Exhibit 10.16

Lease between

SI 34, LLC and Palo Alto Networks, Inc.

(4301 Great America Parkway, Santa Clara, CA)

 

 

1. PARTIES:

THIS LEASE, is entered into on this 17th day of September, 2012, (“Effective
Date”) between SI 34, LLC, a California limited liability company, whose address
is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA 95014, and Palo Alto
Networks, Inc., a Delaware corporation, whose address is 3300 Olcott Street,
Santa Clara, CA 95054, hereinafter called respectively Landlord and Tenant.
Landlord and Tenant are collectively referred to in this Lease as the “Parties”.

 

2. PREMISES:

 

  A. Definitions:

i. Building A.  The term “Building A” shall mean that building containing
approximately one hundred fifty one thousand thirty five (151,035) rentable
square feet and all improvements owned by Landlord and installed therein, shown
as Building A on Exhibit “A” attached hereto and commonly known as 4401 Great
America Parkway, Santa Clara, California. Building A is comprised of two
(2) parts: a 6-story portion containing approximately one hundred fifty thousand
one hundred twenty eight (150,128) rentable square feet, and a corridor at the
third (3rd) floor containing approximately nine hundred seven (907) rentable
square feet that connects Building A and Building B (defined below).

ii. Building B.  The term “Building B” or “Building” shall mean that 6-story
building containing approximately one hundred fifty thousand one hundred twenty
eight (150,128) rentable square feet and all improvements owned by Landlord and
installed therein, shown as Building B on Exhibit “A” attached hereto and
commonly known as 4301 Great America Parkway, Santa Clara, California.

iii. Premises.  The term “Premises” shall initially mean the approximately forty
five thousand (45,000) rentable square feet located on the 5th

 

                                                                               
                                                                   

 

and 6th floors of the Building and a server room in the Building containing
approximately two hundred (200) rentable square feet of space (the “Initial
Space”). Commencing on the Expansion Space Commencement Date (defined in
Section 4 below), the term “Premises” shall mean the Building. The Building,
less the Initial Space, is referred to in this Lease as the “Expansion Space”.
Unless expressly provided otherwise, the term Premises as used herein shall
include the Tenant Improvements (defined in Section 6.B below).

iv.  Common Area.  As used in this Lease, “Common Area” means the driveways,
parking areas, sidewalks, and other facilities within the Project outside of the
Project buildings, to the extent they are designated by Landlord for the common
use and convenience of the tenants, occupants and other authorized users of the
Project or Building. Until the Expansion Space Commencement Date, the term
“Common Area” shall also include the first (1st) floor lobby and all stairs,
elevators, hallways and other areas located in the Building (such lobby, stairs,
elevators, hallways and other Building interior areas being the “Building Common
Area”). From and after the Expansion Space Commencement Date the Building Common
Area shall no longer be considered Common Area, but shall be part of the
Premises leased to Tenant hereunder. Tenant acknowledges that a parking easement
affecting the Project for the benefit of the adjacent property currently owned
by Landlord and located at 4551 Great America Parkway, Santa Clara, California
(“4551 GAP”), allows 4551 GAP the unrestricted use of ninety seven (97) parking
spaces in the area designated as the 4551 GAP parking area on Exhibit “A”.

v. Project. The term “Project” shall mean the real property consisting of
approximately thirteen and one-half (13.5) acres at the corner of Great America
Parkway and Mission College Boulevard in Santa Clara, California upon which the
Building and Building A are located, together with all improvements constructed
thereon from

 

 

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time to time, currently consisting of the Building, Building A and the Common
Area, as indicated on Exhibit “A” attached hereto.

B.  Grant:  Landlord hereby leases the Premises to Tenant, and Tenant hires the
Premises from Landlord. Concurrently with this Lease, Landlord and Tenant are
entering into that certain Lease for Building A (the “Building A Lease”).
Notwithstanding the Effective Date inserted in the introductory paragraph of
this Lease above, this Lease shall not become effective unless and until the
Building A Lease is also fully executed by Landlord and Tenant.

Subject to the provisions of this Lease and such rules and regulations as
Landlord may from time to time prescribe, Tenant shall have the nonexclusive
right, in common with other tenants of the Project and other users permitted by
Landlord, to initially use not more than one hundred forty four (144) parking
spaces within the Common Area designated, on “Exhibit A”, and the non-exclusive
right, in common with other tenants of the Project and other users permitted by
Landlord, to use the other Common Area within the Project and Building. Upon the
commencement of the Lease Term as it relates to the Expansion Space, the number
of non-exclusive parking spaces available to Tenant shall be increased by three
hundred thirty nine (339), for a total of four hundred eighty three
(483) parking spaces in the Common Area.

Landlord shall have the right, in its sole and absolute discretion, subject to
the provisions of this Section 2.B, from time to time, to: (a) make changes to
the Common Area and/or the Project (but not the Building), including, without
limitation, changes in the location, size, shape and number of entrances,
corridors, elevators, foyers, lobbies, restrooms, stairways and other similar
facilities in other buildings in the Project (but not the Building), if
applicable, and driveways, entrances, circulation drives, parking spaces,
parking areas, direction of driveways, landscaped areas and walkways; (b) upon
not less than three (3) business days prior written notice (except in the event
of emergency or need to perform immediate repairs, in which events no prior
notice shall be required) close temporarily any of the Common Area for
maintenance and repair

 

                                                                               
                                                                               
           

 

purposes so long as reasonable access to the Premises remains available; (c) add
minor improvements (e.g., fencing) to the Common Area (provided that, during the
course of construction of such minor improvements, Tenant’s use of the parking
area shall not be affected); and (d) use the Common Area while engaged in making
minor additional improvements to the Common Area and repairs to the Building
and/or the Project, all of which are hereby consented to by Tenant.
Notwithstanding this paragraph above, Landlord shall not cause or permit the
Project parking areas to be used as parking for events at the planned nearby
football stadium (other than by Tenant’s and other Project tenants’ employees).
Subject to Tenant’s rights under this Lease and the Building A Lease, Landlord
reserves the absolute right to effect such other tenancies in the other Project
buildings, if applicable, as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of Landlord. Tenant has
not relied on the fact, nor has Landlord represented, that any specific tenant
or type or number of tenants shall occupy any space in the Building (or other
Project buildings, if applicable), or that any specific tenant or type of tenant
shall be excluded from occupying any space in the Building (or other Project
buildings, if applicable). In exercising the foregoing rights, Landlord shall
not unreasonably interfere with or disturb Tenant’s use of the Premises or
Tenant’s access thereto or materially adversely affect Tenant’s rights under
this Lease or materially increase Tenant’s obligations under this Lease.

The parties acknowledge that there is potential to construct additional
buildings at the Project; however, Landlord agrees that no additional buildings
will be constructed at the Project during the initial Lease Term without the
express consent and approval by Tenant, which may be withheld in Tenant’s sole
discretion.

Landlord and Tenant have agreed to use the square footage numbers set forth in
this Lease as the basis of calculating the rent due under this Lease and
Tenant’s Allocable Share (defined in Section 9.E below), and the rent due under
this Lease and Tenant’s Allocable Share shall not be subject to revision if the
actual square footages are more or less than as stated in this Lease,

 

 

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except as expressly provided elsewhere in this Lease (for example, in the event
of a partial taking of the Project as described in Section 17 below). No
representation or warranty of any kind, express or implied, is given to Tenant
with respect to the square footage of the Premises, Building or any other
portion of the Project. Tenant shall have the sole responsibility for confirming
the actual square footage of the Premises prior to entering into this Lease.
Landlord shall have no liability to Tenant if the square footages described in
this Lease differs from the actual square footages.

The parties acknowledge that the Building is currently leased to Yahoo! Inc.
(“Yahoo”) pursuant to an existing lease with Landlord (the “Yahoo Lease”).
Landlord represents that it has entered into a written agreement with Yahoo
pursuant to which the Yahoo Lease is to terminate and Yahoo is required to
vacate the Building prior to the Commencement Date (the “Yahoo Termination
Agreement”). If Yahoo fails to vacate the Initial Space prior to the
Commencement Date, or the Expansion Space prior to the Expansion Space Delivery
Date, Landlord agrees to enforce Yahoo’s agreement to vacate the Initial Space
or the Expansion Space, as applicable, as aforesaid using all available lawful
methods, including, without limitation, commencing and prosecuting and unlawful
detainer action and lawful eviction.

 

3. USE:

 

  A. Permitted Uses:

Tenant shall use the Premises as permitted under applicable zoning laws only for
the following purposes: General office and administration, sales, marketing,
research and development, engineering, electronic lab other uses incidental
thereto (the “Permitted Uses”). Tenant shall not use the Premises for any use
other than the Permitted Use without the prior written consent of Landlord.
Tenant have the right to use only the number of parking spaces allocated to
Tenant under this Lease. All commercial trucks and delivery vehicles shall be
(i) parked at the rear of the Building, (ii) loaded and unloaded in a manner
which does not interfere with the businesses of other occupants of

 

                                                                               
                                                                               
           

 

the Project, and (iii) permitted to remain within the Project only so long as is
reasonably necessary to complete the loading and unloading. Landlord reserves
the right to impose such additional reasonable rules and regulations with
respect to the Common Area as Landlord deems reasonably necessary to operate the
Project in a manner which protects the quiet enjoyment of all tenants in the
Project. Landlord makes no representation or warranty that any specific use of
the Premises desired by Tenant is permitted pursuant to any Laws (as defined in
Section 8.C below).

 

  B. Uses Prohibited:

Neither Tenant nor Tenant’s Agents shall commit on the Premises or any portion
of the Project any waste, nuisance, or other act or thing which may disturb the
quiet enjoyment of any other tenant or user of the Project, nor allow any sale
by auction or any other use of the Premises for an unlawful purpose. Tenant
shall not (i) damage or overload the electrical, mechanical or plumbing systems
of the Premises, (ii) attach, hang or suspend anything from the ceiling, walls
or columns of the Building in excess of the load limits for which such ceiling,
walls or columns are designed, or set any load on the floor in excess of the
load limits for which such floors are designed, or (iii) generate dust, fumes or
waste products which create a fire or health hazard or damage the Premises or
any portion of the Project, including without limitation the soils or ground
water in or around the Project. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any nature, or
any waste materials, refuse, scrap or debris, shall be stored upon or permitted
to remain on any portion of the Project outside of the Building without
Landlord’s prior approval, which approval may be withheld in its sole and
absolute discretion.

 

  C. Advertisements and Signs:

Tenant shall not place or permit to be placed, in, upon or about the exterior of
the Building any signs not approved by the City of Santa Clara (“City”) and
other governing authority having jurisdiction. Tenant shall not place or permit
to be placed upon the Premises any signs,

 

 

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advertisements or notices without the written consent of Landlord as to type,
size, design, lettering, coloring and location, which consent will not be
unreasonably withheld, conditioned or delayed. Any sign placed on the Premises
shall be removed by Tenant, at its sole cost, prior to the expiration or sooner
termination of the Lease, and Tenant shall repair, at its sole cost, any damage
or injury to the Premises caused thereby, and if not so removed, then Landlord
may have same so removed at Tenant’s expense. Subject to the requirements of
this Section 3.C above, Landlord consents to Tenant’s placement of two
(2) Building-mounted exterior signs and Tenant’s Allocable Share of monument
signage on the monument signs within the Project, at Tenant’s sole cost and
expense. Tenant shall have the exclusive right to all exterior Building-mounted
signage and to the existing monument sign at the driveway to the Building.

 

  D. Covenants, Conditions and Restrictions:

This Lease is subject to the effect of (i) any covenants, conditions,
restrictions, easements, mortgages or deeds of trust, ground leases, rights of
way of record and any other matters or documents of record; and (ii) any zoning
laws of the city, county and state where the Building is situated (collectively
referred to herein as “Restrictions”) and Tenant shall conform to and shall not
violate the terms of any such Restrictions.

 

  E. Sustainability Requirements:

As used in this Lease, “Sustainability Requirements” means any and all Laws
relating to any “green building” or other environmental sustainability practices
and requirements now or hereafter in effect or imposed by any governmental
authority or applicable Laws from time to time (“Sustainability Requirements”).
Without limiting the scope of any Sustainability Requirements that may be in
effect from time to time, Tenant acknowledges that Sustainability Requirements
may address whole-building or premises operations, construction issues,
maintenance issues and other issues, including without limitation requirements
relating to: chemical use; indoor air quality; energy and water

 

                                                                               
                                                                               
           

 

efficiency; recycling programs; interior and exterior maintenance programs;
systems upgrades to meet green or sustainable building energy, water, air
quality, and lighting performance standards; construction methods and
procedures; material purchases; disposal of garbage, trash, rubbish and other
refuse and waste; and the use of proven energy and carbon reduction measures.
Neither Tenant nor Tenant’s Agents shall use or operate the Premises in a manner
that will cause any part of the Project to be in non-compliance with any
Sustainability Requirements in effect from time to time.

 

4. TERM AND RENTAL:

 

  A. Term; Base Monthly Rent:

The Lease term (“Lease Term”) as it relates to the Initial Space shall be for
one hundred twenty-nine (129) months, commencing on the later of (i) November 1,
2012, or (ii) the date that Landlord delivers the Initial Space to Tenant in the
condition required by Section 6.A (the “Initial Space Delivery Date”) (such
later date being the “Commencement Date”), and ending one hundred twenty-nine
(129) months thereafter (“Expiration Date”), subject to extension or sooner
termination as described in this Lease.

The Lease Term as it relates to the Expansion Space shall commence on the later
of (i) August 1, 2013, or (ii) the date that Landlord delivers the Expansion
Space to Tenant in the condition required by Section 6.A (the “Expansion Space
Delivery Date”) (such later date being the “Expansion Space Commencement Date”),
and ending on the Expiration Date, subject to extension or sooner termination as
described in this Lease.

During the period between the date of this Lease and the Expansion Space
Commencement Date (the “Interim Period”), Landlord shall have possession and
control of the Expansion Space, including, without limitation, the right to
lease the Expansion Space to third parties (including Yahoo!); provided,
however, that Landlord and Tenant may process, review and approve the Tenant
Improvement Plans and Specifications during the Interim Period and Tenant shall
be permitted access to the Expansion Space during

 

 

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that period solely for the purposes of taking measurements and otherwise
accommodating the design process.

In addition to all other sums payable by Tenant under this Lease, Tenant shall
pay as base monthly rent (“Base Monthly Rent”) for the Premises the following
amount:

 

Month   (starting on

the Commencement

Date)

 

  

Base Monthly Rent Per

Agreed Upon Rentable

Square Footage

 

1-4

  

Zero dollars ($0.00)

 

5-24

  

Two Dollars and Twenty Five Cents ($2.25) per rentable square foot

 

25-36

  

Two Dollars and Thirty Three Cents ($2.33) per rentable square foot

 

37-48

  

Two Dollars and Forty Two Cents ($2.42) per rentable square foot

 

49-60

  

Two Dollars and Fifty One Cents ($2.51) per rentable square foot

 

61-72

  

Two Dollars and Sixty Cents ($2.60) per rentable square foot

 

73-84

  

Two Dollars and Seventy Cents ($2.70) per rentable square foot

 

85-96

  

Two Dollars and Eighty Cents ($2.80) per rentable square foot

 

97-108

  

Two Dollars and Ninety One Cents ($2.91) per rentable square foot

 

 

                                                                               
                                                                               
           

 

109-120

  

Three Dollars and Two Cents ($3.02) per rentable square foot

 

121-129

  

Three Dollars and Thirteen Cents ($3.13) per rentable square foot

 

 

Base Monthly Rent shall be due and payable only as to that portion of the
Premises as to which the Lease Term has commenced. The starting Base Monthly
Rent for the Expansion Space shall be calculated based on the amount per agreed
upon rentable square feet described in the schedule above in effect as of the
Expansion Space Commencement Date. For illustration purposes only, if the
Commencement Date occurs November 1, 2012 and the Expansion Space Commencement
Date occurs on August 1, 2013, the Base Monthly Rent schedule would be as
follows:

 

Month (starting on    

the

Commencement

Date)

      

Agreed
Upon
Rentable    
Square
Footage

 

  Base Monthly
Rent Per Agreed 
Upon Rentable
Square Footage

1-4 (November 1, 2012 through February 28, 2013)

 

      45,000   $0.00

5-9 (March 1, 2013 through July 31, 2013)

 

      45,000   $101,250

10-24 (August 1, 2013 through September 30, 2014)

 

      150,128   $337,788

25-36 (October 1, 2014 through September 30, 2015)

 

      150,128   $350,455

 

 

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37-48 (October 1, 2015 through September 30, 2016)

 

      150,128   $363,597

49-60 (October 1, 2016 through September 30, 2017)

 

      150,128   $377,232

61-72 (October 1, 2017 through September 30, 2018)

 

      150,128   $390,378

73-84 (October 1, 2018 through September 30, 2019)

 

      150,128   $406,054

85-96 (October 1, 2019 through September 30, 2020)

 

      150,128   $421,281

97-108 (October 1, 2020 through September 30, 2021)

 

      150,128   $437,079

109-120 (October 1, 2021 through September 30, 2022)

 

      150,128   $453,469

121-129 (October 1, 2022 through July 31, 2023)

 

      150,128   $470,474                             
                           

Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of America,
without offset or deduction and except as otherwise expressly provided in this
Lease without prior notice or demand, at the address specified in Section 1 of
this Lease or at such place or places as may be designated in writing by
Landlord during the Lease Term. Base

 

                                                                               
                                                                               
           

 

Monthly Rent for any period less than a calendar month shall be a pro rata
portion of the monthly installment based on the number of days in the partial
calendar month; provided that if this Lease terminates due to Tenant’s default,
Tenant shall not be relieved of the obligation to pay future accruing rent, and
the provisions of Section 14 shall control. Concurrently with Tenant’s execution
of this Lease, Tenant shall pay to Landlord the sum of One Hundred One Thousand
Two Hundred Fifty Dollars ($101,250) as a deposit to be applied on the
Commencement Date against the Base Monthly Rent due for the fifth (5th) month of
the Lease Term plus the amount of Ten Thousand Three Hundred Fifty Dollars
($10,350) as the estimated amount of Reimbursable Operating Costs due for the
first (1st) month of the Lease Term.

 

  B. [Intentionally Deleted]

 

  C. Late Charge:

Tenant hereby acknowledges that late payment by Tenant to Landlord of Base
Monthly Rent and other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which is extremely difficult to
ascertain. Such costs include but are not limited to: administrative,
processing, accounting, and late charges which may be imposed on Landlord by the
terms of any contract, revolving credit, mortgage, or trust deed covering the
Premises. Accordingly, if any installment of Base Monthly Rent or other sum due
from Tenant shall not be received by Landlord or its designee within five
(5) days after it is due, Tenant shall pay to Landlord a late charge equal to
three (3%) percent of such overdue amount, which late charge shall be due and
payable on the same date that the overdue amount was due. Notwithstanding the
foregoing, Tenant shall be entitled to one (1) notice and five (5)-day cure
period each calendar year before the first late charge for such calendar year
shall accrue. No notice or additional cure period shall be required or apply for
the second or any subsequent late charge during a calendar year. The parties
agree that such late charge represents a fair and reasonable estimate of the
costs Landlord will incur by reason of late payment by Tenant, excluding
interest and attorneys fees and

 

 

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costs. If any Base Monthly Rent or other sum due from Tenant remains delinquent
for a period in excess of thirty (30) days then, in addition to such late
charge, Tenant shall pay to Landlord interest on any rent that is not paid when
due at the Agreed Interest Rate (defined in Section 14.B) from the date such
amount became due until paid. Acceptance by Landlord of such late charge or
interest shall not constitute a waiver of Tenant’s default with respect to such
overdue amount nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments of
Base Monthly Rent, then the Base Monthly Rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding any provision
of this Lease to the contrary. In no event shall this provision for a late
charge be deemed to grant to Tenant a grace period or extension of time within
which to pay any amount due under this Lease.

 

5. SECURITY DEPOSIT:

 

  A. Amount and Purpose:

Within seven (7) days after Tenant’s execution of this Lease, Tenant shall
provide Landlord, as security for Tenant’s obligations under this Lease, an
irrevocable standby letter of credit (as replaced or amended pursuant to this
Section 5, the “Letter of Credit”) in the amount of Three Hundred Thousand
Dollars ($300,000) in a form, containing terms, issued by a lending institution,
and drawable in a location all reasonably acceptable to Landlord (the Letter of
Credit and all proceeds thereof, and all other sums paid to Landlord in
substitution of the foregoing, being referred to as the “Security Deposit”).
Landlord hereby approves either JPMorgan Chase Bank N.A. or Silicon Valley Bank
as an acceptable issuer of the Letter of Credit, so long as there is no material
negative change in such issuer’s credit rating or ability to meet its
obligations. If the issuing bank does not provide for local draws on the Letter
of Credit, the Letter of Credit shall permit draws presented by telefacsimile
(“fax”), with such fax presentation being considered the sole operative
instrument of drawing, not contingent upon presentation of the original Letter
of Credit or

 

                                                                               
                                                                               
           

 

original documents with respect thereto. If Tenant defaults beyond applicable
notice and cure periods with respect to any provisions of this Lease, including
but not limited to (i) the provisions relating to payment of Base Monthly Rent
or other charges in default, or any other amount which Landlord may spend or
become obligated to spend by reason of Tenant’s default, or (ii) breach of any
of Tenant’s obligations under this Section 5, Landlord shall be entitled to draw
the full amount of the Letter of Credit at any time by certifying the occurrence
of such default to the issuer; thereafter, the Security Deposit shall be in the
form of cash held by Landlord. Tenant’s failure to timely comply with its
obligations under this Section 5 shall constitute a material default of Tenant,
for which no notice or opportunity to cure shall apply or be required before
Landlord is entitled to draw the full amount of the Letter of Credit. The
Security Deposit shall be held by Landlord as security for the faithful
performance by Tenant of every term, covenant and condition of this Lease
applicable to Tenant, and not as prepayment of rent. Landlord may, but shall not
be obligated to, and without waiving or releasing Tenant from any obligation
under this Lease, use, apply or retain the whole or any part of the Security
Deposit reasonably necessary for the payment of any amount which Landlord may
spend by reason of Tenant’s default or as necessary to compensate Landlord for
any loss or damage which Landlord may suffer by reason of Tenant’s default,
including without limitation loss of future rents due under this Lease upon
termination of this Lease due to a default by Tenant and other damages
recoverable under California Civil Code Section 1951.2 under this Lease.
Landlord shall not be deemed a trustee of the Security Deposit or any other
funds held by Landlord, and Landlord shall not be required to keep the Security
Deposit or any such other funds separate from its general funds. The Security
Deposit and such other funds shall not bear interest for the benefit of Tenant.
If Tenant shall default beyond applicable notice and cure periods in the payment
of Base Monthly Rent or any scheduled payment of Reimbursable Operating Costs
more than three (3) times in any twelve (12) month period, irrespective of
whether or not such default is cured, then the Letter of Credit or cash Security
Deposit held by Landlord shall, within ten (10) days after demand by Landlord,

 

 

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be increased by Tenant to an amount equal to three (3) times the Base Monthly
Rent then payable under this Lease.

 

  B. Requirements of Letter of Credit:

Tenant shall keep the Letter of Credit in effect during the entire Lease Term
under this Lease, as the same may be extended, plus a period of four (4) weeks
following the Expiration Date. At least thirty (30) days prior to expiration of
any Letter of Credit, the term thereof shall be renewed or extended for a period
of at least one (1) year. If the issuer of the Letter of Credit becomes
insolvent, is closed or is placed in receivership, or if Landlord is notified
that the Letter of Credit will not be honored, or if there is a material
negative change in the issuer’s credit rating or ability to meet its
obligations, then within five (5) business days after written demand from
Landlord, Tenant shall deliver to Landlord a new Letter of Credit issued by a
lending institution acceptable to Landlord in Landlord’s reasonable discretion,
and otherwise meeting the requirements of this Section 5. In the event Landlord
draws against the Letter of Credit and the Security Deposit reverts to a cash
Security Deposit held by Landlord, Tenant shall replenish the remaining Security
Deposit (by cash or additional letter of credit meeting the requirements of this
Article 5) such that the aggregate amount of Security Deposit available to
Landlord at all times during the Lease Term is the amount of the Security
Deposit originally required, as the same may be required to be increased as
provided below. If at any time while a Letter of Credit is held as a Security
Deposit, Tenant is a Debtor (as defined in Section 101(13) of the Bankruptcy
Code) under any case or filing, then, anything in this Section 5 to the contrary
notwithstanding, Landlord shall not be required to give Tenant written notice of
and/or opportunity to cure or grace period to cure any default under this Lease
prior to Landlord drawing upon the Letter of Credit following Tenant’s failure
to perform any of its obligations under this Lease. The Security Deposit shall
be returned to Tenant within thirty (30) days after the Expiration Date and
surrender of the Premises to Landlord in the condition required by this Lease,
less any amount deducted in accordance with this Section 5, together with
Landlord’s written notice itemizing

 

                                                                               
                                                                               
           

 

the amounts and purposes for such deduction; provided however that if at the end
of such thirty (30) day period there are any uncured breaches by Tenant of its
obligations under this Lease and the cost of cure or extent of damage as a
result has not yet been ascertained by Landlord, then such thirty (30) day
period shall be extended as reasonably necessary for Landlord to ascertain the
cost of cure and extent to which Landlord has been damaged as a result thereof.
Tenant hereby waives California Civil Code Section 1950.7, or any similar law
now or hereafter in effect (including, without limitation, any federal law) to
the extent the same may have the effect of limiting the circumstances under
which Landlord would be allowed to use or apply the Security Deposit or amount
that could be so used or applied, or imposing a deadline for the return of the
Security Deposit. In the event of termination of Landlord’s interest in this
Lease, Landlord shall deliver the Letter of Credit or cash Security Deposit to
Landlord’s successor in interest in the Premises and thereupon be relieved of
further responsibility with respect to the Letter of Credit or cash Security
Deposit; provided however that if Tenant fails to timely perform its obligations
under the next sentence, Landlord shall have the right, upon request of
Landlord’s successor, to draw on the Letter of Credit on behalf of Landlord’s
successor. Upon termination or transfer of Landlord’s interest in the Lease,
within ten (10) business days after written request by Landlord or Landlord’s
successor, Tenant shall either cause the Letter of Credit to be amended to name
Landlord’s successor as the party entitled to draw down on the Letter of Credit
and deliver such amendment to the requesting party, or shall obtain and deliver
to the requesting party a new Letter of Credit naming Landlord’s successor as
the party entitled to draw on the Letter of Credit and otherwise meeting the
requirement of this Section 5. Landlord shall have the right to pledge the
Letter of Credit or otherwise grant a security interest therein to Landlord’s
lenders, and shall have the right to deliver the Letter of Credit or all or any
portion of any cash Security Deposit to Landlord’s lenders in connection
therewith, provided the Letter of Credit or cash Security Deposit shall only be
used in accordance with, and shall continue to be governed by, the terms and
provisions of this Section 5. At Landlord’s election, within ten (10) days after
request by

 

 

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Landlord, Tenant shall either cause the Letter of Credit to be amended to name
Landlord’s lenders as the beneficiary or as a co-beneficiary with Landlord,
and/or as a co-signer of any certification presented for a draw down of the
Letter of Credit, and to incorporate other changes to the Letter of Credit
reasonably requested by Landlord or Landlord’s lenders, or shall obtain a new
Letter of Credit to effectuate such changes and otherwise meeting the
requirements of this Section 5. If a new Letter of Credit is delivered to
Landlord as required by this Section 5.B, the old Letter of Credit shall be
promptly returned to Tenant. If Landlord or a designated lender rightfully
attempts to draw on the Letter of Credit but does not receive the full amount
requested in cash, Tenant shall within five (5) days after demand from Landlord,
deposit with Landlord cash in the amount of the deficiency. Landlord shall only
draw on the Letter of Credit following an Event of Default or in the event
Tenant fails to renew the Letter of Credit at least thirty (30) days before its
expiration.

 

6. CONSTRUCTION:

 

  A. Landlord Work:

Subject to this Section 6.A below, Landlord shall deliver the Initial Space to
Tenant on the Initial Space Delivery Date and the Expansion Space to Tenant on
the Expansion Space Delivery Date, in each case, in good condition and in
compliance with applicable laws, codes and regulations (including, without
limitation, the Americans with Disabilities Act (“ADA”)) and with all
electrical, plumbing, ceiling tiles, roof, windows (including glazing and
gaskets and caulking), structural elements, Building foundation, fire sprinkler,
lighting, water, gas and heating, ventilating and air conditioning (“HVAC”),
sewer, elevator and other Building operating systems, and parking lots and
driveways and restrooms, in good working condition and repair and ADA compliant
(except for deficiencies or non-compliance caused by Tenant, Tenant’s Agents or
Tenant’s Alterations). Landlord shall have no responsibility for the generator,
the UPS System and batteries, the phone system, the security system or the key
card access system. Notwithstanding anything to the contrary in this Lease,
Landlord shall cause any

 

                                                                               
                                                                               
           

 

defects or deficiencies in the foregoing delivery condition of the Initial Space
and the Expansion Space to be corrected at Landlord’s sole cost and expense (and
not as an Operating Cost), provided, that (i) Tenant gives written notice of
such defect or deficiency to Landlord prior to (a) the date which is sixty
(60) days following the Initial Space Delivery Date, with respect to defects or
deficiencies in the Initial Space and any other element of the Building or the
Project described in the first sentence of this paragraph, and (b) the date
which is thirty (30) days following the Expansion Space Delivery Date with
respect to defects or deficiencies in the Expansion Space (excluding the HVAC),
the roof, the caulking and any other building operating systems, and (ii) the
existence of any such defect or deficiency shall not cause an extension of or
delay in the Commencement Date or the Expansion Space Commencement Date. The
preceding time limitations notwithstanding, if during the course of construction
of the Tenant Improvements, Tenant discovers that any element of the Building or
the Project described in the first sentence of this paragraph is not in
compliance with applicable laws, codes and regulations (including, without
limitation, the ADA), Tenant shall give written notice of such non-compliance to
Landlord promptly upon discovery, and Landlord shall use its best efforts to
cause such non-compliance to be corrected at Landlord’s sole cost with the least
possible interference with, or delay in, Tenant’s construction of the Tenant
Improvements.

Except as expressly provided in this Section 6.A above, the Initial Space and
Expansion Space shall be delivered to Tenant, and Tenant shall accept such
delivery, in its then “AS IS, WITH ALL FAULTS” condition, without representation
or warranty of any kind, express or implied, other than any which may be
expressly contained in this Lease, and with no obligation on the part of
Landlord to perform any other work (other than such work as this Lease expressly
states must be performed by Landlord during the Lease Term). Landlord shall not
be liable for any damage or loss incurred by Tenant for Landlord’s failure for
whatever cause to deliver possession of the Premises by a particular date
(including the Commencement Date or Expansion Space Commencement Date), nor
shall

 

 

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this Lease be void or voidable on account of such failure to deliver or delay in
delivering possession of the Premises; provided that if Landlord does not
deliver possession of the Initial Space to Tenant by December 1, 2012,
(i) Tenant shall have the right to terminate this Lease by written notice
delivered to Landlord within five (5) business days thereafter, and Landlord and
Tenant shall be relieved of their respective obligations hereunder (other than
those that this Lease states expressly survives expiration or sooner termination
of this Lease) and the prepaid Base Monthly Rent, Reimbursable Operating Costs
and the Security Deposit previously paid by Tenant to Landlord shall be
reimbursed to Tenant, or (ii) at Tenant’s election, the date Tenant is otherwise
obliged to commence payment of Base Monthly Rent with respect to the Initial
Space shall be delayed by one additional day for each day that delivery of the
Initial Space is delayed beyond December 1, 2012. If Landlord does not deliver
possession of the Expansion Space to Tenant by August 1, 2013, Tenant shall have
the right to terminate this Lease as to both the Initial Space and the Expansion
Space, by written notice delivered to Landlord within five (5) business days
thereafter, and Landlord and Tenant shall be relieved of their respective
obligations hereunder thereafter accruing (other than those that this Lease
states expressly survives expiration or sooner termination of this Lease) and
the prepaid Base Monthly Rent, Reimbursable Operating Costs and the Security
Deposit previously paid by Tenant to Landlord shall be reimbursed to Tenant or
(ii) at Tenant’s election, the date Tenant is otherwise obliged to commence
payment of Base Monthly Rent with respect to the Expansion Space shall be
delayed by one additional day for each day that delivery of the Expansion Space
is delayed beyond such date.

 

  B. Tenant Improvement Construction:

Landlord shall have no obligation to perform tenant improvement work with
respect to the Initial Space or the Expansion Space.

All initial tenant improvements which Tenant desires to install in the Building
(the “Tenant Improvements”) shall be constructed by Tenant in accordance with
plans and specification approved by Landlord and the requirements of this
Section

 

                                                                               
                                                                               
           

 

6.B and Article 8 below, at Tenant’s sole cost. The process for approval and
disapproval of Tenant’s plans and specifications for the Tenant Improvements is
described in Section 8.A below.

Prior to substantial completion, Tenant shall be obligated to (i) provide active
phone lines to all elevators, and (ii) contract with a firm to monitor the fire
system.

The point at which the high speed fiber optic communication lines enters the
Project is a room in Building A (the “Fiber Room”). During the construction of
the Tenant Improvements. Landlord shall provide Tenant with access to the Fiber
Room upon twenty-four (24) hours written notice from Tenant, to permit Tenant to
connect its fiber optic communication lines to the Building.

The Tenant Improvements shall not be removed or altered by Tenant except as
provided in Article 8 below. Tenant shall have the right to depreciate and claim
and collect any investment tax credits for the Tenant Improvements during the
Lease Term. Upon expiration of the Lease Term or any earlier termination of the
Lease, the Tenant Improvements shall become the property of Landlord and shall
remain upon and be surrendered with the Premises, and title thereto shall
automatically vest in Landlord without any payment therefore, subject to Article
7 and Article 8 below.

 

7. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:

 

  A. Landlord’s Work

Prior to the Expansion Space Commencement Date, Landlord shall cause the parking
areas of the Project to be repaired, resealed and restriped in accordance with
the Scope of Work which was delivered by Landlord to Tenant prior to the
execution of this Lease, at Landlord sole cost and expense (the work described
in this Section 7.A being “Landlord’s Work”).

 

  B. Delivery and Acceptance:

On the Commencement Date, Landlord shall deliver and Tenant shall accept
possession of the

 

 

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Initial Space. On the Expansion Space Commencement Date, Landlord shall deliver
and Tenant shall accept possession of the Expansion Space. Except as otherwise
specifically provided in this Lease, Tenant agrees to accept possession of the
Initial Space and Expansion Space in their then existing condition, subject to
all Restrictions and without representation or warranty by Landlord, express or
implied.

 

  C. Condition Upon Surrender:

Tenant further agrees on the expiration or sooner termination of this Lease, to
surrender the Premises to Landlord in good condition and repair, normal wear and
tear, casualty damage, repairs and replacements which are the Landlord’s
responsibility under this Lease, and Alterations and which it is permitted to
surrender at termination of the Lease excepted. In no event shall Tenant be
required to remove all or any portion of the Tenant Improvements. In this
regard, “normal wear and tear” shall be construed to mean wear and tear caused
to the Premises by the natural aging process which occurs in spite of prudent
application of industry standards for maintenance, repair, replacement, and
janitorial practices, and does not include items of neglected or deferred
maintenance. In any event, and notwithstanding the foregoing, Tenant shall cause
the following to be done prior to the Expiration Date or sooner termination of
this Lease: (i) all interior walls shall be painted or cleaned, (ii) all tiled
floors shall be cleaned and waxed, (iii) all carpets shall be cleaned and
shampooed, (iv) all broken, marred, stained or nonconforming acoustical ceiling
tiles shall be replaced, (v) all cabling placed above the ceiling by Tenant or
Tenant’s contractors shall be removed (unless Landlord waives such requirement
in writing), (vi) all windows shall be washed, (vii) the HVAC system shall be
serviced by a reputable and licensed service firm and left in “good operating
condition and repair”, which condition shall be so certified by such firm, and
(viii) the plumbing and electrical systems and lighting shall be placed in good
order and repair (including replacement of any burned out, discolored or broken
light bulbs, ballasts, or lenses). On or before the Expiration Date or sooner
termination of this Lease, Tenant shall remove all its personal property and
trade fixtures from the Premises. As to all Alterations

 

                                                                               
                                                                               
           

 

for which Landlord consent was not obtained, Tenant shall ascertain from
Landlord not more than one (1) year and not less than ninety (90) days before
the Expiration Date or sooner termination of this Lease whether Landlord desires
to have any such Alterations made by Tenant removed and the Premises or any
parts thereof restored to the condition existing before such Alterations, or to
cause Tenant to surrender any or all Alterations in place to Landlord. If
Landlord shall so desire, Tenant shall, at Tenant’s sole cost and expense,
remove such Alterations as Landlord requires and shall repair and restore said
Premises or such parts thereof before the Expiration Date or sooner termination
of this Lease. Such repair and restoration shall include causing the Premises to
be brought into compliance with all applicable building codes and laws in effect
at the time of the removal, repair and restoration to the extent such compliance
is necessitated by the removal, repair and restoration work.

 

  D. Failure to Surrender:

Subject to this Section 7.D below, if Tenant fails to surrender the Premises at
the Expiration Date or sooner termination of this Lease in the condition
required by Section 7.C and other provisions of this Lease, Tenant shall be
deemed to be holding over without Landlord’s consent, and Tenant shall
indemnify, defend with counsel reasonably acceptable to Landlord, and hold
Landlord and Landlord’s trustees, beneficiaries, shareholders, directors,
officers, members, employees, partners, affiliates, agents, successors and
assigns (collectively “Landlord Related Parties”) harmless from and against all
claims, liabilities, obligations, penalties, fines, actions, losses, damages,
costs or expenses (including without limitation reasonable attorneys fees)
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay and costs incurred by Landlord in returning the Premises to the required
condition, plus interest thereon at the Agreed Interest Rate. If Tenant remains
in possession of, or fails to remove all its personal property and trade
fixtures from, the Premises after the Expiration Date or sooner termination of
this Lease without Landlord’s consent, such hold over shall not

 

 

11

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constitute a renewal or extension of the Lease Term, Tenant’s continued
possession shall be on the basis of a tenancy at sufferance, and Tenant shall be
liable to Landlord for one hundred fifty percent (150%) of the Base Monthly Rent
due in the month preceding the earlier termination or Expiration Date, as
applicable, prorated for partial months based on the number of days in such
month, plus all other amounts payable by Tenant under this Lease. If Tenant
holds over after the Expiration Date or sooner termination of this Lease with
Landlord’s consent, such holding over shall be construed as a month to month
tenancy, at one hundred fifty percent (150%) of the Base Monthly Rent for the
month preceding expiration or sooner termination of this Lease in addition to
all other rent due under this Lease, and shall otherwise be on the terms and
conditions of this Lease, except for the following: those provisions relating to
the Lease Term, any provisions requiring Landlord to perform any Landlord’s Work
or install any Tenant Improvements, or grant any free rent or other concessions,
any options to extend or renew and any right to lease any space at 4551 GAP
pursuant to Section 19.E below, which provisions shall be of no further force
and effect. This provision shall survive the termination or expiration of the
Lease.

 

8. ALTERATIONS & ADDITIONS:

 

  A. General Provisions:

Tenant shall not make, or suffer to be made, any alteration or addition to the
Premises (“Alterations”), or any part thereof, without obtaining Landlord’s
prior written consent and delivering to Landlord the proposed architectural and
structural plans for all such Alterations at least fifteen (15) days prior to
the start of construction. All Tenant Improvements shall also constitute
“Alterations” under this Lease. If such Alterations affect the structure of the
Building, Tenant additionally agrees to reimburse Landlord its reasonable
out-of-pocket costs incurred in reviewing Tenant’s plans. After obtaining
Landlord’s consent (were such consent is required), Tenant shall not proceed to
make such Alterations until Tenant has obtained all required governmental
approvals and permits, and provides Landlord reasonable security, in form
reasonably approved by Landlord, to protect

 

                                                                               
                                                                               
           

 

Landlord against mechanics’ lien claims; provided, however, that no such
security shall be required in connection with Alterations that cost less than
$600,000 per project. Tenant agrees to provide Landlord (i) not less than twenty
(20) days prior written notice of the anticipated and actual start-date of the
work, (ii) a complete set of half-size (15” X 21”) vellum as-built drawings, and
(iii) a certificate of occupancy, or other final government approval if the City
does not issue certificates of occupancy, for the work upon completion of the
Alterations.

Where Landlord’s consent is required for Alterations, Tenant shall cause to be
prepared and shall submit to Landlord: (i) all interior architectural design and
engineering drawings, layouts and material specifications and schedules for the
Premises; (ii) all working, finished, detailed architectural and engineering
construction drawings (including “as-built” drawings) and specifications for the
Alterations and any revisions thereto (collectively, “Tenant’s Plans”), all to
be in compliance with all applicable building codes and all other applicable
Laws. Except for “as-built” drawings, a copy of the foregoing shall be submitted
to Landlord (prior to submission for application for construction permits) for
Landlord’s review and consent (which consent will not be unreasonably withheld,
delayed or conditioned). Tenant shall not be required to construct all or any
particular portion of the Tenant Improvements and may enlarge or reduce the
scope of the Tenant Improvements in its sole discretion (subject to Landlord’s
review and approval of Tenant’s plans and specification as provided herein);
provided that Tenant shall not leave any partially constructed or unfinished
areas.

With respect to the Tenant Improvements, Landlord hereby approves the elements
and description of the Tenant Improvements described on Exhibit “B-1” attached
hereto (the “Preliminary Tenant Improvement Plans”. When the Tenant’s Plans for
the Tenant Improvements have been approved by the parties in accordance to this
Section 8.A, the same shall be attached to this Lease as Exhibit “B-2” and shall
be referred to as the “Tenant Improvement Plans and Specifications”. Any changes
requested by Tenant to the approved Tenant Improvement

 

 

12

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Plans and Specifications shall be subject to the plan review and approval
process described in this Section 8.A.

Not later than ten (10) days after Landlord’s receipt of Tenant’s Plans,
Landlord shall advise Tenant if it approves them or if not shall advise Tenant
what revisions are required to obtain Landlord’s approval; provided however that
failure to notify Tenant of its decision within this ten (10) day period shall
not be deemed approval by Landlord. If Landlord notifies Tenant that revisions
are needed, then the parties shall confer and negotiate promptly and in good
faith to reach agreement on modifications to the Tenant’s Plans. Not later than
five (5) days after Landlord’s receipt of any the proposed modifications to the
Tenant’s Plans, Landlord shall advise Tenant if it approves them or if not shall
advise Tenant what further revisions are required to obtain Landlord’s approval;
provided however that failure to notify Tenant of its decision within this five
(5) day period shall not be deemed approval by Landlord. With respect to the
Tenant Improvements, Landlord shall not withhold its consent to any element of
the Tenant’s Plans or any change thereto that are consistent with or represent
logical evolutions of the items described in the Preliminary Tenant Improvement
Plans, except to the extent any elements of the Tenant’s Plans adversely affect
the structural components or integrity of the Building. In addition, the
materials and finishes utilized in construction of the Tenant Improvements shall
be consistent in quality with those of the Building shell in the reasonable
opinion of Landlord.

All Alterations shall be constructed by a licensed general contractor in
compliance with all applicable Laws including, without limitation, all building
codes, Sustainability Requirements and the Americans with Disabilities Act of
1990 as amended from time to time. Landlord hereby approves Permian Builders,
Devcon Construction, South Bay Construction and Sobrato Construction as
acceptable general contractors. Upon the Expiration Date or sooner termination
of this Lease, all Alterations, except movable furniture and trade fixtures,
shall become a part of the realty and belong to Landlord but shall nevertheless
be subject to removal by Tenant as provided in Section 7.C. Notwithstanding the

 

                                                                               
                                                                               
           

 

foregoing, if at the time Landlord gives its consent to any Alteration
(excluding the Tenant Improvements), Landlord advises Tenant in writing that
such Alteration must be removed at expiration or sooner termination of this
Lease, then Tenant shall be required to remove such Alteration and restore the
Premises to the condition existing before such Alteration was performed not
later than expiration or sooner termination of this Lease. If Landlord fails to
so advise Tenant at the time of its consent, then such Alterations shall not be
required to be removed. Alterations which are not deemed as trade fixtures
include without limitation heating, lighting, electrical systems, air
conditioning (other than supplemental HVAC units, which are addressed in the
immediately following sentence), walls, carpeting, or any installation which has
become an integral part of the Premises and cannot be removed without material
damage to the Premises. Any supplemental HVAC system installed by Tenant may be
removed by Tenant provided that (i) Tenant also removes all supplemental
equipment and systems and other items installed to serve or operate the
supplemental HVAC system, and (ii) Tenant repairs and restores the Premises or
such parts thereof to the condition existing before the installation of the
supplemental HVAC system, which repair and restoration shall include causing the
Premises to be brought into compliance with all applicable building codes and
laws in effect at the time of the removal, repair and restoration to the extent
such compliance is necessitated by the removal, repair and restoration work. All
Alterations shall be maintained, replaced or repaired by Tenant at its sole cost
and expense. In no event shall Landlord’s approval of, or consent to, any
architect, contractor, engineer or other consultant or professional, any
Alterations, or any plans, specifications and drawings for any Alterations
constitute a representation or warranty by Landlord of (i) the accuracy or
completeness of the plans, specifications, drawings and Alterations or the
absence of design defects or construction flaws therein, or the qualification of
any person or entity, or (ii) compliance with applicable Laws, and Tenant agrees
that Landlord shall incur no liability by reason of such approval or consent.
Once any Alterations begin, Tenant shall diligently and continuously pursue
their completion. Notwithstanding anything to the

 

 

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contrary in this Section 8.A above, Tenant may make Alterations in the Premises
which do not affect the structure or structural integrity of the Premises and do
not adversely affect any Building systems, to the extent the cost of such work
(i) does not exceed One hundred Thousand Dollars ($100,000) and (ii) does not,
together with all other Alterations performed during the same calendar year,
exceed Two Hundred Thousand Dollars ($200,000) in the aggregate.

 

  B. Free From Liens:

Tenant shall keep the Premises free from all liens arising out of work
performed, materials furnished, or obligations incurred by Tenant or claimed to
have been performed for or furnished to Tenant (other than the Tenant
Improvements, to the extent paid for by Tenant). In the event Tenant fails to
discharge any such lien within fifteen (15) days after receiving notice of the
filing, Landlord shall immediately be entitled to discharge the lien at Tenant’s
expense and all resulting costs incurred by Landlord, including attorney’s fees
shall be due immediately from Tenant as additional rent.

 

  C. Compliance With Governmental Regulations:

The term Laws or Governmental Regulations shall mean all federal, state, county,
city or governmental agency laws, statutes, ordinances, codes, standards, rules,
requirements, regulations, Sustainability Requirements or orders now in force or
hereafter enacted, promulgated, or issued. The term also includes government
measures regulating or enforcing public access, traffic mitigation,
occupational, health, or safety standards for employers, employees, landlords,
or tenants. Tenant, at Tenant’s sole expense shall comply with all such
Governmental Regulations applicable to the Premises or the Tenant’s use of the
Premises and shall make all repairs, replacements, alterations, or improvements
necessary to comply with said Governmental Regulations, other than work required
of Landlord pursuant to Section 6.A above. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action or proceeding
against Tenant (whether Landlord be a party thereto or not) that Tenant has
violated

 

                                                                               
                                                                               
           

 

any such law, regulation or other requirement in its use of the Premises shall
be conclusive of that fact as between Landlord and Tenant. Tenant’s obligations
pursuant to this Section 8.C shall include, without limitation, maintaining and
restoring the Premises and making structural and nonstructural alterations and
additions to the Premises, Building and Common Area in compliance and conformity
with all Laws and recorded documents to the extent required because of Tenant’s
particular use of the Premises or any work or Alteration made by or on behalf of
Tenant during the Lease Term. The foregoing shall include, without limitation,
compliance with and improvements required by the Americans With Disabilities Act
or any similar Laws, as they may be amended from time to time, subject to
Landlord’s obligations under Section 6.A above. Landlord’s approval of any
Alteration or other act by Tenant shall not be deemed to be a representation by
Landlord that said Alteration or act complies with applicable Laws, and Tenant
shall remain solely responsible for said compliance. Notwithstanding anything to
the contrary in this Lease, Tenant shall not be required to make structural or
non-structural alterations or improvements to the Premises to comply with Laws
unless required, in whole or in part, by Tenant’s particular use of the Premises
or any work or Alteration made by or on behalf of Tenant during the Lease Term.

 

  D. Insurance Requirements:

During the course of construction of its Alterations, Tenant shall cause the
General Contractor to procure (as a cost of the Tenant Improvements) a “Broad
Form” liability insurance policy in the amount of Three Million Dollars
($3,000,000.00). Tenant shall also procure or cause to be procured (as a cost of
the Tenant Improvements) builder’s risk insurance for the full replacement cost
of the Tenant Improvements while the Tenant Improvements are under construction,
up until the date that the casualty insurance policy described in Section 10
below is in full force and effect.

Tenant shall maintain during the course of construction of its Alterations
(other than the Tenant Improvements), at its sole cost and expense, builders’
risk insurance for the amount

 

 

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of the completed value of the Alterations on an all-risk non-reporting form
covering all improvements under construction, including building materials, and
other insurance in amounts and against such risks as Landlord shall reasonably
require in connection with the Alterations. In addition to and without
limitation on the generality of the foregoing, Tenant shall ensure that its
contractors procure and maintain in full force and effect during the course of
construction a “broad form” commercial general liability and property damage
policy of insurance naming Landlord, any property manager or Landlord affiliates
designated by Landlord and Landlord’s lenders as additional insureds. The
minimum limit of coverage of the aforesaid policy shall be in the amount of not
less than One Million Dollars ($1,000,000.00) per occurrence and One Million
Dollars ($1,000,000.00) annual aggregate, and shall contain a severability of
interest clause or a cross liability endorsement. If Commercial General
Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this project/location or
the general aggregate limit shall be twice the required occurrence limit.

 

9. MAINTENANCE OF PREMISES:

 

  A. Landlord’s Obligations:

Landlord at its sole cost and expense, shall maintain in good condition, order,
and repair, and replace as and when necessary, the structural components of the
Building including the foundation, exterior load bearing walls and roof
structure, except that the cost to repair any damage caused by Tenant or
Tenant’s Agents shall be paid for by Tenant to the extent the cost of repair is
not fully paid to Landlord from available insurance proceeds.

In addition, Landlord shall maintain in good condition, order, and repair, and
replace as and when necessary, all underground utility facilities, the cost of
which shall be a Reimbursable Operating Cost (as defined in Section 9.D below).

 

  B. Tenant’s Obligations:

Except for Landlord’s maintenance and repair obligations under Section 6.A,
Section 9.A,

 

                                                                               
                                                                               
           

 

Section 15.E and Section 16 of this Lease, Tenant shall clean, maintain, repair
and replace when necessary the Building and every part thereof through regular
inspections and servicing, including but not limited to the following, to the
extent Landlord does not elect to maintain the same as Reimbursable Operating
Costs: (i) all plumbing and sewage facilities, (ii) all heating ventilating and
air conditioning facilities and equipment, (iii) all fixtures, interior walls,
floors, carpets and ceilings, (iv) all windows, door entrances, plate glass and
glazing systems including caulking, and skylights, (v) all electrical facilities
and equipment, (vi) all automatic fire extinguisher equipment, (vii) the parking
lot, (viii) all elevator equipment, (ix) the roof membrane system, and (x) all
waterscape, landscaping and shrubbery. All wall surfaces and floor tile are to
be maintained in an as good a condition as when Tenant took possession free of
holes, gouges, or defacements. With respect to items (ii), (viii) and
(ix) above, Tenant shall provide Landlord a copy of a service contract between
Tenant and a licensed service contractor providing for periodic maintenance of
all such systems or equipment in conformance with the manufacturer’s
recommendations. Tenant shall provide Landlord a copy of such preventive
maintenance contracts and paid invoices for the recommended work if requested by
Landlord. To the extent that any item in (i) through (x) above is determined by
Landlord to be for the benefit of more than one (1) tenant or occupant of the
Building or Project, Landlord shall assume the obligation to clean, maintain,
repair and replace the same as Reimbursable Operating Costs (as defined in
Section 9.D below) and Tenant shall have no obligation to clean, maintain,
repair or replace such item.

Notwithstanding this Section 9.B above, if Tenant determines that any of the
following located in or servicing the Premises (other than Tenant Improvements
or Alterations) or the Project are in need of material repair or replacement,
and (i) the cost of such repair replacement is in excess of Seventy-five
Thousand Dollars ($75,000), and (ii) the material repair or replacement
constitutes a capital cost under generally accepted accounting principles, then
Tenant shall notify Landlord of same in writing: (i) fire and life safety
systems, (ii) fire

 

 

15

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pumps, (iii) elevators, (iv) roof membrane and (v) HVAC units. Tenant notifies
Landlord of the foregoing, then Landlord shall cause such repair or replacement
(whether an item is repaired or replaced shall be determined by Landlord in its
reasonable discretion) to be made, subject to reimbursement by Tenant as
follows: (1) the first Seventy-Five Thousand Dollars ($75,000) of such cost
shall be paid by Tenant not later than thirty (30) days after demand for payment
is delivered to Tenant, and Landlord shall not be required to contract for or
begin such work until such amount has been paid to Landlord, and (2) the balance
of such cost together with interest thereon at the Agreed Interest Rate shall be
amortized over the useful life of the capital repair or replacement, as
reasonably determined by Landlord in accordance with generally accepted
accounting principles, and the monthly amortized cost shall be paid by Tenant to
Landlord as additional rent on the first day of each calendar month during the
remaining Lease Term.

If a capital repair (including resurfacing and restriping) to the parking lot of
the Project is required in the last five (5) years of the Lease Term, and the
cost of such repair replacement is in excess of Seventy-five Thousand Dollars
($75,000), then Landlord shall cause such replacement to be made, subject to
reimbursement by Tenant in the same manner as provided in the immediately
preceding paragraph.

If the cost of any material repair or replacement is Seventy-five Thousand
Dollars ($75,000) or less, then such cost shall be a Reimbursable Operating
Cost, to the extent properly included therein.

 

  C. Obligations Regarding Reimbursable Operating Costs:

In addition to the direct payment by Tenant of expenses as provided in
Section 9.B, 10, 11 and 12 of this Lease, Tenant agrees to reimburse Landlord
for Tenant’s Allocable Share (as defined in Section 9.E below) of Reimbursable
Operating Costs (as defined in Section 9.D below) resulting from Landlord
payment of expenses related to the Building or Project which are not otherwise
paid by Tenant directly. Landlord shall have the right to periodically

 

                                                                               
                                                                               
           

 

provide Tenant with a written estimate of Reimbursable Operating Costs for the
next twelve (12) months and Tenant shall thereafter, until Landlord revises such
estimate, pay to Landlord as additional rental, along with its Base Monthly
Rent, one twelfth of Tenant’s Allocable Share of the Reimbursable Operating
Costs as estimated by Landlord. Within one hundred twenty (120) days after the
end of each calendar year during the Lease Term Landlord shall deliver to Tenant
a statement (“Annual Statement”) in which Landlord shall set forth the actual
expenditures for Reimbursable Operating Costs for such calendar year and
Tenant’s Allocable Share thereof. The Annual Statement shall be certified by an
authorized officer of Landlord to be correct. If the Annual Statement shows that
Tenant’s payments of estimated Reimbursable Operating Costs exceeded Tenant’s
actual obligation in respect of such calendar year, Landlord shall accompany
said Annual Statement with a payment to Tenant of the amount of such excess. If
the Annual Statement shows that Tenant’s payments of estimated Reimbursable
Operating Costs were less than its actual obligation in respect of such calendar
year, Tenant shall pay said difference to Landlord within thirty (30) days after
Tenant’s receipt of the Annual Statement.

If Tenant disputes the amount or characterization of any item contained in the
Annual Statement then Tenant shall give written notice thereof to Landlord not
later than one hundred twenty (120) days after the Annual Statement is delivered
to Tenant. Tenant shall then have the right to cause Landlord’s records upon
which the Annual Statement is based to be audited by an independent nationally
recognized certified public accounting firm. Except as provided below, the fee
for any audit conducted on Tenant’s behalf shall be borne solely by Tenant. In
no event shall the fee for any audit be computed on a contingency fee basis or
be otherwise dependent upon the findings of such audit, and Tenant shall confirm
to Landlord in writing the non-contingent nature of the contract between Tenant
and such auditor. Tenant shall not have any right to withhold any payment
pending resolution of such dispute or audit, and payment by Tenant of any sum or
sums in dispute shall not be deemed to be a waiver of Tenant’s right to audit or
contest the Annual Statement in

 

 

16

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accordance with the terms and conditions of this Lease. Landlord shall cooperate
with such audit and shall provide Landlord’s books and records reasonably
requested and relative to the audit which shall be conducted during regular
business hours at the office where Landlord maintains its books and records, at
no cost to Landlord except as expressly provided below. If after such audit the
parties do not agree on the audit findings then the dispute shall be settled by
arbitration pursuant to Section 20.E below. If, as a result of Tenant’s
inspection of Landlord’s books or the findings of the third party independent
audit of Landlord’s records and review, an error is discovered in the Annual
Statement, Landlord shall revise the Annual Statement accordingly and any
overpayment by Tenant shall be refunded by Landlord to Tenant not later than
thirty (30) days after receipt by Landlord of written demand for payment, and
any underpayment shall be paid by Tenant not later than thirty (30) days after
receipt by Tenant of written demand for payment. If Tenant does not notify
Landlord of a dispute within one hundred twenty (120) days after receipt of any
Annual Statement, Tenant shall be deemed to have accepted such Annual Statement
and waived its right to dispute the Annual Statement or conduct an audit with
respect to the Annual Statement. Landlord’s records and any information provided
by Landlord to auditors pursuant to this Section, and the results of any such
audit, shall be kept confidential by Tenant and its auditors, and shall not be
made available by the auditors or Tenant to any other person or entity except to
Tenant’s parent or affiliates and outside legal and financial representatives
and except in any dispute resolution proceeding between the parties relating to
such audit. If requested by Landlord, Tenant and its auditor shall, prior to any
such audit, execute and deliver to Landlord a confidentiality agreement prepared
by Landlord, reasonably acceptable to Tenant. If the final audit discloses an
error in Landlord’s determination of the Reimbursable Operating Costs in excess
of five percent (5%) in Landlord’s favor (i.e. the Annual Statement overstated
Reimbursable Operating Costs by more than five percent (5%)), then all
reasonable out-of-pocket costs of the audits shall be borne by Landlord.

 

                                                                               
                                                                               
           

 

  D. Reimbursable Operating Costs:

For purposes of calculating Tenant’s Allocable Share of Building and Project
costs, the term “Reimbursable Operating Costs” is defined as all costs and
expenses which are incurred by Landlord in connection with ownership and
operation of the Building or the Project in which the Premises are located,
together with such additional facilities installed in the Project as may be
determined by Landlord to be reasonably desirable or necessary to the ownership
and operation of the Building and/or Project, except to the extent expressly
excluded from Reimbursable Operating Costs pursuant to this Section 9.D below.
All costs and expenses shall be determined in accordance with generally accepted
accounting principles which shall be consistently applied (with accruals
appropriate to Landlord’s business, but not in excess of eighteen (18) months).
Reimbursable Operating Costs shall include, but not be limited to, the following
to the extent the obligation therefor is not that of Tenant under the provisions
of Section 9.B above: (i) common area utilities, including water, power,
telephone, heating, lighting, air conditioning, ventilating, and Building
utilities to the extent not separately metered; (ii) common area maintenance and
service agreements for the Building and/or Project and the equipment therein,
including without limitation, common area janitorial services, alarm and
security services, exterior window cleaning, and maintenance of the sidewalks,
landscaping, waterscape, roof membrane, parking areas, driveways, service areas,
mechanical rooms, elevators, and the building exterior; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and, if elected by Landlord,
earthquake insurance applicable to the Building or Project (subject to the cost
limitations set forth in Section 10 below); (iv) repairs, replacements and
general maintenance (excluding repairs and general maintenance paid by proceeds
of insurance or by Tenant or other third parties other than as Reimbursable
Operating Costs, and repairs or alterations attributable solely to tenants of
the Building or Project other than Tenant); (v) all real estate taxes and
assessment installments or other impositions or charges which may be levied on

 

 

17

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the Building or Project, upon the occupancy of the Building or Project and
including any substitute or additional charges which may be imposed during, or
applicable to the Lease Term including real estate tax increases due to a sale,
transfer or other change of ownership of the Building or Project, as such taxes
are levied or appear on the City and County tax bills and assessment rolls;
(vi) costs of complying with Sustainability Requirements; (vii) deductibles
under insurance policies; (viii) capital expenditures, which shall be amortized
over their useful lives as reasonably determined by Landlord, together with
interest on the unpaid portion of such expenditure at the Agreed Interest Rate;
and (ix) any of items (i) through (vi) in Section 9.B above to the extent
Landlord has elected to assume with respect thereto the obligations for
cleaning, maintenance, repair and/or replacement. Landlord shall have no
obligation to provide guard services or other security measures for the benefit
of the Project. Tenant assumes all responsibility for the protection of Tenant
and Tenant’s Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project. This is a “Net” Lease, meaning that Base
Monthly Rent is paid to Landlord absolutely net of all costs and expenses,
except only those costs which this Lease expressly states shall be paid by
Landlord at Landlord’s sole cost or which are expressly excluded from
Reimbursable Operating Costs pursuant to this Section 9.B. The provision for
payment of Reimbursable Operating Costs by means of monthly payment of Tenant’s
Allocable Share of Building and/or Project Costs is intended to pass on to
Tenant and reimburse Landlord for all costs of operating and managing the
Building and/or Project, other than those costs which this Lease expressly
states shall be paid by Landlord at Landlord’s sole cost or which are expressly
excluded from Reimbursable Operating Costs pursuant to this Section 9.B . If
less than one hundred percent (100%) of the Building and other Project buildings
is leased at any time during the Lease Term, Landlord shall adjust Reimbursable
Operating Costs to equal Landlord’s reasonable estimate of what Reimbursable
Operating Costs would be had one

 

                                                                               
                                                                               
           

 

hundred percent (100%) of the Building and the other Project buildings been
leased.

Reimbursable Operating Costs shall exclude the following: (a) Costs occasioned
by the act, omission or violation of any law by Landlord, any other occupant of
the Project, or their respective agents, employees or contractors; (b) Costs to
correct any construction defect in the Premises, Building or the Project,
(provided that Tenant shall be solely responsible for correcting defects in
Alterations or any other correction of defects that becomes necessary due to any
Alterations); (c) Costs incurred in connection with negotiations or disputes
with any other occupant of the Project (other than Tenant’s Agents as to which
Tenant shall be solely responsible) and costs arising from the violation by
Landlord or any occupant of the Project (other than Tenant or Tenant’s Agents,
as to which Tenant shall be solely responsible) of the terms and conditions of
any lease or other agreement; (d) premiums for earthquake insurance in excess of
the cost limitations set forth in Section 10 below; (e) Costs incurred in
connection with the presence of any Hazardous Material; (f) interest, charges
and fees incurred on debt; (g) costs of repair and maintenance to be performed
at Landlord’s sole cost and expense as set forth in Section 9.A above;
(h) Landlord’s net income, inheritance, gift, transfer, or estate taxes;
(i) costs to correct any violation of any covenant, condition, restriction,
underwriter’s requirement or law applicable to the Premises or the Project on
the Commencement Date; (j) deductible amounts applicable to any earthquakes
insurance carried by Landlord; (k) any co-insurance payments; and (l) real
estate taxes or assessments: (1) in excess of the amount which would be payable
if such assessment expense were paid in installments over the longest possible
term, and (2) imposed on land or improvements other than the Project. Exclusion
of costs from Reimbursable Operating Costs shall not be construed to release
Tenant from the obligation to pay for such costs other than as Reimbursable
Operating Costs as expressly provided elsewhere in this Agreement (including but
not limited to the amortized cost of capital costs pursuant to Section 9.B above
and Tenant’s obligations relating to Hazardous Materials pursuant to Article 13
below).

 

 

18

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  E. Tenant’s Allocable Share:

For purposes of prorating Reimbursable Operating Costs which Tenant shall pay,
Tenant’s Allocable Share of Reimbursable Operating Costs shall be computed by
multiplying the Reimbursable Operating Costs by a fraction, the numerator of
which is the rentable square footage of that portion of the Premises as to which
the Lease Term has commenced and the denominator of which is either (i) the
total rentable square footage of the Building if the service or cost is
allocable only to the Building, or (ii) the total rentable square footage of the
buildings in the Project if the service or cost is allocable to the entire
Project, or (iii) the total rentable square footage of the premises of those
tenants or occupants of the Project that Landlord determines to be benefiting
from such service or facility. Tenant’s obligation to share in Reimbursable
Operating Costs shall be adjusted to reflect the Lease Commencement and
Expiration Dates and is subject to recalculation in the event of expansion or
contraction of the rentable square footage of the Building or Project.

 

  F. Waiver of Liability:

Failure by Landlord to perform any defined services, or any cessation thereof,
when such failure is caused by accident, breakage, repairs, strikes, lockout or
other labor disturbances or labor disputes of any character or by any other
cause, similar or dissimilar, shall not render Landlord liable to Tenant in any
respect, including damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery utilized in supplying the services listed herein break down or for any
cause cease to function properly, upon receipt of written notice from Tenant of
any deficiency or failure of any services, Landlord shall use reasonable
diligence to repair the same promptly, but Tenant shall have no right to
terminate this Lease and shall have no claim for rebate of rent or damages on
account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord’s obligation of

 

                                                                               
                                                                               
           

 

tenantability and Tenant’s right to make repairs and deduct the cost of such
repairs from the rent, and any similar Law now or hereafter in effect. Except
for Landlord’s willful misconduct, Landlord shall not be liable for a loss of or
injury to person or property, however occurring, through or in connection with
or incidental to furnishing, or its failure to furnish, any of the foregoing.

 

10. INSURANCE:

 

  A. Tenant’s Use:

Neither Tenant nor Tenant’s Agents shall use or permit the Premises, or any part
thereof, to be used for any purpose other than that for which the Premises are
hereby leased; and no use of the Premises by Tenant or Tenant’s Agents shall be
made or permitted, nor acts done, which will cause an increase in premiums
(unless such use is a Permitted Use and Tenant pays such increase) or a
cancellation of any insurance policy covering the Premises or any part thereof,
nor shall Tenant or Tenant’s Agents sell or permit to be sold, kept, or used in
or about the Premises, any article prohibited by the standard form of fire
insurance policies. Tenant shall, at its sole cost, comply with all requirements
of any insurance company or organization necessary for the maintenance of
reasonable fire and public liability insurance covering the Premises and
appurtenances.

 

  B. Landlord’s Insurance:

Landlord agrees to purchase and keep in force All Risk and fire insurance in an
amount equal to the replacement cost of the Building excluding any Tenant
Improvements and Alterations that are reasonably identified by Landlord in
writing to Tenant delivered at the time of Landlord’s approval thereof as not
typical or customary for office uses (“Specialized Tenant Improvements”),
provided that Landlord’s insurance may provide coverage to replace Specialized
Tenant Improvements or Alterations with improvements that are typical or
customary for office uses. In addition, Landlord may elect to purchase insurance
coverage for perils including earthquake, flood and/or terrorist acts, in
amounts and with deductibles reasonably determined by Landlord.

 

 

19

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Notwithstanding anything to the contrary in this Lease, Tenant shall not be
required to reimburse Landlord for the cost of premiums for earthquake insurance
carried with respect to the Building or the Project unless Tenant elects for
Landlord to purchase such insurance in accordance with this paragraph. Tenant
may require Landlord to purchase earthquake insurance for the Building or the
Project by delivering written notice of such election to Landlord at any time
during the Lease Term (the “EQ Insurance Notice”). Such EQ Insurance Notice
shall specify the amount, type, deductible (which deductible shall not be less
than five percent (5%), period of rental loss coverage (which shall provide for
a reasonable period of time for reconstruction, but a minimum of twelve
(12) months), term and other elements of coverage that Tenant requires Landlord
to purchase. Upon receipt of Tenant’s EQ Insurance Notice, Landlord shall
promptly obtain from Landlord’s portfolio insurance provider and deliver to
Tenant a quotation for the specified insurance. The coverage shall be mutually
agreed upon prior to binding. Upon receipt of such quotation from Landlord,
Tenant may elect to withdraw its request for earthquake insurance or approve the
quotation obtained by Landlord, and shall notify Landlord in writing of such
election, whereupon Landlord shall cause such insurance to be purchased. Tenant
shall be required to reimburse Landlord during the Lease Term as Additional Rent
on an annual basis for the premiums approved by Tenant as aforesaid. Landlord
shall notify Tenant in writing of the annual premium quotation for the renewal
of the earthquake insurance as soon as the same is received by Landlord (which
the parties anticipate will be approximately thirty (30) days prior to the
expiration of the existing coverage). Within five (5) business days of Tenant’s
receipt of such premium notice, Tenant shall advise Landlord in writing of
Tenant’s approval of such premium, in which event Landlord shall cause the
earthquake insurance to be renewed for the next year, or of Tenant’s disapproval
of such premium, in which event Landlord shall not renew such coverage. Tenant’s
rights to elect Landlord to obtain or terminate earthquake insurance pursuant to
this Paragraph shall be continuous through the Lease Term, as extended, but may
not be exercised more than once every twelve (12) months.

 

                                                                               
                                                                               
           

 

Landlord may also maintain a policy of (i) commercial general liability
insurance insuring Landlord (and such others designated by Landlord) against
liability for personal injury, bodily injury, death and damage to property
occurring or resulting from an occurrence in, on or about the Premises or
Project in an amount as Landlord determines is reasonably necessary for its
protection, and (ii) rental loss insurance covering a twelve (12) month period.
Tenant agrees to pay Landlord as additional rent, within ten (10) days after
written invoice to Tenant, Tenant’s Allocable Share of the amount of any
deductible under such policy (excluding any deductible under any earthquake
insurance), provided that if damage is confined to the Premises, Tenant shall
pay the entire deductible to Landlord. It is understood and agreed that Tenant’s
obligation under this Section 10.B will be prorated to reflect the Commencement
Date and Expiration Date.

 

  C. Tenant’s Insurance:

Tenant agrees, at its sole cost, to insure its personal property, trade fixtures
and Specialized Tenant Improvements against damage for their full replacement
value (without depreciation). Said insurance shall provide All Risk and fire
coverage equal to the replacement cost of said property. Tenant shall deliver a
copy of the policy and renewal certificate to Landlord. Tenant agrees, at its
sole cost, to obtain and maintain throughout the Lease Term Commercial General
Liability insurance for occurrences within the Project with a combined single
limit of not less than Five Million Dollars ($5,000,000.00) and worker’s
compensation insurance with a combined single limit of One Million Dollars
($1,000,000.00). Tenant’s liability insurance shall be primary insurance
containing a cross-liability endorsement, and shall provide coverage on an
“occurrence” rather than on a “claims made” basis. All such insurance shall
provide for severability of interests; shall provide that an act or omission of
one of the named or additional insureds shall not reduce or avoid coverage to
the other named or additional insureds. Tenant shall name Landlord and
Landlord’s lenders, property manager and any affiliates of Landlord that are
designated by Landlord from time to time as additional insureds

 

 

20

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on its liability policies and shall deliver a copy of the policies and renewal
certificates to Landlord. All insurance policies required under this
Section 10.C shall provide for thirty (30) days’ prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
Notwithstanding the above, Landlord retains the right to have Tenant provide
other forms of insurance which may be reasonably required (i.e., required by
other major landlords of comparable buildings in Santa Clara County) to cover
future risks, but not more than once every forty-eight (48) months.

 

  D. Waiver:

Except as expressly provided elsewhere in this Lease, Landlord and Tenant hereby
waive all tort, contract or other rights each may have against the other on
account of any loss or damage sustained by Landlord or Tenant, as the case may
be, or to the Premises or its contents, which may arise from any risk covered by
their respective insurance policies (or which would have been covered had such
insurance policies been maintained in accordance with this Lease) as set forth
above. The Parties shall each obtain from their respective insurance companies a
waiver of any right of subrogation which said insurance company may have against
Landlord or Tenant, as the case may be.

 

11. TAXES:

Tenant shall be liable for and shall pay as additional rent, prior to
delinquency, all taxes and assessments levied against Tenant’s personal property
and trade or business fixtures. All real estate taxes shall be prorated to
reflect the Commencement Date (as it relates to the Initial Space), the
Expansion Space Commencement Date (as it relates to the Expansion Space) and
Expiration Date. If, at any time during the Lease Term a tax, excise on rents,
business license tax or any other tax, however described, is levied or assessed
against Landlord as a substitute or addition, in whole or in part, for taxes
assessed or imposed on land or buildings, Tenant shall pay and discharge its pro
rata share of such tax or excise on rents or other tax before it becomes
delinquent; except that this provision is not intended to cover net income
taxes, inheritance,

 

                                                                               
                                                                               
           

 

gift or estate tax imposed upon Landlord. In the event that a tax is placed,
levied, or assessed against Landlord and the taxing authority takes the position
that Tenant cannot pay and discharge its pro rata share of such tax on behalf of
Landlord, then at Landlord’s sole election, Landlord may increase the Base
Monthly Rent by the exact amount of such tax and Tenant shall pay such increase.
If by virtue of any application or proceeding brought by Landlord, there results
a reduction in the assessed value of the Premises during the Lease Term, Tenant
agrees to pay Landlord a fee consistent with the fees charged by a third party
appeal firm for such services.

 

12. UTILITIES:

Tenant shall arrange for and pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises. Landlord
shall not be liable for loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing or the
utility company’s failure to furnish utilities to the Premises or any other
portion of the Project, and in such event Tenant shall not be entitled to
abatement or reduction of any portion of Base Monthly Rent or any other amount
payable under this Lease and the continued effectiveness of this Lease shall not
be affected thereby. Tenant acknowledges that the Premises, the Building and/or
the Project may become subject to the rationing of utility services or
restrictions on utility use as required by a public utility company,
governmental agency or other similar entity having jurisdiction thereof. Tenant
acknowledges and agrees that its tenancy and occupancy hereunder shall be
subject to such rationing or restrictions as may be imposed upon Landlord,
Tenant, the Premises, the Building and/or the Project, and Tenant shall in no
event be excused or relieved from any covenant or obligation to be kept or
performed by Tenant by reason of any such rationing or restrictions.

 

13. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

 

  A. Use of Hazardous Materials:

Without the prior written consent of Landlord, neither Tenant, nor any subtenant
of

 

 

21

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the Premises (of any tier in the chain of title) or any of Tenant’s or such
subtenant’s agents, employees, representatives, affiliates, architects,
contractors (including without limitation subcontractors of all tiers),
suppliers, vendors, subtenants, licensees or invitees (collectively “Tenant’s
Agents”), shall cause or permit any Hazardous Materials, as defined below, to be
generated, brought onto, used, stored, created, released or disposed of in or
about the Premises or Project, except that Tenant may use and store small
quantities of common household cleaners and office supplies on the Premises
provided such use and storage is in strict compliance with all Environmental
Laws, as defined below. As used herein, the term “Hazardous Materials” shall
mean any and all substances, materials or wastes (whether liquid, solid or
gaseous), which are a pollutant or contaminant, or which are hazardous, toxic,
ignitable, reactive, corrosive, dangerous, harmful or injurious, or which
present a risk to public health or the environment, or which are or may become
regulated by or under the authority of any Environmental Laws, as defined below,
including, without limitation, asbestos or asbestos containing materials,
petroleum products, pesticides, polychlorinated biphenyls, flammable explosives,
radioactive materials and urea formaldehyde. As used herein, the term
“Environmental Laws” shall mean any present or future federal, state or local
Laws, whether common law, statute, rule, regulation or ordinance, judgment,
order, or other governmental restriction, guideline, listing or requirement,
relating to the environment or any Hazardous Materials, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. §9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. §6901 et seq., and applicable provisions of the
California Health and Safety Code and the California Water Code, all as
heretofore or hereafter may be amended from time to time. In order to obtain
consent, Tenant shall deliver to Landlord its written proposal describing the
Hazardous Materials to be brought onto the Premises, measures to be taken for
storage and disposal thereof, and safety measures to be employed to prevent
pollution or contamination of the air, soil, surface and ground water.
Landlord’s approval may be withheld in its

 

                                                                               
                                                                               
           

 

reasonable judgment. Without diminishing Tenant’s obligation to obtain
Landlord’s consent to Tenant’s use of Hazardous Materials on the Premises where
this Lease requires such consent, Tenant represents and warrants that it shall
comply with all Governmental Regulations applicable to Hazardous Materials
including doing the following: (i) adhere to all reporting and inspection
requirements imposed by Federal, State, County or Municipal Laws and provide
Landlord a copy of any such reports or agency inspections; (ii) obtain and
provide Landlord copies of all necessary permits required for the use and
handling of Hazardous Materials on the Premises; (iii) enforce Hazardous
Materials handling and disposal practices consistent with industry standards;
(iv) surrender the Premises and Project free from any and all Hazardous
Materials generated, brought, used, stored, created, released, or disposed of
(collectively and individually, “Released”) by Tenant or Tenant’s Agents or by
anyone else (other than Landlord or Landlord’s agents, employees or contractors)
coming onto the Premises; and (v) if required in connection with Hazardous
Materials Released by Tenant or Tenant’s Agents, properly close the facility
with regard to Hazardous Materials including the removal or decontamination of
any process piping, mechanical ducting, storage tanks, containers, or trenches
which have come into contact with Hazardous Materials and obtaining a closure
certificate from the local administering agency prior to the Expiration Date or
sooner termination of this Lease.

 

  B. Tenant’s Indemnity Regarding Hazardous Materials:

Tenant shall, at its sole cost and expense and with counsel reasonably
acceptable to Landlord, indemnify, defend and hold harmless Landlord and the
Landlord Related Parties from and against any and all claims, liabilities,
obligations, penalties, fines, actions, losses, damages, costs or expenses
(including without limitation reasonable attorneys fees) incurred or suffered
arising from generating, bringing, using, storing, creating, releasing or
disposing of Hazardous Materials in or about the Premises or Project by Tenant
or Tenant’s Agents, or by anyone else coming onto the Premises (other than
Landlord or Landlord’s agents, employees and contractors), or the

 

 

22

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violation of any Governmental Regulation or Environmental Laws by Tenant or
Tenant’s Agents or by anyone else coming onto the Premises (other than Landlord
or Landlord’s agents, employees or contractors). This indemnification, defense
and hold harmless obligation applies whether or not the concentrations of any
such Hazardous Materials exceed applicable maximum contaminant or action levels
or any governmental agency has issued a cleanup order. Tenant’s indemnification,
defense, and hold harmless obligations include, without limitation, the
following: (i) claims, liabilities, costs or expenses resulting from or based
upon administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under present or future Laws,
including Environmental Laws; (ii) claims, liabilities, costs or expenses
pertaining to the assessment and identification, monitoring, cleanup,
containment, or removal of Hazardous Materials from soils, riverbeds or aquifers
including the provision of an alternative public drinking water source;
(iii) losses attributable to diminution in the value of the Premises, Building
or Project as a result of any generation, bringing upon, use, storage, creation,
release or disposal of (collectively and individually, a “Release”) Hazardous
Materials in or about the Premises or Project by Tenant or Tenant’s Agents;
(iv) loss or restriction of use of rentable space in the Building or Project as
a result of any Release of Hazardous Materials in or about the Premises or
Project by Tenant or Tenant’s Agents; (v) adverse effect on the marketing of any
space in the Building or Project; and (vi) all other liabilities, obligations,
penalties, fines, claims, actions (including remedial or enforcement actions of
any kind and administrative or judicial proceedings, orders or judgments),
damages (including consequential and punitive damages), and costs (including
attorney, consultant, and expert fees and expenses) resulting from the release
or violation. This Section 13.B shall survive the expiration or termination of
this Lease.

 

  C. Notice of Release or Violation:

If, during the Lease Term (including any extensions), Tenant becomes aware of
(i) any actual or threatened release of any Hazardous

 

                                                                               
                                                                               
           

 

Materials on, under or about the Premises or Project or (ii) any inquiry,
investigation, proceeding, claim, notice or order by any private or public
person or entity regarding the presence of Hazardous Materials on, under or
about the Premises or Project, including without limitation alleged violations
of Environmental Laws by Tenant or Tenant’s Agents, Tenant shall give Landlord
written notice of the release or investigation within five (5) days after
learning of it and shall simultaneously and thereafter furnish Landlord with
copies of any claims, notices of violation, reports, or other writings received
by Tenant concerning the release or investigation. In the event of an actual
release of Hazardous Materials, Tenant shall also give Landlord immediate verbal
notice of such release. In the event of any release on or into the Premises or
any portion of the Project or into the soil or ground water under the Premises,
the Building or the Project of any Hazardous Materials used, treated, stored or
disposed of by Tenant or Tenant’s Agents or by anyone else (other than Landlord
or Landlord’s agents, employees or contractors) coming onto the Premises, Tenant
agrees to comply, at its sole cost, with all laws, regulations, ordinances and
orders of any federal, state or local agency relating to the monitoring or
remediation of such Hazardous Materials. In the event of any such release of
Hazardous Materials Tenant shall immediately give verbal and follow-up written
notice of the release to Landlord, and Tenant agrees to meet and confer with
Landlord and any lender designated by Landlord to attempt to eliminate and
mitigate any financial exposure to such lender and resultant exposure to
Landlord under California Code of Civil Procedure Section 736(b) as a result of
such release, and promptly to take reasonable monitoring, cleanup and remedial
steps given, inter alia, the historical uses to which the Project has and
continues to be used, the risks to public health posed by the release, the then
available technology and the costs of remediation, cleanup and monitoring,
consistent with acceptable customary practices for the type and severity of such
contamination and all applicable Laws. Nothing in the preceding sentence shall
eliminate, modify or reduce the obligation of Tenant under Section 13.B of this
Lease to indemnify, defend and hold Landlord and the Landlord Related Parties
harmless. Tenant shall provide Landlord prompt written notice of

 

 

23

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Tenant’s monitoring, cleanup and remedial steps. In the absence of an order of
any federal, state or local governmental or quasi-governmental agency relating
to the cleanup, remediation or other response action required by applicable law,
any dispute arising between Landlord and Tenant concerning Tenant’s obligation
to Landlord under this Section 13.C concerning the level, method, and manner of
cleanup, remediation or response action required in connection with such a
release of Hazardous Materials shall be resolved by mediation and/or arbitration
pursuant to this Lease.

 

  D. Remediation Obligations:

In the event of any release on, under or about the Premises or the Project of
any Hazardous Materials generated, brought onto, used, stored, created or
disposed of by Tenant or Tenant’s Agents or by anyone else (other than Landlord
or Landlord’s agents, employees or contractors) coming onto the Premises, Tenant
shall, at its sole cost, promptly take all necessary and appropriate actions, in
compliance with applicable Environmental Laws, to remove or remediate such
Hazardous Materials, whether or not any governmental agency has issued a cleanup
order, so as to return the Premises and Project to the condition that existed
before the introduction of such Hazardous Materials. Tenant shall obtain
Landlord’s written consent prior to implementing any proposed removal or
remedial action, provided, however, that Tenant shall be entitled to respond
immediately to an emergency without first obtaining Landlord’s written consent.
Nothing in the preceding sentence shall in any way eliminate, modify or reduce
the obligation of Tenant under 13.B of this Lease to indemnify, defend and hold
Landlord and the Landlord Related Parties harmless.

 

  E. Environmental Monitoring:

Landlord and its agents and consultants shall have the right to inspect,
investigate, sample and monitor the Premises, including any air, soil, water,
ground water, or to conduct any other sampling or testing, digging, drilling or
analysis, to determine whether Tenant is complying with the terms of this
Section 13. The costs incurred by Landlord in performing the work described in

 

                                                                               
                                                                               
           

 

the next sentence shall be at Landlord’s sole cost, unless Landlord discovers
that Tenant is not in compliance with the terms of this Section 13. If Landlord
discovers that Tenant is not in compliance with the terms of this Section 13,
the costs incurred by Landlord in determining Tenant’s non compliance, including
attorneys’, consultants’ and experts’ fees, shall be due and payable by Tenant
to Landlord within five (5) days following Landlord’s written demand therefor.

To the actual knowledge of John M. Sobrato, except as disclosed by that certain
Summary of Environmental Evaluation – 4301, 4401 and 4451 Great America Parkway
– Santa Clara, California, dated December 7, 2007, and prepared by PES
Environmental, Inc., (a) no Hazardous Material is present in, on or under the
Building or the Project or the soil, surface water or groundwater thereof,
(b) no underground storage tanks are present on the Project, and (c) no action,
proceeding or claim is pending or threatened regarding the Building or the
Project concerning any Hazardous Material or pursuant to any Environmental Law.
Under no circumstance shall Tenant be liable to Landlord for, and Landlord shall
not require Tenant to remove or remediate (or pay for the cost thereof), any
Hazardous Material that are present as of the Delivery Date or that have
migrated to or under the Building or the Project from off-site sources.

If, during the course of construction of the Tenant Improvements, Tenant
discovers any Hazardous Materials which were present in the Building as of the
Delivery Date, Tenant shall give written notice of the existence of such
Hazardous Materials to Landlord promptly upon discovery, and Landlord shall
promptly take all necessary and appropriate actions, in compliance with
applicable Environmental Laws, to remove or remediate such Hazardous Materials,
and shall use its best efforts to cause such removal or remediation actions to
be completed with the least possible interference with, or delay in, Tenant’s
construction of the Tenant Improvements.

 

 

24

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14. TENANT’S DEFAULT

 

  A. Events of Default

The occurrence of any of the following shall constitute a material default and
breach of this Lease by Tenant (each, an “Event of Default” or “event of
default”): (i) Tenant’s failure to pay the Base Monthly Rent or any other
payment due under this Lease (including additional rent) by the date such amount
is due, excepting the first failure to pay in any twelve (12) month period
provided such first failure is cured within three (3) business days after
receipt of written notice; (ii) [intentionally deleted]; (iii) Tenant’s failure
to observe and perform any other required provision of this Lease, where such
failure continues for thirty (30) days after written notice from Landlord,
provided, however, that if the nature of the default is such that it cannot
reasonably be cured within such thirty (30) day period, Tenant shall not be
deemed in default if it commences within such period to cure, and thereafter
diligently prosecutes the same to completion not later than one hundred twenty
(120) days after such written notice is delivered to Tenant, except however that
if this Lease expressly provides that no notice or cure is required for a breach
or default to exist then such thirty (30) day notice and cure periods described
above shall not apply; (iv) Tenant’s making of any general assignment for the
benefit of creditors; (v) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or of a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed within thirty (30) days after the filing);
(vi) the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; (vii) the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where such seizure is not discharged within thirty
(30) days; (viii) an event of default of the tenant under the Building A Lease,
or a default of the tenant under any lease of any portion of 4551 GAP entered
into pursuant to Section 19.E below, without the necessity for additional notice
or cure

 

                                                                               
                                                                               
           

 

under this Lease, or (viii) the occurrence (beyond any applicable notice and
cure periods) of any other event described as a default elsewhere in this Lease
or any amendment thereto regardless of whether such event is defined as a
material default and breach of this Lease in this Section 14.

 

  B. Remedies:

In the event of any default by Tenant beyond applicable notice and cure periods,
then in addition to other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event Landlord elects to so terminate this Lease, Landlord may recover from
Tenant all the following: (i) the worth at time of award of any unpaid rent
which had been earned at the time of such termination; (ii) the worth at time of
award of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss for
the same period that Tenant proves could have been reasonably avoided; (iii) the
worth at time of award of the amount by which the unpaid rent for the balance of
the Lease Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; (iv) any other amount necessary
to compensate Landlord for all detriment proximately caused by Tenant’s failure
to perform its obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; including the following:
(x) expenses for repairing, altering or remodeling the Premises for purposes of
reletting, (y) broker’s fees, advertising costs or other expenses of reletting
the Premises, and (z) costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord’s election,
such other amounts in addition to or in lieu of the foregoing as may be
permitted by applicable California law. The term “rent”, as used in this Lease,
is defined as the minimum monthly installments of Base Monthly Rent and all
other sums required to be paid by Tenant pursuant to this Lease, all such other
sums being deemed as additional rent due hereunder. As used in (i) and
(ii) above, “worth at the time of

 

 

25

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award” shall be computed by allowing interest at a rate equal to the greater of
the following (the “Agreed Interest Rate”) (i) the discount rate of the Federal
Reserve Bank of San Francisco plus five (5%) percent per annum, as of the
twenty-fifty (25th) day of the month immediately preceding Tenant’s default, on
advances to member banks under Section 13 and 13(a) of the Federal Reserve Act,
as now in effect or hereafter from time to time amended, or (ii) ten percent
(10%) per annum. As used in (iii) above, “worth at the time of award” shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent. Furthermore,
in the event of a default as described in clause (iv), (v), (vi) or (vii) in
Section 14.A above, Landlord reserves the right to compensation for all damages
and costs incurred by Landlord as a result of Tenant’s default, including
without limitation those based upon a tort claim or contractual claim, and
without any cap other than that imposed by the United States Bankruptcy Code (as
amended, and as interpreted by case law, the “Code”) with respect to rent, as
defined in the Code. Tenant hereby waives the protection of any limitation in
the Code imposed upon such damages to the extent such waiver is enforceable
under the Code, and Tenant hereby agrees that the Security Deposit may be
retained by Landlord for purposes of compensation for any and all tort or
contractual or other claims by Landlord against Tenant. Any obligation Landlord
may have to mitigate damages upon a termination due to Tenant’s default shall
not include the obligation to relet the Premises if Landlord has other
comparable available space within the Building or Project.

 

  C. Right to Re-enter:

In the event of any such default by Tenant, Landlord shall have the right, after
terminating this Lease, to re-enter the Premises and remove all persons and
property in accordance with applicable law. Such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant, and disposed of by Landlord, in any manner permitted by law.

 

                                                                               
                                                                               
           

 

  D. Continuation of Lease:

If Landlord does not elect to terminate this Lease as provided in Section 14.B
above, then the provisions of California Civil Code Section 1951.4, (Landlord
may continue the Lease in effect after Tenant’s breach and abandonment and
recover rent as it becomes due if Tenant has a right to sublet and assign,
subject only to reasonable limitations) as amended from time to time, shall
apply, this Lease shall continue in effect, and Landlord may enforce all of its
rights and remedies under this Lease, including without limitation, the right to
recover payment of rent as it becomes due.

 

  E. No Termination:

Neither efforts by Landlord to mitigate damages caused by a breach or default of
Tenant, nor acts of maintenance or preservation or efforts to relet the Premises
shall constitute an election by Landlord to terminate the Lease or a termination
of Tenant’s right to possession of the Premises.

 

  F. Non-Waiver:

Landlord may accept Tenant’s payments without waiving any rights under this
Lease, including rights under a previously served notice of default, except with
respect to the payment accepted. No payment by Tenant or receipt by Landlord of
a lesser amount than any installment of rent due shall be deemed as other than
payment on account of the amount due. If Landlord accepts payments after serving
a notice of default, Landlord may nevertheless commence and pursue an action to
enforce rights and remedies under the previously served notice of default as to
payments not accepted or performance not completed without giving Tenant any
further notice or demand. Furthermore, the Landlord’s acceptance of rent from
the Tenant when the Tenant is holding over without express written consent does
not convert Tenant’s tenancy from a tenancy at sufferance to a month to month
tenancy. No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy for the violation of that provision,
even if that violation continues or is repeated. Any waiver by Landlord of any
provision of this Lease

 

 

26

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must be in writing. Such waiver shall affect only the provision specified and
only for the time and in the manner stated in the writing. No delay or omission
in the exercise of any right or remedy by Landlord shall impair such right or
remedy or be construed as a waiver thereof by Landlord. No act or conduct of
Landlord, including, without limitation, the acceptance of keys to the Premises,
shall constitute acceptance of the surrender of the Premises by Tenant before
the Expiration Date. Only written notice from Landlord to Tenant of acceptance
shall constitute such acceptance of surrender of the Premises. Landlord’s
consent to or approval of any act by Tenant which requires Landlord’s consent or
approvals shall not be deemed to waive or render unnecessary Landlord’s consent
to or approval of any subsequent act by Tenant. The voluntary or other surrender
of this Lease by Tenant, or a mutual cancellation thereof, shall not work a
merger and shall, at the option of Landlord, terminate all or any existing
subleases or subtenants, or may, at the option of Landlord, operate as an
assignment to Landlord of any or all such subleases or subtenants

 

  G. Performance by Landlord:

If Tenant fails to perform any obligation required under this Lease or by Laws
beyond applicable notice and cure periods, Landlord in its sole and absolute
discretion may, without notice, without waiving any rights or remedies and
without releasing Tenant from its obligations hereunder, perform such
obligation, in which event Tenant shall pay Landlord as additional rent all sums
paid by Landlord in connection with such substitute performance, including
interest at the Agreed Interest Rate within ten (10) days of Landlord’s written
notice for such payment.

 

  H. Habitual Default:

The provisions of Section 14 notwithstanding, the Parties agree that if Tenant
shall have defaulted beyond applicable notice and cure periods in the payment of
Base Monthly Rent or any scheduled payment of Reimbursable Operating Costs for
three (3) or more times during any twelve (12) month period during the Lease
Term, then such conduct shall, at the election of the Landlord, represent a
separate

 

                                                                               
                                                                               
           

 

event of default which cannot be cured by Tenant. Tenant acknowledges that the
purpose of this provision is to prevent repetitive defaults by Tenant, which
work a hardship upon Landlord and deprive Landlord of Tenant’s timely
performance under this Lease.

 

15. LANDLORD’S LIABILITY:

 

  A. Limitation on Landlord’s Liability:

In the event of Landlord’s failure to perform any of its covenants or agreements
under this Lease, Tenant shall give Landlord written notice of such failure and
shall give Landlord thirty (30) days to cure or commence to cure such failure
prior to any claim for breach or resultant damages, provided, however, that if
the nature of the default is such that it cannot reasonably be cured within the
30-day period, Landlord shall not be deemed in default if it commences within
such period to cure, and thereafter diligently prosecutes the same to
completion. In addition, upon any such failure by Landlord, Tenant shall give
notice by registered or certified mail to any person or entity with a security
interest in the Premises (“Mortgagee”) that has provided Tenant with notice of
its interest in the Premises, and shall provide Mortgagee a reasonable
opportunity to cure such failure, including such time to obtain possession of
the Premises by power of sale or judicial foreclosure, if such should prove
necessary to effectuate a cure. Tenant agrees that each of the Mortgagees to
whom this Lease has been assigned is an express third-party beneficiary hereof.
Tenant waives any right under California Civil Code Section 1950.7 or any other
present or future law to the collection of any payment or deposit from Mortgagee
or any purchaser at a foreclosure sale of Mortgagee’s interest unless Mortgagee
or such purchaser shall have actually received and not refunded the applicable
payment or deposit. Tenant further waives any right to terminate this Lease and
to vacate the Premises on Landlord’s default under this Lease. Tenant’s sole
remedy on Landlord’s default is an action for damages or injunctive or
declaratory relief; provided, however, Landlord and the Landlord Related Parties
shall not be liable to Tenant for any consequential damages suffered or incurred
by Tenant on account of Landlord’s default including, without limitation,

 

 

27

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on account of lost profits or the interruption of Tenant’s business. Tenant
hereby agrees that Landlord shall not be liable for injury to Tenant’s business
or any loss of income therefrom or for damage to the goods, wares, merchandise,
or other property of Tenant, Tenant’s employees, invitees, customers, or any
other person in or about the Premises or the Project, nor shall Landlord be
liable for injury to the person of Tenant, Tenant’s employees, agents,
contractors, or any other person in or about the Premises or Project, whether
such damage or injury is caused by or results from fire, steam, electricity,
gas, water, or rain, or from the breakage, leakage, obstruction, or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning, or
lighting fixtures, or from any other cause, whether said damage or injury
results from conditions arising upon the Premises or upon other portions of the
Project or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant, occupant, or user of the Project, nor from the
failure of Landlord to enforce the provisions of any other lease of the Project.

 

  B. Limitation on Tenant’s Recourse:

If Landlord is a corporation, trust, partnership, joint venture, unincorporated
association or other form of business entity, then the obligations of Landlord
shall not constitute personal obligations of the Landlord Related Parties.
Tenant shall have recourse only to the interest of Landlord in the Premises
(including without limitation, the proceeds from the sale and rental thereof)
for the satisfaction of the obligations of Landlord and shall not have recourse
to any other assets of Landlord for the satisfaction of such obligations.

 

  C. Indemnification of Landlord:

As a material part of the consideration rendered to Landlord, Tenant hereby
waives all claims against Landlord for damages to goods, wares and merchandise,
and all other personal property in, upon or about said Premises and for injuries
to persons in or about said Premises or

 

                                                                               
                                                                               
           

 

Project, from any cause arising at any time to the fullest extent permitted by
law, and, except to the extent due to the negligence or willful misconduct of
Landlord, or a Landlord default of one of its material performance obligations
under this Lease, Tenant shall indemnify, defend with counsel reasonably
acceptable to Landlord and hold Landlord and the Landlord Related Parties
harmless from and against all claims, liabilities, obligations, penalties,
fines, actions, losses, damages, costs or expenses (including without limitation
reasonable attorneys fees) incurred or suffered arising from the use or
occupancy of the Premises or any part of the Project by Tenant or Tenant’s
Agents, the acts or omissions of Tenant or Tenant’s Agents, Tenant’s breach of
this Lease, or any damage or injury to person or property from any cause,
including but not limited to the use or occupancy of the Premises or any part of
the Project by Tenant or Tenant’s Agents, the acts or omissions of Tenant or
Tenant’s Agents, Tenant’s breach of this Lease or from the failure of Tenant to
keep the Premises in good condition and repair as herein provided. Further, in
the event Landlord is made party to any litigation due to the acts or omission
of Tenant or Tenant’s Agents, Tenant shall indemnify, defend (with counsel
reasonably acceptable to Landlord) and hold Landlord and the Landlord Related
Parties harmless from and against all claims, liabilities, obligations,
penalties, fines, actions, losses, damages, costs or expenses (including without
limitation reasonable attorneys fees) incurred in connection with such
litigation. Notwithstanding anything to the contrary in this Lease, Landlord
shall not be indemnified from losses, damages, liabilities, claims, attorneys’
fees, costs and expenses to the extent arising from the negligence or willful
misconduct of Landlord or that of Landlord’s agents, employees or contractors in
connection with Landlord’s activities on or about the Premises or the Project,
or Landlord’s material default under this Lease.

 

16. DESTRUCTION OF PREMISES:

 

  A. Landlord’s Obligation to Restore:

In the event of damage or destruction of the Premises during the Lease Term
Landlord, and Tenant to the extent of its Specialized Tenant

 

 

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Improvements, shall repair the same to a similar condition to that which existed
prior to such damage or destruction. Such damage or destruction shall not annul
or void this Lease; however, Tenant shall be entitled to a proportionate
reduction of Base Monthly Rent while repairs are being made, such proportionate
reduction to be based upon the extent to which the repairs interfere with
Tenant’s business in the Premises, as reasonably determined by Landlord, and
shall not apply to any portion of the Premises which Tenant had vacated for more
than ninety (90) days prior to such damage or destruction. In no event shall
Landlord be required to replace or restore Specialized Tenant Improvements or
Tenant’s trade fixtures or personal property. If the Premises are damaged or
destroyed and Landlord does not elect to terminate the Lease or is not entitled
to terminate the Lease pursuant to its terms, then Tenant shall have the option
to terminate the Lease if the Premises cannot be fully restored by Landlord in
three hundred sixty (360) days from the date of the damage, or are not in fact,
fully restored by Landlord to their prior condition within three hundred sixty
(360) days after the damage.

 

  B. Limitations on Landlord’s Restoration Obligation:

Notwithstanding the provisions of Section 6.A above, Landlord shall have no
obligation to repair or restore the Premises and Tenant shall have no obligation
to repair or restore any Specialized Tenant Improvements if any of the following
occur: (i) if Landlord estimates the Premises cannot be fully restored in three
hundred sixty (360) days from the date of the damage, as reasonably determined
by Landlord, (ii) if the holder of the first deed of trust or mortgage
encumbering the Building elects not to permit the insurance proceeds payable
upon damage or destruction to be used for such repair or restoration, (iii) the
damage or destruction is not fully covered by the insurance maintained by
Landlord, (iv) the damage or destruction occurs in the last twenty four
(24) months of the Lease Term and Tenant has not elected to exercise its Option
pursuant to Section 19.A hereof, or (v) an event of default has occurred and is
continuing; provided, however, that, if Landlord seeks to terminate this Lease

 

                                                                               
                                                                               
           

 

pursuant to the foregoing clauses (ii) or (iii), then Landlord shall not be
entitled to so terminate this Lease unless the shortfall in insurance proceeds
exceeds five percent (5%) of the replacement value of the Building, and, in such
event, Tenant fails to agree to fund any such shortfall in excess of five
percent (5%) of the replacement value of the Building. In any such event
Landlord may elect either to (i) complete the repair or restoration, or
(ii) terminate this Lease by providing Tenant written notice of its election
within sixty (60) days following the damage or destruction. If Landlord elects
to repair or restore, this Lease shall continue in full force and effect. Tenant
hereby waives the benefits and rights provided to Tenant by the provisions of
Civil Code Sections 1932 and 1933, or any similar Law now or hereafter in
effect.

 

17. CONDEMNATION:

If any part of the Premises shall be taken for any public or quasi-public use,
under any statute or by right of eminent domain or private purchase in lieu
thereof, and only a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part so taken, terminate as of the day
before title vests in the condemnor or purchaser (“Vesting Date”) and Base
Monthly Rent payable hereunder shall be adjusted so that Tenant is required to
pay for the remainder of the Lease Term only such portion of Base Monthly Rent
as the value of the part remaining after such taking bears to the value of the
entire Premises prior to such taking, as reasonably determined by Landlord.
Further, in the event of such partial taking, Landlord shall have the option to
terminate this Lease as of the Vesting Date. If all of the Premises or such part
thereof be taken so that there does not remain a portion susceptible for
occupation hereunder, this Lease shall terminate on the Vesting Date. If part or
all of the Premises be taken, all compensation awarded upon such taking shall go
to Landlord, and Tenant shall have no claim thereto; except Landlord shall
cooperate with Tenant, without cost to Landlord, to recover compensation for the
unamortized cost of any Specialized Tenant Improvements and Alterations, or for
Tenant’s moving costs. Tenant hereby waives the provisions of California Code of
Civil Procedures Section 1265.130 and any similar Law now or

 

 

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hereafter in effect, and the provisions of this Section 17 shall govern in the
case of a taking.

 

18. ASSIGNMENT OR SUBLEASE:

 

  A. Consent by Landlord:

Except as specifically provided in Section 18.E below, Tenant may not
voluntarily, involuntarily or by operation of law, assign, sell or otherwise
transfer all or any part of Tenant’s interest in this Lease or in the Premises,
cause or permit any part of the Premises to be sublet, occupied or used by
anyone other than Tenant, or permit any person to succeed to any interest in
this Lease or the Premises (all of the foregoing being a “Transfer”) without the
express written consent of Landlord. In the event Tenant desires to effectuate a
Transfer, Tenant shall deliver to Landlord (i) executed counterparts of any
agreement and of all ancillary agreements with the proposed transferee,
(ii) current financial statements of the transferee covering the preceding three
(3) years, (iii) the nature of the proposed transferee’s business to be carried
on in the Premises, (iv) a statement outlining all consideration to be given on
account of the Transfer, and (v) a current financial statement of Tenant (or the
most recent publicly available current financial statement, if Tenant is a
public company). Landlord may condition its approval of any Transfer on receipt
of a certification from both Tenant and the proposed transferee of all
consideration to be paid to Tenant in connection with such Transfer. At
Landlord’s request, Tenant shall also provide additional information reasonably
required by Landlord to determine whether it will consent to the proposed
Transfer. Landlord shall have a fifteen (15) day period following receipt of all
the foregoing within which to notify Tenant in writing that Landlord elects to:
(i) permit Tenant to Transfer such space to the named transferee on the terms
and conditions set forth in the notice; or (ii) refuse consent. If Landlord
should fail to notify Tenant in writing of such election within the 15-day
period, Landlord shall be deemed to have elected option (ii) of the prior
sentence immediately above. Landlord’s consent to the proposed Transfer shall
not be unreasonably withheld, conditioned or delayed, provided and upon the
condition that: (i) the proposed transferee is

 

                                                                               
                                                                               
           

 

engaged in a business that is limited to the use expressly permitted under this
Lease; (ii) the proposed transferee is a company with sufficient financial worth
and management ability to undertake the financial obligation of the proposed
Transfer and Landlord has been furnished with reasonable proof thereof;
(iii) the proposed transfer agreement, if it is a sublease, conforms to the
requirements of Section 18.I below or if it is an assignment, is in a form
reasonably satisfactory to Landlord; (iv) the proposed Transfer will not result
in there being greater than eight (8) subtenants or other occupants (not
including employees) within the Premises at any time during the Lease Term;
(v) Tenant pays to Landlord on demand the amount of Two Thousand Five Hundred
Dollars ($2,500) in full reimbursement to Landlord for costs and time incurred
by Landlord in evaluating Tenant’s requested Transfer; and (vi) Tenant shall not
have advertised or publicized in any way the availability of the Premises
without prior notice to Landlord. Without otherwise limiting the criteria upon
which Landlord may withhold its consent, Landlord shall be deemed reasonable in
withholding its consent if it does so for any of the following reasons: (i) the
proposed subtenant or assignee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed subtenant or assignee, either (1) occupies space in the Project at the
time of the request for consent, or (2) is negotiating with Landlord or has
negotiated with Landlord during the six (6) month period immediately preceding
the date Landlord receives Tenant’s request for consent, to lease space in the
Project; or (ii) any one or more of the requirements described in (i) through
(vi) of the prior sentence has not been met. In the event all or any one of the
foregoing conditions are not satisfied (without limiting other factors that may
be considered or conditions that may be imposed by Landlord in connection with a
requested Transfer), Landlord shall be considered to have acted reasonably if it
withholds its consent. Tenant shall not hypothecate, mortgage, pledge or
otherwise encumber Tenant’s interest in this Lease or the Premises or otherwise
use the Lease as a security device in any manner without the consent of
Landlord, (all of the foregoing being an “Hypothecation”) which consent Landlord
may withhold in its sole and absolute discretion.

 

 

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Tenant shall reimburse Landlord on demand for any costs that may be incurred by
Landlord in connection with an Hypothecation, including legal costs incurred in
connection with the granting or denial of any requested consent. Landlord’s
consent to one or more Transfers or Hypothecations shall not operate to waive
Tenant’s obligation to obtain Landlord’s consent to other Transfers or
Hypothecations nor constitute consent to an assignment or other Transfer
following foreclosure of any permitted lien, mortgage or other encumbrance. If
Tenant is a corporation, limited liability company, unincorporated association,
partnership or other legal entity, the sale, assignment, cancellation,
surrender, exchange, conversion or any other transfer or hypothecation of any
stock, membership or other ownership interest in such entity (whether occurring
at one time or over a period of time) in the aggregate of more than fifty
percent (50%) (determined cumulatively) shall be deemed a Transfer; in the case
of a partnership, any withdrawal or substitution (whether occurring at one time
or over a period of time) of any partners owning fifty percent (50%) or more
(cumulatively) of the partnership, or the dissolution of the partnership shall
be deemed a Transfer; provided that, subject to Section 18.D below the foregoing
provisions of this sentence shall not apply to a transfer of stock in a
corporation whose stock is listed on a public stock exchange. If Tenant is an
entity, any sale of all or substantially all of its assets shall be deemed an
assignment of this Lease. If Tenant is a corporation whose stock is not listed
on a public stock exchange, any dissolution, merger, consolidation or
reorganization of Tenant shall be deemed a Transfer. Tenant acknowledges and
agrees that the provision of this Section 18 are not unreasonable standards or
conditions for purposes of Section 1951.4 of the California Civil Code, as
amended from time to time, under bankruptcy laws, or for any other purpose.

 

  B. Assignment or Subletting Consideration:

Landlord and Tenant hereby agree that fifty percent (50%) of any rent or other
economic consideration (including without limitation, payments for trade
fixtures and personal property in excess of the fair market value thereof,
stock,

 

                                                                               
                                                                               
           

 

warrants, and options) in excess of the Base Monthly Rent payable hereunder
(after deducting therefrom Reasonable Transfer Costs (defined below)) (i) paid
to Tenant in connection with any Transfer by Tenant, and/or (ii) paid to a
subtenant or any other person or entity (other than Tenant) (any such subtenant,
person or entity being a “Subsequent Transferor”) in connection with a sublease,
assignment or other Transfer by such Subsequent Transferor, and actually
received by Tenant (with Tenant having the obligation to make reasonable efforts
to collect such amounts) shall be paid by Tenant to Landlord promptly after such
amounts are paid to Tenant, regardless of the amount of subrent the Subsequent
Transferor pays to Tenant or any prior Subsequent Transferor. As used in this
Section 18.B, “Reasonable Transfer Costs” shall mean the following costs, to the
extent reasonably incurred in connection with the Transfer in question:
(i) advertising costs, reasonable attorneys’ fees and brokerage commissions
payable to unaffiliated third parties, (ii) tenant improvement costs incurred
solely in connection with such Transfer and (iii) the unamortized portion of the
cost of the Tenant Improvements attributable to the Transfer. In the case of a
Transfer other than an assignment of Tenant’s entire interest in the Lease and
Premises, Reasonable Transfer Costs shall be amortized on a straight line basis,
without interest, over the initial term of the Transfer. Tenant’s obligation to
pay over Landlord’s portion of the consideration constitutes an obligation for
additional rent hereunder. The above provisions relating to the allocation of
excess rent are independently negotiated terms of the Lease which constitute a
material inducement for the Landlord to enter into the Lease, and are agreed by
the Parties to be commercially reasonable. No Transfer by Tenant shall relieve
it of any obligation under this Lease. Any Transfer which conflicts with the
provisions of this Lease shall be voidable by Landlord at any time following
such Transfer.

 

  C. No Release:

Any Transfer shall be made only if and shall not be effective until the
transferee shall execute, acknowledge, and deliver to Landlord an agreement, in
form and substance satisfactory to Landlord, whereby the transferee shall assume
all

 

 

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the obligations of this Lease on the part of Tenant to be performed or observed
to the extent of the interest being transferred and shall be subject to all the
covenants, agreements, terms, provisions and conditions in this Lease to the
extent applicable to the interest being transferred. Notwithstanding any
Transfer and the acceptance of rent or other sums by Landlord from any
transferee, Tenant and any guarantor shall remain fully liable for the payment
of Base Monthly Rent and additional rent due, and to become due hereunder, for
the performance of all the covenants, agreements, terms, provisions and
conditions contained in this Lease on the part of Tenant to be performed and for
all acts and omissions of any transferee or any other person claiming under or
through any transferee that shall be in violation of any of the terms and
conditions of this Lease, and any such violation shall be deemed a violation by
Tenant. Tenant shall indemnify, defend with counsel reasonably acceptable to
Landlord and hold Landlord and the Landlord Related Parties harmless from and
against all claims, liabilities, obligations, penalties, fines, actions, losses,
damages, costs or expenses (including without limitation reasonable attorneys
fees) resulting from any claims that may be made against Landlord by the
proposed transferee or by any real estate brokers or other persons claiming
compensation in connection with the proposed Transfer.

 

  D. Reorganization of Tenant:

Notwithstanding any other provision of this Lease, the provisions of this
Section 18.D shall apply if Tenant is a publicly-held corporation and: (i) there
is a dissolution, merger, consolidation, or other reorganization of or affecting
Tenant, where Tenant is not the surviving corporation, or there is a sale of all
or substantially all of the assets of Tenant, or (ii) there is a sale,
cancellation, surrender, exchange, conversion or any other transfer of stock
involving or consisting of more than fifty percent (50%) of the total combined
voting power of all classes of Tenant’s capital stock issued, outstanding and
entitled to vote for the election of directors, or there is any merger,
consolidation or other reorganization of or affecting Tenant, whether the
foregoing occurs in a single transaction or in multiple steps, and after any one

 

                                                                               
                                                                               
           

 

or more of such events Tenant’s stock is no longer publicly traded. In a
transaction under clause (i) of this Section 18.D, the surviving or acquiring
corporation or entity (“Surviving Entity”) shall, within thirty (30) days after
the closing of such transaction, execute and deliver to Landlord an agreement in
form reasonably satisfactory to Landlord under which the Surviving Entity
assumes the obligations of Tenant hereunder. In a transaction or series of
transactions under clause (ii) of this Section 18.D, the entities which as a
result of such transaction(s) own a greater than fifty percent (50%) interest in
Tenant (including, without limitation as a result of a reverse triangular merger
or a triangular merger) (collectively the “Acquiring Entity”) shall, within
thirty (30) days after the closing of such transaction, execute and deliver to
Landlord a guaranty of lease in form reasonably satisfactory to Landlord under
which the Acquiring Entity guarantees the full payment and performance of the
remaining obligations of Tenant under the Lease (“Lease Guaranty”). The
foregoing notwithstanding, in the event the Surviving Entity or Acquiring Entity
is itself not a publicly-traded corporation, but is instead the subsidiary of a
publicly-traded corporation (or a subsidiary of a subsidiary of a
publicly-traded corporation, or a subsidiary in a chain of entities in which one
or more parent corporations are publicly traded), then each publicly-traded
parent corporation in such chain shall be required to execute and deliver to
Landlord the Lease Guaranty. In addition, in the event that after such
acquisition Tenant no longer prepares audited financial statements, then in
addition to the financial statements required to be delivered by Tenant
hereunder, the entity required to execute the Lease Guaranty shall provide
Landlord its audited financial statements at the times and in the manner
required of Tenant hereunder. It is the intent of the parties that after such
any transaction or series of transactions described in this Section 18.D,
Landlord shall be entitled to rely on the creditworthiness of publicly-traded
corporations and to receive audited financial information from publicly-traded
corporations.

 

  E. Permitted Transfers

Provided that Tenant complies with the provisions of Section 18.D, Tenant may
enter into

 

 

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any of the following transactions described in this Section 18.E (a “Permitted
Transfer”) without Landlord’s prior consent, provided however that Tenant shall
notify Landlord of any such Transfer not later than five (5) business days after
the effective date of such Transfer. Tenant may sublease all or part of the
Premises or Transfer or assign its interest in this Lease to (i) any corporation
which controls, is controlled by, or is under common control with the original
Tenant to this Lease by means of an ownership interest of more than fifty
percent (50%); (ii) a corporation which results from a merger, consolidation or
other reorganization, so long as the surviving corporation either (a) has a net
worth at the time of such assignment or sublease that is sufficient to undertake
the financial obligations under this Lease or (b) is listed on a public stock
exchange; and (iii) a corporation which purchases or otherwise acquires all or
substantially all of the assets of Tenant so long as such acquiring corporation
either (a) has a net worth at the time of such assignment or sublease that is
sufficient to undertake the financial obligations under this Lease or (b) is
listed on a public stock exchange. The provisions of Section 18.B shall not
apply to Permitted Transfers.

 

  F. Effect of Default:

In the event of Tenant’s default, Tenant hereby assigns all amounts due to
Tenant from any Transfer as security for performance of Tenant’s obligations
under this Lease, and Landlord as assignee of Tenant, or a receiver for Tenant
appointed on Landlord’s application, may collect such amounts and apply it
toward Tenant’s obligations under this Lease, except that Tenant may collect
such amounts unless a default beyond applicable notice and cure periods occurs
as described in Section 14 above. Landlord’s collection of any amounts due from
a Transfer shall not constitute an acceptance by Landlord of attornment by any
subtenants, and upon Tenant’s default beyond applicable notice and cure periods
Landlord shall have all rights provided by this Lease and applicable Laws,
including without limitation terminating this Lease and any or all occupants’
rights to possession of the Premises as Landlord shall determine in Landlord’s
sole and absolute discretion. A termination of the Lease due to Tenant’s default
shall not automatically

 

                                                                               
                                                                               
           

 

terminate a Transfer then in existence; rather at Landlord’s election (1) such
Transfer shall survive the Lease termination, (2) the transferee shall attorn to
Landlord, and (3) Landlord shall undertake the obligations of Tenant under the
transfer agreement; except that Landlord shall not be liable for prepaid rent,
security deposits or other defaults of Tenant to the transferee, or for any acts
or omissions of Tenant and Tenant’s Agents.

 

  G. Conveyance by Landlord:

In the event of any transfer of Landlord’s interest in this Lease, the Landlord
herein named (and in case of any subsequent transfer, the then transferor) shall
be automatically freed and relieved from and after the date of such transfer of
all liability for the performance of any covenants or obligations on the part of
Landlord contained in this Lease accruing thereafter; provided, however, that
any funds in the hands of Landlord or the then transferor at the time of such
transfer, in which Tenant has an interest shall be turned over to the transferee
and any amount then due and payable to Tenant by Landlord or the then transferor
under any provision of this Lease shall be paid to Tenant; and provided,
further, that upon any such transfer, the transferee shall be deemed to have
assumed, subject to the limitations of this Section 18 above all of the
agreements, covenants and conditions in this Lease to be performed from and
after the transfer on the part of Landlord, it being intended hereby that the
covenants and obligations contained in this Lease to be performed on the part of
Landlord shall, subject as aforesaid, be binding on each Landlord, its
successors and assigns, only during its period of ownership.

 

  H. Successors and Assigns:

Subject to the provisions this Section 18, the covenants and conditions of this
Lease shall apply to and bind the heirs, successors, executors, administrators
and assigns of all Parties hereto; and all parties hereto comprising Tenant
shall be jointly and severally liable hereunder.

 

 

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  I. Sublease Requirements:

With respect to any permitted sublet of the Premises by Tenant to an approved
Subtenant (“Subtenant”), the sublet transaction shall be evidenced by a written
sublease between Tenant and Subtenant (the “Sublease”). The Sublease shall
comply with the following requirements: (i) The form of the Sublease and the
terms and conditions thereof shall be subject to Landlord’s approval which shall
not be withheld unreasonably; (ii) The Sublease shall provide that it is subject
to all of the terms and conditions of this Lease, except those terms and
conditions relating to Rent, Additional Rent, and any other amount due under
this Lease; (iii) The Sublease shall provide that the Subtenant shall have no
right to exercise any option or other right granted to Tenant in this Lease;
(iv) The Sublease shall contain a waiver of subrogation against Landlord and
shall require Subtenant’s insurance policies to acknowledge such waiver of
subrogation; (v) The Sublease shall provide that all requirements of the Lease
applicable to subleases shall be applicable to sub-subleases; (vi) The Sublease
shall require Subtenant, acting through Tenant, to obtain Landlord’s prior
written approval, to any alteration to the Premises to the same extent Tenant is
required by this Lease to obtain such consent; (vii) The Sublease shall require
Subtenant to send Landlord copies of any and all notices concerning the Premises
that Subtenant is obligated to provide to Tenant and Tenant to send Landlord
copies of any and all notices concerning the Premises that Tenant is obligated
to provide to Subtenant; (viii) The Sublease shall provide that, at Landlord’s
option, the Sublease shall not terminate in the event that this Lease terminates
and shall require Subtenant to execute an attornment agreement if Landlord, in
its sole and absolute discretion, shall elect to have the Sublease continue
beyond the date of termination of this Lease; and (ix) The Sublease shall
require the Subtenant to agree that on receipt of notice from Landlord that
Tenant has defaulted beyond applicable notice and cure periods, Subtenant shall
pay all sums due under the Sublease to Landlord.

 

                                                                               
                                                                               
           

 

19. OPTION TO EXTEND THE LEASE TERM; RIGHT OF FIRST OFFER FOR 4551 GAP SPACE:

 

  A. Grant and Exercise of Option:

Landlord grants to Tenant, subject to the terms and conditions set forth in this
Section 19 two (2) options (each an “Option” and collectively the “Options”) to
extend the Lease Term for an additional term (each an “Option Term”). Each
Option Term shall be for a period of sixty (60) months and each Option shall be
exercised, if at all, by written notice to Landlord no earlier than eighteen
(18) months prior to the date the Lease Term would expire but for such exercise
(or, in the event of a damage or destruction of the Premises in the last
twenty-four (24) months of the Lease Term, no earlier than twenty-four
(24) months prior to the date the Lease Term would expire but for such exercise)
but no later than twelve (12) months prior to the date the Lease Term would
expire but for such exercise, time being of the essence for the giving of such
notice. Notwithstanding this Section 19.A above, in order for Tenant’s exercise
of an Option under this Lease to be effective, the tenant under the Building A
Lease must concurrently exercise its corresponding option to extend the term of
the Building A Lease. If Tenant exercises an Option, all of the terms, covenants
and conditions of this Lease shall apply except for the grant of additional
Options pursuant to this Section 19 and except for tenant improvement,
improvement allowances or relocation allowances or other leasing concessions and
inducements, and provided that Base Monthly Rent for the Premises payable by
Tenant during the Option Term shall be ninety-five percent (95%) of the Fair
Market Rental as hereinafter defined. Notwithstanding anything herein to the
contrary, (i) if Tenant or the tenant under the Building A Lease is in monetary
or material non-monetary event of default under any of the terms, covenants or
conditions of this Lease or the Building A Lease either at the time Tenant
exercises the Option or at any time thereafter prior to the commencement date of
the Option Term, or (ii) if the net worth of Tenant or the tenant under the
Building A Lease as reported in its most recent financial statements shows
insufficient financial worth to undertake

 

 

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the financial obligations under this Lease or the Building A Lease,
respectively, then Landlord shall have, in addition to all of Landlord’s other
rights and remedies provided in this Lease, the right to terminate the Option
upon notice to Tenant, in which event the Lease Term shall not be extended
pursuant to this Section 19.A. As used herein, the term “Fair Market Rental” is
defined as the rental and all other monetary payments, including any escalations
and adjustments thereto (including without limitation Consumer Price Indexing)
that Landlord could obtain during the Option Term from a third party desiring to
lease the Premises, based upon the (i) current use and other potential uses of
the Premises, as determined by the rents then obtainable for new leases of space
comparable in age and quality to the Premises in the same real estate submarket
as the Building and (ii) the credit standing and financial stature of the
Tenant. The appraisers shall be instructed that the foregoing five percent
(5.0%) discount is intended to offset comparable rents that include the
following costs which Landlord will not incur in the event Tenant exercises its
option (i) brokerage commissions, (ii) tenant improvement or relocation
allowances, (iii) vacancy costs, and (iv) other concessions or inducements.

 

  B. Determination of Fair Market Rental:

If Tenant exercises an Option, Landlord shall send Tenant a notice setting forth
the Fair Market Rental for the Option Term within thirty (30) days following the
date of exercise. If Tenant disputes Landlord’s determination of Fair Market
Rental for the Option Term, Tenant shall, within thirty (30) days after delivery
to Tenant of Landlord’s notice setting forth Fair Market Rental for the Option
Term, send to Landlord a notice stating that Tenant either elects to terminate
its exercise of the Option, in which event the Option shall lapse and this Lease
shall terminate on the Expiration Date, or that Tenant disagrees with Landlord’s
determination of Fair Market Rental for the Option Term and elects to resolve
the disagreement as provided in Section 19.C below. If Tenant does not timely
send Landlord a notice as provided in the previous sentence, Landlord’s
determination of Fair Market Rental shall be deemed the agreed upon Fair Market
Rental amount to be used in computing Base Monthly

 

                                                                               
                                                                               
           

 

Rent payable by Tenant during the Option Term. If Tenant elects to resolve the
disagreement as provided in Section 19.C below and such procedures are not
concluded prior to the commencement date of the Option Term, Tenant shall pay to
Landlord as Base Monthly Rent the greater of (i) the Base Monthly Rent in effect
immediately before the start of the Option Term, or (ii) ninety five percent
(95%) of the Fair Market Rental as determined by Landlord in the manner provided
above. If the Fair Market Rental as finally determined pursuant to Section 19.C
is greater than Landlord’s determination, Tenant shall pay Landlord the
difference between the amount paid by Tenant and the actual Base Monthly Rent
due as so determined in this Section 19 within thirty (30) days after such
determination. If the Fair Market Rental as finally determined in Section 19.C
is less than Landlord’s determination, the difference between the amount paid by
Tenant and the actual Base Monthly Rent due as so determined pursuant to this
Section 19 shall be credited against the next installments of Base Monthly Rent
due from Tenant to Landlord hereunder.

 

  C. Resolution of a Disagreement over the Fair Market Rental:

Any disagreement regarding Fair Market Rental shall be resolved as follows:
Within thirty (30) days after Tenant’s response to Landlord’s notice setting
forth the Fair Market Rental, Landlord and Tenant shall meet at a mutually
agreeable time and place, in an attempt to resolve the disagreement. If within
the 30-day consultation period referred to above, Landlord and Tenant cannot
reach agreement as to Fair Market Rental, each party shall select one appraiser
to determine Fair Market Rental. Each such appraiser shall arrive at a
determination of Fair Market Rental and submit their conclusions to Landlord and
Tenant within thirty (30) days after the expiration of the 30-day consultation
period described above. If only one appraisal is submitted within the requisite
time period, it shall be deemed as Fair Market Rental. If both appraisals are
submitted within such time period and the two (2)appraisals so submitted differ
by less than ten percent (10%) of the higher appraisal, the average of the two
shall be deemed as Fair Market Rental. If the two appraisals differ

 

 

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by ten percent (10%) or more of the higher appraisal, the appraisers shall
immediately select a third appraiser who shall, within thirty (30) days after
this selection, make and submit to Landlord and Tenant a determination of Fair
Market Rental. This third appraisal will then be averaged with the closer of the
two previous appraisals and the result shall be Fair Market Rental, or if it is
in the middle of the two (2) previous appraisals the third appraisal shall be
the Fair Market Rental. All appraisers specified pursuant to this Section 19.C
shall be members of the American Institute of Real Estate Appraisers with not
less than ten (10) years experience appraising office and industrial properties
in the Santa Clara Valley. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser.

 

  D. Personal to Tenant:

All Options provided to Tenant in this Lease are personal and granted solely to
Palo Alto Networks, Inc., a Delaware corporation, and any transferee of Tenant’s
entire interest under this Lease following a Permitted Transfer, and are not
exercisable by any other person or entity whether or not a Transfer has occurred
unless Landlord consents to permit exercise of any Option by any assignee or
subtenant in Landlord’s sole and absolute discretion. In the event Tenant has
multiple options to extend this Lease, a later Option to extend the Lease cannot
be exercised unless the prior Option has been properly exercised and the Option
Term for that exercised prior Option has commenced. All Options provided to
Tenant in this Lease shall terminate upon the expiration or sooner termination
of this Lease.

 

  E. First Right to Negotiate for 4551 GAP Space:

Landlord is currently the owner of 4551 GAP. Notwithstanding any other provision
of this Lease, this Section 19.E shall apply only so long as the owner of 4551
GAP is also the Landlord under this Lease. At such time as the Landlord under
this Lease is not the owner of 4551 GAP, this Section 19.E shall terminate and
be of no further force or effect. Tenant acknowledges that 4551 GAP is currently
being

 

                                                                               
                                                                               
           

 

offered for lease, but Tenant has advised Landlord that it does not want to
lease any portion of 4551 GAP at this time. Therefore Landlord’s initial lease
up of the space at 4551 GAP (the “GAP Space”) shall not be subject to the right
granted to Tenant pursuant to this Section 19.E below, notwithstanding any other
provision of this Section 19.E. Subject to the foregoing, once the initial lease
up of all of the GAP Space has occurred, if any portion of the GAP Space
thereafter again becomes available for lease, Landlord grants to Tenant, subject
to this Section 19.E above and the terms and conditions set forth in this
Section 19.E, a continuing first right to negotiate for such space that has
become available for lease; provided however that in no event shall this first
right to negotiate apply with respect to any 4551 GAP Space that Landlord
desires to lease to any tenant then leasing any space at 4551 GAP or any of such
tenant’s affiliates (each of such tenants and affiliates being a “4551 GAP
Tenant Related Party”). If any 4551 GAP Space becomes available for lease that
Landlord does not desire to lease to a 4551 GAP Tenant Related Party, Landlord
shall provide Tenant with at least five (5) business days advance written notice
of its availability and the economic terms under which Landlord would lease such
4551 GAP Space to any third party. Tenant shall have five (5) business days in
which to accept or reject Landlord’s offer for such 4551 GAP Space in writing.
If Tenant does not respond to Landlord in writing within said five (5) business
day period, Tenant shall be deemed to have rejected Landlord’s offer, and
Landlord shall have the right to lease such 4551 GAP Space on economic terms
that are not substantially more favorable to a tenant than were offered to
Tenant (taking into account an equitable adjustment of any tenant improvement
allowance or free rent (if any) to account for an increase lease term (not
including options to extend). For example, if the lease term (not including
options to extend) for the third party were twice that remaining under this
Lease (not including options to extend), the free rent and tenant improvement
allowance offered to the third party may be up to two (2) times that offered to
Tenant, free of Tenant’s rights under this Section 19.E. If Tenant accepts said
offer in writing, a lease shall be prepared by Landlord setting forth the
economic terms set forth in the

 

 

36

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offer delivered to Tenant, but otherwise containing the same terms and
conditions of this Lease including the same expiration dates and unexpired
options to extend. Said lease shall be promptly signed by both Parties. If such
lease is not signed by Tenant and returned to Landlord within five (5) business
days after the lease is delivered to Tenant, Tenant shall be deemed to have
waived its rights under this paragraph, and Landlord shall have the right to
proceed to enter into a lease with a third party on economic terms that are not
substantially more favorable to the tenant than were offered to Tenant (taking
into account an equitable adjustment of any tenant improvement allowance or free
rent (if any) to account for an increased lease term (not including options to
extend)), free of Tenant’s rights under this paragraph, and upon entering into
such lease Tenant’s rights under this paragraph shall terminate as to the space
leased to the other tenant and shall not be subject to revival. Economic terms
that in the aggregate are not less than ninety (90%) of the economic terms (in
the aggregate) offered to Tenant shall be deemed economic terms that are not
substantially more favorable to the third party tenant. Tenant’s right of first
negotiation under this Section 19 shall be continuous during the Term of this
Lease and any extension thereof. Tenant’s rejection of any particular offer
shall not relieve Landlord of its obligation to again offer any 4551 GAP Space
to Tenant at any time that the 4551 GAP Space subsequently becomes available.

Notwithstanding this Section 19.E above, if Landlord and Tenant enter into any
lease pursuant to this Section 19.E, Tenant’s obligations under this Lease, the
Building A Lease and such new lease shall automatically be deemed to be cross
defaulted, and any corresponding option to renew under one lease may only be
exercised if the corresponding options to renew under all leases are
concurrently exercised by the tenants under such leases and the option terms
under all such leases commences. All of Tenant’s rights under this Section 19.E
shall terminate upon the expiration or sooner termination of this Lease.

 

                                                                               
                                                                               
           

 

20. GENERAL PROVISIONS:

 

  A. Attorney’s Fees:

In the event a suit or alternative form of dispute resolution is brought for the
possession of the Premises, for the recovery of any sum due hereunder, to
interpret the Lease, or because of the breach of any other covenant herein; then
the losing party shall pay to the prevailing party reasonable attorney’s fees
and costs incurred in connection with such proceeding, including the expense of
expert witnesses, depositions and court testimony. The prevailing party shall
also be entitled to recover all costs and expenses including reasonable
attorney’s fees incurred in enforcing any judgment or award against the other
party. The foregoing provision relating to post-judgment costs is severable from
all other provisions of this Lease.

 

  B. Authority of Parties:

If Tenant is a corporation, partnership or other entity, Tenant represents and
warrants that Tenant is duly formed and in good standing, that each individual
signing this Lease is duly authorized to execute and deliver this Lease on
behalf of Tenant and to bind Tenant to this Lease in accordance with Tenant’s
governing documents, and that this Lease is binding upon Tenant in accordance
with its terms. At Landlord’s request, Tenant shall provide Landlord with
corporate resolutions or other proof in a form acceptable to Landlord, of the
authorizations described in this Section 20.B.

If Landlord is a corporation, partnership or other entity, Landlord represents
and warrants that Landlord is duly formed and in good standing, that each
individual signing this Lease on behalf of Landlord is duly authorized to
execute and deliver this Lease on behalf of Landlord and to bind Landlord to
this Lease in accordance with Landlord’s governing documents, and that this
Lease is binding upon Landlord in accordance with its terms.

 

  C. Brokers:

Tenant represents it has not utilized or contacted a real estate broker or
finder with

 

 

37

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respect to this Lease other than Cresa and Tenant agrees to indemnify, defend
with counsel reasonably acceptable to Landlord and hold Landlord and the
Landlord Related Parties harmless from and against all claims, liabilities,
obligations, penalties, fines, actions, losses, damages, costs or expenses
(including without limitation reasonable attorneys fees) asserted by any other
broker or finder claiming through Tenant. Landlord shall pay Cresa a leasing
commission in connection with this Lease pursuant to a separate written
agreement between Landlord and Cresa.

 

  D. Choice of Law:

This Lease shall be governed by and construed in accordance with California law.
Venue for all court proceedings or alternative forms of dispute resolution
proceedings shall be Santa Clara County, California.

 

  E. ARBITRATION OF DISPUTES:

LANDLORD AND TENANT AND ANY OTHER PARTY THAT MAY BECOME A PARTY TO THIS LEASE OR
BE DEEMED A PARTY TO THIS LEASE, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS AND
SUBTENANTS, AGREE THAT, EXCEPT FOR ANY CLAIM BY LANDLORD FOR (I) UNLAWFUL
DETAINER, (II) TENANT’S FAILURE TO PAY THE BASE MONTHLY RENT, OR (III) WITHIN
THE JURISDICTION OF THE SMALL CLAIMS COURT (WHICH SMALL CLAIMS COURT SHALL BE
THE SOLE COURT OF COMPETENT JURISDICTION FOR SUCH SMALL CLAIMS MATTER), ANY
CONTROVERSY, DISPUTE, OR CLAIM OF WHATEVER NATURE ARISING OUT OF, IN CONNECTION
WITH OR IN RELATION TO THE INTERPRETATION, PERFORMANCE OR BREACH OF THIS LEASE,
INCLUDING ANY CLAIM BASED ON CONTRACT, TORT, OR STATUTE, SHALL BE RESOLVED AT
THE REQUEST OF ANY PARTY TO THIS LEASE, OR THEIR RESPECTIVE SUCCESSORS, ASSIGNS
AND SUBTENANTS, THROUGH DISPUTE RESOLUTION PROCESS ADMINISTERED BY J.A.M.S. OR
ANOTHER JUDICIAL MEDIATION SERVICE

 

                                                                               
                                                                               
           

 

MUTUALLY ACCEPTABLE TO THE PARTIES LOCATED IN SANTA CLARA COUNTY, CALIFORNIA.
THE DISPUTE RESOLUTION PROCESS SHALL CONSIST OF A FINAL AND BINDING ARBITRATION
ADMINISTERED BY AND IN ACCORDANCE WITH THE THEN EXISTING RULES AND PRACTICES OF
J.A.M.S. OR OTHER JUDICIAL MEDIATION SERVICE SELECTED, AND JUDGMENT UPON ANY
AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED BY ANY STATE OR FEDERAL COURT
HAVING JURISDICTION THEREOF AS PROVIDED BY CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 1280 ET. SEQ, AS SAID STATUTES THEN APPEAR, INCLUDING ANY AMENDMENTS TO
SAID STATUTES OR SUCCESSORS TO SAID STATUTES OR AMENDED STATUTES, EXCEPT THAT IN
NO EVENT SHALL THE PARTIES BE ENTITLED TO PROPOUND INTERROGATORIES OR REQUESTS
FOR ADMISSIONS DURING THE ARBITRATION PROCESS. THE ARBITRATOR SHALL BE A RETIRED
JUDGE OR A LICENSED CALIFORNIA ATTORNEY. THE VENUE FOR ANY SUCH ARBITRATION
SHALL BE IN SANTA CLARA COUNTY, CALIFORNIA.

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

 

 

38

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ARBITRATION PROVISION IS VOLUNTARY.

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

Landlord:                     Tenant:                

 

  F. Entire Agreement:

This Lease and the exhibits attached hereto contain all of the agreements and
conditions made between the Parties hereto and may not be modified orally or in
any other manner other than by written agreement signed by all parties hereto or
their respective successors in interest. This Lease supersedes and revokes all
previous negotiations, letters of intent, lease proposals, brochures,
agreements, representations, promises, warranties, and understandings, whether
oral or in writing, between the parties or their respective representatives or
any other person purporting to represent Landlord or Tenant.

 

  G. Entry by Landlord:

Upon not less than one (1) business day’s prior notice to Tenant (except in case
of emergency, where no prior notice shall be required) and subject to Tenant’s
reasonable security regulations, Tenant shall permit Landlord and Landlord’s
agents to enter into and upon the Premises at all reasonable times, and without
any rent abatement or reduction or any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned, for the
following purposes: (i) inspecting and maintaining the Premises; (ii) making
repairs, alterations or additions to the Premises; (iii) erecting additional
building(s) and improvements on the land where the Premises are situated or on
adjacent land owned by Landlord; (iv) performing any obligations of Landlord
under the Lease including remediation of Hazardous Materials if determined to be
the responsibility of Landlord, (v) posting and keeping posted thereon notices
of non responsibility for any construction, alteration or repair thereof, as
required or

 

                                                                               
                                                                               
           

 

permitted by any law, and (vi) placing “For Sale” signs, and showing the
Premises to Landlord’s existing or potential successors, purchasers and lenders.
Tenant shall permit Landlord and Landlord’s agents, at any time within twelve
(12) months prior to the Expiration Date (or at any time during the Lease Term
that Tenant is in default hereunder beyond applicable notice and cure periods),
to place upon the Premises “For Lease” signs, and exhibit the Premises to real
estate brokers and prospective tenants at reasonable hours. At any time when
Tenant does not rent all rentable space in the Project, and at any time within
twelve (12) months prior to the Expiration Date (or at any time during the Lease
Term that Tenant is in default hereunder) if Tenant does rent all rentable space
in the Project, Landlord shall have the right to place “For Lease” signs within
the exterior Common Areas.

 

  H. Estoppel Certificates:

At any time during the Lease Term, Tenant shall, within seven (7) business days
following written notice from Landlord, execute and deliver to Landlord a
written statement certifying, if true, the following: (i) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification); (ii) the date to which rent and other charges are paid in
advance, if any; (iii) acknowledging that there are not, to Tenant’s knowledge
without duty of inquiry, any uncured defaults on Landlord’s part hereunder (or
specifying such defaults if they are claimed); and (iv) such other information
as Landlord may reasonably request. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of Landlord’s interest
in the Premises. Tenant’s failure to deliver such statement within such time
shall be conclusive upon the Tenant that this Lease is in full force and effect
without modification, except as may be represented by Landlord, and that there
are no uncured defaults in Landlord’s performance. Where Tenant is not a
publicly traded company, Tenant agrees to provide, within seven (7) business
days of Landlord’s request, Tenant’s most recent three (3) years of audited
financial statements for Landlord’s use in financing or sale of the Premises or
Landlord’s interest therein.

 

 

39

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  I. Exhibits:

All exhibits referred to are attached to this Lease and incorporated by
reference.

 

  J. Interest:

All rent due hereunder, if not paid when due, shall bear interest at the Agreed
Interest Rate. This provision shall survive the expiration or sooner termination
of the Lease. Despite any other provision of this Lease, the total liability for
interest payments shall not exceed the limits, if any, imposed by the usury laws
of the State of California. Any interest paid in excess of those limits shall be
refunded to Tenant by application of the amount of excess interest paid against
any sums outstanding in any order that Landlord requires. If the amount of
excess interest paid exceeds the sums outstanding, the portion exceeding those
sums shall be refunded in cash to Tenant by Landlord. To ascertain whether any
interest payable exceeds the limits imposed, any non-principal payment
(including late charges) shall be considered to the extent permitted by law to
be an expense, fee or premium rather than interest.

 

  K. Modifications Required by Lender:

If any lender of Landlord or ground lessor of the Premises requires a
modification of this Lease that will not increase Tenant’s cost or expense or
materially and adversely change Tenant’s rights and obligations, Tenant shall
execute whatever documents are reasonably required and deliver them to Landlord
within thirty (30) business days after the request.

 

  L. No Presumption Against Drafter:

Landlord and Tenant understand, agree and acknowledge that this Lease has been
freely negotiated by both Parties; and that in any controversy, dispute, or
contest over the meaning, interpretation, validity, or enforceability of this
Lease or any of its terms or conditions, there shall be no inference,
presumption, or conclusion drawn whatsoever against either party by virtue of
that party having drafted this Lease or any portion thereof.

 

                                                                               
                                                                               
           

 

  M. Notices:

All notices, demands, requests, or consents required to be given under this
Lease shall be sent in writing by U.S. certified mail, return receipt requested,
by nationally recognized overnight courier, or by personal delivery (in each
case cost prepaid) addressed to the party to be notified at the address for such
party specified in Section 1 above of this Lease, or to such other place as the
party to be notified may from time to time designate by at least fifteen
(15) days prior notice to the notifying party; provided that such other address
shall not be a P.O Box. When this Lease requires service of a notice, that
notice shall be deemed to constitute and satisfy the requirements of any
equivalent or similar statutory notice, including any notices required by Code
of Civil Procedure Section 1161 or any similar or successor statute.

 

  N. Property Management:

In addition, Tenant agrees to pay Landlord along with the expenses to be
reimbursed by Tenant a monthly fee for management services rendered by either
Landlord or a third party manager engaged by Landlord (which may be a party
affiliated with Landlord), in the amount of three percent (3%) of the Base
Monthly Rent.

 

  O. Rent:

All monetary sums due from Tenant to Landlord under this Lease, including,
without limitation those referred to as “additional rent”, shall be deemed as
rent.

 

  P. Representations:

Except for the provisions of this Lease, Tenant acknowledges that neither
Landlord nor any of its employees or agents have made any agreements,
representations, warranties or promises with respect to the Premises or Project
or with respect to present or future rents, expenses, operations, tenancies or
any other matter. Except as herein expressly set forth herein, Tenant relied on
no statement of Landlord or its employees or agents for that purpose.

 

 

40

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  Q. Rights and Remedies:

Subject to Section 14 above, all rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law, and are in addition to all
other rights and remedies in law and in equity.

 

  R. Severability:

If any term or provision of this Lease is held unenforceable or invalid by a
court of competent jurisdiction, the remainder of the Lease shall not be
invalidated thereby but shall be enforceable in accordance with its terms,
omitting the invalid or unenforceable term.

 

  S. Submission of Lease:

Submission of this document for examination or signature by the Parties does not
constitute an option or offer to lease the Premises on the terms in this
document or a reservation of the Premises in favor of Tenant. This document is
not effective as a lease or otherwise until executed and delivered by both
Landlord and Tenant.

 

  T. Subordination:

This Lease is subject and subordinate to ground and underlying leases, mortgages
and deeds of trust (collectively “Encumbrances”) which may now affect the
Premises, to any covenants, conditions or restrictions of record, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, however, if the holder or holders of any such Encumbrance (“Holder”)
require that this Lease be prior and superior thereto, within seven (7) business
days after written request of Landlord to Tenant, Tenant shall execute, have
acknowledged and deliver all documents or instruments, in the form presented to
Tenant, which Landlord or Holder deems necessary or desirable for such purposes.
Landlord shall have the right to cause this Lease to be and become and remain
subject and subordinate to any and all Encumbrances which are now or may
hereafter be executed covering the Premises or any renewals, modifications,
consolidations, replacements or extensions thereof, for the full amount of all
advances made or to be made thereunder and

 

                                                                               
                                                                               
           

 

without regard to the time or character of such advances, together with interest
thereon and subject to all the terms and provisions thereof; provided only, that
with respect to Encumbrances created after the Effective Date, in the event of
termination of any such lease or upon the foreclosure of any such mortgage or
deed of trust, Holder agrees to recognize Tenant’s rights under this Lease (with
the Lease to continue as a direct lease between Tenant and Holder) as long as
Tenant is not then in default beyond applicable notice and cure periods and
continues to pay Base Monthly Rent and additional rent and observes and performs
all required provisions of this Lease. Within seven (7) business days after
Landlord’s written request, Tenant shall execute any documents reasonably
required by Landlord or the Holder to make this Lease subordinate to any lien of
the Encumbrance. If Tenant fails to do so, then in addition to such failure
constituting a default by Tenant, it shall be deemed that this Lease is so
subordinated to such Encumbrance. Notwithstanding anything to the contrary in
this Section 20.T, Tenant hereby attorns and agrees to attorn to any entity
purchasing or otherwise acquiring the Premises at any sale or other proceeding
or pursuant to the exercise of any other rights, powers or remedies under such
Encumbrance.

Within forty-five (45) days after execution of this Lease, Landlord shall cause
all mortgagees, lenders, ground lessors and other parties currently holding a
security interest affecting the Premises or the Project to execute a recognition
and nondisturbance agreement (which may also provide for subordination as
provided in this Section 20.T above) which (i) provides that this Lease shall
not be terminated so long as Tenant is not in default under this Lease beyond
applicable notice and cure periods, and (ii) so long as the Lease remains in
full force and effect, recognizes all of Tenant’s rights under the Lease and
requires such lender or ground lessor to be bound by Landlord’s obligations
under this Lease to the extent such obligations accrue during such lender or
ground lessor’s fee ownership of the Project.

 

  U. Survival of Indemnities:

All indemnification, defense, and hold harmless obligations of Landlord and
Tenant

 

 

41

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under this Lease shall survive the expiration or sooner termination of the
Lease.

 

  V. Time:

Time is of the essence hereunder.

 

  W. Transportation Demand Management Programs:

Should a government agency or municipality require Landlord to institute TDM
(Transportation Demand Management) facilities and/or programs, Tenant agrees
that the cost of TDM imposed facilities and programs required specifically on
the Premises (as opposed to for the Project generally), including but not
limited to employee showers, lockers, cafeteria, or lunchroom facilities, shall
be paid by Tenant. Further, any ongoing costs or expenses associated with a TDM
program which are required specifically for the Premises and not provided by
Tenant, such as an on-site TDM coordinator, shall be provided by Landlord with
such costs being included as additional rent and reimbursed to Landlord by
Tenant within thirty (30) days after demand. If TDM facilities and programs are
instituted on a Project wide basis, Tenant shall pay Tenant’s Allocable Share of
such costs in accordance with Section 9.E above.

 

  X. Waiver of Right to Jury Trial:

To the extent then authorized by law as of the time of any actual litigation
between them and to the extent not already encompassed within the various
agreements to arbitrate otherwise contained herein, and as an alternative to
arbitration should arbitration for any reason not be enforced, Landlord and
Tenant waive their respective rights to trial by jury of any contract or tort
claim, counterclaim, cross-complaint, or cause of action in any action,
proceeding, or hearing brought by either party against the other on any matter
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, or Tenant’s use or occupancy of the Premises, including any
claim of injury or damage or the enforcement of any remedy under any current or
future law, statute, regulation, code, or ordinance.

 

                                                                               
                                                                               
           

 

  Y. General:

The captions and section headings of this Lease are for convenience of reference
only, and shall not be used to limit, extend or interpret the meaning of any
part of this Lease. This Lease may be executed in multiple counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signatures and initials to this Lease created by the
signer by electronic means and/or transmitted by telecopy or other electronic
transmission shall be valid and effective to bind the party so signing. Each
party agrees to promptly deliver an execution original to this Lease with its
actual signature and initials to the other party, but a failure to do so shall
not affect the enforceability of this Lease, it being expressly agreed that each
party to this Lease shall be bound by its own electronically created and/or
telecopied or electronically transmitted signature and initials and shall accept
the electronically created and/or telecopied or electronically transmitted
signature and initials of the other party to this Lease. All agreements by
Tenant contained in this Lease, whether expressed as covenants or conditions,
shall be construed to be both covenants and conditions, conferring upon
Landlord, in the event of a breach thereof, the right to terminate this Lease.

 

  Z. Approvals:

Whenever the Lease requires approval, determination or consent by either
Landlord or Tenant, then unless it states that such approval, determination or
consent may be withheld in such party’s sole or absolute discretion, such
approval, determination or consent and any conditions imposed thereby shall be
reasonable and shall not be unreasonably withheld, conditioned or delayed.

 

  AA. Furniture, Fixtures and Equipment

The Yahoo Termination Agreement requires Yahoo to surrender the Building and
Building A with certain furniture, fixtures and equipment in place (the “Yahoo
FF&E”). A list of the Yahoo FF&E is attached hereto as Exhibit “C”. To the
extent Yahoo surrenders the Premises to Landlord with any Yahoo FF&E in place,
Tenant shall have

 

 

42

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the right to use such Yahoo FF&E at the Premises during the Lease Term at no
additional cost to Tenant. Prior to the Commencement Date Landlord shall deliver
to Tenant an inventory of the Yahoo FF&E that has been surrendered in the
Building (the “FF&E Inventory”). The Yahoo FF&E, if any, will be provided in its
then “AS IS, WHERE IS” condition, subject to theft and casualty, without
representation or warranty whatsoever and without any obligation on the part of
Landlord to repair or replace same; provided, however, that Landlord represents
that as of the delivery of the FF&E Inventory to Tenant Yahoo has delivered to
Landlord a bill of sale for the Yahoo FF&E listed on the FF&E Inventory. Tenant
shall surrender the all Yahoo FF&E provided to Tenant with the Premises upon the
termination of this Lease in the same condition as received, reasonable wear and
tear, casualty and condemnation excepted. Notwithstanding the prior sentence,
Tenant shall have the option to purchase all or any portion of the Yahoo FF&E
provided to Tenant at any time during the Lease Term for the price of One Dollar
($1) by delivering to Landlord during the Lease Term such payment and written
notice of its exercise of such option identifying the Yahoo FF&E being
purchased, whereupon Tenant shall be required to remove and surrender the
Premises free and clear of all such purchased Yahoo FF&E not later than the
expiration or sooner termination of this Lease.

 

  BB. Right to Cure Landlord’s Default:

In the event Landlord fails to perform any of its obligations under this Lease
and (except in case of emergency posing an immediate threat to persons or
property, in which case no prior notice shall be required) fails to cure such
default within thirty (30) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within said
thirty (30) day period, or fails to commence such cure within said thirty (30)
day period and thereafter continuously with due diligence prosecute such cure to
completion (not to exceed one hundred twenty (120) days) where such default
could not reasonably be cured within said thirty (30) day period, then Tenant
shall have the right, but not the obligation, to cure such default and perform
repairs if such cure or repair is needed for the continued use of the Premises
for

 

                                                                               
                                                                               
           

 

the operation of Tenant’s business, provided all work is performed in a first
class manner and does not void any warranties (of which Tenant has been provided
a copy prior to exercising its self-help right herein) on the Building, and
thereafter bill Landlord the reasonable actual out-of-pocket costs thereof,
which bill shall be accompanied by the itemized bills, and conditional lien
waivers from the contractors, subcontractors, materialmen and suppliers that
made such repairs or supplied materials in connection therewith. If such repairs
are emergency repairs performed without notice to Landlord, in no event shall
such emergency repairs exceed what is required to end the pending emergency. In
the event Landlord fails to pay the amounts due Tenant under this provision for
any such work performed in the Premises as provided for herein within thirty
(30) days after receipt of Tenant’s bill therefore, interest shall accrue on
such delinquent amount at the Agreed Interest Rate from the date of Tenant’s
bill until paid. Landlord’s obligation under this provision shall not be
recovered from any Holder.

[Signatures appear starting on the next page]

 

 

43

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and
year first above written.

 

Landlord:

   

Tenant:

 

SI, 34, LLC,

   

 

Palo Alto Networks, Inc.,

a California limited liability company

   

a Delaware corporation

 

By:   

 

 

Sobrato Interests 1,

   

By:

 

 

/s/ Mark McLaughlin

 

a California limited partnership

    Name:   

Mark McLaughlin

Its:

 

Sole Member

   

Its:

 

President and CEO

 

By:   

 

Sobrato Development Companies, LLC,

         

a California limited liability company

       

Its:

 

General Partner

   

By:

 

/s/ Jeff True

         

Name:

 

Jeff True

         

Its:

 

VP, General Counsel and Secretary

   

By:

 

/s/ John Michael Sobrato

           

    John Michael Sobrato

         

Its:

 

    Manager

     

 

44

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EXHIBIT “A” – Premises & Building

Showing Building A, Building B, the Building A and Building B Parking Area and
4551 GAP

Parking Area

 

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LOGO [g405168snap1.jpg]

 

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EXHIBIT “B-1” - Preliminary Tenant Improvement Plans

September 12, 2012

PaloAlto Networks

4301 Great America Parkway

Santa Clara, Ca.

Forecasted Scope of Tenant Improvements

4301 Great America Parkway

First Floor

 

  —  

Reconfigure fitness center to a reduced size.

 

  —  

Add open plan and some private office space adjacent to lobby.

 

  —  

Add conference space adjacent to lobby.

 

  —  

New carpet throughout.

 

  —  

New paint throughout.

Floors 2-6

 

  —  

Construct hardware, software, customer support and service labs;
15,000-20,000sf. Labs anticipated to be added on floors 2, 3 and 4.

 

  —  

Private Offices: Selectively add private offices.

 

  —  

Conference rooms: Selectively add or modify as required.

 

  —  

Modifications to HVAC and Electrical: some new units as needed to support new
labs, new duct work to support new units, minor re-distribution of existing
ductwork, and electrical service distribution to support new labs accommodate
new spaces.

 

  —  

New carpet throughout.

 

  —  

New paint throughout.

 

  —  

Minimal modifications to existing ceiling and lighting systems.

General:

 

  —  

Re-use existing CAT 5E data cabling.

 

  —  

Re-use existing lighting.

 

  —  

Re-use existing security system.

 

  —  

Life safety system to be modified as required to support new spaces.

 

  —  

No modification to stairs, elevators or restrooms.

 

  —  

No structural work (only as required to support new HVAC units added to deliver
dedicated air to labs, EBC or training rooms, to be determined).

 

  —  

No site, parking, patio, building connector, landscape modifications
anticipated.

 

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EXHIBIT “B-2” - Tenant Improvement Plans and Specifications

 

(sheet references to be attached)

 

ii

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EXHIBIT “C” – Yahoo FF&E

 

List of Yahoo FF&E to be attached

 

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4301 Great America Parkway

 

Floor 6    Panel Height    Station Size    Quantity      36”    7’-6” x 10’-0”
     8       65”    7’-6” x 10’-0”      47          Conf. Tables          41” x
168”      1          58” x 180”      2          42” x 72”      2          48” x
120”      1          48” DIA. ROUND      1          Conf. Chairs      58   

Floor 5

   Panel Height    Station Size      Quantity       50”    7’-6” x 7’-0”      58
         7’-6” x 8’-0”      2          7’-6” x 7’-6”      22          7’-6” x
5’-0”      8          Conf. Tables          41” x 168”      1          58” x
180”      4          42” x 72”      2          48” x 120”      1          48”
DIA. ROUND      1          Conf. Chairs      94   

Floor 4

   Panel Height    Station Size      Quantity       50”    7’-6” x 7’-0”      2
         7’-6” x 7’-6”      145          7’-6” x 5’-0”      3          Conf.
Tables          41” x 168”      1          58” x 180”      3          58” x 150”
     1          38” & 58” x 151” (TAPERED)      1          42” x 72”      2   
      48” x 150”      1          48” DIA. ROUND      1          Conf. Chairs   
  99   

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

4301 Great America Parkway

 

Floor 3    Panel Height    Station Size    Quantity      50”    7’-6” x 7’-6”   
  159          Conf. Tables          41” x 168”      1          58” x 180”     
4          58” x 150”      1          42” x 72”      2          48” x 150”     
1          48” DIA. ROUND      1          Conf. Chairs      103   

Floor 2

   Panel Height    Station Size      Quantity       65”    7’-6” x 7’-6”      17
         2’-6” x 9’-0”      4       50”    7’-6” x 7’-6”      149          7’-6”
x 5’-0”      3          Conf. Tables          58” x 180”      1          58” x
216”      1          58” x 240”      1          42” x 72”      2          48” x
150”      1          48” DIA. ROUND      1          Conf. Chairs      77   

Floor 1

   Panel Height    Station Size      Quantity       65”    5’-0” x 10’-0”      6
         7’-6” x 7’-6”      1          7’-6” x 10’-0”      64          10’-0” x
10’-0”      1          9’-6” x 10’-0”      1          Conf. Tables          58”
x 168”      1          42” x 72”      1          48” x 72”      1          48” x
96”      1          60” DIA. ROUND      1   

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

4301 Great America Parkway

 

          Conf. Chairs      51   

Station Typical Subtotals

   36”    7’-6” x 10’-0”      8       50”    5’-0” x 7’-6”      3          7’-6”
x 7’-0”      60          7’-6” x 7’-6”      475          7’-6” x 8’-0”      2   
   65”    2’-6” X 9’-0”      4          5’-0” X 10’-0”      6          7’-6” x
7’-6”      18          7’-6” x 10’-0”      111          9’-6” X 10’-0”      1   
          10’-0” x 10’-0”      1   

Total Conference Room Chairs

        482   

689 WORKSTATIONS

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

4401 Great America Parkway

 

Floor 6    Panel Height    Station Size    Quantity      65”    6’-0” x 10’-0”
     12          7’-6” x 7’-6”      1          7’-6” x 10’-0”      42         
10’-0” x 10’-0”      9          10’-0” x 12’-0”      2          10’-0” x 15’-0”
     1          10’-0” x 18’-6”      1          Conf. Tables          48” x 120”
     1          58” x 168”      1          42” x 72”      1          58” x 150”
     2          54” DIA. ROUND      1          Conf. Chairs      58    Floor 5
   Panel Height    Station Size    Quantity      65”    5’-0” x 10’-0”      8   
      7’-6” x 10’-0”      85          7’-6” x 7’-6”      2          10’-0” x
15’-6”      1          10’-0” x 12’-6”      3          Conf. Tables          58”
x 150”      2          58” x 168”      2          42” x 72”      2          48”
x 120”      1          48” x 168”      1          36” DIA. ROUND      1         
Conf. Chairs      90    Floor 4    Panel Height    Station Size    Quantity     
65”    5’-0” x 7’-6”      1          5’-0” x 10’-0”      11          7’-6” x
10’-0”      116          7’-6” x 7’-6”      2          9’-6” x 13’-0”      1   

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

4401 Great America Parkway

 

          Conf. Tables              58” x 150”      2          58” x 168”      2
         42” x 72”      2          48” x 168”      1          48” x 120”      1
         Conf. Chairs      90    Floor 3    Panel Height    Station Size   
Quantity      65”    5’-0” x 10’-0”      6          7’-6” x 10’-0”      113   
      7’-6” x 7’-6”      1          7’-6” x 12’-6”      1          7’-6” x
17’-6”      1          10’-0” x 10’-0”      2          Conf. Tables          48”
x 120”      1          48” x 168”      1          58” x 168”      2          42”
x 72”      2          58” x 144”      1          58” x 150”      2         
Conf. Chairs      101    Floor 2    Panel Height    Station Size    Quantity  
   65”    5’-0” x 10’-0”      8          7’-6” x 10’-0”      132          7’-6”
x 7’-6”      1          7’-6” x 7’-0”      1          7’-6” x 17’-6”      3   
      10’-0” x 9’-0”      1          10’-0” x 12’-0”      1          10’-0” x
12’-6”      1          Conf. Tables          58” x 144”      2          58” x
192”      2          58” x 168”      1          42” x 72”      2          48” x
168”      1          Conf. Chairs      105   

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

4401 Great America Parkway

 

Floor 1    Panel Height    Station Size    Quantity      50”    5’-0” x 7’-0”   
  23          7’-6” x 7’-6”      4          7’-6” x 7’-0”      2          10’-0”
x 10’-0”      1       65”    7’-6” x 7’-0”      2          7’-6” x 10’-0”     
34          10’-0” x 10’-0”      1          9’-0” x 9’-0”      1          Conf.
Tables          42” x 96”      1          48” x 120”      1          48” x 72”
     1          48” x 96”      1          54” DIA. ROUND      1             
Conf. Chairs      39   

Station Typical Subtotals

   50”    5’-0” x 7’-0”      23          7’-6” x 7’-6”      4          7’-6” x
7’-0”      2          10’-0” x 10’-0”      1       65”    5’-0” x 7’-6”      1
         5’-0” x 10’-0”      33          6’-0” x 10’-0”      12          7’-6” x
7’-0”      3          7’-6” x 7’-6”      11          7’-6” x 10’-0”      522   
      9’-6” x 13’-0”      1          10’-0” x 9’-0”      1          10’-0” x
10’-0”      12          10’-0” x 12’-0”      3          10’-0” x 12’-6”      3
         10’-0” x 15’-0”      1          10’-0” x 15’-6”      1             
10’-0” x 18’-6”      1   

Total Conference Room Chairs

        483   

635 WORKSTATIONS

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

Yahoo! Fitness Center Equipment List

     Great America        

Equipment

  

Model

    

Quantity

    

Serial Number

    

Purchased

  

Label

Treadmills

                    

Treadmill 2

   StarTrac Pro      1      APS50303908         TM2

Treadmill 4

   Life Fitness 95T      1      TWT107240         TM4

Treadmill 5

   StarTrac      1      TR SC0803 C004430         TM5

Treadmill 6

   LifeFitness 9500hr      1      HTL339180         TM6

Stair Climbers

                    

StairClimber 1

   Stairmaster 4400 PT      1      12009102017         SC1

StairClimber 3

   Stairmaster 4000 PT      1      100000 10118025         SC3

Elliptical Trainers

                    

Elliptical Trainer 2

   Precor EFX 546      1      75C21N0060         EP2

Elliptical Trainer 3

   LifeFitness EFX 5561      1      AXFJG07050018         EP3

Elliptical Trainer 4

   LifeFitness EFX 5561      1      100Z1B10050090         EP4

Elliptical Trainer 5

   LifeFitness 93xi      1      Cannot read S/N         EP5

Elliptical Trainer 6

   LifeFitness 95xi      1      AXB 104581         EP6

Recumbant Bicycles

                    

Recumbant Bike 1

   Life Cycle 9500HR      1      cannot read S/N         RC1

Recumbant Bike 2

   Life Cycle 9500HR      1      CEA659133         RC2

Recumbant Bike 3

   Life Cycle 9500HR      1      CEA644041         RC3

Recumbant Bike 4

   Life Cycle 9500HR      1      CEA659150         RC4

Upright Bicycles

                    

Bike 1

   LifeFitness 90c      1      LCA 100686         UP1

Bike 2

   LifeFitness 95ci      1      108894         UP2

Bike 3

   LifeFitness 9500hr      1      Cannot read S/N         UP3

Bike 4

   LifeFitness 9500hr      1      Cannot read S/N         UP4

Rowing Machines

                    

Rower 1

   Concept2 pm2      1      030501/1         R1

Rower 2

   Concept2 pm2      1      030501/1         R2

Stretch Trainers

   Stretch Trainer                  

Stretch Trainer

   Precor      1      00XMJ1207249        

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

Yahoo! Fitness Center Equipment List

     Great America        

Equipment

 

Model

    

Quantity

    

Serial Number

    

Purchased

  

Label

Weight Machines

                   

Seated Leg Press

  LifeFitness FZSLP      1      FZSLP002139        

Seated Leg Extension

  LifeFitness FZLE      1      FZLE002688        

Leg curl

  Lifefitness      1      69612        

Lat Pulldown

  LifeFitness FZPD      1      FZPD001832        

Seated Row

  LifeFitness FZRW      1      FZRW001806        

Shoulder press

  Lifefitness      1      65379        

Chest press

  Lifefitness      1      69560        

Tricep seated pressdown

  Lifefitness      1      64827        

Bicep Preacher Curl (machine)

  Lifefitness      1      66549        

Jungle Gym

  LifeFitness mj4      1      MJ4002120        

Dual Pulley

  LifeFitness CMDAP      1      CMDAP008035        

Assisted Dip/Chin

  Lifefitness      1      cannot read S/N        

Weight Benches, etc.

                   

Bicep Preacher Curl Bench

  Hammer Strength B00      1      SN#5443. Machine #FWAC    B1

Bench Press Bench

  LifeFitness sofb-0102-101      1      80712000680         B2

Decline Ab Bench

  Body Masters      1      0130419         B3

Decline Ab Bench

  LifeFitness      1      Cannot find S/N         B4

Adj. Flat Bench

  LifeFitness SMAB-0102-102      1      080802003048         B5

Adj. Flat bench

  Body Masters      1      0130418         B6

Incline bench

  Life Fitness SMAB-0102-102      1      2003333         B7

Flat bench

  LifeFitness SFB-01-02-101      1      080712000549         B8

Flat bench

  Body Solid GFB350.0 wc.133      1      M5007120291         B9

Back extension bench

  LifeFitness SBWBE-0102-0101      1      080712002029         B11

Captain’s Chair

  Body Solid wc-125      1      GVKR60         B13

Weight Equipment

                   

DB Weight Rack

  Hammer Strength 220006      1      SN#8004, Machine #FWDR         WR1

DB Weight Rack

  Life Fitness SDR2-0102-101      1      08080202001456         WR2

Weight tree

  Life Fitness      2      Cannot find         WT1

Weight tree

  Life Fitness CSPT-1008-102      1      90505000         WT2

5’ Olympic Bar

       1             

7’ Olympic Bar

       1             

EZ Curl Bar

       1             

Plastic Clamps

       6             

Intek Rubber Encased Olympic Plates

                   

2.5 LB

       13             

5 LB

       11             

10 LB

       9             

25 LB

       8             

35 LB

       8             

45 LB

       8             

Intek Rubber Dumbbells w/End Plates

                   

5 LB

       6             

8 LB

       4             

10 LB

       6             

12 LB

       4             

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Yahoo! Fitness Center Equipment List

     Great America        

Equipment

 

Model

    

Quantity

    

Serial Number

    

Purchased

  

Label

15 LB

       6             

20 LB

       4             

25 LB

       4             

30 LB

       4             

35 LB

       2             

40 LB

       2             

45 LB

       2             

50 LB

       2             

55 LB

       2             

60 LB

       2             

65 LB

       2             

70 LB

       2             

75 LB

       2             

80 LB

       2             

85 LB

       2             

90 LB

       2             

95 LB

       2             

100 LB

       2             

Neo-Hand Dumbbells

                   

3 LB

       10             

5 LB

       16             

8 LB

       10             

12 LB

       10             

Silver Metal Dumbbells

                   

3 LB

       4             

5 LB

       4             

8 LB

       2             

10 LB

       4             

12 LB

       4             

15 LB

       4             

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Yahoo! Cafe Equipment List

Great America

All metro racks

2-door traulsen fridge @ Taqueria

Single door freezer @ grill

Single door warmer @ grill

Flaker ice machine in kitchen hallway

Cuber ice machine from Beantrees closet

Coffee brewer from back kitchen

2 each single door coolers in BT bar

Ice machines over both soda systems

Grab and go cooler in the café

 

**

Coke Fountains are being left behind but those belong to Coke, not Yahoo!.

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Training Room 4401 First Floor

 

Equipment

  

Model

    

Quantity

    

Serial Number

Training Tables

   Versasteel      17     

Training Chairs

   Keilhauer      27     

Wood Podiums

        2     

Expresso Bar

            

Glass front Deli Case

        1     

Under Counter Refrig

        2     

Ice Machine

   Manitowoc      1     

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SERVER ROOM RACK INVENTORY

 

4401

                     Number of server racks      Other Equipment    1st Floor  
13        1 Liebert Unit; 1 UPS    2nd Floor   4           3rd Floor   3       
   4th Floor   3           5th Floor   3           6th Floor   3          

 

                      29   Total     

4301

                     Number of server racks           1st Floor   8        1 UPS
   2nd Floor   4           3rd Floor   3           4th Floor   3           5th
Floor   3           6th Floor   3          

 

                    24   Total     

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TABLE OF CONTENTS

 

              Page  

1.

 

PARTIES:

     1   

2.

 

PREMISES:

     1     

A.

  

Definitions:

     1   

3.

 

USE:

     3     

A.

  

Permitted Uses:

     3     

B.

  

Uses Prohibited:

     3     

C.

  

Advertisements and Signs:

     3     

D.

  

Covenants, Conditions and Restrictions:

     4     

E.

  

Sustainability Requirements:

     4   

4.

 

TERM AND RENTAL:

     4     

A.

  

Term; Base Monthly Rent:

     4     

B.

  

[Intentionally Deleted]

     6     

C.

  

Late Charge:

     6   

5.

 

SECURITY DEPOSIT:

     7     

A.

  

Amount and Purpose:

     7     

B.

  

Requirements of Letter of Credit:

     8   

6.

 

CONSTRUCTION:

     9     

A.

  

Landlord Work:

     9     

B.

  

Tenant Improvement Construction:

     10   

7.

 

ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:

     10     

A.

  

Landlord’s Work

     10     

B.

  

Delivery and Acceptance:

     10     

C.

  

Condition Upon Surrender:

     11     

D.

  

Failure to Surrender:

     11   

8.

 

ALTERATIONS & ADDITIONS:

     12     

A.

  

General Provisions:

     12     

B.

  

Free From Liens:

     14     

C.

  

Compliance With Governmental Regulations:

     14     

D.

  

Insurance Requirements:

     14   

9.

 

MAINTENANCE OF PREMISES:

     15     

A.

  

Landlord’s Obligations:

     15     

B.

  

Tenant’s Obligations:

     15     

C.

  

Obligations Regarding Reimbursable Operating Costs:

     16     

D.

  

Reimbursable Operating Costs:

     17     

E.

  

Tenant’s Allocable Share:

     19     

F.

  

Waiver of Liability:

     19   

10.

 

INSURANCE:

     19     

A.

  

Tenant’s Use:

     19     

B.

  

Landlord’s Insurance:

     19     

C.

  

Tenant’s Insurance:

     20     

D.

  

Waiver:

     21   

11.

 

TAXES:

     21   

 

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12.

 

UTILITIES:

     21   

13.

 

TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

     21     

A.

  

Use of Hazardous Materials:

     21     

B.

  

Tenant’s Indemnity Regarding Hazardous Materials:

     22     

C.

  

Notice of Release or Violation:

     23     

D.

  

Remediation Obligations:

     24     

E.

  

Environmental Monitoring:

     24   

14.

 

TENANT’S DEFAULT

     25     

A.

  

Events of Default

     25     

B.

  

Remedies:

     25     

C.

  

Right to Re-enter:

     26     

D.

  

Continuation of Lease:

     26     

E.

  

No Termination:

     26     

F.

  

Non-Waiver:

     26     

G.

  

Performance by Landlord:

     27     

H.

  

Habitual Default:

     27   

15.

 

LANDLORD’S LIABILITY:

     27     

A.

  

Limitation on Landlord’s Liability:

     27     

B.

  

Limitation on Tenant’s Recourse:

     28     

C.

  

Indemnification of Landlord:

     28   

16.

 

DESTRUCTION OF PREMISES:

     28     

A.

  

Landlord’s Obligation to Restore:

     28     

B.

  

Limitations on Landlord’s Restoration Obligation:

     29   

17.

 

CONDEMNATION:

     29   

18.

 

ASSIGNMENT OR SUBLEASE:

     30     

A.

  

Consent by Landlord:

     30     

B.

  

Assignment or Subletting Consideration:

     31     

C.

  

No Release:

     31     

D.

  

Reorganization of Tenant:

     32     

E.

  

Permitted Transfers

     32     

F.

  

Effect of Default:

     33     

G.

  

Conveyance by Landlord:

     33     

H.

  

Successors and Assigns:

     33     

I.

  

Sublease Requirements:

     34   

19.

 

OPTION TO EXTEND THE LEASE TERM; RIGHT OF FIRST OFFER FOR 4551 GAP SPACE:

     34     

A.

  

Grant and Exercise of Option:

     34     

B.

  

Determination of Fair Market Rental:

     35     

C.

  

Resolution of a Disagreement over the Fair Market Rental:

     35     

D.

  

Personal to Tenant:

     36     

E.

  

First Right to Negotiate for 4551 GAP Space:

     36   

20.

 

GENERAL PROVISIONS:

     37     

A.

  

Attorney’s Fees:

     37     

B.

  

Authority of Parties:

     37     

C.

  

Brokers:

     37     

D.

  

Choice of Law:

     38     

E.

  

ARBITRATION OF DISPUTES:

     38     

F.

  

Entire Agreement:    

     39   

 

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G.

  

Entry by Landlord:

     39     

H.

  

Estoppel Certificates:

     39     

I.

  

Exhibits:

     40     

J.

  

Interest:

     40     

K.

  

Modifications Required by Lender:

     40     

L.

  

No Presumption Against Drafter:

     40     

M.

  

Notices:

     40     

N.

  

Property Management:

     40     

O.

  

Rent:

     40     

P.

  

Representations:

     40     

Q.

  

Rights and Remedies:

     41     

R.

  

Severability:

     41     

S.

  

Submission of Lease:

     41     

T.

  

Subordination:

     41     

U.

  

Survival of Indemnities:

     41     

V.

  

Time:

     42     

W.

  

Transportation Demand Management Programs:

     42     

X.

  

Waiver of Right to Jury Trial:

     42     

Y.

  

General:

     42     

Z.

  

Approvals:

     42     

AA.

  

Furniture, Fixtures and Equipment

     42     

BB.

  

Right to Cure Landlord’s Default:

     43   

EXHIBIT “A” – Premises & Building Showing Building A, Building B, the Building A
and Building B Parking Area and 4551

     i     

GAP Parking Area

  

EXHIBIT “B-1” - Preliminary Tenant Improvement Plans

     i   

EXHIBIT “B-2” - Tenant Improvement Plans and Specifications

     ii   

EXHIBIT “C” – Yahoo FF&E

     i   

 

iii