required to occupy the Property or conduct any business therein and neither
failure to occupy or operate on or from the Property by Lessee shall be a
default or breach of this Lease.

Section 8.2. Maintenance and Repair. (a) Except for damages caused by the
negligence or willful misconduct of Lessor, its agents, employees, contractors
or invitees, Lessee shall, at all times during the Lease and at its own cost and
expense, maintain, repair and make replacements to the Property (which shall
include, by way of illustration and not limitation, Lessor’s equipment, the
heating, plumbing, and electrical systems, windows (including but not limited to
window seals) and other structural components of the Improvements and the roof
of the Improvements, parking areas and driveways (including sealing and striping
at times and frequencies as is customary for similar buildings in the same
metropolitan area), walkways, landscaping, painting and carpeting within the
Improvements, as

 

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well as performing necessary snow and ice removal and garbage collection) so
that the Property and all portions thereof are maintained in at least as good
order, condition and repair as evidenced by that certain Property Condition
Report, dated November 26, 2013 (the “Report”) prepared by IVI Assessment
Services, Inc., being Project No. PC31006692, a copy of which is attached hereto
as Exhibit E, reflecting the current condition of the Property; together with
maintaining in good order and repair all of the “Repair Items” set forth in
Section 8.2(b) below, as further detailed in the Report, from and after the date
such Repair Items are completed at the Property; but in all cases less ordinary
wear and tear, functional obsolescence due to age and casualty. The condition of
the Property per the Report, plus the Repair items and less wear and tear,
functional obsolescence due to age and casualty being referred to hereafter as
the “Standard”. The parties acknowledge that Lessee’s repair and maintenance
obligations under this Section 8.2(a) shall be measured against the Standard.
Subject to Lessee’s obligations under Section 8.2(b) hereafter, Lessee shall
only be obligated to repair, replace and maintain the Property in at least as
good condition as measured against the Standard. Subject to the provisions of
this Section 8.2 and the Standard, Lessee shall make and perform all day-to-day
maintenance and repairs at the Property and pursue Warranty Claims at Lessee’s
sole cost and expense so that the Property, including the Repair Items, is
maintained consistent with the Standard. Subject to the Standard, Lessee shall
make all such repairs to the Property, including the Repair Items, and shall
keep the Property, including the Repair Items, clean, neat, safe, sanitary, and
in good order, repair and condition, including both the inside and the outside.

(b) Lessee Capital Repairs. Subject to the Standard, Lessee shall be
responsible, at its sole cost and expense, for any capital repair or replacement
which may be required during the Lease Term, so that the Property and all
portions thereof (including the Repair Items) are maintained consistent with the
Standard. Lessee, at Lessee’s sole cost and expense, shall to the extent
required to meet the Standard, make the repairs and/or improvements to the
Property as set forth and listed on Exhibit G, (collectively “Repair Items” and
individually a “Repair Item”), at such time, or from time to time, during the
Base Term or any Renewal Term, if applicable, as Lessee determines, as provided
hereafter in this subparagraph (b). With regard to Lessee’s obligations as to
the Repair Items set forth on Exhibit G, Lessee shall comply with the provisions
of Section 8.4 of this Lease.

In addition to the foregoing, Lessee covenants that it shall maintain all
generators on the Property in accordance with a preventative maintenance program
during the term of the Lease, which includes Lessee’s obligation during the
lease term to repair, or if required, to replace, as provided per the
preventative maintenance program being followed by Lessee.

(c) No Lessor Obligation. LESSOR SHALL NOT BE REQUIRED TO MAKE ANY REPAIR,
WHETHER FORESEEN OR UNFORESEEN, CAPITAL OR NOT, OR TO MAINTAIN ANY OF THE
PROPERTY IN ANY WAY, AND LESSEE HEREBY EXPRESSLY WAIVES THE RIGHT TO MAKE
REPAIRS OR MAINTENANCE AT THE EXPENSE OF THE LESSOR, WHICH RIGHT MAY BE PROVIDED
FOR IN ANY APPLICABLE LAW NOW OR HEREAFTER IN EFFECT; PROVIDED HOWEVER THAT
LESSOR SHALL REPAIR AND MAINTAIN THE PROPERTY AND IMPROVEMENTS WHERE SUCH REPAIR
OR MAINTENANCE IS REQUIRED DUE TO LESSOR’S, OR IT’S SERVANT’S, EMPLOYEE’S,
AGENT’S, CONTRACTOR’S OR INVITEE’S NEGLIGENCE OR WILLFUL MISCONDUCT.

 

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Lessee hereby waives Section 1932(1) and Sections 1941 and 1942 of the Civil
Code of California or any successor provision of law.

(d) Nonapplicability. The provisions of this Section 8.2 shall not apply in the
case of Casualty to or Condemnation of the Property, in which case the
obligations of the parties shall be as provided in Article 12.

Section 8.3. Property Assessment Reports. Lessor shall have the right, not more
frequently than once every two (2) years, to engage a qualified third party
professional to prepare property assessment reports of the roof, structure and
HVAC only (and no other items) at the Property (individually a “Property
Assessment Report” and collectively the “Property Assessment Reports”) to
confirm the same are being maintained to the Standard. Lessor shall pay the
qualified third party professional directly for all costs of obtaining any
Property Assessment Reports after the date of this Lease. It is understood and
agreed to between the parties that IVI Assessment Services Inc. and its
successors, affiliates and subsidiaries are qualified third party professionals.
In the event that the Property Assessment Report discloses that maintenance or
repairs are required in order to keep the roof, structure and HVAC as required
by the Standard, then, subject to the following sentence, Lessee shall
diligently and continuously complete such repairs or maintenance as soon as
possible. If Lessee disputes that any such repairs or maintenance are necessary
or consistent with its obligations in maintaining the roof, structure and HVAC
to the Standard, then Lessee shall repair and maintain those items it does not
dispute and the balance shall be resolved as set forth under Article 27
hereafter. Notwithstanding the foregoing, Lessee acknowledges its obligation at
the end of the Lease Term for the Property’s condition and repair to comply with
the Standard.

Section 8.4. Alterations. (a) At any time and from time to time, Lessee, at its
sole cost and expense, may make (1) without Lessor’s consent, non-structural
Alterations to the Property, less than the Threshold Amount; (2) and after
giving prior written notice to Lessor and obtaining Lessor’s prior written
consent (which shall not be unreasonably withheld, conditioned or delayed),
structural Alterations and/or non-structural Alterations in excess of the
Threshold Amount; provided, however, that no Alteration (whether consent is
necessary or not) shall (i) materially negatively impair the utility, remaining
useful life or fair market value of the Property, in each case assuming that the
Improvements are then being operated and maintained in accordance with this
Article 8; (ii) create a violation of this Lease; (iii) increase in any respect
the risk of liability to Lessor under any Environmental Laws; (iv) materially
and permanently reduce the rentable square footage (as calculated in accordance
with the methods of measuring rentable area as described in the Standard Method
for Measuring Floor Area in Office Buildings, ANSI Z65.1-1996, as promulgated by
the Building Owners and Managers Association International) of the Improvements;
(v) materially reduce the electrical power available to the Building;
(vi) permanently weaken (upon completion of construction or repair of the
structure) the structure of the Improvements or any part thereof; or
(vii) reduce the permitted uses of the Improvements under applicable zoning or
land use laws so as to reduce the fair market value of the Property.
Notwithstanding the requirements for notice and consent set forth above, Lessee
may, in good faith, make any repairs (structural or non-structural) required by
virtue of an emergency without satisfying any otherwise applicable notice and/or
consent requirement, provided Lessee notifies Lessor of such repair (to the
extent otherwise required) as promptly as is reasonably practical after the
emergency.

 

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(b) Every Alteration shall comply with the following terms (which compliance
shall be at Lessee’s sole cost and expense): (i) except (unless required by
Applicable Law) for non-structural Alterations costing less than the Threshold
Amount for each scope of work, as reasonably determined by Lessee, the
Alteration shall be made (x) in accordance with plans and specifications (copies
of which shall be delivered to Lessor) prepared by a certified architect or
civil engineer who shall be licensed in the appropriate jurisdiction to the
extent required for the filing of any plans in connection with such Alteration
(which architect may be an employee of Lessee or its Affiliates) and (y) under
the supervision of such architect or engineer or other reasonably capable
person; (ii) the structural integrity of the existing Improvements shall not be
impaired upon completion of such work; (iii) Lessee shall obtain any licenses,
approvals or permits required (including final approvals), copies of which shall
be delivered to Lessor upon written request by Lessor; and (iv) such Alterations
shall not encroach upon any adjacent premises. Lessor agrees to cooperate with
Lessee (at no cost to Lessor) in signing permit applications and similar
documents to the extent required for any Alteration. Lessee may execute such
applications or similar documents on behalf and (if necessary) in the name of
Lessor for all Alterations for which Lessor’s consent is not required and for
Alterations for which Lessor’s consent is required and has been granted if
Lessor has not executed such documents within ten (10) days of Lessee’s request
therefor. Nothing herein shall be deemed to impose any liability or
responsibility on Lessor for performance or payment of any Alteration. In
connection with any Alteration, Lessee shall perform and complete all work
promptly and in a good, workmanlike manner in compliance with Applicable Laws
(subject to Lessee’s right to contest the applicability thereof) and the plans
and specifications submitted to Lessor, if applicable. Except in the event of
self-insurance under Section 9.2 hereafter, Lessee shall maintain or cause to be
maintained at all times during construction property insurance and commercial
general liability insurance including Lessor, as owner/lessor and Lender as
mortgagee and loss payees as their interests may appear under such property
insurance and including as additional insureds under such liability insurance.
Notwithstanding the foregoing sentence, Lessee shall require all third party
general contractors and subcontractors performing services for Lessee with
regard to the Alterations to have and maintain at all times during construction,
construction property insurance and commercial general liability insurance
naming Lessee, Lessor, as owner/lessor and Lender as mortgagee and loss payee,
as their interests may appear under such property insurance and including, as
additional insureds under such liability insurance. Lessee shall provide
“as-built” plans to Lessor for any structural Alteration for which Lessee has
“as-built” plans prepared. If Lessee does not have “as-built” plans prepared for
any Alteration, Lessee shall provide to Lessor with copies of such plans, if
any, submitted to the City in connection with Lessee’s application for any
necessary permits.

(c) With respect to such structural Alterations for which Lessee must obtain the
prior written consent of Lessor pursuant to the terms of this Lease, Lessor
shall have fifteen (15) Business Days after Lessee’s delivery of its request for
consent, together with preliminary drawings and specifications for such
Alterations, within which time Lessor may grant or not grant Lessee’s request
for consent. If Lessor shall not have responded to Lessee within such fifteen
(15) Business Day period, such consent shall be deemed to have been granted.
Whether or not the Alteration is approved, all reasonable out-of-pocket costs of
review incurred by Lessor up to a maximum of Five Thousand ($5,000.00) Dollars,
shall be paid by Lessee within thirty (30) days of receipt of an invoice
therefor.

 

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(d) Lessee shall not, without Lessor’s prior written consent, which consent may
be withheld or denied in Lessor’s sole discretion (i) demolish all or
substantially all of the Improvements or Building on the Property, or (ii) make
any Alterations, at any time, which would (after the completion thereof) impair
the structural integrity of the Building.

(e) Title to Alterations shall without further act vest in Lessor and shall be
deemed to constitute a part of the Property and be subject to this Lease if
(i) such Alteration is in replacement of or in substitution for a portion of the
Improvements as of the date hereof, (ii) such Alteration is required to be made
pursuant to the terms of Section 8.2 or (iii) such Alteration is Non-Severable.
Lessor shall notify Lessee in its consent to any Alteration, requiring prior
Lessor consent, as to whether such Alteration must be removed upon termination
of this Lease. In the event Lessor is deemed to have consented to any
Alteration, Lessee shall not be required to remove such Alteration.

(f) Without limiting Lessee’s rights pursuant to the provisions of this
Section 8.4, at Lessee’s sole cost and without liability to Lessor, Lessor
agrees to cooperate with Lessee (including signing applications upon Lessee’s
written request) in obtaining any necessary permits, variances and consents for
any Alterations which Lessee is permitted to make hereunder; provided none of
the foregoing shall, in any manner, result in a net reduction of access to or
ingress to or egress from the Property, a change in zoning, or otherwise have an
adverse effect on the ability to use the Property for the Permitted Use or have
an adverse effect on Lessor’s or any Mortgage or other loan document executed in
connection therewith (or Lessor’s or Lender’s ability to place such Mortgage
Lien) on the Property.

(g) If an Alteration is not within any of the categories set forth in
Section 8.4(e), then title to such Alteration shall vest in Lessee and such
Alteration shall be removed by Lessee to the extent required under Article 10
hereof. All Alterations to which title shall vest in Lessee as aforesaid, and
all Lessee’s Equipment and Personalty, so long as removal thereof shall not
result in the violation of any Applicable Law or this Lease, may be removed at
any time by Lessee, provided that Lessee shall, at its expense, repair any
damage to the Property caused by the removal of any such Alteration.

Section 8.5. Compliance with Law; Environmental Compliance. (a) Lessee, at
Lessee’s expense, shall comply in all Material respects at all times with all
Applicable Laws, including Environmental Laws regarding the Property.

(b) Lessee shall notify Lessor promptly if Lessee (i) has Actual Knowledge of
the presence or Release of any Hazardous Materials at, on, under, emanating from
or migrating to the Property which could reasonably be expected to violate any
Environmental Law or give rise to any liability under any Environmental Law,
provided that Lessee shall not have any obligation to investigate the Property
for any such presence or Release of Hazardous Materials and none of Lessee’s
employees shall be deemed to have knowledge of the Environmental Laws applicable
to the Property or what would constitute a violation thereof, or (ii) receives
any written notice, claim, demand, material request for information or other
material communication from a Governmental Authority regarding the presence or
Release of any Hazardous Material at, on, under, within, emanating from or
migrating to the Property or related to the Property which could reasonably be
expected to violate in any material respect any Environmental Law or give rise
to any liability.

 

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Lessor hereby notifies Lessee, and Lessee hereby acknowledges that, prior to the
leasing of the Property pursuant to this Lease, Lessee has been notified,
pursuant to California Health and Safety Code Section 25359.7, that Lessor
knows, or has reasonable cause to believe, that certain hazardous substances (as
such term is used in such Section 25359.7), may have come to be located on or
beneath the Property, including as may be disclosed in any environmental report
known to or provided to Lessee concerning the Property.

Section 8.6. Payment of Impositions. (a) Lessee shall pay or cause to be paid
all Impositions due and payable during the Lease Term or payable as provided in
Section 8.7, before any fine, penalty, premium, further interest (except as
provided in Section 8.6(b)) or cost may be assessed or added for nonpayment,
such payments to be made directly to the taxing authorities where feasible.

(b) If any such Imposition may, at the option of the taxpayer, lawfully be paid
in installments (regardless whether interest shall accrue on the unpaid balance
of such Imposition), Lessee may exercise the option to pay the same in
installments, and in such event Lessee shall pay only those installments that
become due and payable during the Lease Term or, as provided in Section 8.7,
relate to the Lease Term, as the same become due and before any fine, penalty,
premium, further interest or cost may be assessed or added thereto.

(c) Notwithstanding the foregoing, Lessee shall have the right to contest any
Imposition, subject to the following: (i) such contest shall be at Lessee’s sole
cost and expense; (ii) such contest shall be by appropriate legal proceedings
conducted in good faith and with due diligence; (iii) such contest will operate
to suspend the collection of, or other realization upon, such Imposition, from
any Property or other interest of Lessor, or from any Rent (and will not
otherwise adversely affect Lessee’s obligation to pay, and Lessor’s right to
receive, Rent); (iv) such contest will not otherwise adversely affect Lender’s
lien on any Property or Lessor’s right to any Property (for purposes hereof,
“adversely affect” being deemed to mean that such lien or Lessor’s right would
be subject to reasonable likelihood of extinguishment, impairment or loss of
priority); (v) such contest will not materially and adversely interfere with the
possession, use or occupancy or sale of the Property; (vi) such contest will not
subject Lessor to any civil (other than for the amounts being contested and
related interest, penalties, costs and expenses) or criminal liability;
(vii) Lessee shall not postpone the payment of any Imposition for such length of
time as shall permit the Property to become subject to a lien created by such
item being contested that is prior to the lien of the Mortgage (other than a
lien for real property taxes which are already a first lien); and (viii) no
Lease Event of Default shall then be existing. Lessee shall pay any Imposition
(and related costs) promptly after forgoing any contest or after receipt of a
final non-appealable adverse judgment.

Section 8.7. Adjustment of Impositions. Impositions with respect to the Property
for a billing period during which Lessee’s obligation to indemnify Lessor
pursuant to this Lease expires or terminates as to the Property shall be
adjusted and prorated on a daily basis between Lessor and Lessee, whether or not
such Imposition is imposed before or after such expiration or termination of
this Lease, and Lessee’s and Lessor’s obligation to pay its pro

 

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rata share thereof shall survive such expiration or termination (to the extent,
with respect to Lessor, it is obligated to reimburse Lessee for Impositions paid
by Lessee for periods after expiration of the Lease Term). Lessee acknowledges
that at closing under the Purchase Contract, no credit was given to Lessor for
accrued real estate taxes, in consideration for Lessee’s agreement to pay
accrued real estate taxes through the termination of the Lease. Thus, in the
year in which the Lease Term terminates, and promptly after the final real
estate tax bill for that tax year is received by Lessor, Lessor will calculate
Lessee’s obligation for real estate taxes through the termination date and
submit an invoice and a copy of the tax bill to Lessee. Lessee will be obligated
to pay to Lessor the amount so determined. Lessor acknowledges that Lessee may
bring any tax certiorari or other actions for refunds of Impositions or
adjustments of Impositions for which Lessee is liable under this Lease or
relating to periods prior to the commencement date of the Lease Term and Lessee
shall be entitled to all such refunds, provided that Lessee shall take no such
action which could increase any Imposition for a period after the expiration of
this Lease. During the Lease Term, Lessor agrees to cooperate with Lessee in
such proceedings, at no cost to Lessor.

Section 8.8. Utility Charges. Lessee shall pay or cause to be paid, directly to
the party entitled thereto, all charges for electricity, power, gas, oil, water,
telephone, sanitary sewer services and all other utilities used in or on the
Property prior to and during the Lease Term, and such obligation on the part of
Lessee shall survive the expiration or earlier termination of this Lease until
all such outstanding balances for services rendered prior to or during the Lease
Term have been paid. Any refunds, credits or rebates of such charges
attributable to the Lease Term or the period prior to the commencement of the
Lease Term shall be the property of Lessee, and Lessor shall pay the same to
Lessee promptly upon its receipt thereof. Lessee shall have the right to select
all service providers for the Property. Lessor shall not be entitled to charge
any fees associated with Lessee’s acquisition and/or use of utilities. If Lessee
defaults in the payment of any such charges, Lessor may, at its option, pay such
charges on behalf of Lessee, in which event Lessee shall promptly reimburse
Lessor therefor and all such sums together with interest at the Default Rate
shall be deemed Supplemental Rent hereunder. All applications and connections
for necessary utility services on the Property shall be made in the name of
Lessee only, unless otherwise required by the utility service provider. Lessor
shall under no circumstances be liable to Lessee in damages or otherwise for
failure or interruption in service of electricity, water, gas, heat,
telecommunication services, including telephone, sewer service or
air-conditioning caused by any reason whatsoever, including the making of any
repairs or improvements to the Property.

Section 8.9. Litigation; Zoning; Joint Assessment. Lessee shall give written
notice within ten (10 Business Days to Lessor of any litigation or governmental
proceedings pending or threatened against Lessee or the Property of which Lessee
has Actual Knowledge, which could reasonably be expected to materially adversely
affect the condition of the Property. Lessee shall not initiate any zoning
reclassification for the Property, or any portion thereof, or seek any variance
under any existing zoning ordinances or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other Applicable Law.
Lessee shall not initiate any proceeding to cause the Property to be jointly
assessed with any other property or with any personal property of Lessee, or
take any other action or initiate any proceeding which might cause the personal
property of the Lessee to be taxed in a manner whereby such taxes or levies
could be assessed against the Property.

 

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ARTICLE 9.

INSURANCE

Section 9.1. Coverage. (a) Lessee shall maintain insurance of the types and in
the amounts set forth on Schedule 9.1 attached hereto and made a part hereof,
including without limitation a policy or policies of (i) commercial general
liability insurance with respect to the Property, with Lessor, Lessor’s asset
and/or property manager, Lessor’s managing agent for the building, any ground
lessors and Lender (whose name shall have been furnished to Lessee) included as
additional insured parties on such policy or policies to the extent of any
indemnity provided by Lessee under this Lease, and (ii) property insurance with
respect to the Property, with Lessor and Lender named as loss payees as their
interests may appear, all in forms and amounts as set forth in Schedule 9.1.

(b) Nothing in this Article 9 shall prohibit Lessee from maintaining, at its
expense, commercial general liability and or property insurance on or with
respect to the Property naming Lessee as insured and/or loss payee in amounts
greater than the insurance required to be maintained under this Section 9.1 or
any other insurance with respect to the Property (including business
interruption insurance), naming Lessee as insured and/or loss payee thereunder,
unless such insurance would conflict with or otherwise limit the availability of
or coverage afforded by insurance required to be maintained under this
Section 9.1. Nothing in this Section 9.1 shall prohibit Lessor from maintaining,
at its expense, other insurance on or with respect to the Property or the
operation, use and occupancy of the Property, unless such insurance would
conflict with, cause Lessor to be a coinsurer or otherwise limit or adversely
affect Lessee’s ability to obtain, or the cost of, the insurance required to be
maintained by Lessee under Section 9.1(a).

(c) Copies of any certificates of insurance required to be delivered under
Schedule 9.1 shall be delivered to Lessor at the time set forth in Section 9.1.

(d) In the event of Lessee’s failure to obtain or maintain the insurance called
for under this Lease after any applicable notice and grace period, Lessor shall
have the right, together with Lessor’s other remedies set forth herein, to
obtain the policies of insurance required under this Lease and to bill Lessee
for the reasonable premium payments therefor, such bills to be paid by Lessee to
Lessor within five (5) days after delivery to Lessee of bills therefor, together
with interest at the Default Rate. This subsection shall not be deemed to be a
waiver of any of Lessor’s rights and remedies, under any other provision of this
Lease.

(e) Each insurance policy required to be carried by Lessee under this Lease
shall also provide that any loss otherwise payable thereunder shall be payable
notwithstanding any act or omission of Lessor or Lessee which might, absent such
provision, result in a forfeiture of all or a part of such insurance payment.

(f) Lessee shall comply with all insurance requirements applicable under any
insurance policies required to be maintained under this Lease.

 

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(g) To the extent that any insurance policy maintained by Lessee pursuant to
this Lease has a deductible as between Lessee and the insurance company and
Lessor is entitled to insurance proceeds with respect to a claim thereunder,
then as between Lessor and Lessee, Lessee shall be responsible to cover such
deductible or pay such claim.

(h) Lessor (i) shall promptly and no later than 30 days after notice thereof
provide Lessee with written notice of any claim, demand, lawsuit, or the like
for which it seeks coverage pursuant to this Article 9 or Schedule 9.1 and
provide Lessee with copies of any demands, notices, summons, or legal papers
received in connection with such claim, demand, lawsuit, or the like; and
(ii) shall fully cooperate with Lessee, at Lessee’s sole cost and expense, in
the defense of the claim, demand, lawsuit, or the like.

Section 9.2 Self Insure. Notwithstanding anything contained in Section 9.1,
during such periods as either the Lessee or Guarantor shall maintain a GAAP
tangible net worth of at least $500,000,000.00 and both Lessee and Guarantor are
either direct or indirect wholly owned subsidiaries of AT&T Inc., Lessee shall
have the right to self-insure by assuming in whole or in part, without
insurance, any and all risks otherwise required by this Lease to be insured
against by Lessee. If Lessee does not maintain, in whole or in part, insurance
of the types and in the amounts set forth on Schedule 9.1, then it shall be
deemed to have elected to self-insure, provided, however, Lessee’s
self-insurance obligation for Lessor shall not extend to claims for punitive
damages, exemplary damages, or gross negligence (collectively “Special Damages”)
unless and only to the extent that the third party insurance coverages per
Section 9.1 in affect at the time of the casualty would have responded to and
paid the insured for such Special Damages claims. Lessee’s self-insurance
obligation shall also not apply when the claim or liability arises solely from
the negligence, fault, misconduct, actions or inactions of Lessor, its
employees, contractors, or agents. Subject to the foregoing, in the event of a
casualty to which casualty insurance coverage required to be carried under
Section 9.1 would have responded, but for Lessee’s election to self-insure under
this Section 9.2, then upon adjustment of the loss Lessee shall make payment to
Lessor (and its Lender if then required under Lessor’s loan with such Lender) in
an amount equal to the loss that would have been paid under such insurance
coverages (assuming no deductible) had Lessee then had such required Section 9.1
insurance coverages in place at the time of the casualty. The parties
acknowledge that it is their intention to have Lessee’s self-insured obligation
to Lessor and the payments received by Lessor under such self-insurance, be
identical to and the same as would be paid to Lessor if Lessee had then had in
place third party insurance coverages as set forth in Section 9.1 and Schedule
9.1.

 

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ARTICLE 10.

RETURN OF PROPERTY TO LESSOR

Section 10.1. Return of Property to Lessor. (a) Lessee shall, upon the
expiration or termination of this Lease, at its own expense, return the Property
to Lessor by surrendering the same into the possession of Lessor (i) free and
clear of all Liens caused by Lessee (whether by payment or bonding), other than
(A) Lessor Liens, (B) any Lien created by the Mortgage and related debt
documents, (C) Liens for taxes not yet due and payable subject to Lessee’s
obligations under Sections 8.6(b) and 8.7, (D) Liens and Impositions being
contested in accordance with the provisions of Section 7.1 or 8.6(c), as the
case may be, and (E) other Permitted Liens (other than this Lease and any
assignment of this Lease), and (ii) in compliance with the terms of this Lease.
Lessee hereby waives notice to vacate the Property and agrees that Lessor shall
be entitled to the benefit of all provisions of the law respecting the summary
recovery of possession of the Property from Lessee holding over to the same
extent as if statutory notice had been given.

(b) All Alterations and Lessee’s Equipment and Personalty not removed by Lessee
by the last day of the Lease Term (but in the event of a termination other than
upon the expiration of the Base Term, within thirty (30) days after said
termination of this Lease), other than those Alterations as to which title shall
vest in Lessor pursuant to Section 8.4, shall be deemed abandoned and Lessor may
dispose of such property in any manner that Lessor, in its sole discretion,
determines is appropriate. Lessor hereby notifies Lessee that Lessor will not
store any such property of Lessee and such property shall become the property of
Lessor. In no event shall Lessee be required to remove or pay for the removal of
any built in, permanent fixtures or improvements existing on, or within, the
Property as of the date of this Lease, any raised computer floors built during
the Lease Term, any other Alterations made in compliance with the terms of this
Lease or any cabling or wiring (or similar property) now or hereafter located on
or in the Property.

(c) Upon the return of the Property to Lessor, Lessee shall also deliver (i) all
transferable licenses and permits pertaining to the Property by general
assignment, without warranty or recourse; (ii) as built-drawings, including
plans for HVAC, mechanical and electrical systems, to the extent in Lessee’s
possession and not previously delivered to Lessor; (iii) available keys to the
Property; (iv) a general assignment of all subleases existing on the date hereof
or entered into in accordance with the terms of this Lease; and (v) to the
extent assignable, a general assignment, without warranty or recourse, of all
maintenance contracts (to the extent required by Lessor) and existing warranties
applicable to the Property.

(d) Lessee agrees to reasonably cooperate with Lessor and its representatives to
effectuate a smooth transition of the operation and maintenance of the Property.
Notwithstanding anything in this Lease to the contrary and provided that Lessee
surrenders the Property upon the expiration or termination of this Lease in
compliance with all Applicable Laws and the terms of this Lease, the failure to
remove any of Lessee’s Alterations or Lessee’s Equipment and Personalty in
accordance with the provisions hereof shall not result in Lessee being deemed a
holdover tenant hereunder.

 

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ARTICLE 11.

ASSIGNMENT BY LESSEE

Section 11.1. Assignment by Lessee. (a) Lessee may, at Lessee’s sole expense and
without the consent of Lessor, assign this Lease for a period that does not
extend beyond the Lease Term to any Person. Any assignee shall assume the
obligations of Lessee arising from and after the effective date of the
assignment.

(b) Notwithstanding any assignment provided for in Section 11.1(a), Lessee and
Guarantor shall not be released from its primary liability hereunder and shall
continue to be obligated for all obligations of “Lessee” in this Lease, which
obligations shall continue in full force and effect as obligations of a
principal as though no assignment had been made.

Section 11.2. Use by Other Persons. Notwithstanding anything contained in this
Article 11 which may be construed to the contrary, Lessor acknowledges that the
Property may be occupied by one or more customers, service providers, vendors,
contractors, and Related Persons (as defined in Section 14.1) and their
employees and contractors and that such use of the Property shall not be
considered an assignment or sublease unless Lessee elects to treat it as such.

Section 11.3. Notice to Lessor. Lessee shall endeavor to give prior written
notice to Lessor of every assignment or subletting to any Person who is not an
Affiliate of Lessee.

Section 11.4. Prohibited Assignments/Subleases. In no event shall this Lease be
assignable by operation of any law, and Lessee’s rights hereunder may not
become, and shall not be listed by Lessee as an asset under any bankruptcy,
insolvency or reorganization proceedings. Acceptance of any payment of Base Rent
or Supplemental Rent by Lessor after any non-permitted assignment or sublease
shall not constitute approval thereof by Lessor.

Section 11.5. Lessor’s Right to Collect Sublease Rents upon Lease Event of
Default. If the Property (or any portion) is sublet and a Lease Event of Default
occurs, then Lessor is authorized, at its option, to collect all sublease rents
directly from the sublessee. Lessee hereby assigns the right to collect the
sublease rents to Lessor in the event of Lessee default. The collection of
sublease rents by Lessor shall not relieve Lessee of its obligations under this
Lease, nor shall it create a contractual relationship between sublessee and
Lessor or give sublessee any greater estate or right to the Property than
contained in its sublease.

Section 11.6. Sale of Property. In the event of the transfer and assignment by
Lessor of its interest in this Lease and the Property, Lessor shall thereby be
released from any obligations arising prior to or accruing hereunder as of and
after the date of such transfer, and Lessee agrees to attorn to the successor in
interest of Lessor following any such transfer of such interest either
voluntarily or by operation of law, to recognize such successor as Lessor under
this Lease, and look solely to such successor in interest of Lessor for the
performance of such obligations. Lessor shall remain liable for any obligations
of Lessor hereunder arising from or accruing prior to the date of the transfer
of the Premises by Lessor.

 

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Any security given by Lessee to secure the performance of Lessee’s obligations
hereunder may be assigned and transferred by Lessor to its successor in
interest, and Lessor shall thereby be discharged of any further obligations
relating thereto.

ARTICLE 12.

LOSS; DESTRUCTION; CONDEMNATION OR DAMAGE

Section 12.1. Destruction of the Building. (a) Subject to the terms of this
Article 12, if the Building is totally or partially damaged or destroyed by
Casualty, Lessee shall restore the Building to the same or better condition as
existed immediately prior to such Casualty. Lessee shall have no obligation to
repair and restore Lessee’s Equipment and Personalty, trade fixtures,
decorations, signs, contents, or any non-standard improvements to the Premises.
If (i) the Casualty results in damage to the Building which will take in excess
of (A) two hundred seventy (270) days from the beginning of restoration to
restore (as reasonably determined by an independent registered architect engaged
by Lessor who will certify to Lessor and Lessee as soon as practicable, but in
any event within forty-five (45) days after the Casualty the amount of time
needed to restore) the Building to the same condition as existed immediately
prior to such Casualty, using standard working methods, and such Casualty occurs
at any time during the then current Lease Term, or (B) three (3) months from the
beginning of restoration to restore (as reasonably determined by such architect
in the same manner as in clause (A) above) the Building to the same condition as
existed immediately prior to such Casualty and such Casualty occurs during the
last twelve (12) months of the then current Lease Term; (ii) the repair,
restoration or reconstruction is prohibited by any zoning ordinance, building
code or other Applicable Law, which in Lessor’s commercially reasonable
determination, makes the rebuilding of the Building not economically viable,
then Lessor may elect to terminate this Lease upon giving notice of such
election in writing to Lessee within sixty (60) days after the occurrence of the
Casualty, which notice shall specify a proposed termination date not earlier
than the later of (x) one hundred twenty (120) days after the Casualty and
(y) sixty (60) days after the date of the notice.

(b) Lessee shall commence the repair, restoration or rebuilding thereof within
ninety (90) days after such Casualty (subject to delays in the adjustment of
insurance and receipt of necessary permits from Governmental Authorities) and
shall substantially complete such restoration, repair or rebuilding of the
Property or the Building, as the case may be, to the same or better condition as
existed immediately prior to the Casualty as promptly as practicable after the
commencement thereof. In such event, this Lease will remain in full force and
effect, and Lessee shall be bound by the terms hereof, including the obligation
to pay Rent, subject to the provisions of Article 13.

(c) If Lessor elects to terminate this Lease (whether in part or in whole) by
notice as provided above, such termination shall be effective on the proposed
termination date specified in the notice provided to Lessee, provided that
Lessee shall have the right, upon written notice to Lessor to elect an earlier
termination date, not earlier than thirty (30) days after receipt of such
notice. In such event, Lessee shall be obligated to pay to Lessor the Rent
accrued to the effective date of such termination, which obligation shall
survive such termination, for the portion of the Property as to which this Lease
was terminated.

(d) The provisions of this Lease, including this Article 12, constitute an
express agreement between Lessor and Lessee with respect to any and all damage
to, or destruction of, all or any part of the Property, and any statute,
regulation or case law of the State of California, including without limitation,
Sections 1932(2) and 1933(4) of the California Civil Code, with respect to
termination rights arising from damage or destruction shall have no application
to this Lease or any damage or destruction to all or any part of the Property.

 

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Section 12.2. Lessee’s Right to Terminate. (a) If (i) the architect determines
in accordance with Section 12.1 above that the Casualty resulted in damage to
all or a substantial part of the Building which will take in excess of
(x) eighteen (18) months from the beginning of restoration to restore the
Building to the same condition as existed immediately prior to the Casualty and
the Casualty occurs at any time during the Lease Term or (y) three (3) months
from the beginning of restoration to restore the Building to the same condition
as existed immediately prior to the Casualty and the Casualty occurs during the
last twelve (12) months of the then current Lease Term, but Lessor does not
elect to terminate this Lease, or (ii) as a result of a Casualty to the
Building, Lessee must either (A) cease its operations at such Building for a
period of fifteen (15) months or more, (B) move a Substantial Portion of its
operations from the Building or relocate a Substantial Percentage of its
employees from the Building to another location not on the Property for a period
of fifteen (15) months or more or (C) lay off a Substantial Percentage of its
employees working at the Building for a period of fifteen (15) months or more
(any of the foregoing Casualties described in clause (i) or (ii), a “Substantial
Casualty”), then Lessee may elect to terminate this Lease upon giving notice of
such election in writing to Lessor within sixty (60) days after Lessee is
notified in writing of the architect’s determination as to the time required to
restore the Building or Lessee determines that a Substantial Casualty under
clause (ii) above has occurred, which notice shall specify a termination date
not earlier than sixty (60) days after the date of the notice.

(b) If Lessee elects to terminate this Lease pursuant to Section 12.2(a), then
Lessee shall pay to Lessor the excess, if any, of the discounted Present Value
of the Rent that would otherwise become due for the Property for the period of
time commencing on the date of termination of this Lease and ending on the last
day of the Lease Term over the discounted Present Value of the Fair Market Rent
that Lessor can reasonably be expected to collect after restoration of the
Property through the end of the Lease Term (assuming reasonable periods of time
to prepare plans, secure permits and rebuild the Property substantially to its
condition prior to the Casualty and to market and re-lease the Property to
another tenant or tenants, all as determined pursuant to Section 12.2(c)).
Lessee’s obligation to rebuild is separate from, and not affected by, Lessee’s
and Lessor’s rights hereunder to terminate the Lease.

If the Lease is terminated by either Lessee or Lessor as the result of a
Casualty, then Lessor shall have the option, by giving written notice to Lessee,
to rebuild and restore the Property in lieu of Lessee repairing the damage and
restoring the Property. In that event, Lessor shall receive from Lessee either
the insurance proceeds (plus any deductible), or, if Lessee is then
self-insuring, the amount that would have been received in insurance proceeds
(including any deductible) paid in response to the adjusted loss to restore the
Property from damage due to the casualty.

 

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Lessor acknowledges that if it elects not to have the Property restored after a
casualty and the Lease is terminated, then payment to it from either insurance
proceeds or Lessee under self-insurance shall be only such amount as represents
the fair market value of the Property as of the date of the Casualty, and not an
amount equal to the full replacement cost to restore the Property.

(c) If Lessor and Lessee cannot agree on the discounted Present Value of the
Fair Market Rent that Lessor could reasonably be expected to collect after
restoration of the Property (or portion thereof), such discounted Present Value
of the Fair Market Rent will be determined by appraisal in accordance with the
Appraisal Procedure. The period of time required to rebuild the Building will be
determined by two independent registered architects, one selected by Lessor and
one selected by Lessee, assuming the reasonably prompt and efficient engagement
of and work by architects, contractors and others necessary to rebuild the
Building. The period of time that it would take to re-lease the Building after
the reconstruction and/or repair thereof will be determined by two independent
commercial real estate brokers, one selected by Lessor and one selected by
Lessee, and each familiar with properties similar to the Property and with the
commercial lease market in the area. The determinations of such architects and
brokers shall be binding on the parties. If such architects or brokers cannot
agree on the period of time to rebuild or re-lease the Building within twenty
(20) Business Days after the their appointment, then a third architect or
broker, as the case may be, shall be selected by the two other architects or
brokers, as applicable or, failing agreement as to such third architect or
broker within thirty (30) Business Days after the appointment of the others, by
the American Arbitration Association office in the City (or if none, then the
closest city that does have an office). The determinations of the relevant
periods of time of the three architects or brokers, as the case may be, shall be
made within twenty (20) Business Days of the appointment of the third such
Person; such three time periods shall be averaged and such average time period
shall be the time period required to rebuild or re-lease the Building, provided
that if any one of the three determinations diverges from such average by ten
percent (10%) or more, that determination shall be discarded and the average of
the remaining two determinations shall be the applicable time period binding on
the parties. The fees and expenses of the architect and broker appointed by a
party shall be paid by such party; the fees and expenses of a third architect or
broker shall be divided equally between the two parties. Lessee shall be
released from any and all obligations hereunder arising from and after such
termination, other than the obligation to pay such discounted present value of
the Rent.

Section 12.3. Condemnation. (a) In the event of a Total Taking of the Property,
the Lease Term shall terminate upon the earlier of delivery of possession of the
Property to the condemning authority or the effective date of the taking and
Lessee shall be obligated to pay to Lessor the sum of (i) any unpaid Base Rent
accruing to the date of termination, plus (ii) after determination of the amount
of the Award attributable to the discounted Present Value of the Fair Market
Rent as provided in paragraph (d) below, the amount, if any, required to be paid
by Lessee under paragraph (e) below.

(b) If a Minor Condemnation occurs, Lessor shall repair and restore the
Property, to the extent practicable and as provided in this Section 12.3, to the
condition as existed

 

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immediately prior to the Minor Condemnation and shall use the Award to pay the
costs thereof. Notwithstanding the occurrence of a Minor Condemnation, the
obligation of Lessee to pay scheduled Rent to Lessor shall continue subject to
Section 13.1, and Lessee shall be entitled to any rent interruption insurance
proceeds payable in connection therewith and the amount of the Award payable to
Lessee pursuant to paragraph (c) below. Lessee hereby waives any and all rights
it might otherwise have pursuant to Section 1265.130 of the California Code of
Civil Procedure, or any other California law, statute or ordinance now or
hereafter in effect, to seek termination of this Lease in the event of a Minor
Condemnation.

(c) Any award, compensation or damages (the “Award”) for a Minor Condemnation or
a Total Taking shall be paid to and be the sole property of Lessor whether the
Award shall be made as compensation for diminution of the value of the leasehold
estate or the fee of the Property or otherwise, and Lessee hereby assigns to
Lessor all of Lessee’s right, title and interest in and to any and all of the
Award; provided that, to the extent the Award would not diminished, Lessee shall
have the right to make a separate claim against the condemning authority (but
not Lessor) for such compensation as may be separately awarded or recoverable by
Lessee for moving, if a separate award for such items is made to Lessee; and
provided further that Lessee shall have an independent right to make a claim for
any Condemnation of Lessee’s Equipment and Personalty. Any portion of the Award
that is not required to be expended by Lessor for repairing or restoration shall
be retained by Lessor as Lessor’s sole property.

(d) The amount of any Award payable to Lessor on account of a Total Taking (not
including any separate award payable to Lessee for moving or for condemnation of
Lessee’s Equipment and Personalty) that is attributable to the Fair Market Rent
that would be payable for the remainder of the then current Lease Term shall be
ascertained through the Appraisal Procedure and such amount shall be discounted
to the Present Value thereof.

(e) If the discounted Present Value of the Rent that would have become due from
the date of termination of this Lease to the end of the then current Lease Term
exceeds the amount of the award attributable to the discounted Present Value of
the Fair Market Rent as determined under paragraph (d) above, Lessee shall pay
to Lessor, within ten (10) Business Days after the determination thereof, the
amount of such excess. If the amount of the Award attributable to the discounted
Present Value of the Fair Market Rent as determined under paragraph (d) above
exceeds the discounted Present Value of the Rent that would have become due
hereunder, Lessee shall not make any additional payment to Lessor and Lessor
shall not have any obligation to remit any portion of the Award to Lessee.

ARTICLE 13.

REDUCTION OF RENT

Section 13.1. Reduction of Rent. If after any repair, restoration or rebuilding
required to be undertaken by Lessor as a result of a Casualty or Minor
Condemnation there is a permanent reduction in the rentable square feet of the
Building located on the Property available to or occupied by Lessee, then the
Base Rent shall be proportionately reduced from the date of determination of
such permanent reduction through the end of the Lease Term. The proportionate
reduction shall be computed on, as applicable, (i) the basis that the rentable
square

 

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feet of the Building from time to time available to Lessee after the Casualty or
Minor Condemnation bears to the aggregate rentable square feet of the Building
prior to the Casualty or Minor Condemnation. Any reduction in Rent shall become
effective as of the determination of such permanent reduction. To the extent
Lessee shall have paid any Base Rent for any period after such determination of
permanent reduction in an amount which did not take into account the applicable
reduction in Base Rent pursuant to this Section 13.1, Lessor shall remit the
excess payment to Lessee within thirty (30) Business Days.

ARTICLE 14.

SUBLEASE

Section 14.1. Subleasing Permitted; Lessee Remains Obligated. Lessee may at any
time and from time to time, directly or indirectly through one or more
Affiliates or Persons, (“Related Persons”), sublease the Property or any portion
or portions thereof to any Person or permit the occupancy of the Property or any
portion or portions thereof by any Person. No such sublease, sub-sublease,
license, occupancy agreement or similar agreement (each, a “Sublease”) shall
release Lessee and Guarantor from its primary liability for the performance of
its duties and obligations hereunder, and Lessee and Guarantor shall continue to
be obligated for all obligations of “Lessee” in this Lease, which obligations
shall continue in full effect as though no Sublease had been made.

Section 14.2 Service Providers. Lessor acknowledges that Lessee in the course
and custom of its business has provided space and will continue to provide space
in its offices and elsewhere at the Property on a regular basis to Lessee’s
customers, subcontractors, vendors and other service providers who provide
services integral to Lessee’s business and operations. Such furnishings of space
shall not constitute an assignment or sublease for purposes of this Lease,
regardless of the terms or conditions upon which Lessee provides the same.

ARTICLE 15.

INSPECTION

Section 15.1. Inspection. Upon at least two (2) Business Days’ prior written
notice to Lessee, Lessor and its representatives and agents (each, an
“Inspecting Party”), may from time to time (but not more frequently than one
time per calendar quarter), during normal business hours and in a commercially
reasonable manner and at their own risk, to inspect the Property, to verify
compliance with the provisions of this Lease. No Sublease shall contain any
restrictions on inspection other than as set forth herein. The Inspecting Party
shall repair any damage caused by any inspection performed pursuant to this
Section 15.1. Lessee shall have the right to have its representatives, including
security guards, present at any such inspection. In addition, Lessee may
designate one or more reasonably sized “secure areas” to which no Inspecting
Party shall have access and the Inspecting Party shall comply with Lessee’s
other reasonable security requirements. Notwithstanding the foregoing, Lessor
shall have the right to inspect such “secure areas” if required by Lessor’s
board of directors or auditors, subject to a representative of Lessee being
present at all times with the Inspecting Party. No video or other photography of
any such area shall be permitted. Each Inspecting Party agrees to hold in
confidence all proprietary information and trade secrets of which it becomes
aware during such

 

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inspection. All such inspections shall be at Lessor’s expense. In no event shall
such inspections materially disrupt Lessee’s ongoing business operations within
the Building or on the Property. Notwithstanding anything in this Lease to the
contrary, no prior notice to Lessee is required for Lessor’s inspection
resulting from an emergency. For the period of six (6) months prior to the
expiration of the term of this Lease, Lessor may show the Property to
prospective tenants upon at least two (2) Business Days’ prior written notice to
Lessee. In addition, at any time during the term of this Lease, Lessor shall
have a right show the Property to prospective purchasers of the Property,
subject to the Lease, upon at least two (2) Business Days’ prior written notice
to Lessee and subject to such parties being accompanied at all times by a Lessee
representative.

ARTICLE 16.

LEASE EVENTS OF DEFAULT

Section 16.1. Lease Events of Default. Each of the following events shall
constitute a “Lease Event of Default”:

(a) Lessee shall fail to make any payment of Base Rent and such failure shall
continue for a period of five (5) Business Days after written notice from Lessor
to Lessee that such amount is due and unpaid (except that Lessor shall not be
required to provide written notice of the failure to pay Base Rent more than two
(2) times in any twelve (12) month period);

(b) Lessee shall fail to make any payment of Supplemental Rent, and such failure
shall continue for a period of five (5) Business Days after written notice of
such failure to Lessee from Lessor (except that Lessor shall not be required to
provide written notice of the failure to pay Supplemental Rent more than two
(2) times in any twelve (12) month period);

(c) Lessee shall fail to timely perform or observe any covenant or agreement
(not otherwise specified in this Article 16) to be performed or observed by it
hereunder and such failure shall continue for a period of thirty (30) days after
written notice thereof from Lessor to Lessee; provided that the continuation of
such a failure for thirty (30) days or longer after such notice shall not
constitute a Lease Event of Default if such failure can be cured, but cannot
reasonably be cured within such thirty (30) day period, and Lessee shall
commence to cure such failure within such thirty (30) day period and shall be
diligently and continuously prosecuting the cure of such failure;

(d) Lessee shall fail to carry or maintain in full force any insurance required
hereunder, and such failure shall continue for thirty (30) days after such
obligations arise, but not beyond the expiration date of any required policy of
insurance;

(e) Any representation or warranty made by Lessee herein shall prove to have
been incorrect in any material respect when such representation or warranty was
made, shall remain materially incorrect at the time in question and shall not be
cured in all material respects within thirty (30) days after written notice to
Lessee thereof, provided that the continuation of such a failure for thirty
(30) days or longer after such notice shall not constitute a Lease Event of
Default if such failure can be cured, but cannot reasonably be cured within such
thirty (30) day period, and Lessee shall commence to cure such failure within
such thirty (30) day period and shall be diligently and continuously prosecuting
the cure of such failure; and

 

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(f) (i) Lessee or Guarantor makes any general arrangement or assignment for the
benefit of creditors, a transfer in fraud of creditors or shall become
insolvent; (ii) Lessee or Guarantor becomes a “debtor” as defined in 11 U.S.C.
§ 101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within ninety (90) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
the assets of Lessee or Guarantor where possession is not restored to Lessee
within ninety (90) days; (iv) the attachment, execution or other judicial
seizure of substantially all of the assets of Lessee or Guarantor where such
seizure is not discharged within ninety (90) days; (v) Lessee or Guarantor
admits in writing its inability to pay its debts generally as they become due;
(vi) Lessee or Guarantor files a petition or answer seeking reorganization,
arrangement or other protection under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any State thereof;
(vii) Lessee or Guarantor is liquidated or dissolved, or placed under
conservatorship or other protection under any applicable Federal or state law;
(viii) any petition is filed by or against Lessee or Guarantor under Federal
bankruptcy laws, or any other proceeding is instituted by or against Lessee or
Guarantor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
Lessee or Guarantor, or for any substantial part of the property of Lessee, and
such proceeding is not dismissed within ninety (90) days after institution
thereof; or (ix) Lessee or Guarantor shall take any action to authorize or
effect any of the actions set forth above in this clause (f).

(g) Lessee’s interest under this Lease is sold under execution or other legal
process.

(h) Lessee’s interest under this Lease is modified or altered by any
unauthorized assignment or subletting or by operation of law.

(i) Lessee’s failure to take occupancy of the Property when same is tendered by
Lessor to Lessee, unless Base Rent and Supplemental Rent have been prepaid to
cover the applicable period of non-occupancy.

(j) Lessee’s or Guarantor’s failure to comply with the requirements of
Section 25.26 of this Lease.

Any notice required under this Section 16.1 shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 or any successor law.

 

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ARTICLE 17.

ENFORCEMENT

Section 17.1. Lessor Remedies. Upon the occurrence of any Lease Event of Default
and at any time thereafter so long as the same shall be continuing, Lessor may,
at its option, by notice to Lessee do one or more of the following as Lessor in
its sole discretion shall determine:

(a) In addition to any other remedies available to Lessor under this Lease, at
law or in equity, Lessor shall have the immediate option to terminate this Lease
and all rights of Lessee hereunder and Lessor shall have all the rights and
remedies of a Lessor provided by Section 1951.2 of the California Civil Code. In
the event that Lessor shall elect to so terminate this Lease, then Lessor may
recover from Lessee:

(i) the worth at the time of award of any unpaid Rent which had been earned at
the time of such termination; plus

(ii) the worth at the time of the award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such Rental loss that Lessee proves could have been reasonably
avoided; plus

(iii) the worth at the time of award of the amount by which the unpaid Rent for
the balance of the term after the time of award exceeds the amount of such
Rental loss that Lessee proves could be reasonably avoided; plus

(iv) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee’s failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result
therefrom including, but not limited to: unamortized Lessee Improvement costs;
attorneys’ fees; brokers’ commissions; the costs of refurbishment, alterations,
renovation and repair of the Property; and removal (including the repair of any
damage caused by such removal) and storage (or disposal) of Lessee’s personal
property, equipment, fixtures, Alterations and any other items which Lessee is
required under this Lease to remove but does not remove.

As used in subparagraphs (i) and (ii) above, the “worth at the time of award” is
computed by allowing interest at the Default Rate. As used in subparagraph
(iii) above, the “worth at the time of award” is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award.

(b) Assuming that Lessor has not exercised its right to terminate this Lease
under paragraph (a) above, Lessor may terminate Lessee’s right of possession of
the Property without terminating this Lease by giving written notice to Lessee
that Lessee’s right to possession shall end on the date stated in such notice,
whereupon the right of Lessee to possession of the Property or any part thereof
shall cease on the date stated in such notice. If Lessor terminates Lessee’s
right of possession of the Property without terminating this Lease, such
termination of possession shall not release Lessee, in whole or in part, from
Lessee’s obligation to pay the Rent hereunder for the then current Lease Term.
In such event, Lessor shall have the right from time to time to recover from
Lessee, and Lessee shall remain liable for, all accrued Rent not theretofore
paid which is due under this Lease during the period from the date of such
notice of termination of possession to the date of such demand by Lessor, but
not for any period after the last day of the then current Lease Term. In any
such case, Lessor shall not be obligated to use any efforts to relet the
Property (which may be for a term extending beyond the then current Lease Term
of this Lease. Also, in any such case, Lessor may change the locks or other
entry devices of the Property and make repairs, alterations and additions in or
to the Property and redecorate the same

 

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to the extent deemed by Lessor, in its reasonable judgment, necessary or
desirable, and Lessee shall upon written demand pay the reasonable costs
thereof, together with any reasonable costs incurred by Lessor in accomplishing
such reletting (the “Additional Expenses”). Lessor may collect the rents from
any such reletting and apply the same first to the payment of late charges and
default interest, second to the payment of maintenance, repair and insurance
costs, third to the payment of the Additional Expenses and finally to the
payment of Rent herein provided to be paid by Lessee, and any excess or residue
shall operate as an offsetting credit against the amount of Rent payable
hereunder as the same thereafter becomes due and payable; provided that the use
of such offsetting credit to reduce the amount of Rent due Lessor, if any, shall
not be deemed to give Lessee any right, title or interest in or to such excess
or residue and any such excess or residue shall belong to Lessor solely;
provided further that in no event shall Lessee be entitled to a credit against
such Rent in excess of the aggregate amount (including the Rent and any
Additional Expenses payable by Lessee) due hereunder or which would have been
paid by Lessee for the period for which the credit to Lessee is being determined
had no default occurred. No such reentry, repossession, repairs, alterations,
additions or reletting shall (i) be construed as an eviction or ouster of Lessee
or as an election on Lessor’s part to terminate this Lease, unless a written
notice of such intention is given to Lessee, or (ii) operate to release Lessee
in whole or in part from any of Lessee’s obligations hereunder, and Lessor may,
at any time and from time to time, sue and recover judgment for any deficiencies
from time to time remaining after the application from time to time of the
proceeds of any such reletting.

(c) Lessor may exercise any other right or remedy that may be available to it
under Applicable Laws or in equity, or proceed by appropriate court action
(legal or equitable) to enforce the terms hereof or to recover damages for the
breach hereof, including the right and remedies provided by California Civil
Code Section 1951.4 (“lessor may continue lease in effect after lessee’s breach
and abandonment and recover rent as it becomes due, if lessee has right to
sublet or assign, subject only to reasonable limitations”). A single suit or
separate suits may be brought to collect any such damages for any period or
periods with respect to which Rent shall have accrued, and such suits shall not
in any manner prejudice Lessor’s right to collect any such damages for any
subsequent period. Lessor may defer any such suit until after the expiration of
the Base Term or the then current Renewal Term, in which event such suit shall
be deemed not to have accrued until the expiration of the Base Term or the then
current Renewal Term, as the case may be.

Section 17.2. Survival of Lessee’s Obligations. No repossession of any or all of
the Property or exercise of any remedy under this Lease, including termination
of this Lease, shall, except as specifically provided herein, relieve Lessee of
any of its liabilities and obligations hereunder, including the obligation to
pay Rent. In addition, except as specifically provided herein, Lessee shall be
liable for any and all unpaid Rent due hereunder before, after or during the
exercise of any of the foregoing remedies, including the Additional Expenses and
reasonable legal fees and other costs and expenses (plus interest on such
amounts from the date payable until the date paid at the Default Rate) incurred
by Lessor and Lender by reason of the occurrence of any Lease Event of Default
or the exercise of Lessor’s remedies with respect thereto and including all
costs and expenses incurred in connection with the return of the Property in the
manner and condition required by, and otherwise in accordance with the
provisions of, Article 10 as if the Property were being returned at the end of
the Lease Term.

 

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Section 17.3 Remedies Cumulative; No Waiver; Consents; Mitigation of Damages. To
the extent permitted by, and subject to the mandatory requirements of,
Applicable Laws, each and every right, power and remedy specifically given to
Lessor in this Lease or otherwise available under Applicable Law shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law or in equity, and
each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by Lessor, and the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any right, power or remedy. No delay or omission by
Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of Lessee or to be an acquiescence therein.
Lessor’s consent to any request made by Lessee shall not be deemed to constitute
or preclude the necessity for obtaining Lessor’s consent in the future to all
similar requests. No express or implied waiver by Lessor of any Lease Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Event of Default. To the extent that Lessor is required to do
so pursuant to California Civil Code Section 1951.2 and without limitation on
the allocation of the burden of proof in said Section, Lessor shall use
reasonable efforts to mitigate any damages suffered by Lessor that result from a
Lease Event of Default except in connection with Lessor’s exercise of its
remedies pursuant to Section 17.1. No action or inaction by Lessor shall
constitute Lessor’s termination of this Lease other than a writing executed by
Lessor setting forth Lessor’s election to terminate this Lease.

ARTICLE 18.

RIGHTS TO PERFORM FOR LESSEE AND LESSOR

Section 18.1. Lessor’s Right to Perform for Lessee. If Lessee shall fail to
perform or comply with any of its agreements contained herein, following
applicable notice and cure periods as provided in other provisions of this
Lease, Lessor shall then provide written notice to Lessee that Lessee has failed
to perform or comply with an agreement or obligation hereunder and specifying
the nature of the failure to perform or comply and advising Lessee that if such
failure continues for (a) a period of thirty (30) days, in the case of a failure
which does not pose a risk of material damage to the structural components of
the Improvements and (b) a period of five (5) days in the case of a failure that
poses a risk of material damage to the structural components of the Improvements
after this notice, then Lessor may, but shall not be required to, at its
election, exercise its right to perform such repairs and/or obligations for
Lessee under this Section 18.1. Thereafter, if Lessee does not perform or comply
with its agreement as specified in such notice, Lessor may perform or comply
with such agreement, and Lessor shall not thereby be deemed to have waived any
default caused by such failure, and the amount of payment required to be made by
Lessee hereunder and made by Lessor on behalf of Lessee, and all reasonable
out-of-pocket third-party costs and expenses of Lessor (including reasonable
attorneys’ fees and expenses) incurred in connection with the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Default Rate, shall be deemed Supplemental Rent, payable by
Lessee to Lessor upon demand. In addition, during the continuance of a Lease
Event of Default in respect of Lessee’s obligations under Section 8.2, then, in
addition to the rights above and at the cost of Lessee, (a) Lessor shall have
the right to hire Persons (as selected by Lessor in its reasonable discretion)
to cure such Lease Event of

 

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Default and to take any and all other actions necessary to cure such Lease Event
of Default and (b) Lessee shall cooperate with Lessor, and the Persons hired by
Lessor, in the performance of such cure, including without limitation
(i) providing access (subject to the limitations with respect to access by an
Inspecting Party provided in Section 15.1) to the Property at reasonable times
during business hours.

Notwithstanding the foregoing, Lessor shall not be obligated to provide the
notice required under this Section 18.1 in the event of an emergency.

Section 18.2. Lessee’s Right to Perform for Lessor. If Lessor shall fail to
perform or comply with any of its agreements contained herein (including without
limitation its obligations under Section 8.2), following applicable notice by
Lessee as provided in other provisions of this Lease, Lessee shall then provide
written notice to Lessor that Lessor has failed to perform or comply with an
agreement or obligation hereunder and specifying the nature of the failure to
perform or comply and advising Lessor that if such failure continues for (a) a
period of thirty (30) days, in the case of a failure which does not impact
Lessee’s business and operations at the Property, (b) a period of ten (10) days,
in the case of a failure that impacts Lessee’s business and operations at the
Property and (c) a period of five (5) days in the case of a failure that impacts
Lessee’s business and operations at the Property in a material way or causes an
interruption of Lessee’s business and operations after this notice, then Lessee
shall exercise its right to perform for Lessor under this Section 18.2.
Thereafter, if Lessor does not perform or comply with its agreement as specified
in such notice, Lessee may perform or comply with such agreement, and the amount
of payment required to be made by Lessor hereunder and made by Lessee on behalf
of Lessor, and the reasonable out-of-pocket third-party costs and expenses of
Lessee (including reasonable attorneys’ fees and expenses) incurred in
connection with the performance of or compliance with such agreement, as the
case may be, together with interest thereon at the Default Rate, shall be
immediately payable by Lessor to Lessee upon demand and may be offset against
any Rent payment otherwise due hereunder. In addition, in the event Lessor fails
to perform its obligations under Section 8.2, then, in addition to the rights
above and at the cost of Lessor, (a) Lessee shall have the right to hire Persons
(as selected by Lessee in its reasonable discretion) to perform such obligations
of Lessor and (b) Lessor shall cooperate with Lessee, and the Persons hired by
Lessee, in the performance thereof.

Notwithstanding the foregoing, Lessee shall not be obligated to provide the
notice required under this Section 18.2 in the event of an emergency.

ARTICLE 19.

INDEMNITIES

Section 19.1. General Indemnification. Lessee shall indemnify, defend and save
harmless Lessor, Lessor’s mortgagee, deed of trust trustee and beneficiary,
Lessor’s ground lessor, if any, and Lessor’s agents, contractors,
subcontractors, employees, successors and assigns (collectively, the “Lessor
Indemnified Parties”) from and against all Claims brought by third parties and
that arise from Lessee’s or its subtenant’s, assignee’s, agent’s, licensee’s,
contractor’s, subcontractor’s, concessionaire’s or employee’s or existing
tenant’s (Lessee and such other parties collectively, the “Lessee Parties”) use
and occupancy of

 

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the Property or from any other activity, work or thing done, permitted or
suffered by any Lessee Party on or about the Property, but this indemnity shall
not include any damages or Claims by third parties arising from or relating to
any activity, work or thing done on or about the Property by any Lessor Party
(as defined below). If any proceeding covered by this Section 19.1 is filed by a
third party against any Lessor Indemnified Party, then at Lessor’s request,
Lessee shall defend such Lessor Indemnified Party in such proceeding at Lessee’s
sole cost with legal counsel selected by Lessee and reasonably satisfactory to
Lessor. In no event shall Lessee be obligated to indemnify any Lessor
Indemnified Party for any damages or Claims arising out of the grossly negligent
act or omission or any willful misconduct of Lessor or any other Lessor
Indemnified Party. This Section 19.1 shall survive the expiration or earlier
termination of this Lease.

Section 19.2 No Third Party Environmental Indemnification. The parties agree
that neither of them shall be obligated to indemnify, defend or hold harmless
the other for any Claim or liability arising under any Environmental Law as a
result of the action, failure to act or negligence of any other Person (except
in the case of Lessee, itself or the Lessee Parties, and in the case of Lessor,
itself or the Lessor Parties) on or about the Property or on any surrounding
property.

Section 19.3 Drainage Easement Indemnification. Lessor acknowledges that Lessee
has disclosed to Lessor, and Lessor is aware of, the existence of a platted
drainage easement that runs directly under the building on the Property (the
“Drainage Easement”). The Drainage Easement is of record and shown on the
recorded plat of the Property, as well as on Lessor’s survey of the Property,
and is listed as a Schedule B exception to Lessor’s owner title insurance
coverage. Subject to the Cap set out below, Lessee will indemnify and hold
Lessor, and all subsequent owners of the Property, (the “Indemnified Parties”),
harmless from all costs, liabilities, losses and damages actually incurred by
the Indemnified Parties, or any of them, as a result of or arising from the
Drainage Easement being located under the existing building on the Property, and
all governmental proceeding arising therefrom, if any, including any legal or
other third party expenses incurred by the Indemnified Parties related thereto.
This indemnification shall survive after the termination of this Lease and
continue in full force and affect for the benefit of Lessor, and all subsequent
owners of the Property. Provided, however, notwithstanding anything contained in
the foregoing provisions of this Section 19.3 to the contrary, the maximum
liability of Lessee to the Indemnified Parties, collectively, under this
indemnity as to the Drainage Easement shall not exceed, and is capped at, Five
Hundred Thousand Dollars ($500,000.00) (the “Cap”) and Lessee shall have no
further or other liability, in excess of the Cap, to the Indemnified Parties, or
any of them, for any matter under this Section 19.3. For purposes of clarity,
the Cap is the maximum liability of Lessee, in the aggregate, to the Indemnified
Parties and is not per indemnitor. Lessee shall endeavor to use commercially
reasonable efforts, at its sole cost and expense, to secure either i) a letter
from the City of San Diego approving the construction of the building over the
Drainage Easement; or ii) a vacation of the Drainage Easement.

 

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ARTICLE 20.

LESSEE REPRESENTATIONS AND COVENANTS

Section 20.1. Representations and Warranties. Lessee represents and warrants to
Lessor that the following are true and correct as of the Closing Date:

(a) Due Organization. Lessee is a corporation duly organized, validly existing
and in good standing in the State of Delaware and qualified to do business and
in good standing in the State in which the Property is located. Lessee has the
corporate power and authority to conduct its business as now conducted, to lease
the Property and to enter into and perform its obligations under this Lease.
Lessee is duly qualified to do business and is in good standing as a foreign
corporation in California and any jurisdiction where the failure to so qualify
would have a material adverse effect on its ability to perform its obligations
under this Lease.

(b) Due Authorization; No Conflict. This Lease has been duly authorized by all
necessary corporate action on the part of Lessee and has been duly executed and
delivered by Lessee, and the execution, delivery and performance hereof by
Lessee will not contravene or result in any breach of or constitute any default
under any agreement or instrument to which Lessee is a party or by which Lessee
is bound.

(c) Governmental Action. All Governmental Action required in connection with the
execution, delivery and performance by Lessee of this Lease has been or will
have been obtained, given or made.

(d) Enforceability. This Lease constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with its terms,
except as enforceability may be limited by bankruptcy, moratorium, fraudulent
conveyance, insolvency, equitable principles or other similar laws affecting the
enforcement of creditors’ rights in general.

(e) Bankruptcy. No bankruptcy, reorganization, arrangement or insolvency
proceedings are pending, threatened or contemplated by Lessee, and Lessee has
not made a general assignment for the benefit of creditors.

(f) Legal Proceedings. To Lessee’s Actual Knowledge, there are no pending or
threatened actions, suits or proceedings by or before any court or Governmental
Authority against or affecting Lessee with respect to the Property.

(g) Licenses and Permits. To Lessee’s Actual Knowledge, Lessee has not received
any notices of any violations from any Governmental Authority with respect to
the Property which have not been corrected to the satisfaction of the issuer of
the notice.

(h) Nondiscrimination. As required by certain agreements affecting the Property,
Lessee covenants by and for itself, its successors and assigns, and all persons
claiming under or through it, that there shall be no discrimination against or
segregation of, any person or group of persons on account of race, color, creed,
religion, sex, marital status, age, handicap, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Property herein leased, nor shall the Lessee itself or any person claiming under
or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
land herein leased.

 

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ARTICLE 21.

[INTENTIONALLY DELETED]

ARTICLE 22.

BROKERAGE

Section 22.1 Brokers. Lessor and Lessee warrant and represent to each other that
neither has dealt with any broker or brokers regarding the negotiation of this
Lease, other than Lessor and Lessee’s dealings with the Broker, and shall
indemnify and hold the other harmless from any claim for brokerage, finder fee
or other commission arising from this transaction to the extend due to the
actions of such party. Broker shall be compensated by Lessee as provided
pursuant to separate agreement.

ARTICLE 23.

TRANSFER OF LESSOR’S INTEREST

Section 23.1. Permitted Transfer. Subject to Article 4, Lessor may transfer all,
or any part of, its right, title and interest in and to the Property and its
rights under this Lease, other than to any Significant Competitor, on the
following terms and conditions, each of which shall be satisfied prior to the
effective date of the transfer (other than a transfer by a deed-in-lieu of
foreclosure or similar transfer made in connection with an exercise of remedies
under the Mortgage):

(a) such transfer shall be in compliance with the Mortgage and related documents
(if still in place) and with all Applicable Laws and shall not create a
relationship which would violate any Applicable Law;

(b) the transferor shall have given or at closing shall give to Lessee notice of
such transfer, which notice shall contain such information and evidence as shall
be reasonably necessary to establish compliance with this Article 23 and the
name and address of the transferee for notices;

(c) no transfer may be made of less than all of the legal parcels comprising the
Property; and

(d) in the event that, after giving effect to Lessor’s transfer of its interest
in the Property and it rights under this Lease, there is more than one holder of
an interest in the Property, Lessor and such transferees shall designate in the
notice to Lessee one point of contact for all notices, correspondence and Rent
payments from Lessee from and after the effective date of such transfer.

Section 23.2. Effects of Transfer. From and after any transfer by Lessor, Lessor
shall be released, to the extent of the interest transferred and the obligations
assumed by the transferee, from its liability hereunder. Such release shall be
in respect of obligations that are assumed by the transferee arising on or after
the date of such transfer. Upon any transfer by Lessor of the Property as above
provided, any such transferee shall be deemed

 

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the “Lessor” for all purposes of this Lease and each reference herein to Lessor
shall thereafter be deemed a reference to such transferee for all purposes,
except to the extent that Lessor retains any obligations hereunder.

ARTICLE 24.

PERMITTED FINANCING

Section 24.1. Financing During Lease Term. Subject to the terms of this
Section 24.1, Lessee’s rights under this Lease are subordinate to any underlying
Leases, existing easements, licenses, or deeds of trust, mortgages or other
security interest now or hereafter affecting the Premises or Lessor’s Property,
provided that Lessee’s tenancy is not disturbed. To the fullest extent allowed
by applicable law, the foregoing subordination is self-operative and no further
instrument of subordination is required; provided, however, Lessee hereby agrees
to execute, at the Lessor’s request, any customary and reasonable instrument
which the Lessor or any lender may deem necessary or desirable to effect the
subordination and nondisturbance of this Lease to any such mortgage. Attached to
this Lease as Exhibit “D” is a form of the Subordination, Non-Disturbance and
Attornment Agreement (“SNDA”) that the parties agree is reasonable and
customary. Provided that Lessee receives a nondisturbance agreement executed by
Lessor and the Lender, Lender will, without charge, execute, acknowledge and
deliver to the Lessor the Subordination, Non-Disturbance and Attornment
Agreement (or such other form which is customary and reasonable, as determined
by Lender, in its reasonable discretion) in recordable form, within ten
(10) business days after such receipt of the applicable form. Notwithstanding
the foregoing, the Lender may unilaterally elect to subordinate its mortgages
and liens to this Lease. In no event will the Lessee be required to guarantee or
be obligated on such mortgage or lien. If Lessor puts financing on the Property
as of the Effective Date, then upon the commencement of this Lease, Lender shall
provide an SNDA to Lessee, for recording at Lessee’s cost. No SNDA upon the
commencement of the Lease will be required if there is no Lender at that time.

Section 24.2. Lessee’s Consent to Assignment for Indebtedness. Lessee
acknowledges that in order to secure Lessor’s obligations to Lender, Lessor may
agree, among other things, to the assignment (to the extent provided therein) to
Lender of Lessor’s right, title and interest to this Lease. While the Mortgage
or any replacements thereof are in effect and provided that Lessor has notified
Lessee in writing of the existence and name and address of Lender, Lessee
hereby:

(a) consents to such assignment of this Lease; and

(b) covenants to, if so directed by Lessor, make payment directly to Lender or
its designee in accordance with the terms of this Lease of Base Rent and any
amounts payable under Article 17.

ARTICLE 25.

MISCELLANEOUS

Section 25.1. Binding Effect; Successors and Assigns; Survival. The terms and
provisions of this Lease, and the respective rights and obligations hereunder of

 

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Lessor and Lessee, shall be binding upon their respective successors, legal
representatives and assigns (including, in the case of Lessor, any Person to
whom Lessor may transfer the Property in accordance with Article 23) and inure
to the benefit of their respective permitted successors and assigns, and the
rights hereunder of Lender shall inure (subject to such conditions as are
contained herein) to the benefit of its permitted successors and assigns.

Section 25.2. Quiet Enjoyment. So long as Lessee complies with the terms,
covenants and provisions of this Lease, Lessor covenants and agrees that Lessee
shall have the right to peaceably and quietly hold, possess and use any and all
of the Property hereunder during the Lease Term.

Section 25.3. Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be in writing sent to either that Person’s Address, with a copy
thereof to be sent to each Person to receive a copy pursuant to the definition
of “Address”, by (a) a prepaid nationally recognized overnight courier service,
in which event such notice shall be deemed received one (1) Business Day after
delivery to such courier service specifying overnight delivery, or (b) U.S.
certified or registered mail, return receipt requested, postage prepaid, in
which event such notice shall be deemed received when actually received, as
evidenced by the return receipt, or when delivery is first refused. From time to
time, either party may designate a new Address for purposes of notice hereunder
by giving fifteen (15) days’ written notice thereof to each of the other parties
hereto. All notices given hereunder shall be irrevocable unless expressly
specified otherwise. Lessor shall label any envelope which contains a notice of
default with the legend “Default Notice”.

Section 25.4. Severability. Any provision of this Lease that shall be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and each party hereto
shall remain liable to perform its obligations hereunder except to the extent of
such unenforceability. To the extent permitted by applicable law, Lessee hereby
waives any provision of law that renders any provision hereof prohibited or
unenforceable in any respect.

Section 25.5. Amendments, Complete Agreements. Neither this Lease nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but may be terminated, amended, supplemented, waived or modified only by
an instrument in writing signed by the party against which the enforcement of
the termination, amendment, supplement, waiver or modification shall be sought.
This Lease is intended by the parties as a final expression of their lease
agreement and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein. No representations, undertakings, or agreements have been
made or relied upon in the making of this Lease other than those specifically
set forth herein.

 

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Section 25.6. Headings. The Table of Contents and headings of the various
Articles and Sections of this Lease are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions hereof.

Section 25.7. Counterparts. This Lease may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

Section 25.8. Governing Law. This Lease shall be governed by, and construed in
accordance with, the laws of the State in which the Property is located,
excluding its conflict of laws provisions.

SUBJECT TO ARTICLE 27, EACH OF LESSOR AND LESSEE HEREBY SUBMITS TO JURISDICTION
OF THE FEDERAL COURTS HAVING JURISDICTION GENERALLY IN THE LOCATION OF THE
PROPERTY, (AND ANY APPELLATE COURTS TAKING APPEALS THEREFROM) FOR THE
ENFORCEMENT OF SUCH PERSON’S OBLIGATIONS HEREUNDER (OR IF SUCH COURT DOES NOT
HAVE JURISDICTION THEN TO JURISDICTION OF THE CIRCUIT COURT FOR THE COUNTY IN
WHICH THE PROPERTY IS LOCATED). EACH OF LESSOR AND LESSEE HEREBY WAIVES AND
AGREES NOT TO ASSERT AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS LEASE AND BROUGHT IN ANY SUCH COURT IN THE STATE (A) THAT
IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR PROCEEDING
MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT IT IS EXEMPT
OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM OR (C) THAT THE VENUE OF THE ACTION, SUIT OR PROCEEDING IS
IMPROPER. TO THE EXTENT PERMITTED BY LAW, LESSEE AND LESSOR EACH HEREBY
EXPRESSLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATED TO THE ENFORCEMENT OF THIS LEASE.

Section 25.9. Memorandum. Lessee and Lessor agree that a memorandum of this
Lease (and any amendment hereof) in the form attached hereto as Exhibit B shall
be executed and recorded, at Lessee’s expense, in the land records of the
jurisdiction in which the Property is located.

Section 25.10. Estoppel Certificates. Each party hereto agrees that at any time
and from time to time during the Lease Term (but on no more than two occasions
during each Lease Year), it will promptly, but in no event later than ten
(10) days after request by the other party hereto, execute, acknowledge and
deliver to such other party a certificate in the form of Exhibit C attached
hereto. Such certificate may be relied upon by any bona fide, permitted
purchaser of, or mortgagee with respect to, Lessor’s or Lessee’s interest in the
Property (direct or indirect), or any prospective sublessee of Lessee in respect
of all or a portion of the Property.

Section 25.11. Lessee Easements. Lessor does hereby grant to Lessee, and Lessor
shall execute, upon request, such further or other executed and notarized

 

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documents, in recordable form, to evidence a non-exclusive easement for all
existing communications or other infrastructure of Pacific Bell Telephone
Company, or AT&T Inc., or AT&T Services, Inc. or affiliates of any of them,
within the Building or about the Property which are presently utilized by any of
said entities in the furtherance of their business or utilization of the
Property and business conducted thereon.

Provided no Default or Event of Default exists, upon request by Lessee and
subject to the receipt of the approval of any Lender, Lessor agrees (i) to enter
into or modify with Lessee, at Lessee’s expense, such easements, covenants,
waivers, approvals or restrictions for utilities, parking or other matters as
Lessee may desire for the operation of the Leased Premises (collectively,
“Lessee Easements”); provided, that Lessor shall be obligated to take any such
action only if (a) any such Lessee Easements, do not adversely affect the fair
market value of the Property or render the use of the Property dependent upon
any other property or condition the use of the Property upon the use of any
other property, (b) any such Lessee Easements do not impair Lessee’s use or
operation of the Property and is not detrimental to the proper conduct of
Lessee’s business on the Property, (c) Lessee advises Lessor of the amount of
the consideration, if any, being paid for such Lessee Easements and that Lessee
considers the consideration, if any, being paid for such Lessee Easements to be
fair and adequate, (d) for so long as this Lease is in effect, Lessee will
perform all obligations, if any, imposed on the Property under the applicable
instrument evidencing such Lessee Easement and Lessee will remain obligated
under this Lease in accordance with its terms, and (e) Lessee pays all costs and
expenses incurred by Lessor and Lender, including, without limitation, title
bring-down, insurance costs and attorneys’ fees in connection with said Lessee
Easements including, without limitation, reasonable attorneys’ fees, all of
which (items (a) - (e) above) Lessee shall certify to Lender and Lessor in
writing. The obligations of Lessor under this Paragraph shall also be subject to
the satisfaction of the following: (i) the first mortgage Lender have approved
and executed a consent to the Lessee Easement; and (ii) Lessee satisfies such
conditions as the Lessor may reasonably request as to the consent to the
proposed Lessee Easement. Lessee’s request shall also include (i) the authorized
undertaking of Lessee, in form and substance reasonably satisfactory to Lessor,
to the effect that Lessee will remain obligated hereunder to the same extent as
if such Lessee Easements had not been effected, and (ii) confirmation of the
lien priority of the Mortgage and such instruments, certificates, surveys, title
insurance policy endorsements and opinions of counsel reasonably acceptable to
Lessor or its Lender as Lessor or its Lender may reasonably request.

Section 25.12. No Joint Venture. Any intention to create a joint venture or
partnership relation between Lessor and Lessee is hereby expressly disclaimed.

Section 25.13. No Accord and Satisfaction. The acceptance by Lessor of any sums
from Lessee (whether as Rent or otherwise) in amounts which are less than the
amounts due and payable by Lessee hereunder is not intended, nor shall be
construed, to constitute an accord and satisfaction or compromise of any dispute
between such parties regarding sums due and payable by Lessee hereunder, unless
Lessor specifically deems it as such in writing.

Section 25.14. No Merger. In no event shall the leasehold interests, estates or
rights of Lessee hereunder, or of Lender, merge with any interests, estates or

 

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rights of Lessor in or to any and all of the Property, it being understood that
such leasehold interests, estates and rights of Lessee hereunder, and of Lender,
shall be deemed to be separate and distinct from Lessor’s interests, estates and
rights in or to the Property, notwithstanding that any such interests, estates
or rights shall at any time or times be held by or vested in the same person,
corporation or other entity.

Section 25.15. Lessor Bankruptcy. During the Lease Term, the parties hereto
agree that if Lessee elects to remain in possession of any and all of the
Property after the rejection of this Lease by Lessor under Section 365(h) of the
Bankruptcy Code, all of the terms and provisions of this Lease shall be
effective during such period of possession by Lessee, including Lessee’s
purchase rights hereunder, even if Lessor becomes subject to a case or
proceeding under the Bankruptcy Code or the exercise by Lessee of such purchase
rights.

Section 25.16. Naming and Signage of the Property. (a) Lessee shall have the
sole and exclusive right, at any time and from time to time, during the lease
term or any renewal or extension thereof to i) select and/or change the name or
names of the Property, and the Improvements, ii) determine not to use any name
in connection with the Property; and iii) all rights in respect of signage for
or in connection with the Property. Lessee shall also have the right to petition
or apply to the appropriate Governmental Authority to have the names of the
public roadways surrounding the Property changed, and Lessor shall, at Lessee’s
sole cost and expense, cooperate with Lessee to effectuate any such name change.
Lessor shall not have or acquire any right or interest with respect to any such
name or names used at any time by Lessee, or any trade name, trademark service
mark or other intellectual property of any type of Lessee. Lessor shall
cooperate with Lessee to effectuate Lessee’s sign rights hereunder, at no cost
to Lessor. Lessee may install any sign or signs on the Property as it elects, at
its sole cost and in compliance with Applicable Laws. Any signs installed by
Lessee (other than those existing as of the commencement of the Lease Term)
shall be removed by Lessee at the expiration or earlier termination of the Lease
Term, and Lessee shall repair any damage caused by such removal.

(b) Lessee’s name and the name of the Property as selected by Lessee pursuant to
this Section 25.16 (the “Property Name”) shall remain the exclusive property of
Lessee and nothing contained herein shall grant any Person the right to use
Lessee’s name, logo, trademarks or service marks without Lessee’s prior written
consent, which consent may be withheld in Lessee’s sole discretion, provided
that Lessor may use the Property Name or Lessee’s name in any filings made by it
with the Securities and Exchange Commission or any Government Authority to the
extent such information is required to be included in such filings. Lessor shall
reasonably cooperate with Lessee, at Lessee’s sole cost and expense, in such
actions as Lessee deems reasonably necessary or appropriate to protect Lessee’s
rights with respect to Lessee’s name, logo, trademarks or service marks and the
Property Name selected by Lessee. Upon termination of the Lease, Lessor shall
rename the Property and neither Lessor nor any other Person shall thereafter be
permitted to use the Property Name under any circumstances.

Section 25.17. Expenses. Whenever this Lease provides for the reimbursement by
Lessee of costs and expenses of Lessor or any other party, or (ii) by Lessor of
costs and expenses of Lessee, then such reimbursement obligation shall be
limited to actual, out-of pocket third-party costs and expenses, including
without limitation reasonable attorneys’ fees.

 

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Section 25.18. Additional Parking. In the event that Lessee reasonably
determines that additional parking needs to be constructed on the Property to
accommodate the employee parking at the Property, then Lessee shall notify
Lessor. Lessee and Lessor shall then negotiate in good faith for a period not to
exceed thirty (30) days to resolve timing and costs for the construction of such
additional parking, as required by Lessee. In the event that the parties are
unable to resolve the timing and costs for construction of such additional
parking, then Lessee shall be entitled to obtain all applicable permits for, and
commence and complete construction of, such additional parking. In that event,
the cost for such additional parking shall be at Lessee’s sole cost and expense.

Section 25.19. Further Assurances. Lessor and Lessee, at the cost and expense of
the requesting party (except as otherwise set forth in this Lease to the
contrary), will cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as the other party
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Lease. Nothing herein shall obligate Lessee to
provide to Lessor or Lender any proprietary or confidential information relating
to the manner, method and procedures of Lessee’s business operations.

Section 25.20. OFAC Representation. For purposes hereof, “List” shall mean the
Specially Designated Nationals and Blocked Persons List maintained by OFAC
and/or on any other similar list maintained by OFAC pursuant to any authorizing
statute, executive order or regulation, and “OFAC” shall mean the Office of
Foreign Assets Control, Department of the Treasury. Each party represents and
warrants to the other that (i) each Person owning a ten percent (10.00%) or
greater interest in such party is (A) not currently identified on the List, and
(B) is not a person with whom a citizen of the United States is prohibited to
engage in transactions by any trade embargo, economic sanction, or other
prohibition of United States law, regulation, or Executive Order of the
President of the United States and (ii) each party has implemented procedures,
and will consistently apply those procedures, to ensure the foregoing
representations and warranties remain true and correct at all times. Each party
shall comply with all requirements of law relating to money laundering,
anti-terrorism, trade embargos and economic sanctions, now or hereafter in
effect and shall use reasonable efforts to notify the other in writing if any of
the foregoing representations, warranties or covenants are no longer true or
have been breached or if such party has a reasonable basis to believe that they
may no longer be true or have been breached. In addition, at the request of a
party, the other party shall provide such information as may be requested by the
requesting to determine the other party’s compliance with the terms hereof.

Section 25.21. REIT Status. If the ownership of the Property is in a Real Estate
Investment Trust, then Lessor and Lessee agree that Rent paid to Lessor under
this Lease shall qualify as “rents from real property” within the meaning of
Section 856(d) of the Internal Revenue Code of 1986, as amended (the “Code”) and
the U.S. Department of Treasury Regulations promulgated thereunder (the
“Regulations”). Should the Code or the Regulations, or interpretations thereof
by the Internal Revenue Service contained in Revenue Rulings, be changed so that
any Base Rent or Supplemental Rent no longer qualifies as “rent from real
property” for the purposes of Section 856(d) of the Code and the Regulations
promulgated thereunder, other than by reason of the application of
Section 856(d)(2)(B) or 856(d)(5) of the Code or the Regulations relating
thereto, such Base Rent or Supplemental Rent shall be adjusted

 

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so that it will so qualify; provided, however, that any adjustments required
pursuant to this Section shall be made so as to produce the equivalent (in
economic terms) Base Rent or Supplemental as payable prior to such adjustment.

Section 25.22. Lessor Exculpation. Anything to the contrary in this Lease
notwithstanding, the covenants contained in this Lease to be performed by Lessor
shall not be binding on any member of Lessor in its or his or her individual
capacity, but instead said covenants are made for the purpose of binding only
Lessor’s right, title and interest in and to the Property, and neither Lessor
nor any of its Affiliates or successors and assigns shall have any liability
under this Lease in excess of, and Lessee shall have no recourse under this
Lease against Lessor or any Affiliate of it except for Lessor’s interest in the
Property, Rent and proceeds of the Property.

Section 25.23. Remedies Cumulative. To the extent permitted by, and subject to
the mandatory requirements of, Applicable Laws, each and every right, power and
remedy herein specifically given to Lessor in this Lease or otherwise existing
at law or in equity shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing
at law, in equity or by statute, and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient by
Lessor. No delay or omission by Lessor in the exercise of any right, power or
remedy or in the pursuit of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Lessee or to
be an acquiescence therein. Lessor’s consent to any request made by Lessee shall
not be deemed to constitute or preclude the necessity for obtaining Lessor’s
consent, in the future, to all similar requests. No waiver by Lessor of any
default shall in any way be, or be construed to be, a waiver of any future or
subsequent default.

Section 25.24 Holding Over. Lessee covenants that if for any reason Lessee shall
fail to vacate and surrender possession of the Property or any part thereof, in
the condition required herein, on or before the expiration or earlier
termination of this Lease, then Lessee shall have a right to hold over for three
(3) months at the same Rent as was paid at expiration of the then lease term,
provided that Lessee has given Lessor at least three months prior written notice
of same. If Lessee continues to hold over thereafter, then the Rent during the
next three (3) months of Lessee’s continued possession of the Property shall be
as a month to month tenant, during which time, Lessee shall, as to the portion
of the Leased Premises in which Lessee is holding over, pay to Lessor an amount
equal to one hundred twenty five percent (125%) of a pro-rata portion of the
total monthly amount of Rent (corresponding to the portion of the Property still
occupied by Lessee) payable hereunder immediately prior to such period. Lessor
shall not be entitled to any other damages as a result of Lessee’s continued
possession of the Property and in no event shall Lessee be liable for any
consequential, special or other damages, monetary or otherwise, as a result of
such hold over. Lessee’s obligations under this Section 25.24 shall survive the
expiration or earlier termination of this Lease.

Section 25.25 Survival. The following provisions shall survive the termination
of this Lease: (a) Sections 6.1, 8.5, 8.6, 8.7, 8.8, Articles 7, 10, 12 and 19
to the extent relating to unfulfilled obligations of Lessee or Lessor arising or
occurring prior to the date of termination of this Lease; (b) any provision of
this Lease pursuant to which Lessor or Lessee

 

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had an existing obligation which was unsatisfied at the time of termination of
this Lease and remains unsatisfied, including, without limitation, to the extent
there was any unsatisfied obligation under Section 12.1 and Article 3; provided,
however, that nothing in this Section 25.25 shall be deemed to extend any
applicable statute of limitations; and (c) any other provision of this Lease
which by its terms is expressly stated to so survive.

Section 25.26 Financial Statements. Lessee shall cause Guarantor to comply with
any requirements of the Guaranty regarding financial statements. Within ninety
(90) days after receipt of a written request, which may be by email, from Lessor
or Lender, (but not more frequently than two (2) times in any lease year),
Lessee shall submit to Lessor and Lender the most current internally prepared
annual (no older than 1 year) balance sheet, income and cash flow statements,
respectively, certified by a senior financial officer of Lessor, with a
certification which states:

“Per section XX.X of the lease agreement dated XXXX, XX, XXXX, enclosed are the
following unaudited financial statements for the period ending XXXX 3X, 20XX:

 

  •   Balance sheet as of XXXX 3X, 20XX

 

  •   Statement of income for the month and year to date ended XXXX 3X, 20XX

 

  •   Statement of cash flows for the month and year to date ended XXXX 3X, 20XX

To the best of my knowledge, the statements fairly represent the financial
condition and results of operations.

These statements are true, correct and complete and were prepared in accordance
with GAAP, or an alternative presentation which is reasonably consistent with
GAAP, applied on a consistent basis, subject to changes resulting from normal
year-end adjustments.”

Section 25.27 Relationship of Lease and Mortgage. This Lease, the leasehold
estate of Lessee created hereby and all rights of Lessee hereunder are and shall
be senior or subordinate to the Mortgage and to all renewals, modifications,
consolidations, replacements and extensions of the Mortgage as requested by
Lender. Lender and Lessee shall each execute and deliver to the other party a
subordination, non-disturbance and attornment agreement substantially in the
form of Exhibit D.

Section 25.28 Lessor Representations. This Lease has been duly authorized by all
necessary action on the part of Lessor and has been duly executed and delivered
by Lessor, and the execution, delivery and performance hereof by Lessor will not
(i) require any consent or approval of any Person, other than such consents and
approvals as have been obtained, (ii) contravene any Applicable Law binding on
Lessor or (iii) contravene or result in any breach of or constitute any default
under Lessor’s organizational documents, or any indenture, mortgage, loan
agreement, contract, partnership or joint venture agreement, lease or other
agreement or instrument to which Lessor is a party or by which Lessor is bound.

Section 25.29 Rooftop Rights. Subject to the terms and conditions of this
Section 25.29, Lessee during the Lease Term shall have an exclusive right, at no
additional cost, to install, use operate, maintain, repair and replace
communications dishes, antennas, monopoles, towers or other supporting
structures and other communications equipment (“Communication Dishes”) on the
rooftop of the Building and corresponding equipment rooms within the Building,
and applicable chases, risers or the like therein (collectively the

 

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“Communication Spaces”) and the same shall be free from charge; provided
however, that (i) Lessor shall have approved in its reasonable discretion the
dimensions and specifications for the Communication Dishes, and the proposed
method of attaching the Communication Dishes to the Communication Space;
(ii) Lessor’s engineer determines that the space on which Lessee desires to
install the Communication Dishes are capable of bearing the weight of the
Communication Dishes. All Communication Dishes of Lessee in place as of the
commencement of this Lease are approved by Lessor.

Prior to or contemporaneous with Lessee requesting Lessor’s approval of the
installation of additional Communication Dishes, Lessee shall provide to Lessor:
(i) plans and specifications for the Communication Dishes; (ii) copies of all
required governmental and quasi-governmental permits, licensees, special zoning
variances, and authorizations for the installation and operation of the
Communication Dishes, all of which Lessee shall obtain at its own cost and
expense; and (iii) unless Lessee is self-insuring as provided in Section 9.2 of
this Lease, a policy or certificate of insurance evidencing such commercially
reasonable insurance coverage as may be reasonably required by Lessor for the
installation, operation and maintenance of the Communication Dishes. Lessor may
withhold its approval of the installation of the Communication Dishes if the
installation, operation or removal of the Communication Dishes may (A) damage
the structural integrity of the Building or void any warranty or guaranty
applicable to the roof or the Building; or (B) cause the violation of any zoning
ordinance or other governmental or quasi-governmental law, rule or regulation
applicable to the Building. Lessor may require as a precondition to its approval
of the installation of any additional Communication Dishes if the same will
exceed the load bearing specifications of the roof, that Lessee, at Lessee’s
sole cost and expense, install additional structural support (in a manner
determined by Lessor’s engineer in its sole discretion) to the portion of the
roof on which Lessee desires to install the Communication Dishes so that the
load bearing specifications of the roof are not exceeded. Lessee shall not be
entitled to rely on any such approval as being a representation by Lessor that
such installation and operation is permitted by or in accordance with any zoning
ordinance or other governmental or quasi-governmental law, rule or regulation
applicable to the Building.

Lessor, upon reasonable notice to Lessee, shall be provided with access, while
accompanied by a Lessee representative, to the any of the Communication Spaces,
in order to inspect the Communication Dishes and to determine, inter alia, if
the Communication Dish is causing damage to the roof or any other part of the
Building. Lessor may require Lessee, at any time prior to the expiration of the
Lease, to terminate the operation of any Communication Dish that Lessor
reasonably establishes, after opportunity of Lessee to effect a cure to the
issue, is causing physical damage to the structural integrity of the Building or
voids any warranty or guaranty applicable to the roof or the Building, or is
causing the violation of any governmental or quasi-governmental law, rule or
regulation (now or hereafter in effect) applicable to the Building.

Unless Lessee desires to retain the Communication Dishes, as aforesaid at the
expiration or earlier termination of the Lease, then Lessee, at Lessee’s sole
cost and expense, shall remove the Communication Dishes and all cabling and
other equipment relating thereto from the Building, and Lessee shall restore the
area where the Communication Dishes was located to its condition existing prior
to such installation in a manner and with materials consistent with removal of
communication dishes from data centers like the Property. In the event Lessee
fails

 

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to promptly do so, Lessee hereby authorizes Lessor to remove the Communication
Dishes and all cabling and other equipment relating thereto and restore the area
of the Roof and the other portions of the Building affected thereby, and charge
Lessee for all costs and expenses incurred in connection therewith. Lessee’s
obligation to perform and observe this covenant shall survive the expiration or
earlier termination of the Term of the Lease.

Lessee shall obtain, at its sole expense, all necessary licenses, permits and
approvals from any Governmental Authority required in order to install, operate
or maintain its Communication Dishes. Lessee shall install, maintain and use its
Communication Dishes and repair any damage to the Building caused by Lessee’s
installation, maintenance or use of its Communications Dishes, all at it sole
expense, and in full compliance with Applicable Laws.

Lessee covenants and agrees that the installation, operation and removal of the
Communication Dishes shall be at its sole cost and risk. Lessee covenants and
agrees absolutely and unconditionally to indemnify, defend and hold Lessor
harmless from and against all claims, actions, damages, liability, judgments,
settlements, costs and expenses (including attorneys’ fees and expenses)
suffered or sustained by Lessor arising out of the installation, operation,
maintenance or removal of the Communication Dishes, including without limitation
any loss or injury resulting from transmissions from the Communication Dishes or
in any way relating to the connection of any component of the Communication
Dishes to, or the removal of any component of the Communication Dishes from, the
Building’s electric power source.

Section 25.30 Authorized Representative. Lessor has designated Lisa Drummond, as
its exclusive “Authorized Representative” for purposes of dealing with the
Lessee in connection with all matters relating to the Lease. All notices,
consents, directions, approvals, instructions, requests and other communications
required or permitted by the terms of the Lease to be given to Lessor shall be
deemed given only when given in accordance with Section 25.3 of the Lease, to
Authorized Representative. All notices, consents, directions, approvals,
instructions, requests and other communications required or permitted by the
terms of the Lease to be given to Lessee shall be deemed given only when given
in accordance with Section 25.3 of the Lease, by Authorized Representative.
Lessee may rely and shall be protected in acting upon any notice, consent,
direction, approval, instruction, request or other communication furnished to it
by the Authorized Representative and shall be under no duty to inquire into or
investigate the validity, accuracy or contents of any such communication. Lessor
may, in its discretion, appoint a new Authorized Representative (the “New
Authorized Representative”), and Lessor agrees that it shall notify Lessee of
such New Authorized Representative in accordance with Section 25.3.

Section 25.31 Confidentiality. Except as otherwise provided herein, it is agreed
that the terms and conditions of this Lease shall be kept confidential by Lessor
and Lessor, and not disclosed to third-parties (provided, that either party may
in a press release or other communication disclose the existence of the Lease
and its parties). Notwithstanding the confidentiality provisions herein, Lessee
or Lessor may disclose the contents of this Lease: (i) as and only to the extent
required by law, including, without limitation, governmental regulatory,
disclosure, securities laws, tax and reporting requirements; (ii) as necessary
to seek appropriate advice from professional advisors, including tax preparers,
bank personnel, business advisors, legal advisors, lenders, and financial
advisors; (iii) as necessary to

 

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enforce the terms of this Lease, or (iv) if the information is already a matter
of public record or generally known to the public other than as a result of an
unauthorized act by the party seeking to disclose such information. Each of
Lessee and Lessor shall require third parties (such as management companies and
contractors) to abide by comparable confidentiality provisions with respect to
the terms and conditions of this Lease.

Section 25.32 Guaranty. Contemporaneously with the delivery of the executed
Lease to Lessor, Lessee shall deliver to Lessor a guaranty of this Lease by AT&T
Teleholdings, Inc., a Delaware corporation (the “Guarantor”), in the form of
Exhibit “E” attached hereto, dated and effective the same date as this Lease.

Section 25.33 Access. For purposes of Section 1938 of the California Civil Code,
Lessor hereby discloses to Lessee, and Lessee hereby acknowledges, that the
Property has not undergone inspection by a Certified Access Specialist (CASp).

ARTICLE 26

FORCE MAJEURE

Section 26.1 Force Majeure. Neither party shall be liable for any delay or
failure to perform its nonmonetary obligations hereunder due to (and the time
for performance of any covenant shall be deemed extended by the time last due
to) any causes beyond its reasonable control, including, without limitation,
fire, accident, act of the public enemy, war, terrorism, rebellion,
insurrection, sabotage, transportation delay, labor dispute, shortages of
material, labor, energy or machinery, or act of God, act of government or the
judiciary. Lessor shall not be liable for any interruption in electrical utility
services to the Property or a material part thereof, and the Rent shall not
abate.

ARTICLE 27

DISPUTE RESOLUTION

Section 27.1 Negotiation. (a) In the event of any dispute arising out of or
relating to this Lease or the breach thereof, the parties shall use their
commercially reasonable efforts to settle the dispute by direct negotiations
between individuals with full settlement authority.

(b) Mediation. If the dispute is not settled promptly through negotiation, the
parties shall submit the dispute to mediation under the then-applicable
Mediation Rules of the American Arbitration Association in the same city as the
Arbitration would be held. The parties to the dispute shall share equally the
mediator’s fees and any administrative fee, but shall otherwise bear their own
expenses.

(c) Arbitration. Thereafter, any unresolved dispute arising out of or relating
to this Lease, or the breach thereof, shall be decided by Arbitration, provided,
however, that notwithstanding the foregoing, in the event of a monetary Lease
Event of Default under either Section 16.1(a) and 16.1(b) of the Lease, Lessor
shall not be bound by this Article 27 or required to go to mediation or
Arbitration and may seek any and all judicial relief as may then be available
under Applicable Laws. In connection with any such judicial relief, the
prevailing party shall be entitled to recover from the non-prevailing party its
reasonable attorney fees and costs incurred thereby.

 

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(d) Excluding 12.2. The dispute resolution under Section 12.2 shall be binding
and control the matter set forth therein, notwithstanding this Article 27.

[Signatures begin on next page]

 

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IN WITNESS WHEREOF, Lessor and Lessee have duly authorized, executed and
delivered this Lease as of the date first hereinabove set forth.

 

LESSOR: DC-7337 Trade Street LLC, LLC, a Delaware limited liability company By:
  Carter/Validus Operating Partnership, LP, a Delaware limited partnership, its
sole member   By:   Carter Validus Mission Critical REIT, Inc., a Maryland
corporation, its General Partner     By:  

/s/ John E. Carter

    Name:   John E. Carter     Its:   Chief Executive Officer

 

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[Signature Page to Lease]

 

LESSEE: AT&T Services, Inc., a Delaware corporation By:  

/s/ Francis Cortland Bishop

Name:   Francis Cortland Bishop Title:   Director of Real Estate Transactions

 

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APPENDIX A

Definitions

For purposes of this Lease, unless otherwise specified or the context otherwise
requires, the following rules of construction and usage shall apply:

(i) any term defined above by reference to another instrument or document shall
continue to have the meaning ascribed thereto whether or not such other
instrument or document remains in effect;

(ii) words which include a number of constituent parts, things or elements,
shall be construed as referring separately to each constituent part, thing or
element thereof, as well as to all of such constituent parts, things or elements
as a whole;

(iii) references to any Person include such Person’s successors and assigns and
in the case of an individual, the word “successors” includes such Person’s
heirs, devisees, legatees, executors, administrators and personal
representatives;

(iv) words importing the singular include the plural and vice versa;

(v) words importing a gender include any gender;

(vi) the words “consent”, “approve”, “agree” and “request”, and derivations
thereof or words of similar import, mean the prior written consent, approval,
agreement or request of the Person in question;

(vii) a reference to any statute, regulation, proclamation, ordinance or law
includes all statutes, regulations, proclamations, ordinances or laws varying,
consolidating or replacing them, and a reference to a statute includes all
regulations, proclamations and ordinances issued or otherwise applicable under
that statute;

(viii) the words “including” and “includes,” and words of similar import, shall
be deemed to be followed by the phrase “without limitation”;

(ix) the words “hereof” and “hereunder,” and words of similar import, shall be
deemed to refer to this Lease as a whole and not to the specific section or
provision where such word appears;

(x) unless the context shall otherwise require, a reference to the “Property” or
“Improvements” shall be deemed to be followed by the phrase “or a portion
thereof”;

(xi) the Schedules and Exhibits of this Lease are incorporated herein by
reference; and

(xii) the titles and headings of Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses are inserted as a matter of convenience and
shall not affect the construction of this Lease.

 

Appendix A-1

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

“Actual Knowledge” with respect to any Person, shall mean the present, actual
(as opposed to constructive or imputed) knowledge solely of (i) with respect to
Lessor, senior officers of Lessor or the officers or employees of Lessor charged
with the oversight on its behalf of the transactions contemplated by this Lease,
and (ii) with respect to Lessee, Francis C. Bishop, Director of Transactions,
and no other Person, in each case without investigation or inquiry.

“Additional Expenses” shall have the meaning specified in Section 17.1(b).

“Address” shall mean, subject to the rights of the party in question to change
its Address in accordance with the terms of this Lease:

 

  (i) with respect to Lessee:

AT&T Services, Inc.

Corporate Real Estate – Lease Administration

One AT&T Way

Bedminster, NJ 07921

and to:

AT&T Services

Whitacre Tower

208 South Akard, Room 3137

Dallas, TX 75202

Attn: General Attorney – Real Estate

Fax: (214) 746-2214

and to:

Daniel T. Engle

Thompson Coburn LLP

505 North 7th Street

One US Bank Plaza, Suite 2700

St. Louis, MO 63101

Fax: (314) 552-7031

 

  (ii) with respect to Lessor:

DC-7337 Trade Street LLC

c/o Carter Validus Properties, LLC,

4211 W. Boy Scout Blvd., Suite 500

Tampa, FL 33607

Attention: John E. Carter

Telephone: (813) 263-5312

Fax: (813) 287-0397

 

Appendix A-2

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

with a copy to:

GrayRobinson, P.A.

401 E. Jackson Street, Suite 2700

Tampa, Florida 33602

Attention: Stephen L. Kussner, Esquire

Telephone: (813) 273-5296

Facsimile: (813) 273-5145

 

(iii) with respect to Guarantor:

AT&T Teleholdings, Inc.

208 S. Akard Street

Dallas, TX 75202

Attn: Assistant Treasurer

“Affiliate” of any Person shall mean any Person directly or indirectly
controlling, controlled by or under common control with, such Person and shall
include, if such Person is an individual, members of the Family of such Person
and trusts for the benefit of such individual or Family members. For purposes of
this definition, the term, “control” (including the correlative meanings of the
terms “controlling” “controlled by” and “under common control with”), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.

“Alterations” shall mean alterations, improvements, installations, demolitions,
modifications, changes and additions to the Property.

“Applicable Law(s)” shall mean (i) all existing and future applicable laws
(including common laws), rules, regulations, statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations by
any Governmental Authority (including without limitation Environmental Laws),
and applicable judgments, decrees, injunctions, writs, orders or like action of
any court, arbitrator or other administrative, judicial or quasi-judicial
tribunal or agency of competent jurisdiction (including those pertaining to the
environment and those pertaining to the construction, use or occupancy of the
Property), and (ii) any reciprocal easement agreement, covenant, other agreement
or deed restriction or easement of record affecting the Property as of the date
hereof or subsequent hereto pursuant to the terms of this Lease (but excluding
for purposes of this definition the Mortgage and related debt documents).

“Appraisal Procedure” shall mean the following procedure for determining the
Fair Market Sales Value, the Fair Market Rent or any other amount which may,
pursuant to any provision of this Lease, be determined by the Appraisal
Procedure: one Qualified Appraiser shall be chosen by Lessor and one Qualified
Appraiser shall be chosen by Lessee. If Lessee or Lessor fails to choose a
Qualified Appraiser within twenty (20) Business Days after written notice from
the other party of the selection of its Qualified Appraiser, then the appraisal
by such appointed

 

Appendix A-3

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Qualified Appraiser shall be binding on the parties. If both parties select a
Qualified Appraiser, but the two Qualified Appraisers cannot agree on a value
within twenty (20) Business Days after the appointment of the second Qualified
Appraiser, then a third Qualified Appraiser shall be selected by the two
Qualified Appraisers or, failing agreement as to such third Qualified Appraiser
within thirty (30) Business Days after the appointment of the second Qualified
Appraiser, by the American Arbitration Association office in the City (or if no
office in such City, then in the AAA office nearest to such City). The
appraisals of the three Qualified Appraisers shall be given within twenty
(20) Business Days of the appointment of the third Qualified Appraiser; such
three appraisals shall be averaged and such average appraised value shall be the
appraised value, provided, that (i) if the highest of the three (3) appraisals
is more than ten percent (10%) higher than the intermediate appraisal, the
highest appraisal shall be disregarded and (subject to clause (iii), below) the
average of the remaining two appraisals shall be the appraised value binding on
the parties, (ii) if the lowest of the three (3) appraisals is more than five
percent (5%) lower than the intermediate appraisal, the lowest appraisal shall
be disregarded and (subject to clause (iii), below) the average of the remaining
two appraisals shall be the appraised value binding on the parties, and (iii) if
both the highest and lowest appraisals are to be disregarded pursuant to clauses
(i) and (ii), above, then the appraised value binding on the parties shall be
the intermediate appraisal, provided that if any one of the three appraisals
diverges from such average by ten percent (10%) or more, that appraisal shall be
discarded and the average of the remaining two appraisals shall be the appraised
value binding on the parties. The fees and expenses of the Qualified Appraiser
appointed by a party shall be paid by such party; the fees and expenses of the
third Qualified Appraiser shall be divided equally between the two parties,
except that all fees and expenses of all the Qualified Appraisers shall be paid
by Lessee in the case of an appraisal or determination under Article 17.

“Arbitration” shall mean submission of the dispute in question to the American
Arbitration Association in the City (or if no office in such City, then in the
AAA office nearest to such City) for binding resolution in accordance with its
expedited arbitration procedures. Any issue submitted to Arbitration pursuant to
this Lease shall be reviewed and settled by a single arbitrator pursuant to the
American Arbitration Association’s Commercial Arbitration Rules, including the
Optional Rules for Emergency Measures of Protection, then in affect. The
arbitrator shall be chosen from a panel of experts, licensed, if applicable,
having at least ten (10) years of professional experience in the appropriate
field related to the issue in question. The arbitrator shall be appointed within
thirty (30) days after either party determines that there is a need for
Arbitration. Discovery shall be permitted in accordance with the Federal Rules
of Civil Procedure. If an arbitration proceeding is brought pursuant to this
Lease, the unsuccessful party shall pay the costs, including reasonable
attorneys’ fees and disbursements, incurred by the successful party and the
costs of the arbitration. The arbitrator shall have the authority to grant
injunctive relief in a form similar to that which a court of law would otherwise
grant, and judgment upon the award rendered by the arbitrator shall be entered
in any court having jurisdiction thereof. All aspects of the Arbitration shall
be treated as confidential. Neither the parties nor the arbitrator may disclose
the existence, content or results of the Arbitration, except as necessary to
enforce award or to comply with legal or regulatory requirements. Before making
any such disclosure, the party intending to make the disclosure shall give the
other party written notice of that intention and shall afford the other party a
reasonable opportunity (not less than twenty (20) days) to protect its
interests.

 

Appendix A-4

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“Award” shall have the meaning given to such term in Section 12.3 of this Lease.

“Bankruptcy Code” shall mean the Bankruptcy Reform Act of 1978, as amended and
as may be further amended.

“Base Rent” shall mean, for the Base Term, the applicable rent payable pursuant
to Section 3.1 of this Lease.

“Base Term” shall mean the period commencing on the Closing Date and ending one
hundred and twenty (120) months thereafter, or such shorter period as may result
from earlier termination of this Lease as provided therein.

“Building” shall mean specified in the definition of “Property.”

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which banks are authorized to be closed in the State of New York or the State in
which the Property is located.

“Capital Repair” shall have the meaning specified in Section 8.2.

“Casualty” shall mean any fire, explosion or other casualty causing damage or
destruction to the Property and/or the Improvements.

“City” shall mean the City in which the Property is located.

“Claims” shall mean Liens (including, without limitation, lien removal and
bonding costs but excluding Permitted Liens), liabilities, obligations, damages,
losses, demands, penalties, assessments, payments, fines, claims, actions,
suits, judgments, settlements, costs, expenses and disbursements (of any kind
whatsoever, including, without limitation, reasonable, actually-incurred legal
fees and expenses).

“Closing Date” shall mean the date of this Lease.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

“Condemnation” shall mean any condemnation, requisition or other taking or sale
of the use, occupancy or title to any or all of the Property by or on account of
any eminent domain proceeding or other action by any Governmental Authority or
other Person under the power of eminent domain or otherwise or any transfer in
lieu or in anticipation thereof.

“CPI” shall mean the national Consumer Price Index, for all urban consumers
(1982-84=100), all items, all cities, as published by the Bureau of Labor
Statistics for the City in which the Property is located.

“Default Rate” shall mean the lesser of i) five percent (5%) above Prime Rate;
or ii) the highest rate permitted by Applicable Law.

 

Appendix A-5

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

“Environmental Laws” shall mean all federal, state or local laws, ordinances,
rules, orders, statutes, decrees, judgments, injunctions, codes, regulations and
common law (a) relating to the environment, human health or natural resources;
(b) regulating, controlling or imposing liability or standards of conduct
concerning Hazardous Materials; (c) relating to the remediation of the Property,
including investigation, response, clean-up, remediation, prevention, mitigation
or removal of Hazardous Materials; or (d) requiring notification or disclosure
of releases of Hazardous Materials or any other environmental conditions on the
mortgaged property, as any of the foregoing may have been or may be amended,
supplemented or supplanted from time to time, including the Resource
Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. §§ 6901 et seq., as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.
(“CERCLA”), the Hazardous Materials Transportation Act of 1975, 49 U.S.C.
§§ 1801-1812, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2671, the
Clean Air Act, 42 U.S.C. §§ 7041 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §§ 136 et seq., as any of the foregoing may have been
or may be amended, supplemented or supplanted from time to time.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“Existing Rent” shall have the meaning specified in Section 25.24 of this Lease.

“Fair Market Rent” with respect to the Property (or the applicable portion
thereof) shall mean the fair market monthly rent that would be obtained in an
arm’s-length transaction between an informed and willing lessee and an informed
and willing lessor, in either case under no compulsion to lease, and neither of
which is related to Lessor or Lessee, for the lease of the Property (or the
portion thereof) on the terms set forth in this Lease, and taking into
consideration (as a downward adjustment to such rent) the fact that no brokerage
commission will be payable and that Lessee will not be receiving any tenant
improvement allowance, period of free rent or other economic concession. Such
Fair Market Rent shall be calculated as the value for the use of the Property as
it is then actually used and assuming that Lessor has complied with its
maintenance and repair obligations under this Lease, that the Property is in
compliance with all Applicable Laws and that no Hazardous Materials are present
in, on, under or about the Property.

“Fair Market Sales Value” with respect to the Property shall mean the fair
market sales value that would be obtained in an arm’s-length transaction between
an informed and willing buyer and an informed and willing seller, under no
compulsion, respectively, to buy or sell, and neither of which is related to
Lessor or Lessee, for the purchase of the Property. Such Fair Market Sales Value
shall be calculated as the value of the Property assuming that Lessor has
complied with its obligations under Article 8 of this Lease and that the
Property is in compliance with all Applicable Laws and that no Hazardous
Materials are present in, on, under or about the Property.

“Family” shall mean, as to any Person, such Person’s grandparents, all lineal
descendants of such Person’s grandparents, Persons adopted by, or stepchildren
of, any such grandparent or descendant and Persons currently married to, or who
are widows or widowers of, any such grandparent, descendant, adoptee or
stepchild.

 

Appendix A-6

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“First Offer Notice” shall have the meaning specified in Section 4.1(a).

“Fixtures” shall have the meaning specified in the definition of the term
Property.

“GAAP” shall mean generally accepted accounting principles as in effect from
time to time in the United States of America.

“Governmental Action” shall mean all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, decrees,
licenses, exemptions, publications, filings, notices to and declarations of any
Governmental Authority, or required by any Applicable Laws, including without
limitation all environmental and operating permits and licenses that are
required for the use, occupancy, zoning and operation of the Property.

“Governmental Authority” shall mean any federal, state, county, municipal or
other governmental or regulatory authority, agency, board, body, commission,
instrumentality, court or quasi governmental authority (or private entity in
lieu thereof).

“Hazardous Material” shall mean any substance (whether solid, liquid or gas),
pollutant, contaminant, waste or material (including those that are toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous or considered pollutants, including petroleum,
its derivatives, by-products and other hydrocarbons and asbestos), in each case
that is or becomes regulated by any Governmental Authority or that may form the
basis of liability under any Environmental Law.

“Impositions” shall mean, collectively, (a) real estate taxes and other ad
valorem taxes and non-ad valorem taxes on the Property; (b) ad valorem, sales
and use, gross receipts, transaction privilege, rent or similar taxes levied or
incurred with respect to the Property, or the use, lease, ownership or operation
thereof; (c) personal property tax on any property covered by this Lease that is
classified by any Governmental Authority as personal property; (d) assessments
(including all assessments for public improvements or benefits, whether or not
commenced or completed within the Lease Term), water, sewer, utilities or other
rents and charges; and (e) franchise taxes, value added taxes, rental taxes,
excises, levies, fees and all other governmental charges of any kind or nature
whatsoever, general or special, foreseen or unforeseen, ordinary or
extraordinary, with respect to the Property or any part thereof and/or the Rent,
including in all cases all interest and penalties thereon and which at any time
prior to, during or with respect to the Lease Term may be assessed or imposed on
or with respect to or be a Lien upon Lessor or the Property or any part thereof
or any rent therefrom or any estate, title or interest therein. Impositions
shall exclude, however, and nothing contained in the Lease or any debt documents
or related Mortgage shall be construed to require Lessee to pay, (i) any tax
imposed on Lessor or Lender based on the net income of Lessor or Lender or any
transfer tax imposed on Lessor, Lender or any other Person, except to the extent
that any tax described in this clause (i) is levied, assessed or imposed as a
total or partial substitute for a tax, assessment, levy or charge upon the
Property, the Rent or any part thereof or interest therein which Lessee would
otherwise be required to pay thereunder; (ii) any transfer tax imposed with
respect to the sale, exchange or other disposition by (A) Lessor of the Property
or (B) Lender of its debt; (iii) excess profits taxes, capital gains taxes,
taxes on doing business, capital taxes or taxes imposed on net or gross income
or receipts, mortgage recording taxes, assessments or governmental charges; or
(iv) any

 

Appendix A-7

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

gross receipts, transaction privilege, rent or similar tax, assessment, levy or
charge upon Lessor, the Property, the Rent or any part of any thereof or
interest therein, but solely to the extent that the same is levied, assessed or
imposed as a total or partial substitute for a tax, assessment, levy or charge
described in clause (i) or clause (ii) which Lessee would otherwise not be
required to pay hereunder.

“Improvements” shall have the meaning specified in the definition of the term
Property.

“Inspecting Party” shall have the meaning specified in Section 15.1.

“Land” shall have the meaning specified in the definition of the term Property.

“Lease” shall have the meaning set forth in the first paragraph hereof.

“Lease Event of Default” shall have the meaning specified in Article 16.

“Lease Term” shall mean the Base Term plus any Renewal Term(s).

“Lease Year” shall mean each consecutive period of twelve (12) full calendar
months occurring after the Closing Date; provided, however, that, if the Closing
Date shall not be the first day of a month, then the first Lease Year shall also
include the partial month in which the Closing Date occurs.

“Lender” shall mean, from time to time, the holder of the first lien Mortgage on
the Property, provided that Lessor shall notify Lessee of the existence and
identity of any Lender. During periods when there is no Lender, references
herein to Lender shall have no force or effect.

“Lessee” shall mean the Lessee named in the first paragraph of this Lease.

“Lessee Parties” shall have the meaning specified in Section 19.1.

“Lessee’s Equipment and Personalty” shall mean all furniture, equipment and
personal property of Lessee, including without limitation inventory, servers.
racking, shelving, conveyer equipment, lifts, cabling, structured cabling plant,
antennae, machinery, air compressors, battery chargers, communication equipment,
data cabinets, automated teller machines, hoist equipment, lockers, plug-in
light fixtures, propane tanks, storage racks, trash compactors, signs, desks,
movable partitions, vending machines, all “non-exempt” assets under Section 851
of the California Public Utilities Code, computer software and hardware,
removable storage and utility rooms and removable trade fixtures and equipment,
even if bolted or otherwise affixed to the floors (including, without
limitation, telecommunication switches), in each case, as now or may hereafter
exist in or on the Improvements and any other personal property owned by Lessee
or a sublessee of Lessee, or other occupant of the Property. In no case shall
Lessee’s Equipment and Personalty include: fixtures (except as expressly
provided above), built-in heating, ventilating, or air-conditioning equipment,
or electrical equipment upstream of the medium voltage switchgear serving the
Building, all as utilized in connection with the operation of the Property.

“Lessor” shall mean the Lessor named in the first paragraph of this Lease.

 

Appendix A-8

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

“Lessor Indemnified Parties” shall have the meaning specified in Section 19.1.

“Lessor Liens” shall mean Liens on or against the Property or this Lease or any
payment of Rent which result from (a) any act of or Claim against Lessor or any
violation by Lessor of any of the terms of the Mortgage or any related debt
documents, other than a violation due to a default by Lessee under this Lease,
(b) Liens in favor of any taxing authority by reason of any Tax owed and payable
by Lessor, except that Lessor Liens shall not include any Lien resulting from
any Tax for which Lessee is obligated to indemnify Lessor until such time as
Lessee shall have paid to or on behalf of Lessor the Tax or the required
indemnity with respect to the same, or (c) any expenses owed, caused or
occasioned by Lessor or any of its employees or agents which are not indemnified
by Lessee pursuant to Section 19.1; provided that Lessor Liens shall not include
Permitted Liens or any Liens created by the Mortgage and any other debt
documents, except to the extent any such Lien arises by Lender’s payment of any
of the foregoing.

“Lessor Parties” shall have the meaning specified in Section 19.1.

“Lien” shall mean any lien, mortgage, pledge, charge, security interest or
encumbrance of any kind, or any other type of preferential arrangement that has
the practical effect of creating a security interest, including without
limitation any thereof arising under any conditional sale agreement, capital
lease or other title retention agreement.

“Material” as used to describe Lessee’s compliance requirement in Section 8.5 of
this Lease shall mean that the failure to so comply may reasonably be expected
to result in material risk of (i) physical injury to or death of any individual,
(ii) criminal liability; (iii) fines and/or compliance costs in excess of the
Threshold Amount; or (iv) forfeiture of the Property, or any portion thereof.

“Minor Condemnation” shall mean any Condemnation of the Property that is not a
Total Taking of the Property.

“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors.

“Mortgage” shall mean a first lien deed of trust or mortgage (together with any
related assignment of rents) between the Lessor, as mortgagor or trustor, and
Lender, as mortgagee or beneficiary, and as the same may be renewed, amended,
modified, consolidated, replaced or extended from time to time, provided that
Lessor shall notify Lessee of the existence of any such Mortgage. During periods
when there is no Mortgage, references in this Lease to the Mortgage shall have
no force or effect.

“Non-severable” shall describe an Alteration or part of an Alteration which
cannot be removed from the Property or the existing Improvements without causing
material damage to the Property or Improvements; provided that Lessee’s
Equipment and Personalty shall not be deemed to be Non-severable regardless of
any damage that may be caused by the removal thereof.

“Offeror” shall have the meaning specified in Section 4.1(a).

 

Appendix A-9

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“Permitted Encumbrances” shall mean the easements, rights of way, reservations,
servitudes and rights of others with respect to the Property which are listed in
the Title Policy issued to Lessor or Lender (as applicable), including without
limitation, any easements, rights of way, reservations, servitudes and rights of
others with respect to the Property granted after the date hereof pursuant to
Section 25.11.

“Permitted Liens” shall mean:

(a) the respective rights and interests of Lessee, Lessor and Lender under this
Lease and any Mortgage,

(b) Liens for Taxes either not yet due or being contested in good faith and by
appropriate proceedings, so long as such proceedings shall not involve any
danger of the sale, forfeiture or loss of any part of the Property, title
thereto or any interest therein (other than to a de minimis extent) and are
undertaken in accordance with the terms of any documents securing Lender’s loan
to Lessor, (including, without limitation, posting of any bonds or other
collateral to the extent required by such documents);

(c) materialmen’s, mechanics’, workers’, repairmen’s, employees or other like
Liens for amounts either not yet due or being contested in good faith and by
appropriate proceedings so long as such proceedings shall not involve any danger
of the sale, forfeiture or loss of any part of the Property, title thereto or
any interest therein (other than to a de minimis extent); provided that, if a
Lease Event of Default under Section 16.1(a) or (b) shall have occurred and be
continuing, Lessee shall pay, discharge or record or bond any such lien within
sixty (60) days after Lessee receives notice thereof;

(d) Liens arising out of judgments or awards with respect to which at the time
an appeal or proceeding for review is being prosecuted in good faith and either
which have been bonded or for the payment of which adequate reserves shall have
been provided to Lessor’s reasonable satisfaction;

(e) Permitted Encumbrances;

(f) Liens existing on the date hereof; and

(g) assignments and subleases expressly permitted by this Lease.

No Lien shall be deemed to be Permitted Lien if such Lien, individually or in
the aggregate with other Liens, materially and adversely affects (i) the value
of the Property, (ii) Lessee’s ability to pay all Rent as and when due hereunder
or (iii) Lessee’s right to use and operate the Property.

“Permitted Use” shall have the meaning given to such term in Section 8.1.

“Person” shall mean individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
non-incorporated organization or government or any agency or political
subdivision thereof.

 

Appendix A-10

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“Present Value”, for any amount, shall be computed on a monthly basis at a
discount rate equal to four percent (4%).

“Prime Rate” shall mean the “prime rate” from time to time in effect, as
published in The Wall Street Journal on such day (or if not published on such
day, for the immediately preceding day on which it was published) in its “Money
Rates” column as the Prime Rate; provided that if The Wall Street Journal ceases
to publish such a rate or substantially changes the methodology used to
determine such rate, then the rate shall be otherwise independently determined
from an alternate source selected by Lessor in good faith or determined by
Lessor in good faith on a basis substantially similar to the methodology used by
The Wall Street Journal on the date of this Lease. As of the date hereof, The
Wall Street Journal defines “Prime Rate” as the base rate on corporate loans
posted by at least 75% of the nation’s 30 largest banks.

“Property” shall mean the real property whose parcel or parcels of land are
described on Exhibit A to this Lease (the “Land”), together with (a) all
buildings, parking, structures and other improvements of every kind situated on
the Land (collectively, the “Building” or “Improvements”), all easements, rights
and appurtenances relating to the Land or the Improvements and (b) all fixtures,
including all components thereof, on or appurtenant to the Improvements and used
in the operation of the Property and all replacements, modifications,
alterations and additions thereto (collectively, the “Fixtures”), provided that
in no event shall “Property” include Lessee’s Equipment and Personalty.

“Property Name” shall have the meaning specified in Section 25.16.

“Purchase Contract” shall have the meaning specified in the Recitals to this
Lease.

“Qualified Appraiser” shall mean an independent nationally recognized real
estate appraiser who shall be a member of The Appraisal Institute (or its
successor organization) with not less than five (5) years experience appraising
properties similar to the Property in the market in which the Property is
located.

“Rating Agency” shall mean either Moody’s or Standard & Poor’s, as the case may
be.

“Related Persons” shall have the meaning specified in Section 14.1.

“Release” shall mean the release or threatened release in violation of
Applicable Laws of any Hazardous Material into or upon or under any land or
water or air, or otherwise into the environment, including, without limitation,
by means of burial, disposal, discharge, emission, injection, spillage, leakage,
seepage, leaching, dumping, pumping, pouring, escaping, emptying, placement and
the like.

“Renewal Notice” shall have the meaning specified in Section 5.1.

“Renewal Term” shall have the meaning specified in Section 5.1(a).

“Rent” shall mean Base Rent and Supplemental Rent, collectively.

 

Appendix A-11

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“Rent Collection Account” shall mean the account established by Lender from time
to time and to which Lessee is directed to make all payments of Base Rent due
hereunder.

“Rent Payment Dates” shall mean the first (1st) day of each month during the
Lease Term, provided that if such date is not a Business Day, the Rent Payment
Date shall be the immediately following Business Day; provided further that Base
Rent for the period commencing on the Closing Date and terminating on the last
day of the month in which the Closing Date occurs shall be payable in advance on
the Closing Date; and provided further that, as provided in Section 16.1(a), no
Lease Event of Default shall have occurred unless any such Rent payment is not
received by Lessor on or before the tenth (10th) Business Day after notice that
such amount is due and unpaid.

“Significant Competitor” means any of the following listed companies or related
affiliates of any such listed party:

 

  (1) Verizon

 

  (2) Century Link/Qwest

 

  (3) LEVEL 3/ Global Crossing

 

  (4) BT

 

  (5) Sprint

 

  (6) Time Warner

 

  (7) Orange

 

  (8) Comcast

 

  (9) XO

 

  (10) Cox

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies, Inc., and its successors.

“Sublease” shall have the meaning given such term in Section 14.1.

“Subsidiary”, as to any Person, shall mean any corporation whose assets and
liabilities are consolidated with those of such Person for financial reporting
purposes.

“Substantial Casualty” shall have the meaning specified in Section 12.2(a).

“Substantial Percentage”, when used with respect to Lessee’s employees, shall
mean fifty percent (50%) or more of Lessee’s employees then working at the
Property or applicable Building, as the case may be.

“Substantial Portion”, when used with respect to Lessee’s business operations
shall mean fifty percent (50%) or more of Lessee’s business operations.

“Supplemental Rent” shall mean any and all amounts, fees, expenses, liabilities,
obligations, late charges, Taxes and Impositions other than Base Rent which
Lessee assumes or agrees or is otherwise obligated to pay under this Lease to
Lessor, Lender or any other party.

“Terms” shall have the meaning specified in Section 4.1.

 

Appendix A-12

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“Threshold Amount” shall mean One Million Dollars ($1,000,000), provided that
such amount shall be increased on every January 1 after the Closing Date in the
same proportion (if any) as the CPI increases over such annual period.

“Total Taking of the Property” shall mean a Condemnation either (i) of (a) the
entire Property or (b) a portion thereof if, in Lessee’s commercially reasonable
opinion, as a result thereof the Property cannot be restored to an economically
viable office complex with a similar (within ten percent (10%)) of usable square
feet of floor area; or (ii) as a result of which it will take in excess of
(A) eighteen (18) months from the beginning of restoration to restore the
Building to the same condition as existed immediately prior to the Condemnation
and the Condemnation occurs at any time during the Lease Term or (B) three
(3) months from the beginning of restoration to restore the Building to the same
condition as existed immediately prior to the Condemnation and the Condemnation
occurs during the last twelve (12) months of the then current Lease Term, such
time periods to be determined as provided in Section 12.1 with respect to a
Casualty; or (iii) as a result of which Lessee must either (A) cease its
operations at the Building for a period of fifteen (15) months or more, (B) move
a Substantial Portion of its operations from the Building or relocate a
Substantial Percentage of its employees from the Building, in either case to
another location not on the Property or (C) lay off a Substantial Percentage of
its employees from the Building for a period of nine (9) months or more.

“Warranty Claim” shall have the meaning specified in Section 6.1(a).

 

Appendix A-13

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SCHEDULE 3.1

RENT SCHEDULE

 

Escalation for Years 1-10                                         Three percent
(3%)

 

Lease Years   

Rent Per

Month

     Rent per Annum  

Year 1

   $ 828,675.00       $ 9,944,100.00   

Year 2

   $ 853,535.25       $ 10,242,423.00   

Year 3

   $ 879,141.31       $ 10,549,695.72   

Year 4

   $ 905,515.55       $ 10,866,186.60   

Year 5

   $ 932,681.02       $ 11,192,172.24   

Year 6

   $ 960,661.45       $ 11,527,937.40   

Year 7

   $ 989,481.29       $ 11,873,775.48   

Year 9

   $ 1,019,165.73       $ 12,229,988.76   

Year 10

   $ 1,049,740.70       $ 12,596,888.40   

 

Renewal Term(s)    See Section 5.1

 

Schedule 3.1

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SCHEDULE 9.1

Insurance Requirements

Lessee shall provide the following insurance coverage:

(a) Lessee covenants and agrees that it will at all times keep in full force and
effect the following insurance coverage:

(i) Liability. A broad form commercial general liability insurance policy,
including but not limited to premises, operations, automobile liability (which
may be carried by separate policy) and products liability, personal injury
liability, contractual liability, and property damage liability coverage at the
Property and the business conducted by Lessee thereon. The policy shall provide
coverage limits of One Million Dollars ($1,000,000.00) for bodily injury and
property damage for any single occurrence and Five Million Dollars
($5,000,000.00) in the aggregate. The required coverage shall also include a
commercial excess or umbrella liability policy of Ten Million Dollars
($10,000,000.00) per occurrence and in the aggregate and shall include Lessor
and related parties and the property manager and Lender as additional insureds,
as their interest may appear Lessee may use any combination of primary or excess
coverage to meet required total limits. Commercial Excess or Umbrella is to be
excess of General Liability, Auto Liability and Employer liability policies.
Lessor’s additional insured status shall (i) be limited to bodily injury,
property damage or personal and advertising injury caused, in whole or in part,
by Lessee, its employees, agents, guests or independent contractors in their use
of the premises; and (ii) not extend to claims for punitive or exemplary damages
arising out of the acts or omissions of Lessor, its employees, agents or
independent contractors or where such coverage is prohibited by law or to claims
arising out of the gross negligence of Lessor, its employees, agents or
independent contractors; and, (iii) not exceed Lessee’s indemnification
obligation under this Agreement, if any.

(ii) Workers’ Compensation. Workers’ compensation or other such insurance in
accordance with applicable state law requirements covering all of Lessee’s
employees, with Employers Liability limit of One Million Dollars
($1,000,000.00).

(iii) Property Insurance. Lessee shall also maintain property insurance with
respect to Property at 100% replacement cost for any and all property claims,
with Lessor and Lender named as additional named insured, as their interests may
appear. Lessee may self-insure the property coverage if the conditions for
self-insurance under Section 9.2 of the Lease are satisfied.

(iv) Auto Insurance. Auto Liability coverage for owned and non-owned vehicles
with minimum limit of One Million Dollars ($1,000,000.00).

(v) Earthquake. Such commercially available earthquake coverage as Lessor may
require in a commercially reasonable amount.

 

Schedule 9.1

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(b) Certificates of all insurance required to be maintained by Lessee hereunder
will be delivered to Lessor upon or within ten (10) Business Days after
execution of this Lease, and, upon any renewals or extensions of said policies,
certificates of insurance shall be delivered to Lessor at least ten (10) days
prior to the expiration or termination of such policies.

(c) Notwithstanding the forgoing, Lessee may, in its sole discretion if the
conditions set forth in Section 9.2 of the Lease are satisfied, self-insure any
of the required insurance under the same terms as required by this Agreement. In
the event Lessee elects to self-insure its obligation under this Agreement to
include Lessor and Lessor’s primary lender as an additional insured, the
following conditions apply:

(i) Lessor shall promptly and no later than thirty (30) days after notice
thereof provide Lessee with written notice of any claim, demand, lawsuit, or the
like for which it seeks coverage pursuant to this Section and provide Lessee
with copies of any demands, notices, summonses, or legal papers received in
connection with such claim, demand, lawsuit, or the like; (ii) Lessor shall not
settle any such claim, demand, lawsuit, or the like without the prior written
consent of Lessee; and (iii) Lessor shall fully cooperate with Lessee in the
defense of the claim, demand, lawsuit, or the like.

(d) Except to the extent otherwise provided in the Lease, the parties hereto
release each other, and their respective representatives, agents, contractors
and employees from any claims for damage to the Property, the Improvements
and/or Lessee’s Equipment and Personalty that are caused by or result from risks
insured against under any property insurance policies carried by the parties (or
which should have been carried by the parties pursuant to the terms hereof).
Each party shall endeavor to cause each property insurance policy obtained by it
to provide that the insurance company waives in writing all right of recovery by
way of subrogation against the other party in connection with any damage covered
by such policy. Neither party shall be liable to the other for any damage caused
by fire or any of the risks insured against (or to be insured against) under any
property insurance policy required by the Lease except to the extent set forth
in the first sentence of this paragraph (d).

 

Schedule 9.1

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY:

The land referred to herein below is situated in the County of
                    , State of                     and is described as follows:

 

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EXHIBIT B

FORM OF MEMORANDUM OF LEASE

RECORDING REQUESTED BY

AND UPON RECORDING RETURN TO:

 

  

 

  

 

  

MEMORANDUM OF LEASE

AND NOTICE OF RIGHT OF FIRST OFFER

THIS MEMORANDUM OF LEASE, made as of the      day of            , by and between
by and between             , a             , as Lessor (“Lessor”), having its
principal place of business at                                 , and
                                , a                                 , as Lessee
(“Lessee”), having a place of business at                                 .

W I T N E S S E T H

 

1. The parties have entered into a lease agreement dated as of
                     between Lessor and Lessee (the “Lease”), whereby Lessor is
demising and leasing to Lessee the premises known as             ,             ,
California, as more particularly described as set forth on Exhibit “A” annexed
hereto and made a part hereof, being hereinafter referred to as the “Demised
Premises”.

 

2. The term of said Lease commences on the      day of              and ends on
the              (        ) anniversary thereof, subject to
            (        ) renewal options of             (        ) years each.

 

Exhibit B-1

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3. The rental for the Demised Premises and all other covenants, conditions, and
terms are set forth in the Lease and are hereby adopted herein and made a part
hereof by reference to the same full extent as if all the covenants, conditions,
and terms thereof were fully set forth herein.

 

4. The Lease includes a right of first offer for Lessee to purchase the Demised
Premises, as set forth in the Lease and a right to certain easements for
existing infrastructure, as provided in Section 25.11 of the Lease, which
provisions are incorporated by reference herein.

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IN WITNESS WHEREOF, the parties sign this Memorandum of Lease the day and year
first above written.

 

LESSOR: [                                         ] By:  

 

  Name:   Title: LESSEE: By:  

 

  Name:   Title:

[ADD APPROPRIATE NOTARIZATION]

 

Exhibit B-3

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EXHIBIT C

FORM OF ESTOPPEL AGREEMENT

 

TENANT:  

 

  PROJECT:  

 

 

TENANT ESTOPPEL CERTIFICATE

 

To:                                          , its successors and assigns (the
“Lender”) and                     , a                      (“Landlord”)

 

  Re:                     , dated             , by and between Landlord and
                                        , a                      (“Tenant”) for
space in the building located at                      and commonly referred to
as “                    ” (the “Project”)

Ladies and Gentlemen:

The undersigned, as tenant (“Tenant”), hereby states and declares as follows:

 

1. Tenant is the lessee under that certain lease (the “Original Lease”)
pertaining to the Project which is dated                     .

 

2. The name of the current Landlord is:                     , a             
                    .

 

3. The Lease (as defined below) is for the following portion of the Project
(collectively, the “Demised Premises”):
                                        .

 

4. The Original Lease has not been modified or amended except by the following
documents (the Original Lease, as amended, shall hereinafter be referred to as
the “Lease”):

 

  •                                                                

 

  •                                                                

 

  •                                                                

 

5. The commencement date of the Lease occurred on                     . The
Lease Term shall expire                     , unless sooner terminated in
accordance with the terms of the Lease. Tenant has no option to renew or extend
the term of the Lease, except as follows (if none, so state):             .

 

Exhibit C

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6. The Lease contains the entire agreement of Landlord and Tenant with respect
to the Demised Premises, and is in full force and effect.

 

7. As of the date hereof, Tenant is occupying the Demised Premises and is paying
rent on a current basis under the Lease.

 

  (a) The minimum monthly or base rent currently being paid by Tenant for the
Demised Premises pursuant to the terms of the Lease is              per month

 

  (b) Common area maintenance, taxes, insurance and other charges (collectively,
the “Reimbursables”) due under the Lease have been paid through             ,
20    .

 

8. Tenant has accepted possession of the Demised Premises, and all items with
respect to the Demised Premises to be performed by Landlord have been completed,
including, but not limited to, completion of construction thereof (and all other
improvements required under the Lease) in accordance with the terms of the
Lease. Landlord has paid in full any required contribution towards work to be
performed by Tenant, if any, under the Lease, except as follows (if none, so
state):                     .

 

9. The Demised Premises shall be expanded by the addition of the following space
on the dates hereinafter indicated (if none, so state):                     .

 

10. No default or event that with the passage of time or notice would constitute
a default (hereinafter collectively a “Default”) on the part of Tenant exists
under the Lease in the performance of the terms, covenants and conditions of the
Lease required to be performed on the part of Tenant.

 

11. To the best of Tenant’s knowledge, no Default on the part of Landlord exists
under the Lease in the performance of the terms, covenants and conditions of the
Lease required to be performed on the part of Landlord.

 

12. Tenant has no option or right to purchase all or any part of the Project
except as stated in Article 4 of the Lease.

 

13. Tenant has not assigned, sublet, transferred, hypothecated or otherwise
disposed of its interest in the Lease and/or the Demised Premises, or any part
thereof.

 

14. Neither the Lease nor any obligations of Tenant thereunder have been
guaranteed by any person or entity, except as follows (if none, so state):
                    .

 

15. No hazardous substances are being generated, used, handled, stored or
disposed of by Tenant on the Demised Premises or on the Project in violation of
any applicable laws, rules or regulations or the terms of the Lease.

 

16. No rentals are accrued and unpaid under the Lease, except for Reimbursables,
if any, which are not yet due and payable.

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

17. No prepayments of rentals due under the Lease have been made for more than
one month in advance. No security or similar deposit has been made under the
Lease, except for the sum of $         which has been deposited by Tenant with
Landlord pursuant to the terms of the Lease.

 

18. As of the date hereof, Tenant has no defense as to its obligations under the
Lease and asserts no setoff, claim or counterclaim against Landlord.

 

19. Tenant has not received notice of any assignment, hypothecation, mortgage or
pledge of Landlord’s interest in the Lease or the rents or other amounts payable
thereunder, except as follows (if none, so state):
                                        .

 

20. The undersigned is authorized to execute this Tenant Estoppel Certificate on
behalf of Tenant.

 

21. This Tenant Estoppel Certificate may be executed in any number of separate
counterparts, each of which shall be deemed an original, but all of which,
collectively and separately, shall constitute one and the same instrument.

 

[LESSOR/LESSEE] By:  

 

  Name:   Title:

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EXHIBIT D

After Recording Return to:

 

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

Grantor #1 (Landlord):  

 

Grantor #2 (Tenant):  

 

Grantee (Lender):  

 

Abbreviated Legal Description:  

 

  Official Legal Description on Exhibit A Assessor’s Tax Parcel ID #  

 

  Reference No.   N/A  

 

1

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the “Agreement”)
is made as of the      day of            , 20     by and between:

 

 

 

   

 

   

 

 

(“Lender”),

and

 

 

 

    having an address at    

 

   

 

   

 

   

 

    (“Tenant”).  

RECITALS:

A. Tenant is the holder of a leasehold estate in a portion of those certain
premises located in the City of                    , County of
                    , State of                     , and more particularly
described on Exhibit “A” attached hereto and made a part hereof (the “Property”)
under and pursuant to the provisions of a certain lease dated
                    , between                     , a                     , as
landlord, and                     , as tenant (the “Lease”); and

B.                      is the current owner in fee simple of the Property and
the landlord under the Lease (“Landlord”); and

C. Lender is the agent for lenders which have made a loan or are about to make a
loan to                                        , a Delaware limited partnership,
as borrower (“Borrower”) evidenced or to be evidenced by one or more promissory
notes made by Borrower to the order of such lenders (as amended, restated,
replaced, consolidated, supplemented or otherwise modified from time to time,
collectively, the “Note”) and secured or to be secured by that certain
Mortgage/Deed to Secure Debt/Deed of Trust and Security Agreement (as the same
may be modified, amended or restated from time to time, the “Security
Instrument”) and that certain Assignment of Leases and Rents (as the same may be
modified, amended or restated from time to time, the “Assignment of Rents”)
granted by Landlord to or for the benefit of Lender and encumbering the
Property; and

D. Tenant has agreed to subordinate the Lease to the Security Instrument and to
the lien thereof and Lender has agreed to grant non-disturbance to Tenant under
the Lease on the terms and conditions hereinafter set forth.

 

2

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AGREEMENT:

For good and valuable consideration, Tenant and Lender agree as follows:

1. SUBORDINATION. The Lease and all of the terms, covenants and provisions
thereof and all rights, remedies and options of Tenant thereunder are and shall
at all times continue to be subject and subordinate in all respects to the
terms, covenants and provisions of the Security Instrument and to the lien
thereof, including without limitation, all renewals, increases, modifications,
spreaders, consolidations, replacements and extensions thereof and to all sums
secured thereby and advances made thereunder with the same force and effect as
if the Security Instrument had been executed, delivered and recorded prior to
the execution and delivery of the Lease.

2. NON-DISTURBANCE. If any action or proceeding is commenced by Lender for the
foreclosure of the Security Instrument or the sale of the Property, Tenant shall
not be named as a party therein unless such joinder shall be required by law,
provided, however, such joinder shall not result in the termination of the Lease
or disturb the Tenant’s possession or use of the premises demised thereunder,
and the sale of the Property in any such action or proceeding and the exercise
by Lender of any of its other rights under the Note or the Security Instrument
shall be made subject to all rights of Tenant under the Lease, provided that at
the time of the commencement of any such action or proceeding or at the time of
any such sale or exercise of any such other rights Tenant shall not be in
default under any of the terms, covenants or conditions of the Lease or of this
Agreement on Tenant’s part to be observed or performed beyond any applicable
notice or grace period.

3. ATTORNMENT. If Lender or any other subsequent purchaser of the Property shall
become the owner of the Property by reason of the foreclosure of the Security
Instrument or the acceptance of a deed or assignment in lieu of foreclosure or
by reason of any other enforcement of the Security Instrument (Lender or such
other purchaser being hereinafter referred as “Purchaser”), and the conditions
set forth in Section 2 above have been met at the time Purchaser becomes owner
of the Property, the Lease shall not be terminated or affected thereby but shall
continue in full force and effect as a direct lease between Purchaser and Tenant
upon all of the terms, covenants and conditions set forth in the Lease and in
that event, Tenant agrees to attorn to Purchaser and Purchaser by virtue of such
acquisition of the Property shall be deemed to have agreed to accept such
attornment, whereupon, subject to the observance and performance by Tenant of
all the terms, covenants and conditions of the Lease on the part of Tenant to be
observed and performed, Purchaser shall recognize the leasehold estate of Tenant
under all of the terms, covenants and conditions of the Lease for the remaining
balance of the term with the same force and effect as if Purchaser were the
lessor under the Lease subject to the terms of Section 4 of this Agreement;
provided, however, that Purchaser shall not be:

(a) liable for any past act, omission, neglect, default or breach of
representation or warranty of any prior landlord (any such prior landlord,
including Landlord and any successor landlord, being hereinafter referred to as
a “Prior Landlord”), provided that so long as Purchaser has received written
notice and a reasonable opportunity to cure, the foregoing shall not limit
Purchaser’s obligations under the Lease to correct any conditions that
(i) existed as of the date Purchaser became the owner of the Property, and
(ii) violate Purchaser’s obligations under the Lease; provided further, however,
that the foregoing shall not obligate Purchaser for any damages arising from
such past act, omission, neglect, default or breach of representation or
warranty of any Prior Landlord;

 

3

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(b) subject to any offsets, defenses, abatements or counterclaims which shall
have accrued in favor of Tenant against any Prior Landlord prior to the date
upon which Purchaser shall become the owner of the Property;

(c) liable for the return of rental security deposits, if any, paid by Tenant to
any Prior Landlord in accordance with the Lease unless such sums are actually
received by Purchaser;

(d) bound by any obligation which may appear in the Lease to perform any
improvement work to the Property;

(e) bound by any obligation which may appear in the Lease to pay any sum of
money to Tenant;

(f) bound by any payment of rents, additional rents or other sums which Tenant
may have paid more than one (1) month in advance to any Prior Landlord unless
(i) such sums are actually received by Purchaser or (ii) such prepayment shall
have been expressly approved of by Purchaser;

(g) bound by any agreement terminating or amending or modifying the rent, term,
commencement date or other material term of the Lease, or any voluntary
surrender of the premises demised under the Lease, made without Lender’s or
Purchaser’s prior written consent prior to the time Purchaser succeeded to
Landlord’s interest; or

(h) responsible for the making of repairs in or to the Property in the case of
damage or destruction to the Property or any part thereof due to fire or other
casualty or by reason of condemnation unless Purchaser is obligated under the
Lease to make such repairs and Purchaser receives insurance proceeds or
condemnation awards sufficient to finance the completion of such repairs.

In the event that any liability of Purchaser does arise pursuant to this
Agreement, such liability shall be limited and restricted to Purchaser’s
interest in the Property and shall in no event exceed such interest.

4. NOTICE TO TENANT. After notice is given to Tenant by Lender that an Event of
Default (as defined in the Security Instrument) exists under the Security
Instrument and that the rentals under the Lease should be paid to Lender
pursuant to the terms of the Assignment of Rents, Tenant shall thereafter pay to
Lender or as directed by the Lender, all rentals and all other monies due or to
become due to Landlord under the Lease and Landlord hereby expressly authorizes
Tenant to make such payments to Lender and hereby releases and discharges Tenant
from any liability to Landlord on account of any such payments.

5. NOTICE TO LENDER AND RIGHT TO CURE. Tenant agrees to simultaneously notify
Lender by certified mail, return receipt requested, with postage prepaid, of any
default on the part of Landlord under the Lease which would entitle Tenant to
cancel or terminate the Lease or abate or reduce the rent payable thereunder,
and Tenant further agrees that, notwithstanding any provisions of the Lease, no
cancellation or termination of the Lease and no abatement or reduction of the
rent payable thereunder shall be effective unless Lender has received notice of
the same and has failed within forty-five (45) days after both Lender’s receipt

 

4

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of said notice and the time when Lender shall have become entitled under the
Security Instrument (as hereinafter defined) to remedy the same, to commence to
cure the default which gave rise to the cancellation or termination of the Lease
or abatement or reduction of the rent payable thereunder and thereafter
diligently prosecutes such cure to completion, provided that in the event Lender
cannot commence such cure without possession of the Property, no cancellation or
termination of the Lease and no abatement or reduction of the rent payable
thereunder shall be effective if Lender commences judicial or non-judicial
proceedings to obtain possession within such period and thereafter diligently
prosecutes such efforts and cure to completion. In addition, if such default is
not susceptible of cure by Lender and Lender obtains possession of the Property,
such default shall be waived. Notwithstanding the foregoing, Lender shall have
no obligation to cure any default by Landlord except as provided in Section 3 in
the event Lender shall become the owner of the Property by reason of the
foreclosure of the Security Instrument or the acceptance of a deed or assignment
in lieu of foreclosure or by reason of any other enforcement of the Security
Instrument.

6. NOTICES. Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing and
shall be deemed to have been properly given (a) if hand delivered, when
delivered; (b) if mailed by United States Certified Mail (postage prepaid,
return receipt requested), three Business Days after mailing (c) if by Federal
Express or other reliable overnight courier service, on the next Business Day
after delivered to such courier service or (d) if by telecopier on the day of
transmission so long as copy is sent on the same day by overnight courier as set
forth below:

 

If to Tenant:   

 

     

 

     

 

      Attention:  

 

  

If to Lender:   

 

     

 

      Attention:      With a copy to:   

 

     

 

      Attention:     

or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 6, the term “Business Day” shall
mean a day on which commercial banks are not authorized or required by law to
close in the state where the Property is located. Either party by notice to the
other may designate additional or different addresses for subsequent notices or
communications.

7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of Lender, Tenant and Purchaser and their respective successors and
assigns.

8. GOVERNING LAW. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State of                      and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State of                     .

 

5

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9. MISCELLANEOUS. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto. If any term,
covenant or condition of this Agreement is held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be construed without such
provision. This Agreement may be executed in any number of duplicate originals
and each duplicate original shall be deemed to be an original. This Agreement
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Agreement. The failure of any party hereto to execute this Agreement, or
any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6

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IN WITNESS WHEREOF, Lender and Tenant have duly executed this Agreement as of
the date first above written.

 

LENDER: By:  

 

Name:  

 

Its:  

 

[INSERT NOTARY BLOCK FOR APPLICABLE STATE]

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

7

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TENANT:

 

a  

 

By:  

 

Name:  

 

Its:  

 

[INSERT NOTARY BLOCK FOR APPLICABLE STATE]

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

8

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The undersigned hereby joins in the execution of this Agreement in order to
evidence its acceptance of, and agreement to, the provisions of Section 4
hereof.

 

LANDLORD:

 

a Delaware limited liability company By:   Carter/Validus Operating Partnership,
LP a Delaware limited partnership   By:   Carter Validus Mission Critical REIT,
Inc., a Maryland corporation     By:  

 

    Name:  

 

    Its:  

 

[INSERT NOTARY BLOCK FOR APPLICABLE STATE]

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

9

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Exhibit “A”

LEGAL DESCRIPTION

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

Exhibit E

See Attached Property Condition Report

 

2

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Exhibit F

GUARANTY

THIS GUARANTY (this “Guaranty”) is made and entered into as of the      day
of            , 2013 by AT&T Teleholdings, Inc., a Delaware corporation, as
guarantor (“Guarantor”) in favor of                     , LLC, a Delaware
limited liability company (“Lessor”).

RECITALS

AT&T Services, Inc., a Delaware corporation, as lessee (“Lessee”), and Lessor
have entered into that certain Lease Agreement (the “Lease”), pursuant to which
Lessee has leased from Lessor certain real property, together with the
improvements thereon, located at                                          in the
City of                     , State of                     , as specifically
described in the Lease (the “Property”);

Each of Guarantor and Lessee are wholly-owned subsidiaries of AT&T Inc.;

Pursuant to certain agreements of the parties, Lessee has agreed to cause
Guarantor to execute and deliver to Lessor this Guaranty to secure Lessee’s
obligations under the Lease; and

Guarantor has agreed to provide to Lessor this Guaranty.

NOW, THEREFORE, in consideration of the benefits to be derived by Guarantor from
enabling Lessee to lease the Property from Lessor in accordance with the terms
of the Lease and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor agrees as follows for
the benefit of Lessor:

1. All capitalized terms used but not otherwise defined in this Guaranty shall
have the meanings given to them in the Lease.

2. Guarantor unconditionally and irrevocably guarantees to Lessor from and after
(i) the occurrence and during the continuance of a Lease Event of Default;
(ii) the appointment of a receiver over the Lessee or the Lessee’s assets in
connection with any State, Federal or Administrative Proceeding; or (iii) the
filing by or against the Lessee of (x) a petition for bankruptcy under Title 11
of the United States Code; (y) an assignment for the benefit of creditors; or
(z) other insolvency, liquidation or dissolution proceeding: (a) the full and
prompt payment of any and all Base Rent and Supplemental Rent payable by Lessee
under the Lease, and (b) the full and timely performance and observance of all
of the terms, provisions, covenants and obligations of Lessee under the Lease
(collectively, with the payment of Rent, the “Obligations”).

3. Lessor may enforce this Guaranty against Guarantor at any time, from and
after (i) the occurrence and during the continuance of a Lease Event of Default;
(ii) the appointment of a receiver over the Lessee or the Lessee’s assets in
connection with any State, Federal or Administrative Proceeding, or (iii) the
filing by or against the Lessee of (x) a petition for bankruptcy under Title 11
of the United States Code; (y) an assignment for the benefit of creditors; or
(z) other insolvency, liquidation or dissolution proceeding.

 

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4. This Guaranty is an absolute, unconditional and continuing guaranty without
regard to the validity or enforceability of any Obligations. Further, Guarantor
expressly agrees that its obligations hereunder shall not in any way be
terminated, affected or impaired by reason of (a) the granting by Lessor of any
indulgences to Lessee, (b) the assertion against Lessee of any of the rights or
remedies reserved to Lessor pursuant to the provisions of the Lease or (c) the
release of Lessee from any of Lessee’s obligations under the Lease whether by
operation of law or otherwise, provided, however, that the Guarantor shall not
be responsible for the amount by which Lessee’s liability under the Lease is
reduced pursuant to a release, settlement or compromise memorialized in a
written agreement executed by Lessor and Lessee. Guarantor hereby waives all
suretyship defenses and all other defenses other than strict payment and
performance in full of all Obligations other than as described in (c) above.
Guarantor further covenants and agrees that this Guaranty shall remain and
continue in full force and effect as to any renewal, modification or extension
of the Lease and, any assignment or other transfer thereof or any interest
therein by Lessee, interests in Lessee or by operation of law, whether or not
Guarantor shall have received any notice of or consent to such renewal,
modification, extension or assignment. This Guaranty constitutes a guaranty of
payment and not merely a guaranty of collection.

5. It is agreed that the failure of Lessor to insist in any one or more
instances upon strict performance or observance of any of the terms, provisions
or covenants of the Lease or to exercise any right therein contained shall not
be construed or deemed to be a waiver or relinquishment in the future of such
term, provision, covenant or right.

6. All of Lessor’s rights and remedies under the Lease and this Guaranty are
intended to be distinct, separate and cumulative and no such right and remedy
therein or herein provided is intended to be to the exclusion of or a waiver of
any other.

7. Subject to paragraph 3, Guarantor hereby waives presentment, demand for
performance, notice of nonperformance, protest, notice of protest, notice of
dishonor and notice of acceptance. Guarantor further waives any right to require
that an action be brought against Lessee or any other person or to require that
resort be had by Lessor to any security held by Lessor. The foregoing provisions
shall not constitute a waiver of any notice required by the terms of the Lease
or this Guaranty.

8. Guarantor hereby waives to the fullest extent permitted by law any and all
rights, whether arising at law, in equity, by agreement or otherwise to
subrogation to or indemnity, reimbursement or contribution from Lessee or any
other Person primarily, contingently or secondarily directly or indirectly
liable for all or any part of the Obligations that otherwise would arise out of
or result from any payment by Guarantor to Lessor under or pursuant to this
Guaranty.

9. In accordance with and subject to the applicable terms of the Lease, Lessor
may assign all of its interests in and to the Lease to any person to whom Lessor
sells the Property (as defined in the Lease) and to any lender providing a loan
to Lessor, or any collateral agent or

 

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trustee acting for the benefit of any such lender or lenders. Lessor will
provide written notice to Guarantor, of any such assignment. In such event, each
and every successive permitted assignee of this Guaranty and Lessor’s interest
in the Lease notice of which Guarantor shall have received will have the right
to enforce this Guaranty, by suit or otherwise, as fully as if such assignee
were named herein. Guarantor will not assign its obligations under this Guaranty
without the prior written consent of Lessor, other than (i) to a successor to
all or substantially all of the assets and liabilities of Guarantor or (ii) a
subsidiary of AT&T Inc. with a senior unsecured debt rating not less than the
rating of Guarantor immediately prior to the assignment. Guarantor will provide
written notice to Lessee of any such assignment, provided that notwithstanding
such assignment, Guarantor shall not be released from its obligation under this
Guaranty.

10. Guarantor warrants and represents that (a) it has the legal right power,
authority and capacity to execute this Guaranty, (b) the execution, delivery and
performance of this Guaranty do not violate any material agreements to which
Guarantor is a party or by which Guarantor is bound and (c) this Guaranty is
fully binding on and enforceable against Guarantor, except as enforcement may be
limited by bankruptcy, moratorium, fraudulent conveyance, insolvency, equitable
principles or other similar laws affecting the enforcement of creditors’ rights
in general.

11. If at any time any part of any payment received by Lessor and applied to any
of the Obligations is rescinded or avoided or returned by Lessor for any reason,
including the insolvency, bankruptcy or reorganization of any of Lessee,
Guarantor or any other Person, such Obligations shall be deemed to have
continued in existence to the extent that such payment is rescinded, avoided or
returned, and this Guaranty shall be reinstated as to such Obligations as though
such prior application by Lessor had not been made or otherwise taken into
account. The provisions of this Paragraph 11 shall survive the payment and
satisfaction of the Obligations and this Guaranty as well as the delivery of any
instruments of release, satisfaction or termination that may be delivered in
connection with the Lease or this Guaranty.

12. In the event of the rejection or disaffirmance of the Lease by Lessee or
Lessee’s receiver pursuant to any law affecting creditor’s rights, Guarantor
shall, and does hereby (without the necessity of any further agreement or act),
assume all obligations and liabilities of Lessee under or arising out of the
Lease, to the same extent as if Guarantor had been originally named the lessee
under the Lease and there had been no such rejection or disaffirmance. At the
request of Lessor upon or after such rejection or disaffirmance, Guarantor shall
confirm such assumption in writing. Upon such assumption, Guarantor shall have
and succeed to all rights of Lessee under the Lease and shall be entitled to a
new lease on all of the terms and conditions of the Lease with respect to the
remaining Lease Term (to the extent permitted by law). Guarantor and Lessor
shall execute and deliver such documents as the other party may from time to
time reasonably require to evidence such assumption and succession.

13. Guarantor shall upon demand pay to Lessor the amount of any and all
reasonable and documented expenses, including reasonable attorneys’ fees and
expenses, which Lessor may incur in connection with a successful enforcement of
its rights hereunder.

14. The terms and provisions of this Guaranty, and the respective rights and
obligations hereunder of Lessor and Guarantor, shall be binding upon their
respective successors, legal representatives and assigns and inure to the
benefit of their respective permitted successors and assigns.

 

5

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15. Notwithstanding anything to the contrary expressed or implied by this
Guaranty, Guarantor shall have the right to cure or cause to be cured any
default under the Lease or Lease Event of Default within the cure periods
provided for in the Lease in the case of a default. Lessor will accept any such
cure by or caused by Guarantor. In the event Guarantor cures a Lease Event of
Default as provided herein, Lessor shall not exercise any remedies against
Lessee under Section 17.1 of the Lease.

16. Intentionally Omitted.

17. All notices to be sent hereunder shall be sent in the manner and deemed
delivered at the times set forth in the Lease; with the exception that notices
sent to Guarantor shall be sent to:

 

   AT&T Teleholdings, Inc.    208 S. Akard Street    Dallas, TX 75202    Attn:
Assistant Treasurer with a copy to:   

AT&T Inc.

208 S. Akard Street

   Dallas, TX 75202    Attention:    Director-Corporate Finance
and with a copy to:         

AT&T Inc.

208 S. Akard St.

Dallas, Texas 75202

   Attention:    Kenneth H. Gitter       General Attorney

18. This Guaranty shall be deemed to be a contract made under and governed by
the internal laws (without regard to the conflict of laws provisions) of the
State of New York.

19. Lessor acknowledges that this Guaranty is a guarantee of the Obligations
only and that Guarantor has not provided any security or collateral in support
of the Guaranty. The terms of the Guaranty shall not be deemed to restrict the
conduct of Guarantor’s business and operations in any way, including any changes
to the corporate structure of, or acquisition, disposition or transfer of any of
the assets of, the Guarantor, its subsidiaries and affiliates.

20. Guarantor acknowledges full and complete notice and knowledge of all terms,
conditions, covenants, obligations and agreements set forth in the Lease.
Guarantor further acknowledges the valid consideration received by it for
entering into this Guaranty.

 

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21. Within thirty (30) days after written request of Lessor, that i) Lessor is
selling or refinancing the Property; or ii) Lessor has received a request from
the lender to Lessor requesting financials (which lender to Lessor request may
not be more frequently than annually); then the Guarantor shall provide to
Lessor the most current internally prepared annual (no older than 1 year)
balance sheet, income and cash flow statements, respectively, certified by a
senior financial officer of Guarantor, with a certification which states:

“Pursuant to section 21 of the AT&T Teleholdings, Inc. Guaranty dated
                    , 2013, enclosed are the following unaudited financial
statements for the period ending XXXX 3X, 20XX:

 

  •   Balance sheet as of XXXX 3X, 20XX

 

  •   Statement of income for the month and year to date ended XXXX 3X, 20XX

 

  •   Statement of cash flows for the month and year to date ended XXXX 3X, 20XX

To the best of my knowledge, the statements fairly represent the financial
condition and results of operations.

These statements are true, correct and complete and were prepared in accordance
with GAAP, or an alternative presentation which is reasonably consistent with
GAAP, applied on a consistent basis, subject to changes resulting from normal
year-end adjustments.”

22. Guarantor waives all diligence in collection or in protection of any
security, presentment, protest, demand, notice of dishonor or default, notice of
acceptance of this Guaranty, notice of any extensions granted or other action
taken in reliance hereon and all demands and notices of any kind in connection
with this Guaranty or any Obligations.

23. Guarantor’s payment of any amount pursuant to this Guaranty shall not in any
way entitle Guarantor to (and Guarantor hereby waives) any right, title or
interest (whether by subrogation or otherwise) of the Lessee under the Lease or
to any security being held for any Obligations.

24. Lessor and Guarantor intend and believe that each provision of this Guaranty
complies with and is valid under all applicable law. However, if any provision
of this Guaranty is found by a court to be invalid for any reason, the remainder
of this Guaranty shall continue in full force and effect and the invalid
provisions shall be construed as if it were not contained herein.

25. [Intentionally Deleted].

26. Guarantor acknowledges that Lessor is relying upon this Guaranty in agreeing
to execute the Lease, and that, but for the execution of this Guaranty by
Guarantor, Lessor would not lease the Property to Lessee.

[Signatures begin on next Page]

 

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[SIGNATURE PAGE TO GUARANTY]

IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty, as
of the date set forth in the first preamble to this Guaranty.

 

AT&T TELEHOLDINGS, INC. a Delaware corporation By:  

 

Name:   Jonathan P. Klug Title:   Treasurer

[Signature Page of Lessor follows]

 

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Lessor hereby accepts this Guaranty and agrees to be bound by the provisions of
Paragraphs 3, 4, 5, 9, 12 , 14, 15, 18, 19 and 24 hereof.

 

                    , LLC, a Delaware limited liability company By:  

Carter/Validus Operating Partnership, LP, a

Delaware limited partnership, its sole

member

  By:  

Carter Validus Mission Critical

REIT, Inc., a Maryland corporation,

its General Partner

    By:  

 

    Name:   John E. Carter     Its:   Chief Executive Officer

 

9

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Exhibit G

The “Repair Items” per Section 8.2 of the Lease are set out below:

 

10

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NO.

  

SECTION
NO.

  

ITEMS TO BE RESOLVED IN 0-12 MONTHS

   ESTIMATED
COST     

 

* Tenant shall covenant to repair

   3.3    EXTERIORS       1      

Replace Curtain Wall System

The Subject’s curtain wall facades were reported to leak due to wind driven rain
and to be a chronic maintenance issue. Double glazed units

were observed to be clouded. The façade expansion joint material and

the glazing units have exceeded their EULs. Re-glazing of the entire system
should be done. Management indicated that they are currently requesting
proposals to re-glaze the system.

   $ 300,000       2      

Clean and Paint Stucco and Service Doors

The mechanical penthouses’ exterior stucco walls have peeling paint and require
power washing and painting. Hollow metal service doors throughout. Subject were
observed to have faded paint and rust and require cleaning and painting

   $ 7,000          3.4    ROOFING       3      

Re-Roofing, Built-Up, Rip-Off & Replace-Mechanical Plant Building

The mechanical equipment building BUR was found to be has exceeded its EUL. We
observed many previous repairs, and the susceptibility of trapped water vapor
within the felts is a concern. The existing roof covering should be ripped off
and replaced.

   $ 63,000      

4

      Freight Elevator      

NO.

  

 

SECTION
NO.

  

ITEMS TO BE RESOLVED IN 1-60 MONTHS

   ESTIMATED
COST         3.4.1    ROOFING       5       Re-Roofing, Built-Up, Mineralized
Cap Sheet, Rip-Off & Replace Office Building    $ 450,000          3.7.1   
HEATING, VENTILATION & AIR CONDITIONING       6       Replace Centrifugal
Chillers, Water Cooled System    $ 1,000,000       7       Replace Packaged Fan
Coil A/C Unit    $ 1,230,000      

NO.

  

 

SECTION
NO.

  

ITEMS TO BE RESOLVED BEFORE END OF LEASE

   ESTIMATED
COST         3.3    EXTERIORS       8       Caulk Pre-Cast Concrete, Panel
Joints    $ 25,000          3.1    ELEVATORS       9       Replace Variable Air
Volume (VAV) Boxes    $ 175,000       10       Apply 1 1/2” Overlay to Asphalt
Pavement    $ 540,000      

NO.

  

 

SECTION
NO.

  

ALLOCATIONS TO BE MADE FOR THE
FOLLOWING ITEMS

   ESTIMATED
COST            PLUMBING SYSTEMS      

11

      Replace Central Domestic Water Boiler    $ 2,500             HEATING,
VENTILATION & AIR CONDITIONING      

12

      Replace Cooling Tower    $ 1,500,000      

 

11