Exhibit 10.4

REDWOOD BUSINESS CENTER

FULL SERVICE LEASE

BASIC LEASE INFORMATION

 

DATE:    July 2, 2013 LANDLORD:    REDWOOD BUSINESS CENTER 1 LLC, a California
limited liability company and AMERIVINE TOWN CENTER, LLC, a California limited
liability company LANDLORD’S ADDRESS:   

c/o Basin Street Properties

119 C Street

Petaluma, CA 94952

Attn: Scott W. Stranzl

Phone:(707) 795-4477

Fax:(707) 795-6283

TENANT:    CYAN, INC., a Delaware corporation doing business in California as
Cyan California TENANT’S ADDRESS:   

a. Before Commencement Date:

   1383 North McDowell Boulevard, Suite 300 Petaluma, CA 94954, Attn: General
Counsel

b. After Commencement Date:

   Same PREMISES:    The entire third floor of the Building (the “3rd Floor
Premises”) consisting of approximately 20,005 rentable square feet of space
(including the bridge between the Building and the adjacent building located at
1383 N. McDowell Blvd.) and, after the 2nd Floor Rent Commencement, the entire
second floor of the Building (the “2nd Floor Premises”), consisting of
approximately 18,773 rentable square feet per floor, for a total of 38,778
rentable square feet. BUILDING:    That certain office building to be
constructed within the Project, having an address of 1385 McDowell Blvd. and
consisting of approximately 57,438 rentable square feet of space. PROJECT:   
That certain business center located in Petaluma, California, and commonly
referred to as “Redwood Business Center” and consisting of approximately 155,984
rentable square feet of space once the Building is constructed. TERM:    Ten
(10) years

a. Commencement Date

   See Section 3.1.

b. Estimated Commencement Date

   June 1, 2014 BASE RENT:   

a. Initial Monthly Base Rent

   Forty Six Thousand One Hundred Eleven and 90/100 Dollars ($46,011.50)

b. Adjustment Date of Monthly Base Rent

   See Addendum

 

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BASE YEAR    The calendar year in which the Commencement Date occurs. TENANT’S
BUILDING PERCENTAGE SHARE:    Initially 34.83% (20,005 r.s.f./57,438 r.s.f.);
increasing to 67.51% (38,778 r.s.f./57,438 r.s.f.) upon 2nd Floor Rent
Commencement pursuant to Section27. TENANT’S PROJECT PERCENTAGE SHARE:   
Initially 12.83%% (20,005/155,984); increasing to 24.86% (38,778/155,984) upon
2nd Floor Rent Commencement pursuant to Section27. SECURITY DEPOSIT:    Forty
Six Thousand One Hundred Eleven and 90/100 Dollars ($46,011.50) PERMITTED USE:
   For use as office, research and development and laboratory with rack mounted
electronic equipment and environmental chamber and for no other use or purpose.
PARKING SPACES:    Tenant shall have the right to use 3.8 spaces per 1,000
usable square feet of the Premises on an unreserved basis in the parking areas
shown on Exhibit A-2. REAL ESTATE BROKERS:   

a. Landlord’s Broker:

   N/A

b. Tenant’s Broker:

   N/A GUARANTOR:   

Name:

   N/A

Address:

   N/A EXHIBITS AND ADDENDUM   

 

Addendum:    Four (4) pages Exhibit A-1:    Diagram of Premises Exhibit A-2:   
Diagram of Project Exhibit B-1:    Work Letter Agreement—3rd Floor Exhibit B-2:
   Work Letter Agreement—2nd Floor Exhibit C:    Commencement Date Memorandum
Exhibit D:    Rules and Regulations

 

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REDWOOD BUSINESS CENTER

FULL SERVICE LEASE

THIS REDWOOD BUSINESS CENTER FULL SERVICE LEASE (this “Lease”) dated as of
July 2, 2013, is entered into by and between REDWOOD BUSINESS CENTER 1 LLC, a
California limited liability company and AMERIVINE TOWN CENTER, LLC, a
California limited liability company (collectively, “Landlord”), and CYAN, INC.,
a Delaware corporation doing business in California as Cyan California
(“Tenant”).

1. Definitions. The following terms shall have the meanings set forth below:

1.1. Building. The term “Building” shall have the meaning set forth in the Basic
Lease Information.

1.2. Building Common Areas. The term “Building Common Areas” shall mean the
areas and facilities within the Building provided and designated by Landlord for
the general use, convenience or benefit of Tenant and other tenants and
occupants of the Building (e.g., common stairwells, stairways, hallways, shafts,
elevators, restrooms, janitorial telephone and electrical closets, pipes, ducts,
conduits, wires and appurtenant fixtures servicing the Building).

1.3. Commencement Date. The term “Commencement Date” shall have the meaning set
forth in the Basic Lease Information.

1.4. Common Areas. The term “Common Areas” shall mean the Building Common Areas
and the Project Common Areas.

1.5. Premises. The term “Premises” shall have the meaning set forth in the Basic
Lease Information.

1.6. Project. The term “Project” shall have the meaning set forth in the Basic
Lease Information.

1.7. Project Common Areas. The term “Project Common Areas” shall mean the areas
and facilities within the Project provided and designated by Landlord for the
general use, convenience or benefit of Tenant and other tenants and occupants of
the Project (e.g., walkways, parking lots, driveways, traffic aisles,
accessways, utilities and communications conduits and facilities).

1.8. Rentable Area. The term “Rentable Area” shall mean the rentable area of the
Premises, Building and Project as reasonably determined by Landlord. The parties
agree that for all purposes under this Lease, the Rentable Area of the Premises,
Building and Project shall be deemed to be the number of rentable square feet
identified in the Basic Lease Information.

1.9. Tenant’s Building Percentage Share. The term “Tenant’s Building Percentage
Share” shall mean the percentage specified in the Basic Lease Information. If
the Rentable Area of the Premises or the Rentable Area of the Building is
changed due to a change in the actual size thereof, then Tenant’s Building
Percentage Share shall be adjusted to a percentage equal to the Rentable Area of
the Premises divided by the Rentable Area of the Building.

1.10. Tenant’s Project Percentage Share. The term “Tenant’s Project Percentage
Share” shall mean the percentage specified in the Basic Lease Information. If
the Rentable Area of the Premises or the Rentable Area of the Project is changed
due to a change in the actual size thereof, then Tenant’s Project Percentage
Share shall be adjusted to a percentage equal to the Rentable Area of the
Premises divided by the Rentable Area of the Project.

1.11. Term. The term “Term” shall have the meaning set forth in the Basic Lease
Information.

 

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2. Premises.

2.1. Demise. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, for the Term, at the rent and upon the conditions set forth below, the
Premises, together with the right in common with other Building occupants to use
the Building Common Areas and other Project occupants to use the Project Common
Areas.

2.2. Intentionally Deleted.

2.3. Reserved Rights. Provided the following actions do not unreasonably
interfere with Tenant’s access to the Premises or Tenant’s parking rights,
Landlord reserves the right to do the following from time to time:

(a) Changes. To install, use, maintain, repair, replace and relocate pipes,
ducts, shafts, conduits, wires, appurtenant meters and mechanical, electrical
and plumbing equipment and appurtenant facilities for service to other parts of
the Building or Project above the ceiling surfaces, below the floor surfaces and
within the walls of the Premises and in the central core areas of the Building
and in the Building Common Areas, and to install, use, maintain, repair, replace
and relocate any pipes, ducts, shafts, conduits, wires, appurtenant meters and
mechanical, electrical and plumbing equipment and appurtenant facilities
servicing the Premises, which are located either in the Premises or elsewhere
outside of the Premises;

(b) Boundary Changes. To change the boundary lines of the Project;

(c) Facility Changes. To alter or relocate the Common Areas or any facility
within the Project;

(d) Parking. To designate and/or redesignate specific parking spaces in the
Project for the exclusive or non-exclusive use of specific tenants in the
Project;

(e) Services. To install, use, maintain, repair, replace, restore or relocate
public or private facilities for communications and utilities on or under the
Building and/or Project; and

(f) Other. To perform such other acts and make such other changes in, to or with
respect to the Common Areas, Building and/or Project as Landlord may reasonably
deem appropriate.

2.4. Work Letter Agreements. Landlord and Tenant shall each perform the work
required to be performed by it as described in the Work Letter Agreements
attached hereto as Exhibit B-1 and Exhibit B-2. Landlord and Tenant shall each
perform such work in accordance with the terms and conditions contained therein.

3. Term.

3.1. Commencement Date. The Term shall be for the period of time specified in
the Basic Lease Information unless sooner terminated as hereinafter provided.
The Term shall commence on the date the 3rd Floor Premises are delivered to the
Tenant in the condition required herein and with the Tenant Improvements and
Tenant Extra Improvements therein and Building Common Areas and bridge
(including all systems serving the Building Common Areas, bridge and the
Premises) in “substantially completed” condition (as defined in the Work Letter
Agreement—3rd Floor), subject to adjustment for “Tenant Delays” as provided in
the Work Letter Agreement—3rd Floor but in no event prior to the Warm Shell
Completion Date (as so adjusted, the “Commencement Date”) and shall continue
thereafter in full force and effect for the period specified as the Term or
until this Lease is terminated as otherwise provided herein. For purposes of
this Lease, the first “Lease Year” shall mean the period commencing on the
Commencement Date and ending twelve (12) months thereafter, except that if the
Commencement Date is other than the first day of a calendar month, the first
“Lease Year” shall mean the period commencing on the Commencement Date and
ending on the last day of the twelfth (12th) full calendar month after the
Commencement Date. Thereafter, the term “Lease Year” shall mean a period equal
to twelve (12) full calendar months.

3.2. Delay in Delivery. Landlord shall deliver possession of the Premises to
Tenant in good, vacant, broom clean condition, with the Tenant Improvements and
Tenant Extra

 

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Improvements and Building Common Area and bridge, including Building systems
serving all of the foregoing, substantially completed, and in compliance with
all laws. If for any reason Landlord has not delivered to Tenant possession of
the Premises by the Estimated Commencement Date, this Lease shall remain in
effect and Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom. Notwithstanding the foregoing, if (a) Landlord has not
received all permits to construct the Building, the Tenant Improvements and
Tenant Extra Improvements and received design review approval for the bridge by
December 1, 2013, (b) Landlord has not commenced construction of the Building
(beyond the pad or other work that has been completed prior to the date hereof)
by January 1, 2014, (c) Landlord has not received all permits to construct the
bridge by March 1, 2014, or (d) the Commencement Date has not occurred on or
before March 1, 2015, then, as Tenant’s sole and exclusive remedy, Tenant may
terminate this Lease by written notice to Landlord given prior to the
satisfaction of the applicable condition, whereupon any monies previously paid
by Tenant to Landlord shall be reimbursed to Tenant. The foregoing dates shall
be extended one day for each day that Landlord is delayed in completing the
requirements to meet the above conditions due to Tenant Delay and one day for
each day after June 14, 2013 until Tenant submits this Lease to Landlord fully
executed by Tenant.

3.3. Commencement Date Memorandum. Following the date on which Landlord delivers
possession of the Premises to Tenant and the Commencement Date, Landlord may
prepare and deliver to Tenant a commencement date memorandum (the “Commencement
Date Memorandum”) in the form of Exhibit C, attached hereto, subject to such
changes in the form as may be required to insure the accuracy thereof. The
Commencement Date Memorandum shall certify the date on which Landlord delivered
possession of the Premises to Tenant and the dates upon which the Term commences
and expires. Tenant’s failure to execute and deliver to Landlord the
Commencement Date Memorandum within ten (10) days after Tenant’s receipt of the
Commencement Date Memorandum shall be conclusive upon Tenant as to the matters
set forth in the Commencement Date Memorandum.

4. Rent.

4.1. Base Rent. For purposes of this Lease, the term “Rent” shall mean the Base
Rent, all additional rent, and all of the other monetary obligations of Tenant
under this Lease. Tenant shall pay to Landlord the Base Rent specified in the
Basic Lease Information, in advance, on or before the first day of each and
every calendar month commencing on the Commencement Date. If the Term commences
on other than the first day of a calendar month, the first payment of Base Rent
shall be appropriately prorated on the basis of the number of days in such
calendar month. If the Term expires on other than the last day of a calendar
month, the last payment of Base Rent shall be appropriately prorated based on
the number of days in such calendar month.

4.2. Adjustments to Base Rent. The Base Rent shall be adjusted as provided in
the Addendum attached hereto.

4.3. Additional Rent. Commencing on the Commencement Date, Tenant shall pay, as
additional rent, all amounts of money that Tenant is required to pay to Landlord
under this Lease in addition to monthly Base Rent whether or not the same is
designated “additional rent.” Tenant shall pay to Landlord all additional rent
upon Landlord’s written request or otherwise as provided in this Lease.

4.4. Late Payment. Tenant acknowledges that late payment of Rent to Landlord
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, processing and accounting charges and late charges which may be
imposed on Landlord by the terms of any trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sums due from Tenant shall
not be received by Landlord within five (5) days of when due, Tenant shall pay
to Landlord a late charge in an amount equal to five percent (5%) of such
overdue amount. 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. Acceptance of such late charge by Landlord 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.
Notwithstanding anything to the contrary herein, before assessing a late charge
or late interest the first time in any one (1) year period, Landlord shall
provide Tenant written notice of the delinquency, and shall waive such late
charge and late interest if Tenant pays such delinquency within five (5) days
thereafter.

 

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4.5. Interest. In addition to the imposition of a late payment charge pursuant
to Section 4.4 above, any Rent that is not paid within five (5) days of when due
shall bear interest from the date due until paid at the rate that is the lesser
of eight percent (8%) per annum (the “Interest Rate”) or the maximum rate
permitted by law. Payment of interest shall not excuse or cure any default
hereunder by Tenant.

4.6. Payment. All payments due from Tenant to Landlord hereunder shall be made
to Landlord without deduction or offset, in lawful money of the United States of
America at Landlord’s address for notices hereunder, or to such other person or
at such other place as Landlord may from time to time designate in writing to
Tenant.

5. Taxes.

5.1. Tenants Obligations. Tenant shall pay to Landlord, as additional rent,
Tenant’s Building Percentage Share of any increase in Taxes over the Base Taxes
during each year of the Term (prorated for any partial calendar year during the
Term). The term “Base Taxes” shall mean those taxes incurred by Landlord during
the calendar year specified as the Base Year in the Basic Lease Information.

5.2. Definition of Taxes. The term “Taxes” shall include all transit charges,
housing fund assessments, real estate taxes and all other taxes relating to the
Premises, Building and Project of every kind and nature whatsoever, including
any supplemental real estate taxes attributable to any period during the Term;
all taxes which may be levied in lieu of real estate taxes; and all assessments,
assessment bonds, levies, fees, penalties (if a result of Tenant’s delinquency)
and other governmental charges (including, but not limited to, charges for
parking, traffic and any storm drainage/flood control facilities, studies and
improvements, water and sewer service studies and improvements, and fire
services studies and improvements); and all amounts necessary to be expended
because of governmental levies, whether general or special, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind and nature for public
improvements, services, benefits or any other purpose, which are assessed, based
upon the use or occupancy of the Premises, Building and/or Project, or levied,
confirmed, imposed or become a lien upon the Premises, Building and/or Project,
or become payable during the Term, and which are attributable to any period
within the Term.

5.3. Limitation. Nothing contained in this Lease shall require Tenant to pay any
franchise, estate, inheritance, succession or transfer tax of Landlord, or any
income, profits or revenue tax or charge upon the net income of Landlord from
all sources. In addition, notwithstanding anything herein to the contrary,
“Taxes” shall not include and Tenant shall not be required to pay any portion of
any tax or assessment expense or any increase therein (a) levied on Landlord’s
rental income, unless such tax or assessment is imposed in lieu of real property
taxes; (b) imposed on land and improvements other than the Project;
(c) attributable to Landlord’s gift or state taxes; or (d) resulting from the
improvement of any of the Project for the sole use of other occupants to the
extent such improvements exceed the value of typical improvements in the
Project. In addition, (i) Taxes shall not include any amounts otherwise included
as Taxes that relate solely to another building or buildings in the Project,
(ii) Taxes that relate to more than just the Building may be included in Taxes
only to the extent reasonably allocable to the Building and (iii) if Base Taxes
are not based on a fully completed and assessed Building, Base Taxes shall be
increased to reflect a fully completed and assessed Building.

5.4. Installment Election. In the case of any Taxes which may be evidenced by
improvement or other bonds or which may be paid in annual or other periodic
installments, Landlord shall elect to cause such bonds to be issued or such
assessment to be paid in installments over the maximum period permitted by law.

5.5. Estimate of Tenant’s Share of Taxes. Prior to the commencement of each
calendar year during the Term, or as soon thereafter as reasonably practicable,
Landlord shall notify Tenant in writing of Landlord’s estimate of the amount of
Taxes which will be payable by Tenant for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar year, Tenant
shall pay to Landlord in advance, together with Base Rent, one-twelfth
(1/12th) of the estimated amount; provided, however, if Landlord fails to notify
Tenant of

 

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the estimated amount of Tenant’s share of Taxes for the ensuing calendar year
prior to the end of the current calendar year, Tenant shall be required to
continue to pay to Landlord each month in advance Tenant’s estimated share of
Taxes on the basis of the amount due for the immediately prior month until
thirty (30) days after Landlord notifies Tenant of the estimated amount of
Tenant’s share of Taxes for the ensuing calendar year. If at any time it appears
to Landlord that Tenant’s share of Taxes payable for the current calendar year
will vary from Landlord’s estimate, Landlord may give notice to Tenant of
Landlord’s revised estimate for the year, and subsequent payments by Tenant for
the year shall be based on the revised estimate.

5.6. Annual Adjustment. Within one hundred twenty (120) days after the close of
each calendar year during the Term, or as soon after the one hundred twenty
(120) day period as reasonably practicable, Landlord shall deliver to Tenant a
statement of the adjustment to the Taxes for the prior calendar year. If, on the
basis of the statement, Tenant owes an amount that is less than the estimated
payments for the prior calendar year previously made by Tenant, Landlord shall
apply the excess to the next payment of Rent due. If, on the basis of the
statement, Tenant owes an amount that is more than the amount of the estimated
payments made by Tenant for the prior calendar year, Tenant shall pay the
deficiency to Landlord within thirty (30) days after delivery of the statement.
The year-end statement shall be binding upon Tenant unless Tenant notifies
Landlord in writing of any objection thereto within one hundred eighty
(180) days after Tenant’s receipt of the year end statement. In addition, if,
after the end of any calendar year or any annual adjustment of Taxes for a
calendar year, any Taxes are assessed or levied against the Premises, Building
or Project that are attributable to any period within the Term (e.g.,
supplemental taxes or escaped taxes), Landlord shall notify Tenant of its share
of such additional Taxes and Tenant shall pay such amount to Landlord within
thirty (30) days after Landlord’s written request therefor.

5.7. Personal Property Taxes. Tenant shall pay or cause to be paid, not less
than ten (10) days prior to delinquency, any and all taxes and assessments
levied upon all of Tenant’s trade fixtures, inventories and other personal
property in, on or about the Premises. When possible, Tenant shall cause
Tenant’s personal property to be assessed and billed separately from the real or
personal property of Landlord. On request by Landlord, Tenant shall furnish
Landlord with satisfactory evidence of payment of Tenant’s business personal
property taxes and deliver copies of such business personal property tax bills
to Landlord.

5.8. Taxes on Tenant Improvements. Notwithstanding any other provision hereof,
Tenant shall pay to Landlord the full amount of any increase in Taxes during the
Term resulting from any and all alterations of any kind whatsoever placed in, on
or about or made to the Premises, Building or Project for Tenant that exceed the
value of typical improvements in the Project, other than the Tenant Improvements
and Tenant Extra Improvements, which shall be included in Base Taxes.

6. Operating Expenses.

6.1. Obligation to Pay Operating Expenses. Operating Expenses at the level
incurred for the Base Year are included in the Base Rent for each calendar year
of the Term. Commencing with the first calendar month following the Base Year,
Tenant shall pay to Landlord as additional rent during the Term (i) Tenant’s
Building Percentage Share of any increase in Operating Expenses allocated to the
ownership, operation, repair and/or maintenance of the Building over the Base
Operating Expenses allocated to the Building and (ii) Tenant’s Project
Percentage Share of any increase in Operating Expenses allocated to the
ownership, repair and maintenance of the Project over the Base Operating
Expenses for the Project, as reasonably determined by Landlord; provided that
Landlord has the right to allocate any Operating Expenses incurred in connection
with the ownership, operation, repair and/or maintenance of the Project to one
or more particular buildings within the Project and at such ratios as Landlord
reasonably determines based upon the nature of the Operating Expense; and
provided further that any Operating Expense that is solely related to a single
Building shall be allocated solely to such Building. The term “Base Operating
Expenses” shall mean those Operating Expenses incurred by Landlord during the
calendar year specified as the Base Year in the Basic Lease Information.

6.2. Definition of Operating Expenses. The term “Operating Expenses” shall
include all expenses and costs of every kind and nature which Landlord shall pay
or become obligated to pay because of or in connection with the ownership,
operation, repair and/or

 

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maintenance of the Building, Common Areas and/or Project, and the supporting
facilities, including, without limitation: (A) all maintenance, janitorial and
security costs, (B) costs for all materials, supplies and equipment; (C) all
costs of water, heat, gas power, electricity, refuse collection, parking lot
sweeping, landscaping, and other utilities and services provided or allocated to
the Building and the Common Areas; (D) all property management expenses,
including, without limitation, all property management fees and all expense and
cost reimbursements, (E) all costs of alterations or improvements to the
Building or Common Areas made to achieve compliance with federal, state and
local law including, without limitation, the Americans with Disabilities Act (42
U.S.C. Section 12101 et seq.), or to reduce Operating Expenses or improve the
operating efficiency of the Building or the Project, all of which costs will be
amortized over the useful life of such alteration or improvement as reasonably
determined by Landlord, together with interest upon the unamortized balance at
the Interest Rate or such other higher rate as may have been paid by Landlord on
funds borrowed for the purpose of making the alterations or improvements;
(F) premiums for insurance maintained by Landlord pursuant to this Lease or with
respect to the Building and the Project; (G) costs for repairs, replacements,
and general maintenance of the Building, Common Areas and Project, but excluding
any repairs or replacements paid for out of insurance proceeds or by other
parties; (H) all costs incurred by Landlord for making any capital improvements
or structural repairs to the Building or the Common Areas, which costs will be
amortized over the useful life of such improvement, repair or modification, as
reasonably determined by Landlord, together with interest upon the unamortized
balance at the Interest Rate or such other higher rate as may have been paid by
Landlord on funds borrowed for the purpose of constructing the improvements or
making the improvements or repairs; (I) all costs of maintaining machinery,
equipment and directional signage or other markers; and (J) the share allocable
to the Building of dues and assessments payable under any reciprocal easement or
common area maintenance agreements or declarations or by any owners associations
affecting the Building or the Project. Notwithstanding the foregoing, the amount
of Controllable Operating Expenses (defined below) payable by Tenant pursuant to
Section 6.1 above during the initial Term shall not increase by more than three
percent (3%) per calendar year on a cumulative basis. For purposes of this
Lease, the term “Controllable Operating Expenses” shall mean and include all
Operating Expenses other than Taxes, insurance and utilities. Notwithstanding
anything in this Lease to the contrary, “Operating Expenses” shall also not
include all or any portion of the following: (a) costs occasioned by casualties
or condemnation; (b) costs to correct any construction defect in the Project or
to correct any violation of any covenant, condition, restriction, underwriter’s
requirement or law applicable to the Project on the Commencement Date; (c) costs
of the initial construction of the Building or any renovation, improvement,
painting or redecorating of any portion of the Project not made available for
Tenant’s use; (d) insurance deductibles, and co-insurance payments; (e) costs
incurred in connection with the presence of any Hazardous Material, except to
the extent caused by the release or emission of the Hazardous Material in
question by Tenant; (f) expense reserves; (g) costs which could properly be
capitalized under generally accepted accounting principles, except such costs to
the extent included in Sections 6.2(E) and 6.2(H) above; (h) costs for services
not provided to Tenant under this Lease or of a nature that are payable directly
by Tenant under this Lease; and (i) any fee, profit or compensation for
management and administration of the Project in excess of 4% of gross rent.
Notwithstanding anything to the contrary in these Articles 5 or 6, Tenant shall
not be required to pay any expenses or taxes otherwise due hereunder if Landlord
first notifies Tenant of such expenses or taxes in a statement received by
Tenant more than eighteen (18) months after such expenses or taxes are incurred.

6.3. Less Than Full Occupancy. If the Building or the Project are less than
ninety-five percent (95%) occupied during any year of the Term, including the
Base Year, Operating Expenses for each such calendar year shall be adjusted to
equal Landlord’s reasonable estimate of Operating Expenses as though ninety-five
percent (95%) of the total rentable area of the Building and/or the Project as
applicable had been occupied. Notwithstanding anything herein to the contrary,
Tenant shall have no obligation to pay the cost of any Taxes or Operating
Expenses of a type not also included in the actual Taxes or Operating Expenses
of the Base Year unless the initial cost of such Tax or Operating Expense is
added to the Taxes or Operating Expenses of the Base Year.

6.4. Estimates of Operating Expenses. Tenant shall pay to Landlord each month at
the same time and in the same manner as monthly Base Rent one-twelfth
(1/12th) of Landlord’s estimate of the amount of Operating Expenses payable by
Tenant for the then-current

 

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calendar year. If at any time it appears to Landlord that Tenant’s share of
Operating Expenses payable for the current calendar year will vary from
Landlord’s estimate, Landlord may give notice to Tenant of Landlord’s revised
estimate for the calendar year, and subsequent payments by Tenant for the
calendar year shall be based on the revised estimate. Within one hundred twenty
(120) days after the close of each calendar year, or as soon after such 120-day
period as practicable, Landlord shall deliver to Tenant a statement in
reasonable detail of the actual amount of Operating Expenses payable by Tenant
for such calendar year. Landlord’s failure to provide such statement to Tenant
within the 120-day period shall not act as a waiver and shall not excuse Tenant
or Landlord from making the adjustments to reflect actual costs as provided
herein. If on the basis of such statement Tenant owes an amount that is less
than the estimated payments for such calendar year previously made by Tenant,
Landlord shall credit such excess against the next payment of Rent due. If on
the basis of such statement Tenant owes an amount that is more than the
estimated payments for such calendar year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within thirty (30) days after delivery of
the statement. In addition, if, after the end of any calendar year or any annual
adjustment of Operating Expenses for a calendar year, Operating Expenses are
incurred or billed to Landlord that are attributable to any period within the
Term (e.g., sewer district flow fees), Landlord shall notify Tenant of its share
of such additional Operating Expenses and Tenant shall pay such amount to
Landlord within thirty (30) days after Landlord’s written request therefor. The
obligations of Landlord and Tenant under this Section 6.4 with respect to the
reconciliation between the estimated and actual amounts of Operating Expenses
payable by Tenant for the last year of the Term shall survive the termination of
this Lease. Tenant or its authorized representative compensated on a
non-contingent basis shall have the right to inspect the books of Landlord, for
the purpose of verifying the information contained in any Operating Expense
statement.

6.5. Payment at End of Term. Any amount payable by Tenant which would not
otherwise be due until after the termination of this Lease, shall, if the exact
amount is uncertain at the time that this Lease terminates, be paid by Tenant to
Landlord upon such termination in an amount to be estimated by Landlord with an
adjustment to be made once the exact amount is known.

7. Permitted Use.

7.1. Use and Compliance with Laws. The Premises shall be used and occupied by
Tenant solely for the Permitted Use set forth in the Basic Lease Information.
Tenant shall, at Tenant’s expense, comply promptly with all applicable federal,
state and local laws, regulations, ordinances, rules, orders, and requirements
in effect during the Term relating to the condition, use or occupancy of the
Premises. Tenant shall not use or permit the use of the Premises in any manner
that will tend to create waste or a nuisance, or that unreasonably disturbs
other tenants of the Building or Project, nor shall Tenant place or maintain any
signs, antennas, awnings, lighting or plumbing fixtures, loudspeakers, exterior
decoration or similar devises on the Building or the Project or visible from the
exterior of the Premises without Landlord’s prior written consent, which consent
may be withheld in Landlord’s sole discretion. Tenant shall not use any
corridors, sidewalks, stairs, elevators or other areas outside of the Premises
for storage or any purpose other than access to the Premises. Except as
otherwise provided herein, Tenant shall not use, keep or permit to be used or
kept on the Premises any foul or noxious gas or substance, nor shall Tenant do
or permit to be done anything in and about the Premises, either in connection
with activities hereunder expressly permitted or otherwise, which would cause an
increase in premiums for or a cancellation of any policy of insurance (including
fire insurance) maintained by Landlord in connection with the Premises, Building
or Project or which would violate the terms of any covenants, conditions or
restrictions, the design guidelines, the sign guidelines affecting the Building
or the land on which it is located, or the Rules (as the term is defined under
Section 7.4.2 below). Notwithstanding anything in this Lease to the contrary,
Tenant shall not be required to comply with or cause the Premises to comply with
any laws, rules, regulations or insurance requirements requiring the
construction of alterations unless such compliance is necessitated as a result
of Tenant’s particular use of the Premises.

7.2. Signs. Except as provided in Section 29 of the Addendum, Tenant shall not
attach or install any sign to or on any part of the outside of the Premises, the
Building or the Project, or in the halls, lobbies, windows or elevator banks of
the Building without Landlord’s prior written consent, which consent may be
withheld in Landlord’s sole discretion. Any signage approved by Landlord shall
be subject to prior approval of and conformance with the

 

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requirements of the design review committee of the Project and the design review
agency of the applicable city and/or county, and shall be installed at Tenant’s
sole cost and expense. Tenant, at its sole cost and expense, shall (i) maintain
all permitted signage in good condition and repair, and (ii) remove such signage
upon expiration or earlier termination of this Lease and restore the Building
and the Project to their condition existing immediately prior to the placement
or erection of said sign or signs in such a condition that no discoloration or
other evidence of the prior sign appears on the Building where the sign
previously was affixed. If Tenant fails to do so, Landlord may maintain, repair
and/or remove such signage and restore the Building and or Project to its
original condition without notice to Tenant and at Tenant’s expense, the cost of
which shall be payable by Tenant as additional rent.

7.3. Suitability. Tenant acknowledges that, except as otherwise expressly
provided in this Lease, neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises, Building or with
respect to the suitability or fitness of either for the conduct of Tenant’s
business or for any other purpose.

7.4. Use of Common Areas.

7.4.1. Right to Use Common Areas. Landlord gives Tenant and its authorized
employees, agents, customers, representatives and invitees the nonexclusive
right to use the Common Areas with others who are entitled to use the Common
Areas, subject to Landlord’s rights as set forth in this Section 7.4.

7.4.2. Rules. All Common Areas shall be subject to the exclusive control and
management of Landlord and Landlord shall have the right to establish, modify,
amend and enforce reasonable rules and regulations with respect to the Common
Areas. Tenant acknowledges receipt of a copy of the current rules and
regulations (the “Rules”) attached hereto as Exhibit D, and agrees that they
may, from time to time, be modified or amended by Landlord in a commercially
reasonable manner. Tenant agrees to abide by and conform with the Rules; to
cause its concessionaires and its and their employees and agents to abide by the
Rules; and to use its best efforts to cause its customers, invitees and
licensees to abide by the Rules. Notwithstanding anything herein to the
contrary, Tenant shall not be required to comply with any new rule or regulation
unless the same applies non-discriminatorily to all occupants of the Project,
does not unreasonably interfere with Tenant’s use of the Premises or Tenant’s
parking rights and does not materially increase the obligations or decrease the
rights of Tenant under this Lease.

7.4.3. Use. So long as the same do not unreasonably interfere with Tenant’s
access to the Premises or Tenant’s parking rights, Landlord shall have the right
to close temporarily any portion of the Common Areas for the purpose of
discouraging use by parties who are not tenants or customers of tenants; to use
portions of the Common Areas while engaged in making additional improvements or
repairs or alterations to the Building or the Project; to use or permit the use
of the Common Areas by others in the Project to whom Landlord may grant or have
granted such rights; and to do and perform such acts in, to, and with respect
to, the Common Areas as in the use of good business judgment Landlord shall
determine to be appropriate for the Project.

7.4.4. Change in Common Areas. So long as the same do not unreasonably interfere
with Tenant’s access to the Premises or Tenant’s parking rights, Landlord shall
have the right to increase or reduce the Common Areas, provided the Project
meets the parking requirement under Section 7.6 below.

7.4.5. Recycling. Tenant shall cooperate with Landlord and other tenants in the
Project in recycling waste paper, cardboard or such other materials identified
under any trash recycling program that may be established in order to reduce
trash collection costs.

7.5. Environmental Matters.

7.5.1. Hazardous Materials. The term “Hazardous Materials” as used herein means
any petroleum products, asbestos, polychlorinated biphenyls, P.C.B.’s, or
chemicals, compounds, materials, mixtures or substances that are now or
hereafter defined or listed in, or otherwise classified as a “hazardous
substance”, “hazardous material”, “hazardous waste”, “extremely hazardous
waste”, “infectious waste”, “toxic substance”, “toxic pollutant” or

 

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any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity or toxicity pursuant to any federal, state or local
environmental law, regulation, ordinance, resolution, order or decree relating
to industrial hygiene, environmental protection or the use, analysis,
generation, manufacture, storage, release, disposal or transportation of the
same (“Hazardous Materials Laws”).

7.5.2. Tenant’s Covenants. Except for ordinary office supplies and janitorial
cleaning materials which in common business practice are customarily and
lawfully used, stored and disposed of in small quantities, Tenant shall not use,
manufacture, store, release, dispose or transport any Hazardous Materials in,
on, under or about the Premises, the Building or the Project without giving
prior written notice to Landlord and obtaining Landlord’s prior written consent,
which consent Landlord may withhold in its reasonable discretion. Tenant shall
at its own expense procure, maintain in effect, and comply with all conditions
of any and all permits, licenses, and other governmental and regulatory
approvals required in connection with Tenant’s generation, use, storage,
disposal and transportation of Hazardous Materials. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials
removed from the Premises to be removed and transported solely by duly licensed
haulers to duly licensed facilities for final disposal of such materials and
wastes. Tenant shall not maintain or install in, on, under or about the
Premises, the Building or the Project any above or below ground storage tanks,
clarifiers or sumps, nor any wells for the monitoring of ground water, soils or
subsoils.

7.5.3. Notice. To the extent of Tenant’s actual knowledge, Tenant shall
immediately notify Landlord in writing of: (a) any enforcement, cleanup, removal
or other governmental or regulatory action relating to the Premises instituted,
completed or threatened pursuant to any Hazardous Materials Law; (b) any claim
made or threatened by any person or entity against Tenant or the Premises
relating to damage, contribution, cost, recovery, compensation, loss or injury
resulting from or claimed to result from any Hazardous Materials; and (c) any
reports, information, inquiries or demands made, ordered, or received by or on
behalf of Tenant which arise out of or in connection with the existence or
potential existence of any Hazardous Materials in, on, under or about the
Premises, the Building or the Project, including, without limitation, any
complaints, notices, warnings, asserted violations, or mandatory or voluntary
informational filings with any governmental agency in connection therewith, and
immediately supply Landlord with copies thereof.

7.5.4. Indemnity. Tenant shall indemnify, defend (by counsel reasonably
acceptable to Landlord), protect and hold harmless Landlord, and each of
Landlord’s officers, directors, partners, employees, affiliates, joint
venturers, members, trustees, owners, shareholders, principals, agents,
representatives, lenders, successors and assigns, from and against any and all
claims, liabilities, damages, fines, penalties, forfeitures, losses, cleanup and
remediation costs or expenses (including attorneys’ fees) or death of or injury
to any person or damage to any property whatsoever, arising from or caused in
whole or in part, directly or indirectly, by (i) the use, analysis, generation,
manufacture, storage, release, disposal, or transportation of Hazardous
Materials by Tenant and Tenant’s agents, employees, contractors, licensees or
invitees to, in, on, under, about or from the Premises, the Building or the
Project, or (ii) Tenant’s failure to comply with any Hazardous Materials Law.
Tenant’s obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
cleanup, detoxification or decontamination of the Premises, the Building, or the
Project and the preparation and implementation of any closure, remedial action
or other required plans in connection therewith, and shall survive the
expiration or earlier termination of this Lease.

7.5.5. Landlord’s Rights. Subject to the terms of Section 22.5 herein, Landlord
shall have the right to enter the Premises at all times upon reasonable prior
notice for the purposes of ascertaining compliance by Tenant with all applicable
Hazardous Materials Laws; provided, however, that in the instance of an
emergency no notice shall be required. Subject to the notice requirements in
Section 15.1, Landlord shall have the option to declare a default of this Lease
for the release or discharge of Hazardous Materials by Tenant or Tenant’s
employees, agents, contractors, or invitees on the Premises, Building or Project
in violation of law or in deviation from prescribed procedures in Tenant’s use
or storage of Hazardous Materials. If Tenant fails to comply with any of the
provisions under this Section 7.5, Landlord shall have the right (but not the
obligation) to remove or otherwise cleanup any Hazardous

 

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Materials from the Premises, the Building or the Project. In such case, the
costs of any Hazardous Materials investigation, removal or other cleanup
(including, without limitation, transportation, storage, disposal and attorneys’
fees and costs) will be additional rent due under this Lease, whether or not a
court has ordered the cleanup, and will become due and payable on demand by
Landlord.

7.6. Parking. Landlord grants to Tenant and Tenant’s customers, suppliers,
employees and invitees during the Term, including any extension thereof, the
right to use in the parking areas designated on Exhibit A-2 the number of
parking spaces stated in the Basic Lease Information on an unreserved basis for
the use of motor vehicles, subject to rights reserved to Landlord as specified
in this Section 7.6. In addition, Tenant may use the parking stalls located in
the vicinity of the building pad located adjacent to the Club One building at
1201 Redwood Way until such time as a building is constructed on such pad.
Subject to the terms of Section 7.4, Landlord reserves the right to grant
similar nonexclusive rights to other tenants; to promulgate rules and
regulations relating to the use of the including parking area; to make changes
in the parking layout from time to time; and to do and perform any other acts in
and to these areas and improvements as Landlord determines to be advisable.
Tenant agrees not to overburden the parking facilities and to abide by and
conform with the rules and regulations and to cause its employees and agents to
abide by and conform to the rules and regulations. Upon request, Tenant shall
provide Landlord with license plate numbers of all vehicles driven by its
employees and to cause Tenant’s employees to park only in spaces specifically
designated for tenant parking. Subject to the terms of Section 7.4, Landlord
shall have the unqualified right to rearrange or reduce the number of parking
spaces; provided, however, the ratio of the number of parking spaces available
to Tenant will be no less than 3.8 spaces per 1,000 usable square feet of the
Premises. Landlord shall ensure that the parking available to the Project shall
at all times comply with applicable City requirements.

8. Services.

8.1. Utilities and Services. Landlord shall (i) furnish the Premises with
electricity for lighting fixtures and office machines, gas, sewer, water and
heat and air conditioning required for the comfortable occupancy and operation
of the Premises, during all hours of Tenant’s operation and at such other times
as Tenant may reasonably request and (ii) provide customary trash pick up, and
daily janitorial service on normal business days. Landlord shall, at Landlord’s
sole cost and expense, install separate metering for electricity and gas usage
by Tenant in the Premises (or control systems to measure same), including
without limitation electrical and/or gas for mechanical systems such as HVAC and
boilers. In such case, Tenant shall pay for such utilities (i) directly to the
utility provider, in which case Tenant shall receive a credit toward its Base
Rent for the budgeted cost of such utilities in the Base Year (the “Base Year
Budget Amount”, which is fourteen cents ($.14) per square foot per month for
electricity and two cents ($.02) per square foot per month for gas) determined
in Landlord’s reasonable discretion, or (ii) to Landlord as additional rent, in
which case Tenant shall reimburse Landlord within thirty (30) days after
Landlord’s written request for the actual utility cost for such utilities in
excess of the Base Year Budget Amount determined in Landlord’s reasonable
discretion. For purposes of this Lease, usual business hours are Monday through
Friday, 7 am to 6 pm, national holidays excepted. Landlord shall provide Tenant
with access to the Premises twenty-four hours a day, seven days a week. For the
avoidance of doubt, Tenant shall be free to use electricity, gas and HVAC in the
Premises at any time without payment of any after-hours or other charge other
than the separately metered utility costs; provided that Tenant shall reimburse
Landlord within thirty days following written demand for the increase in
maintenance and replacement costs caused by Tenant’s usage in excess of typical
office occupants determined in Landlord’s reasonable discretion.

8.2. No Liability. Landlord shall not be in default hereunder or be liable for
any damages or personal injuries to any person directly or indirectly resulting
from, nor shall there be any Rent abatement by reason of, any interruption or
curtailment whatsoever in utility services due to causes beyond Landlord’s
reasonable control; provided, in the event of any material interruption in
essential utility services in excess of two (2) continuous business days that
prevents the normal operation of Tenant’s business in the Premises, which is
solely caused by the negligence or willful misconduct of Landlord, commencing on
the third (3rd) continuous business day of such interruption until such
essential utility services are restored, Rent shall abate to the extent Tenant’s
use of the Premises are diminished. Notwithstanding anything herein to the
contrary, if the Premises should become not reasonably suitable for Tenant’s use
as a

 

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consequence of cessation of utilities or other services, interference with
access to the Premises, legal restrictions or the presence of any Hazardous
Material which does not result from Tenant’s release or emission of such
Hazardous Material, and in any of the foregoing cases the interference with
Tenant’s use of the Premises persists for seven (7) days, then Tenant shall be
entitled to an equitable abatement of rent to the extent of the interference
with Tenant’s use of the Premises occasioned thereby.

9. Maintenance and Repairs.

9.1. Tenant’s Repairs and Maintenance. Tenant shall, at Tenant’s expense,
maintain the Premises in good order, condition and repair, including without
limitation, (i) all interior surfaces, ceilings, walls, door frames, interior
window frames, floors, carpets, draperies, window coverings and fixtures,
(ii) all interior windows, doors, locks and closing devices, entrances, interior
plate glass, and signs, (iii) all phone lines, electrical wiring, and equipment,
switches, outlets and light bulbs, (iv) all of Tenant’s personal property,
improvements and alterations, and (vii) all other fixtures and special items
installed by or for the benefit of, or at the expense of Tenant. Tenant shall
not enter onto the roof area of the Building, except for the purpose of
installing or maintaining (i) Tenant’s signage to the extent Tenant is required
to do so under the terms of this Lease and (ii) any of Tenant’s equipment
thereon that Landlord has approved, which approval Landlord shall not
unreasonably withhold, condition, or delay. Tenant shall repair any damage to
the roof area caused by its entry.

9.2. Landlord’s Repairs and Maintenance. Landlord shall keep in good condition
and repair the foundation, roof structure, exterior walls and other structural
parts of the Building, the Building systems, the Common Areas, and all other
portions of the Building not the obligation of Tenant. Tenant expressly waives
the benefits of any statute, including Civil Code Sections 1941 and 1942, which
would afford Tenant the right to make repairs at Landlord’s expense or to
terminate this Lease due to Landlord’s failure to keep the Building in good
order, condition and repair. Landlord shall have no liability to Tenant for any
damage, inconvenience or interference with the use of the Premises by Tenant as
the result of Landlord performing any such maintenance and repair work.

9.3. Failure to Repair or Maintain. In the event Tenant fails to perform
Tenant’s obligations under this Section 9 within applicable notice and cure
periods, Landlord may, but shall not be required to, give Tenant notice to do
such acts as are reasonably required to so maintain the Premises. If Tenant
shall fail to commence such work and diligently prosecute it to completion, then
Landlord shall have the right (but not the obligation) to do such acts and
expend such funds at the expense of Tenant as are reasonably required to perform
such work. Any amounts so expended by Landlord will be additional rent due under
this Lease, and such amounts will become due and payable on demand by Landlord.
Landlord shall have no liability to Tenant for any such damages, inconvenience
or interference with the use of the Premises by Tenant as a result of performing
such work.

9.4. Surrender of Premises. Upon the expiration or earlier termination of this
Lease, Tenant shall surrender the Premises to Landlord in the condition and
repair existing as of the Commencement Date, ordinary wear and tear, casualties,
condemnation, Hazardous Materials (other than those released or emitted by
Tenant), alterations or other interior improvements which it is permitted to
surrender at the termination of this Lease and repairs that Tenant is not
responsible for under this Lease, excepted. The term “ordinary wear and tear” as
used herein shall mean wear and tear which normally manifests itself solely
through the passage of time consistent with the employment of commercially
prudent measures to protect finishes and components from damage and excessive
wear, the application of regular and appropriate preventative maintenance
practices and procedures, routine cleaning and servicing as often as appropriate
for Class A corporate and professional office occupancies in the Petaluma office
market. The term “ordinary wear and tear” would thus encompass the natural
fading of painted surfaces, fabric and materials over time, and carpet wear
caused by normal foot traffic. The term “ordinary wear and tear” shall not
include any damage or deterioration that could have been prevented by Tenant’s
employment of ordinary prudence, care and diligence in the occupancy and use of
the Premises and the performance of all of its obligations under this Lease.
Items not considered reasonable wear and tear hereunder include the following
for which Tenant shall bear the obligation for repair and restoration (except to
the extent caused by the negligence or willful misconduct of Landlord or its
employees or agents, or Landlord’s violation of this Lease) (i) excessively
soiled, stained, or marked surfaces or finishes; (ii) damage, including holes in

 

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building surfaces (e.g., cabinets, doors, walls, ceilings and floors) caused by
the installation or removal of Tenant’s trade fixtures, furnishings,
decorations, equipment, alterations, utility installations, security systems,
communications systems (including cabling, wiring and conduits), displays and
signs; and (iii) damage to any component, fixture, hardware, system or component
part thereof within the Premises, and any such damage to the Building or
Project, caused by Tenant or its agents, contractors or employees, subject to
Section 11.3 herein. Tenant, at its sole cost and expense, agrees to repair any
damages to the Premises caused by or in connection with the removal of any
articles of personal property, business or trade fixtures, signs, machinery,
equipment, cabinetwork, furniture, moveable partitions or permanent improvements
or additions, including without limitation thereto, repairing the floor and
patching and painting the walls where required by Landlord to Landlord’s
reasonable satisfaction. Tenant shall indemnify Landlord against any loss or
liability resulting from delay by Tenant in so surrendering the Premises,
including without limitation, any claims made by any succeeding tenant resulting
from such delay.

10. Alterations.

10.1. Consent Required. Tenant shall not make any alterations, improvements or
additions (each, an “Alteration”) in, on or about the Premises without
Landlord’s prior written consent, which consent may be withheld by Landlord in
its sole and absolute discretion. Notwithstanding the foregoing, Tenant may make
Alterations without Landlord’s prior written consent where (i) the reasonably
estimated cost of the Alteration does not exceed $25,000, and (ii) such
Alterations do not affect or involve the structural integrity, roof membrane,
exterior areas, building systems or water-tight nature of the Premises;
provided, however, minor changes such as adding or relocating electric outlets
or light switches shall not be considered to affect or involve the build
systems). In requesting Landlord’s consent, Tenant shall, at Tenant’s sole cost,
submit to Landlord complete drawings and specifications describing the
Alteration and the identity of the proposed contractor. Notwithstanding anything
in this Lease to the contrary, Tenant’s trade fixtures, furniture, equipment and
other personal property installed in the Premises (“Tenant’s Property”) shall at
all times be and remain Tenant’s property. At any time Tenant may remove
Tenant’s Property from the Premises, provided that Tenant repairs all damage
caused by such removal. Landlord shall have no lien or other interest in any
item of Tenant’s Property. Landlord shall have no right to require Tenant to
remove any alterations unless it notifies Tenant at the time it consents to such
alteration that it shall require such alteration to be removed.

10.2. Conditions.

10.2.1. Notice. Before commencing any work relating to Alterations requiring
consent pursuant to Section 10.1 above, Tenant shall notify Landlord of the
expected date of commencement thereof and of the anticipated cost thereof.
Landlord shall then have the right at any time and from time to time to post and
maintain on the Premises such notices as Landlord reasonably deems necessary to
protect the Premises and Landlord from mechanics’ liens or any other liens.

10.2.2. Liens. Tenant shall pay when due all claims for labor or materials
furnished to Tenant for use in the Premises. Tenant shall not permit any
mechanics’ liens or any other liens to be levied against the Premises for any
labor or materials furnished to Tenant in connection with work performed on the
Premises by or at the direction of Tenant. Tenant shall indemnify, hold harmless
and defend Landlord (by counsel reasonably satisfactory to Landlord) from any
liens and encumbrances arising out of any work performed or materials furnished
by or at the direction of Tenant. In the event that Tenant shall not, within
five (5) business days following the imposition of any such lien, cause such
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other remedies provided herein by law, the right,
but not the obligation, to cause the same to be released by such means as it
shall deem proper, including payment of the claim giving rise to such lien. All
such sums paid by Landlord and all expenses incurred by it in connection
therewith, including attorneys’ fees and costs, shall be payable to Landlord by
Tenant on demand with interest at the Interest Rate.

10.2.3. Compliance with Laws. All Alterations in or about the Premises performed
by or on behalf of Tenant shall be done in a first-class, workmanlike manner,
shall not unreasonably lessen the value of leasehold improvements in the
Premises, and shall be completed in compliance with all applicable laws,
ordinances, regulations and orders of any governmental authority having
jurisdiction thereover, as well as the requirements of insurers of the Premises
and the Building.

 

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10.2.4. Labor Disputes. Upon Landlord’s request, Tenant shall remove any
contractor, subcontractor or material supplier from the Premises and the
Building if the work or presence of such person or entity results in labor
disputes in or about the Building or Project or damage to the Premises, Building
or Project.

10.2.5. Americans with Disabilities Act. Except in connection with the Tenant
Improvements and Tenant Extra Improvements constructed pursuant to the Work
Letter Agreement, Landlord, at Landlord’s sole discretion, may refuse to grant
Tenant permission for Alterations that require, because of application of
Americans with Disabilities Act or other laws, substantial improvements or
alterations to be made to the Common Areas, provided Landlord constructed the
Building and Tenant Improvements in accordance with all laws, unless Tenant pays
for such improvements or alterations.

10.2.6. End of Term. Landlord, by written notice at the time its consents to
such Alteration, may require that Tenant, at Tenant’s expense, remove any
Alterations prior to or upon the expiration of this Lease, and restore the
Premises to their condition prior to such Alterations. Unless Landlord requires
their removal, as provided above, all Alterations made to the Premises shall
become the property of Landlord and remain upon and be surrendered with the
Premises upon the expiration of this Lease; provided, however, that Tenant’s
machinery, equipment (including without limitation, all of Tenant’s rack mounted
electronic equipment), and trade fixtures, other than any which may be affixed
to the Premises so that they cannot be removed without material damage to the
Premises, shall remain the property of Tenant and may be removed by Tenant
subject to the provisions of Section 9.4 above.

10.3 Antenna. Tenant shall have the right for the duration of the Term to
install, maintain and operate solely for its use (and not for use by any third
party) a satellite dish antenna or wireless access antenna, mounted on a
non-penetrating structure, and related plenum-rated cabling (collectively, the
“Antenna”) on the roof of the Building in a location selected by Landlord.
Tenant shall (a) install and maintain the Antenna at Tenant’s sole cost and
expense, (b) obtain and maintain all required governmental permits for the
Antenna, (c) comply with all applicable codes and permits concerning the
installation, maintenance and operation of the Antenna, and (d) place the
Antenna behind visual screening as required by Landlord. If the installation
and/or maintenance of the Antenna requires any penetration of the roof of the
Building, Landlord may elect for Landlord’s contractor to perform the
installation or maintenance thereof at Tenant’s sole cost and expense. Tenant
shall not make any physical changes to the Antenna without Landlord’s prior
written approval in each instance. Prior to the expiration or earlier
termination of the Lease, Tenant shall remove the Antenna and repair all damage
to the Building (including without limitation, the roof and conduits thereof) as
a result of the installation, operation, maintenance, use or removal of the
Antenna, and restore that Building to its condition as of the date of
installation of the Antenna. Tenant shall not allow any provider of
telecommunication, video, data or related services to locate any equipment on
the roof of the Building to the extent the equipment is for use by persons or
entities other than Tenant.

11. Insurance and Indemnity.

11.1. Insurance. Tenant shall obtain and maintain during the Term the following
insurance:

11.1.1. Commercial General Liability Insurance. Commercial general liability
insurance (occurrence form) having a combined single limit of not less than
$2,000,000 per occurrence, providing coverage for, among other things, blanket
contractual liability, premises, product/completed operations and personal
injury coverage (in a form, with a deductible amount, and with carriers
reasonably acceptable to Landlord).

11.1.2. Automobile Liability Insurance. Comprehensive automobile liability
insurance having a combined single limit of not less than Two Million Dollars
($2,000,000) per occurrence, and insuring Tenant against liability for claims
arising out of ownership, maintenance or use of any owned, hired, borrowed or
non-owned automobiles;

 

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11.1.3. Workers’ Compensation and Employer’s Liability Insurance. Workers’
compensation insurance having limits not less than those required by state
statute and federal statute, if applicable, and covering all persons employed by
Tenant in the conduct of its operations on the Premises (including the all
states endorsement), together with employer’s liability insurance coverage in
the amount of at least Two Million Dollars ($2,000,000);

11.1.4. Property Insurance. “Special Form” property insurance (or its equivalent
if “Special Form” property insurance is not available), including vandalism and
malicious mischief, and endorsement for earthquake sprinkler damage, each
covering damage to or loss of Tenant’s personal property, fixtures and
equipment, including electronic data processing equipment (“EDP Equipment”),
media and extra expense, and all alterations, additions and improvements made by
Tenant to the Premises other than the Tenant Improvements and Tenant Extra
Improvements (and coverage for the full replacement cost thereof). EDP
Equipment, media and extra expense shall be covered for perils insured against
in the so-called “EDP Form”. If the property of Tenant’s invitees is to be kept
in the Premises, warehouser’s legal liability or bailee customers insurance for
the full replacement cost of such property;

11.1.5. Business Income/Extra Expense Insurance. Business income with extra
expense insurance (form CP 0030 or equivalent) in an amount not less than the
annual Base Rent and Additional Rent payable by Tenant hereunder for the then
current calendar year, with a minimum fifty percent (50%) coinsurance
percentage, the agreed value option and building ordinance (Form CP 1531 or
equivalent). Any boiler and machinery policies or endorsements obtained shall
also include these same provisions and coverages; and

11.1.6. Additional Insurance. Any such other insurance as Landlord or Landlord’s
lender may reasonably require consistent with insurance coverages typically
required by commercial landlords of similar property in the vicinity of
Petaluma, California. Notwithstanding the foregoing, Tenant shall not be
required to obtain such additional insurance during the Term or Extended Term,
to the extent the result of obtaining such additional insurance would result in
Tenant paying in excess of an amount equal to one hundred and three percent
(103%) of the total insurance premiums paid by Tenant for the immediately
preceding calendar year.

11.2. General. The insurance carrier shall be authorized to do business in the
State of California, with a policyholders and financial rating of at least
A-:VII Class status as rated in the most recent edition of Best’s Key-Rating
guide. Tenant’s commercial general liability insurance policy shall be endorsed
to provide that (i) Landlord is designated as an additional insured, and
(ii) such insurance is primary with respect to Landlord and that any other
insurance maintained by Landlord is excess and noncontributing with such
insurance. Tenant shall notify Landlord not less than thirty (30) days prior to
any cancelation or reduction in such insurance coverage. If, in the opinion of
Landlord’s lender or in the commercially reasonable opinion of Landlord’s
insurance adviser, the specified amounts of coverage are no longer adequate,
such coverage shall, within thirty (30) days’ written notice to Tenant, be
appropriately increased to coverages consistent with those typically required by
commercial landlords of similar property in the vicinity of Petaluma,
California. Notwithstanding the foregoing, Tenant shall not be required to
obtain such increased coverages during the Term or Extended Term, to the extent
the result of obtaining such increased coverages would result in Tenant paying
in excess of an amount equal to one hundred and three percent (103%) of the
total insurance premiums paid by Tenant for the immediately preceding calendar
year. Prior to the commencement of the Term, Tenant shall deliver to Landlord a
duplicate of such policy or a certificate thereof to Landlord for retention by
it with endorsements. At least five (5) days prior to the expiration of such
policy or any renewal or modification thereof, Tenant shall deliver to Landlord
a replacement or renewal binder, followed by a duplicate policy or certificate
within a reasonable time thereafter. If Tenant fails to obtain such insurance or
to furnish Landlord any such duplicate policy or certificate as herein required,
Landlord may, at its election, without notice to Tenant and without any
obligation to do so, procure and maintain such coverage and Tenant shall
reimburse Landlord on demand as additional rent for any premium so paid by
Landlord.

11.3. Waiver of Claims. Notwithstanding anything in this Lease to the contrary,
Landlord waives all claims against Tenant and Tenant’s officers, directors,
partners, employees, agents and representatives for loss or damage to any
property to the extent that such loss or

 

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damage is due to a risk which is actually insured against or which is required
to be insured against under this Lease by property insurance, without regard to
the negligence or willful misconduct of the entity so released. Tenant waives
all claims against Landlord and Landlord’s officers, directors, partners,
employees, affiliates, joint venturers, members, trustees, owners, shareholders,
principals, agents, representatives, successors and assigns, for loss or damage
to any property to the extent that such loss or damage is due to a risk which is
actually insured against or which is required to be insured against under this
Lease by property insurance, without regard to the negligence or willful
misconduct of the entity so released. The insuring party shall, upon obtaining
the policies of insurance required under this Lease, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease. Tenant agrees that in the event of a sale, assignment
or transfer of the Premises by Landlord, this waiver of subrogation shall
continue in favor of the original Landlord and any subsequent Landlord. All of
Landlord’s and Tenant’s repair and indemnity obligations under this Lease shall
be subject to the waiver contained in this paragraph.

11.4. Landlord’s Insurance. During the Term, Landlord shall keep the Building,
including all Tenant Improvements and Tenant Extra Improvements, insured against
loss or damage by fire, with extended coverage and vandalism, malicious mischief
and special extended perils (all risk) endorsements or their equivalents, in
amounts not less than one hundred percent (100%) of the replacement cost of the
Building and structures insured. Landlord may maintain rent insurance, for the
benefit of Landlord, equal to at least one year’s Base Rent hereunder. If this
Lease is terminated as a result of damage by fire, casualty or earthquake, all
insurance proceeds from policies carried by Landlord shall be paid to and
retained by Landlord, subject to the rights of any authorized encumbrancer of
Landlord.

11.5. Earthquake and Flood. Tenant acknowledges that Landlord does not, at the
time of the signing of this Lease, insure the Building for earthquake or flood
damage. Landlord may, when Landlord deems the premiums to be reasonable, insure
the Building fully or partially for earthquake and/or flood damage. At such
time, the premium for earthquake and/or flood insurance will be added to the
Operating Expenses for such year and the Base Year for purposes of determining
additional rent.

11.6. Indemnity. Tenant waives all claims against Landlord for any injury to
Tenant’s business or loss of income there from, damage to any property or injury
to or death of any person in, on, or about the Premises, the Building, or any
other portion of the Project arising at any time and from any cause, unless
caused by the negligence or willful misconduct of Landlord or its agents,
employees or contractors or Landlord’s violation of this Lease. Tenant shall
indemnify, defend (by counsel reasonably satisfactory to Landlord) and hold
harmless Landlord, and Landlord’s officers, directors, partners, employees,
affiliates, joint venturers, members, trustees, owners, shareholders,
principals, agents, representatives, successors and assigns, from and against
all claims, costs, damages, actions, indebtedness and liabilities (except such
as may arise from the negligence, willful misconduct of Landlord, and Landlord’s
officers, directors, partners, employees, affiliates, joint venturers, members,
trustees, owners, shareholders, principals, agents, representatives, successors
and assigns, or Landlord’s violation of this Lease) arising by reason of any
death, bodily injury, personal injury, property damage or any other injury or
damage in connection with Tenant’s negligence, willful misconduct, or violation
of this Lease. The foregoing indemnity obligation of Tenant shall include
reasonable attorneys’ fees, and all other reasonable costs and expenses incurred
by Landlord from the first notice that any claim or demand is to be made. The
provisions of this Section 11.6 shall survive the termination or expiration of
this Lease with respect to any damage, injury, or death occurring prior to such
expiration or termination. Landlord shall indemnify, defend, protect and hold
harmless Tenant from, all losses, damages, liabilities, claims, attorneys’ fees,
costs and expenses arising from the negligence or willful misconduct of Landlord
or its agents, contractors, licensees or invitees or a violation of Landlord’s
obligations or representations under this Lease.

12. Damage or Destruction.

12.1. Landlord’s Obligation to Rebuild. Subject to the provisions of Sections
12.2, 12.3 and 12.4 below, if, during the Term, the Premises or portions of the
Building required for Tenant’s use of the Premises are totally or partially
destroyed from any casualty, Landlord shall, within ninety (90) days after the
destruction, commence to restore the same to substantially the same condition as
they were in immediately before the destruction and prosecute the same
diligently to completion. Such destruction shall not terminate this Lease.
Landlord’s obligation

 

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shall not include repair or replacement of Tenant’s alterations (other than the
Tenant Improvements and Tenant Extra Improvements) or Tenant’s equipment,
furnishings, fixtures and personal property. If the existing laws do not permit
the Premises to be restored to substantially the same condition as they were in
immediately before destruction, and Landlord is unable to get a variance to such
laws to permit the commencement of restoration of the Premises within the 90-day
period, then either party may terminate this Lease by giving written notice to
the other party within thirty (30) days after expiration of the 90-day period.

12.2. Right to Terminate. Landlord shall have the option to terminate this Lease
if the Premises or portions of the Building required for Tenant’s use of the
Premises are destroyed or damaged by fire or other casualty, regardless of
whether the casualty is insured against under this Lease, if Landlord reasonably
determines that (i) there are insufficient insurance proceeds made available to
Landlord to pay all of the costs of the repair or restoration for reasons other
than Landlord’s failure to carry the required insurance (provided proceeds in
the amount of deductibles and co-insurance amounts shall be considered to have
been made available to Landlord), or (ii) the repair or restoration of the
Premises or such portions of the Building cannot be completed within two hundred
seventy (270) days after the date of the casualty. If Landlord elects to
exercise the right to terminate this Lease as a result of a casualty, Landlord
shall exercise the right by giving Tenant written notice of its election to
terminate this Lease within forty-five (45) days after the date of the casualty,
in which event this Lease shall terminate fifteen (15) days after the date of
the notice. If Landlord does not exercise its right to terminate this Lease,
Landlord shall promptly commence the process of obtaining all of the necessary
permits and approvals for the repair or restoration of the Premises or the
Building as soon as practicable and thereafter prosecute the repair or
restoration of the Premises or the Building diligently to completion and this
Lease shall continue in full force and effect. Notwithstanding the foregoing, if
the Premises are damaged by any peril and Landlord does not terminate this
Lease, then Tenant shall have the option to terminate this Lease if the Premises
cannot be, or are not in fact, fully restored by Landlord to their prior
condition within two hundred seventy (270) days after the damage. During any
rebuilding following a casualty that displaces Tenant from the Premises,
Landlord shall use reasonable efforts to assist Tenant in procuring temporary
space at market rates in any other nearby buildings owned by Landlord or
affiliates of Landlord.

12.3. Last Year of Term. In addition to Landlord’s right to terminate this Lease
under Section 12.2, Landlord shall have the right to terminate this Lease upon
thirty (30) days’ prior written notice to Tenant if the Premises or Building is
substantially destroyed or damaged during the last six (6) months of the Term.
Landlord shall notify Tenant in writing of its election to terminate this Lease
under this Section 12.3, if at all, within forty-five (45) days after Landlord
determines that the Premises or Building has been substantially destroyed. If
Landlord does not elect to terminate this Lease, the repair of the Premises or
Building shall be governed by Sections 12.1, 12.2 and 12.4.

12.4. Uninsured Casualty. If the Premises are damaged from any casualty, the
risk of which is not covered by the property insurance Landlord is required to
carry hereunder, Landlord may within ninety (90) days following the date of such
damage: (i) commence to restore the Premises to substantially the same condition
as they were in immediately before the destruction and prosecute the same
diligently to completion, in which event this Lease shall continue in full force
and effect; or (ii) within the 90-day period Landlord may elect not to so
restore the Premises, in which event this Lease shall cease and terminate. In
either such event, Landlord shall give Tenant written notice of its intention
within the 90-day period. Notwithstanding anything in this Lease to the
contrary, Landlord shall not have the right to terminate this Lease if Tenant
agrees to pay for the uninsured cost to repair the Premises in excess thereof.
Notwithstanding the foregoing, including Section 12.2 above, Landlord shall not
have the right to terminate this Lease if it actually intends to restore the
casualty damage.

12.5. Abatement of Rent. In the event of destruction or damage to the Premises,
if this Lease is not terminated as above provided, there shall be an abatement
or reduction of Rent between the date of destruction and the date Landlord
substantially completes its reconstruction obligations, based upon the extent to
which the destruction materially interferes with Tenant’s use of the Premises.
All other obligations of Tenant under this Lease shall remain in full force and
effect. Except for abatement of Rent, Tenant shall have no claim against
Landlord for any loss suffered by Tenant due to damage or destruction of the
Premises or any work of repair undertaken as herein provided.

 

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12.6. Waiver. The provisions of California Civil Code Sections 1932(2) and
1933(4), and any successor statutes, are inapplicable with respect to any
destruction of the Premises, such sections providing that a lease terminates
upon the destruction of the Premises unless otherwise agreed between the parties
to the contrary.

13. Eminent Domain.

13.1. Condemnation. If all or any part of the Premises shall be taken as a
result of the exercise of the power of eminent domain or sold in lieu of
condemnation (“Condemned”), this Lease shall terminate as to the part so taken
as of the date of title vesting in such proceeding. In the case of a partial
condemnation of greater than fifty percent (50%) of the rentable area of the
Premises, either Landlord or Tenant shall have the right to terminate this Lease
as to the balance of the Premises by notice to the other within thirty (30) days
after the date of title vesting in such proceeding. In the event of a partial
condemnation of the Premises which does not result in a termination of this
Lease, the monthly Rent thereafter to be paid shall be equitably reduced on a
rentable square footage basis. If the continued occupancy of Tenant is
materially interfered with for any time during the partial taking,
notwithstanding the partial taking does not terminate this Lease as to the part
not so taken, the Rent shall proportionately abate so long as Tenant is not able
to continuously occupy the part remaining and not so taken.

13.2. Award. If the Premises are wholly or partially Condemned, Landlord shall
be entitled to the entire award paid in connection with such condemnation, and
Tenant waives any right or claim to any part thereof from Landlord or the
condemning authority. Tenant shall have the right to claim and recover from the
condemning authority, but not from Landlord, such compensation as may be
separately awarded or recoverable by Tenant in Tenant’s own right on account of
any and all costs which Tenant might incur in moving Tenant’s merchandise,
furniture, fixtures, leasehold improvements and equipment to a new location,
relocation costs, lost goodwill, the unamortized value of any improvements made
at Tenant’s expense and the “bonus value” of this Lease.

14. Assignment and Subletting.

14.1. Assignment and Subletting; Prohibition. Tenant shall not assign, mortgage,
pledge or otherwise transfer this Lease, in whole or in part (each hereinafter
referred to as an “assignment”), nor sublet or permit occupancy by any party
other than Tenant of all or any part of the Premises (each hereinafter referred
to as a “sublet” or “subletting”), without the prior written consent of Landlord
in each instance, which consent shall not be unreasonably withheld. No
assignment or subletting by Tenant shall relieve Tenant of any obligation under
this Lease, including Tenant’s obligation to pay Base Rent and additional rent
hereunder. Any purported assignment or subletting contrary to the provisions of
this Lease without Landlord’s prior written consent shall be void. The consent
by Landlord to any assignment or subletting shall not constitute a waiver of the
necessity for obtaining Landlord’s consent to any subsequent assignment or
subletting. Landlord may consent to any subsequent assignment or subletting, or
any amendment to or modification of this Lease with the assignees of Tenant,
without notifying Tenant or any successor of Tenant, and without obtaining its
or their consent thereto, and such action shall not relieve Tenant or any
successor of Tenant of any liability under this Lease. As additional rent
hereunder, Tenant shall reimburse Landlord for all reasonable legal fees and
other expenses incurred by Landlord in connection with any request by Tenant for
consent to an assignment or subletting, not to exceed $1,500 in each instance.

14.2. Information to be Furnished. If Tenant desires at any time to assign its
interest in this Lease or sublet the Premises, Tenant shall first notify
Landlord of its desire to do so and shall submit in writing to Landlord: (i) the
name of the proposed assignee or subtenant; (ii) the nature of the proposed
assignee’s or subtenant’s business to be conducted in the Premises; (iii) the
terms and provisions of the proposed assignment or sublease, including the date
upon which the assignment shall be effective or the commencement date of the
sublease (hereinafter referred to as the “Transfer Effective Date”) and a copy
of the proposed form of assignment or sublease; and (iv) such financial
information, including financial statements, and other information as Landlord
may reasonably request concerning the proposed assignee or subtenant.

14.3. Landlord’s Election. At any time within thirty (30) days after Landlord’s
receipt of the information specified in Section 14.2, Landlord may, by written
notice to Tenant, elect to (i) consent to the proposed assignment or subletting
by Tenant; or (ii) withhold its consent to the proposed assignment or subletting
by Tenant.

 

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14.4. Intentionally Deleted.

14.5. Withholding Consent. Without limiting other situations in which it may be
reasonable for Landlord to withhold its consent to any proposed assignment or
sublease, Landlord and Tenant agree that it shall be reasonable for Landlord to
withhold its consent in any one (1) or more of the following situations: (1) in
Landlord’s reasonable judgment, the proposed subtenant or assignee or the
proposed use of the Premises would generate vehicle or foot traffic, parking or
occupancy density materially in excess of the amount customary for the Building
or the Project or result in a materially greater use of the elevator,
janitorial, security or other Building services (e.g., HVAC, trash disposal and
sanitary sewer flows) than is customary for the Project; or (2) the proposed
assignee or subtenant is a governmental entity, agency or department or the
United States Post Office. If Landlord fails to elect any of the alternatives
within the thirty (30) day period referenced in Section 14.3, it shall be deemed
that Landlord has granted its consent to the proposed assignment or sublease.

14.6. Bonus Rental. If, in connection with any assignment or sublease, Tenant
receives rent or other consideration, either initially or over the term of the
assignment or sublease, in excess of the Rent called for hereunder, or in case
of the sublease of a portion of the Premises, in excess of such Rent fairly
allocable to such portion, Tenant shall, after first deducting the reasonable
expenses incurred by Tenant for (i) any alterations or improvements to the
Premises in connection with the assignment or sublet, and (ii) any brokerage
commissions in connection with the assignment or sublet, as additional rent
hereunder, fifty percent (50%) of the excess of each such payment of Rent or
other consideration received by Tenant promptly after Tenant’s receipt of such
Rent or other consideration. To the extent that a subtenant or assignee
purchases goods or services from sublandlord or an affiliate of sublandlord for
an amount in excess of the fair market value for such goods or services, such
costs incurred or amounts expended shall be deemed to be “other consideration”
for purposes of calculating excess Rent due to Landlord hereunder.

14.7. Scope. If the Premises or any part thereof is sublet or occupied by
anybody other than Tenant, Landlord may collect rent from the assignee,
subtenant or occupant and apply the net amount collected to the Rent due herein
and apportion any excess rent so collected in accordance with the terms of
Section 14.6, but no such assignment, subletting, occupancy or collection shall
be deemed a waiver of the provisions regarding assignment and subletting, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. No assignment or subletting shall affect the continuing
primary liability of Tenant (which, following assignment, shall be joint and
several with the assignee), and Tenant shall not be released from performing any
of the terms, covenants and conditions of this Lease.

14.8. Executed Counterparts. No sublease or assignment shall be valid, nor shall
any subtenant or assignee take possession of the Premises, until a fully
executed counterpart of the sublease or assignment has been delivered to
Landlord and Landlord, Tenant and the applicable assignee or subtenant have
entered into a consent to assignment or sublease in a form acceptable to
Landlord.

14.9. Intentionally Deleted.

 

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14.10. Affiliated Transfers. Notwithstanding anything herein to the contrary, a
sale, issuance, or transfer of Tenant’s capital stock shall not be deemed an
assignment or subletting of this Lease or the Premises, and the assignment or
subletting by Tenant of all or any portion of this Lease or the Premises to
(i) a parent or subsidiary of Tenant or to an entity under common control with
Tenant, or (ii) any entity which purchases a substantial portion of the assets
of Tenant, or (iii) any entity related to Tenant by merger, consolidation or
reorganization (all such persons or entities described in clauses (i), (ii) and
(iii) being sometimes herein referred to as “Affiliates”) shall not be deemed an
assignment or subletting under this Section 14 (hence, the aforesaid events
shall not be subject to obtaining Landlord’s prior consent and the provisions of
Section 14.6 shall not apply thereto), provided in all instances that:

14.10.1. any such Affiliate was not formed as a subterfuge to avoid the
obligations of this Section 14; and

14.10.2. any such assignment or sublease shall be subject to all of the terms
and provisions of this Lease, and such assignee or sublessee (i.e., any such
Affiliate), other than in the case of an Affiliate resulting from a merger or
consolidation, shall assume all the obligations of Tenant under this Lease.

15. Default by Tenant.

15.1. Events of Default. The occurrence of any of the following events shall
constitute an event of default on the part of Tenant under this Lease:

15.1.1. Payment. A failure by Tenant to pay Rent within five (5) days after
Landlord’s delivery of written notice that such payment is due;

15.1.2. Bankruptcy. The bankruptcy or insolvency of Tenant, any transfer by
Tenant to defraud creditors, any assignment by Tenant for the benefit of
creditors, or the commencement of any proceedings of any kind by or against
Tenant under any provision of the Federal Bankruptcy Act or under any other
insolvency, bankruptcy or reorganization act unless, in the event any such
proceedings are involuntary, Tenant is discharged from the same within sixty
(60) days thereafter; the appointment of a receiver for a substantial part of
the assets of Tenant in each case which is not discharged within thirty
(30) days or the levy upon this Lease or any estate of Tenant hereunder by any
attachment or execution;

15.1.3. Abandonment or Vacation. The abandonment of the Premises;

15.1.4. Performance of Lease Terms. Tenant’s failure to perform any of the
terms, covenants, agreements or conditions of this Lease to be observed or
performed by Tenant (excluding any event of default under Section 15.1.1 above),
which default has not been cured within thirty (30) days after written notice
thereof by Landlord to Tenant; provided, however, that if the nature of the
default is such that the same cannot reasonably be cured within the 30-day
period, Tenant shall not be deemed to be in default if within such period Tenant
shall commence such cure and thereafter diligently prosecute the same to
completion; and

15.1.5. Failure to Comply. Tenant’s failure to comply with the provisions
contained in Sections 18 and 19 which failure has not been cured within ten
(10) days after written notice thereof by Landlord to Tenant.

An event of default shall constitute a default by Tenant under this Lease. In
addition, any notice required to be given by Landlord under this Lease shall be
in lieu of and not in addition to any notice required under Section 1161 of the
California Civil Code of Procedure.

15.2. Remedies. In the event of any default by Tenant, Landlord may at any time
thereafter, without limiting Landlord in the exercise of any right or remedy at
law or in equity which Landlord may have by reason of such default or breach:

15.2.1. Continue Lease. Pursue the remedy described in California Civil Code
Section 1951.4 whereby Landlord may continue this Lease in full force and effect
after Tenant’s breach and recover the Rent and any other monetary charges as
they become due, without terminating Tenant’s right to sublet or assign this
Lease, subject only to reasonable limitations as herein provided. During the
period Tenant is in default, Landlord shall have the right to do all acts
necessary to preserve and maintain the Premises as Landlord deems reasonable and
necessary.

15.2.2. Perform. Pay or perform such obligation due (but shall not be obligated
to do so), if Tenant fails to pay or perform any obligations when due under this
Lease within the time permitted for their payment or performance. In such case,
the costs incurred by Landlord in connection with the performance of any such
obligation will be Additional Rent due under this Lease and will become due and
payable on demand by Landlord.

15.2.3. Terminate. Terminate Tenant’s rights to possession by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall be entitled
to recover from

 

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Tenant all damages incurred by Landlord by reason of Tenant’s default,
including, without limitation, the following: (A) the worth at the time of award
of any unpaid Rent which had been earned at the time of such termination; plus
(B) the worth at the 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 Rent loss that is proved could have been reasonably avoided; plus
(C) the worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds the amount of such Rent
loss that is proved could be reasonably avoided; plus (D) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of events would be likely to result therefrom; plus (E) at
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable State law. Upon
any such termination of Tenant’s possessory interest in and to the Premises,
Tenant (and at Landlord’s sole election, Tenant’s sublessees) shall no longer
have any interest in the Premises, and Landlord shall have the right to make any
reasonable repairs, alterations or modifications to the Premises which Landlord
in its sole discretion deems reasonable and necessary. The “worth at the time of
award” of the amounts referred to in subparagraphs (A) and (B) above is computed
by allowing interest at the maximum rate an individual is permitted by law to
charge. The worth at the time of award of the amount referred to in subparagraph
(C) above is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

15.2.4. Additional Remedies. Pursue any other legal or equitable remedy
available to Landlord. Unpaid installments of Rent and other unpaid monetary
obligations of Tenant under the terms of this Lease shall bear interest from the
date due at the Interest Rate.

15.3. Intentionally Deleted.

15.4. Continue. Even though Tenant has breached this Lease and abandoned the
Premises, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant’s right to possession, and Landlord may enforce all its rights
and remedies under this Lease, including the right to recover Rent as it becomes
due under this Lease. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver upon initiative of Landlord to
protect Landlord’s interest under this Lease, shall not constitute a termination
of Tenant’s right to possession.

15.5. Tenant’s Exercise Rights. In the event Tenant is in default beyond
applicable notice and cure periods under any provision of this Lease then, at
Landlord’s sole election, Tenant shall not have the right to exercise any
available right, option or election under this Lease.

16. Default by Landlordd. Landlord shall not be in default under this Lease
unless Landlord, or the holder of any mortgage, deed of trust or ground lease
covering the Premises, fails to perform obligations required of Landlord within
a reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord certified mail, postage prepaid, and to the holder
of any first mortgage, deed of trust or ground lease covering the Premises whose
name and address shall have been furnished to Tenant in writing, specifying
wherein Landlord has failed to perform such obligations; provided, however, that
if the nature of Landlord’s obligation is such that more than thirty (30) days
are required for performance, then Landlord shall not be in default if Landlord
or the holder of any such mortgage, deed of trust or ground lease commences
performance within such 30-day period and thereafter diligently prosecutes the
same to completion. Except for the express termination rights set forth in this
Lease, in no event shall Tenant be entitled to terminate this Lease by reason of
Landlord’s default, and Tenant’s remedies shall be limited to an action for
monetary damages at law and/or injunctive relief.

17. Security Deposit. On the Commencement Date, Tenant shall deliver to Landlord
cash in the amount specified as the Security Deposit in the Basic Lease
Information. The Security Deposit shall be held by Landlord as security for the
performance by Tenant of all of the provisions of this Lease. If Tenant fails to
pay Rent or other charges due hereunder, or otherwise defaults with respect to
any provision of this Lease, Landlord may use, apply or retain all or any
portion of the Security Deposit for the payment of any Rent or other charge in
default, or the payment of any other sum to which Landlord may become obligated
by reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer thereby.

 

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If Landlord so uses or applies all or any portion of the Security Deposit, then
within ten (10) days after demand therefor Tenant shall deposit cash with
Landlord in an amount sufficient to restore the deposit to the full amount
thereof, and Tenant’s failure to do so shall be a material breach of this Lease.
Landlord shall not be required to keep the Security Deposit separate from its
general accounts. The Security Deposit, or so much thereof as has not
theretofore been applied by Landlord, shall be returned to Tenant without
payment of interest for its use (or, at Landlord’s option to the last assignee,
if any, of Tenant’s interest hereunder) within thirty (30) days after the
expiration or earlier termination of this Lease, and after Tenant has vacated
the Premises. No trust relationship is created herein between Landlord and
Tenant with respect to the Security Deposit. In lieu of the cash Security
Deposit described above, the Security Deposit may be in the form of an
irrevocable letter of credit (the “Letter of Credit”), issued to Landlord, as
beneficiary, in form and substance reasonably satisfactory to Landlord, by a
bank reasonably approved by Landlord, in which case, the Letter of Credit shall
serve as the Security Deposit under this Lease. Tenant shall maintain the Letter
of Credit for the entire Term, provided that Tenant may at any time substitute a
cash Security Deposit for the Letter of Credit, and upon such substitution,
Landlord shall return the Letter of Credit to Tenant. The Letter of Credit shall
provide that it will be automatically renewed until thirty (30) days after the
expiration of this Lease unless the issuer provides Landlord with written notice
of non-renewal at the notice address herein at least sixty (60) days prior to
the expiration thereof. If, not later than thirty (30) days prior to the
expiration of the Letter of Credit, Tenant fails to furnish Landlord with a
replacement Letter of Credit pursuant to this section, Landlord shall have the
right to draw the full amount of the Letter of Credit, and shall hold the
proceeds of the Letter of Credit as a cash Security Deposit pursuant to this
Section 17 of the Lease. Except as set forth in the preceding sentence, Landlord
shall only draw upon the Letter of Credit following an event of default and only
to the extent required to cure the default. If Landlord draws upon the Letter of
Credit solely due to Tenant’s failure to renew the Letter of Credit at least
thirty (30) days before its expiration (i) such failure to renew shall not
constitute a default hereunder and (ii) Tenant shall at any time thereafter be
entitled to provide Landlord with a replacement Letter of Credit that satisfies
the requirements hereunder, at which time Landlord shall return the cash
proceeds of the original Letter of Credit drawn by Landlord.

18. Estoppel Certificate.

18.1. Obligation to Execute Estoppel. Tenant shall within ten (10) days after
notice from Landlord, execute, acknowledge and deliver to Landlord a statement
certifying (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect), (ii) the amount of the Rent
and the Security Deposit, (iii) the date to which the Rent has been paid,
(iv) acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults, if any
are claimed, and (v) such other matters as may reasonably be requested by
Landlord. Any such statement may be conclusively relied upon by Landlord and any
prospective purchaser or encumbrancer of the Building.

18.2. Failure to Execute Estoppel. Tenant’s failure to deliver such statement
within such time shall be conclusive upon Tenant that (i) this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(ii) there are no uncured defaults in Landlord’s performance, and (iii) not more
than one month’s Base Rent has been paid in advance.

18.3. Financial Statements. If Landlord desires to sell all or any portion of
its interest in the Building or the Project or to finance or refinance the
Building or the Project, Tenant agrees to deliver to Landlord and any lender or
prospective purchaser designated by Landlord such financial statements of Tenant
as may be reasonably required by Landlord or such lender or prospective
purchaser and are then maintained by Tenant in the normal course of Tenant’s
business and accounting practices. All such financial statements shall be
received by Landlord in confidence and shall be used for the purposes herein set
forth. In addition, within ten (10) days after Landlord’s written request, but
not more frequently than once in any twelve (12) month period, Tenant shall
deliver to Landlord Tenant’s most current annual financial statements audited by
Tenant’s certified public accountant. If audited financial statements are not
available, Tenant shall deliver to Landlord Tenant’s financial statements
certified to be true and correct by Tenant’s chief financial officer. Tenant’s
annual financial statements shall not be dated more than twelve (12) months
prior to the date of Landlord’s request. Notwithstanding the foregoing
provisions of this Section 18.3, for so long as Tenant remains subject to the
periodic

 

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reporting requirements of the Securities Exchange Act of 1934, as amended (the
“’34 Act”), Tenant’s obligation to provide financial statements shall be deemed
satisified by Tenant making its required filings under the ’34 Act.

19. Subordination. This Lease, at Landlord’s sole option, shall be subordinate
to any ground lease, mortgage, deed of trust, or any other hypothecation for
security now or hereafter placed upon the Building and to any and all advances
made on the security thereof and to all renewals, modifications, consolidations,
replacements, refinancings and extensions thereof. Notwithstanding such
subordination, Tenant’s right to quiet possession of the Premises shall not be
disturbed if Tenant is not in default beyond applicable notice and cure periods
and so long as Tenant shall pay the Rent and observe and perform all of the
provisions of this Lease, unless this Lease is otherwise terminated pursuant to
its terms. If any mortgagee, trustee or ground lessor shall elect to have this
Lease prior to the lien of its mortgage, deed of trust or ground lease, and
shall give notice thereof to Tenant, this Lease shall be deemed prior to such
mortgage, deed of trust, or ground lease, whether this Lease is dated prior to
or subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof. If any mortgage or deed of trust to which this Lease
is subordinate is foreclosed or a deed in lieu of foreclosure is given to the
mortgagee or beneficiary, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure; if any
ground lease to which this Lease is subordinate is terminated, Tenant shall
attorn to the ground lessor. Tenant agrees to execute any documents reasonably
required to effectuate such subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be, or to
evidence such attornment. Any such document of attornment shall also provide
that the successor shall not disturb Tenant in its use of the Premises in
accordance with this Lease. Further, the subordination of this Lease to any
future ground lease or instrument of security shall be conditioned upon Tenant’s
receipt from any such ground lessors or lenders of a commercially reasonable
agreement recognizing Tenant’s rights under the Lease in the event of a
foreclosure of the lender’s security interest or termination of the ground
lease. In addition, Landlord shall use good faith efforts to assist Tenant in
obtaining a commercially reasonable subordination, non-disturbance and
attornment agreement with the existing lender for the Building.

20. Attorneys’ Fees. In any action or proceeding which Landlord or Tenant brings
against the other party in order to enforce its respective rights hereunder or
by reason of the other party failing to comply with all of its obligations
hereunder, whether for declaratory or other relief, the unsuccessful party
therein agrees to pay all costs incurred by the prevailing party therein,
including reasonable attorneys’ fees, to be fixed by the court, and said costs
and attorneys’ fees shall be made a part of the judgment in said action. A party
shall be deemed to have prevailed in any action (without limiting the definition
of prevailing party) if such action is dismissed upon the payment by the other
party of the amounts allegedly due or the performance of obligations which were
allegedly not performed, or if such party obtains substantially the relief
sought by such party in the action, regardless of whether such action is
prosecuted to judgment.

21. Notices. All notices, consents, demands, and other communications from one
party to the other given pursuant to the terms of this Lease shall be in writing
and shall be personally delivered, delivered by courier service, delivered by
national overnight delivery service (e.g., Federal Express, Airborne Express and
UPS), or deposited in the United States mail, certified or registered, postage
prepaid, return-receipt requested, and addressed as follows: To Tenant at the
address specified in the Basic Lease Information or to such other place as
Tenant may from time to time designate in a notice to Landlord; to Landlord at
the address specified in the Basic Lease Information, or to such other place and
to such other parties as Landlord may from time to time designate in a notice to
Tenant. All notices personally delivered or delivered by courier shall be deemed
received upon delivery or refusal of delivery, and any notice required under
this Lease that is sent by mail shall be deemed received, if properly addressed,
three (3) business days after any such notice is deposited in the United States
mail as required herein.

22. General Provisions.

22.1. Applicable Law. This Lease shall be governed by and construed in
accordance with the internal laws of the State of California, notwithstanding
any choice of law statutes, regulations, provisions or requirements to the
contrary.

 

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22.2. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

22.3. Waiver. No waiver of any provision hereof by either party shall be deemed
by the other party to be a waiver of any other provision, or of any subsequent
breach of the same provision. Landlord’s or Tenant’s consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Landlord’s or
Tenant’s consent to, or approval of, any subsequent act by the other party.

22.4. Holdover. Should Tenant, or any of its successors in interest, hold over
in the Premises, or any part thereof, after the expiration of the Term unless
otherwise agreed to in writing, such holding over shall constitute and be
construed as tenancy from month-to-month only, at a monthly rent equal to one
hundred fifty percent (150%) of the Base Rent owed during the final year of the
Term, as the same may have been extended, together with the Additional Rent due
under this Lease. The inclusion of the preceding sentence shall not be construed
as Landlord’s permission for Tenant to hold over. Subject to the provisions of
this Lease restricting assignment or subletting by Tenant, this Lease shall bind
the parties, their personal representatives, successors and assigns.

22.5. Entry. Upon one (1) business day prior notice to Tenant (which notice
shall not be required in the event of an emergency), Landlord and Landlord’s
representatives and agents shall have the right to enter the Premises during
regular business hours for the purpose of inspecting the same, showing the same
to prospective purchasers or lenders, and making such alterations, repairs,
improvements, or additions to the Premises, the Building or the Common Areas as
Landlord may deem necessary or desirable. Landlord may at any time during the
last nine (9) months of the Term place on or about the Premises any ordinary
“For Lease” sign. Landlord may at any time place on or about the Premises any
ordinary “For Sale” sign. Any entry by Landlord and Landlord’s agents shall not
impair Tenant’s operations more than reasonably necessary, and shall comply with
Tenant’s reasonable security measures.

22.6. Subleases. The voluntary or other surrender of this Lease by Tenant, the
mutual cancellation thereof or the termination of this Lease by Landlord as a
result of Tenant’s default shall, at the option of Landlord, terminate all or
any existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.

22.7. Limitation of Liability. In the event that Landlord or any successor owner
of the Building sells or conveys the Building, then all liabilities and
obligations of Landlord or the successor owner under this Lease accruing after
the sale or conveyance shall terminate and become binding on the new owner, and
Tenant shall release Landlord from all liability under this Lease (including,
without limitation, the Security Deposit), except for acts or omissions of
Landlord occurring prior to such sale or conveyance. Tenant expressly agrees
that (i) the obligations of Landlord shall not constitute personal obligations
of the officers, directors, partners, employees, affiliates, joint venturers,
members, trustees, owners, shareholders, or other principals, agents or
representatives of Landlord (“Member of Landlord”), and (ii) Tenant shall have
recourse only to the amount of Landlord’s interest in the Project for the
satisfaction of such obligations and not against the other assets of Landlord,
including all sales, insurance condemnation and rental proceeds thereof. In this
regard, Tenant agrees that in the event of any actual or alleged failure, breach
or default by Landlord of its obligations under this Lease, that (i) no Member
of Landlord shall be sued or named as a party in any suit or action (except as
may be necessary to secure jurisdiction of Landlord), (ii) no judgment will be
taken against any Member of Landlord, and any judgment taken against any Member
of Landlord may be vacated and set aside at any time without hearing, (iii) no
writ of execution will ever be levied against the assets of any Member of
Landlord, and (iv) these agreements by Tenant are enforceable both by Landlord
and by any Member of Landlord.

22.8. Authority. Tenant represents and warrants that the individual executing
this Lease on behalf of Tenant is duly authorized to execute and deliver this
Lease on behalf of the corporation, company or partnership in accordance with,
where applicable, a duly adopted resolution of the board of directors of the
corporation, the vote of the members of the limited liability company or the
vote of the partners within the partnership, and that this Lease is binding upon
the corporation, company or partnership in accordance with its respective
articles of incorporation and bylaws, operating agreement or partnership
agreement.

 

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22.9. Time. Time is expressly declared to be of the essence of this Lease and of
each and every covenant, term, condition, and provision hereof.

22.10. Joint and Several Liability. If there is more than one party comprising
Tenant, the obligations imposed on Tenant shall be joint and several.

22.11. Construction. The language in all parts of this Lease shall be in all
cases construed as a whole according to its fair meaning and not strictly for
nor against either Landlord or Tenant.

22.12. Definitions. As used in this Lease and whenever required by the context
thereof, each number, both singular and plural, shall include all numbers and in
each gender shall include all genders. Landlord and Tenant, as used in this
Lease or in any other instrument referred to in or made a part of this Lease,
shall likewise include both the singular and the plural, a corporation, limited
liability company, partnership, individual or person acting in any fiduciary
capacity as executor, administrator, trustee or in any other representative
capacity.

22.13. Exhibits. The Basic Lease Information, Exhibits and Addendum attached to
this Lease and incorporated herein by reference thereto.

22.14. Force Majeure. Any delay in construction, repairs, or rebuilding any
building, improvement or other structure herein shall be excused and the time
limit extended to the extent that the delay is occasioned by reason of acts of
God, labor troubles, laws or regulations of general applicability, acts of
Tenant or Tenant Delays (as the term is defined in the Work Letter Agreement—3rd
Floor), or other occurrences beyond the reasonable control of Landlord.
Accordingly, Landlord’s obligation to perform shall be excused for the period of
the delay and the period for performance shall be extended for a period equal to
the period of such delay, provided such delay shall not delay any of Tenant’s
rent abatement or termination rights.

22.15. Broker’s Fee. Each party represents that it has not had dealings with any
real estate broker, finder or other person, with respect to this Lease in any
manner, except the brokerage firm(s) specified in the Basic Lease Information.
Each party shall hold harmless the other party from all damages resulting from
any claim that may be asserted against the other party by any other broker,
finder, or other person claiming by, through or under such party. Landlord shall
pay any commissions or fees that are payable to the broker or finder specified
in the Basic Lease Information, with respect to this Lease in accordance with
the provisions of a separate commission contract.

22.16. Intentionally Deleted

22.17. Entire Agreement. This Lease, including attached Exhibits, Addendum, and
Basic Lease Information, contains all agreements and understandings of the
parties and supersedes and cancels any and all prior or contemporaneous written
or oral agreements, instruments, understandings, and communications of the
parties with respect to the subject matter herein. This Lease, including the
attached Exhibits, Addendum, and Basic Lease Information, may be modified only
in a writing signed by each of the parties. The Exhibits, Addendum and Basic
Lease Information attached to this Lease are incorporated herein by reference.

22.18. Approvals. Whenever this Lease requires an approval, consent,
determination or judgment by either Landlord or Tenant, unless another standard
is expressly set forth, such approval, consent, determination or judgment and
any conditions imposed thereby shall be reasonable and shall not be unreasonably
withheld or delayed.

22.19. Reasonable Expenditures. Any expenditure by a party permitted or required
under this Lease, for which such party demands reimbursement from the other
party, shall be limited to the fair market value of the goods and services
involved, shall be reasonably incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party.

22.20. Remeasurement. Landlord shall have its architect measure the Building and
the Premises upon completion of construction and shall promptly provide written
notice of such measurements to Tenant. Tenant shall have the one-time right,
within thirty (30) following receipt of such notice, to verify the square
footage by an architect that is reasonably acceptable to Landlord and Tenant,
using the ANSI/BOMA-Z65.1-2010 measurement standard. In any event,

 

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if the rentable square footage of the Premises or Building is different than
that set forth in this Lease, the Base Rent, Tenant’s Percentage Share and the
Security Deposit shall be adjusted to reflect the actual square footage;
provided, however, in no event shall the rentable square footage of the Premises
be deemed to be more than 105% of the amount set forth in the Basic Lease
Information.

22.21. Addendum. The Addendum attached hereto is incorporated herein by
reference. If no Addendum, state “none” in the following space:            .

[SIGNATURE TO APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties have executed this Lease on the date first
mentioned above.

 

“Landlord”   “Tenant”

REDWOOD BUSINESS CENTER 1 LLC,

a California limited liability company

 

CYAN, INC.,

a Delaware corporation doing business as Cyan

California

By:   Redwood Technology Center, LLC     a California limited liability company
      Its: Manager and Sole Member   By:  

/s/ Michael Zellner

          Name:   Michael Zellner  

 

By:

 

 

G&W Ventures, LLC

    Its:   CFO     a California limited liability company           Its: Manager
                      By:  

 

    By:  

/s/ Matthew T. White

Matthew T. White, Manager

   

Name:

Its:

 

 

 

 

AMERIVINE TOWN CENTER, LLC, a California limited liability company By:  
Amerivine Inc., a California corporation Its:   Sole Member By:  

/s/ David F. Coleman

  David F. Coleman Its:   President

 

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ADDENDUM

23. Base Rent. The Base Rent during the Term shall be as follows:

 

Lease Year

   Square Footagea    Monthly Base Rent
Per Sq. Ft.    Monthly Base Rent

Year 1

   20,005    $2.30    $46,011.50

Year 2 (months 1-6)

   20,005    $2.37    $47,411.85

Year 2 (months 7-12)b

   38,778    $2.37    $91,903.86

Year 3

   38,778    $2.44    $94,618.32c

aRent is calculated based on rentable square footage of 20,005 for the third
floor of the Building and 18,773 for the second floor of the Building. Such
square footages are subject to adjustment as provided in Section 22.20.

bThe date that Tenant commences paying rent for the second floor of the Building
is estimated and shall be adjusted to the actual date pursuant to Section 27
below. In addition, rent may commence for the second floor of the Building in
phases pursuant to such section.

cFor Lease Years 4 through 10, Base Rent shall be increased 3% from the prior
Lease Year.

24. Option to Extend.

 

  a. Exercise of Option.

Tenant shall have an option to extend the term of the lease on all the
provisions contained in this Lease, except for Base Rent, and the Base Year,
which shall be adjusted to 2024, for one five (5) year period (the “Extended
Term”) following expiration of this Term, by giving notice of exercise of the
option (“Option Notice”) to Landlord at least twelve (12) months before but not
more than eighteen (18) months before the expiration of the Term. Provided that,
if Tenant is in default beyond applicable notice and cure periods on the date of
giving the option notice, the Option Notice shall be totally ineffective.

Base Rent for the Extended Term shall be at the then current Fair Market Rental
Rate (defined below) determined as set forth below.

Tenant shall have no other right to extend the term beyond the Extended Term.

 

  b. Determination of Fair Market Rent.

 

  (1)

Agreement on Rent. For the purposes of this Lease, the “Fair Market Rental Rate”
means the monthly base rent (i.e., rent other than operating expenses, taxes and
insurance premiums) expected to prevail as of the commencement of an Extended
Term for the entire Extended Term (including appropriate increases) for the
Premises, based on leases of comparable space in the vicinity of the Project of
a quality and with interior improvements, parking, site amenities, building
systems, location, identity and access all comparable to that of the Premises,
for a term equal to the Extended Term. Fair Market Rental Rate shall take into
account Tenant’s obligations to pay additional rent under this Lease and that
there will be no free rent, tenant improvement allowance or other concessions
during the Extension Term under this Lease, but will not take into consideration
any alterations installed in the Premises at Tenant’s expense. Within fifteen
(15) days after Landlord’s receipt of Tenant’s Option Notice, by written notice
to Tenant (“Landlord’s Rent Notice”), Landlord

 

Addendum, Page 1

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  shall advise Tenant as to Landlord’s determination of the Fair Market Rental
Rate. If Tenant disagrees with Landlord’s determination, Tenant shall advise
Landlord as to Tenant’s determination of Fair Market Rental Rate by written
notice (“Tenant’s Rent Notice”) within fifteen (15) days after Tenant’s receipt
of Landlord’s Rent Notice. If Tenant fails to deliver Tenant’s Rent Notice to
Landlord within the time period provided above, Tenant shall be bound by
Landlord’s determination of the Fair Market Rental Rate as set forth in
Landlord’s Rent Notice. If Tenant shall timely deliver to Landlord Tenant’s Rent
Notice, Landlord and Tenant shall attempt in good faith to reach agreement as to
the Fair Market Rental Rate within fifteen (15) days after Landlord’s receipt of
Tenant’s Rent Notice.

 

  (2) Selection of Brokers. If Landlord and Tenant are unable to agree as to the
amount of the Fair Market Rental Rate within the aforementioned fifteen (15) day
period as evidenced by a written amendment to this Lease executed by them, then,
within ten (10) days after the expiration of the fifteen (15) day period,
Landlord and Tenant shall each, at its sole cost and by giving notice to the
other party, appoint a competent real estate broker licensed in California with
at least five (5) years’ full-time commercial real estate leasing experience in
Sonoma County to determine the Fair Market Rental Rate. If either Landlord or
Tenant does not appoint a broker within ten (10) days after the other party has
given notice of the name of its broker, the single broker appointed shall be the
sole broker and shall determine the Fair Market Rental Rate. If Landlord and
Tenant as stated in this Section appoint two (2) brokers, they shall attempt to
select a third broker meeting the qualifications stated in this Section within
ten (10) days. If they are unable to agree on the third broker, either Landlord
or Tenant, by giving ten (10) days’ notice to the other party, can apply to the
then president of the real estate board of the county in which the Building is
located, or to the Presiding Judge of the Superior Court of the county in which
the Building is located, for the selection of a third broker who meets the
qualifications stated in this paragraph. Landlord and Tenant each shall bear
one-half (1/2) of the cost of appointing the third broker and of paying the
third broker’s fee. The third broker, however selected, shall be a person who
has not previously acted in any capacity for either Landlord or Tenant.

 

  (3) Value Determined By Three (3) Brokers. The brokers shall determine the
Fair Market Rental Rate by using the “Market Comparison Approach” with the
relevant market being office buildings located in the City of Petaluma. Within
thirty (30) days after the selection of the third broker, Landlord’s broker
shall arrange for the simultaneous delivery to Landlord of written appraisals
from each of the brokers and the three (3) appraisals shall be added together
and their total divided by three (3); the resulting quotients shall be the Fair
Market Rental Rate. If, however, the low appraisal and/or the high appraisal of
the Fair Market Rental Rate are/is more than ten percent (10%) lower and/or
higher than the middle appraisal, the low appraisal and/or the high appraisal
shall be disregarded. If only one (1) appraisal is disregarded, the remaining
two (2) appraisals shall be added together and their total divided by two (2);
the resulting quotient shall be the Fair Market Rental Rate. If both the low
appraisal and the high appraisal of the Fair Market Rental Rate is/are
disregarded as stated in this Section, the middle appraisal shall be the Fair
Market Rental Rate.

 

  c. Notice to Landlord and Tenant; Lease Amendment.

After the monthly Base Rent for an Extended Term has been set, Landlord and
Tenant immediately shall execute an amendment to the Lease stating the monthly
Base Rent.

 

Addendum, Page 2

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25. Building Construction. Promptly following the date of this Lease, Landlord
shall commence with the final design and permitting for the Building, and shall
thereafter diligently construct the Building in a good and workmanlike manner,
in compliance with all laws and in substantial compliance with the plans
therefor approved by Landlord and Tenant. The design of the Building shall be
substantially the same as the current design previously approved by the City of
Petaluma, but shall include an enclosed bridge between the third floor of the
Building and the adjacent building located at 1383 North McDowell Blvd. (with
such bridge design and location to be determined solely by Landlord following
consultation with Tenant so long as the bridge is enclosed). Tenant acknowledges
that Landlord will have to obtain design review approval for the bridge between
the 2nd and 3rd floors. The cost of all such work, including design,
engineering, permitting and construction costs, shall be borne by Landlord;
provided that Landlord shall construct the Building to the same design standards
and criteria as the adjacent building located at 1383 North McDowell Blvd., but
will, to the extent allowed by the City of Petaluma, not enclose the exterior
stairwells between the 2nd and 3rd floors. As used in this Lease, the term “Warm
Shell” shall mean the structure, floor slabs, elevators, stairs, roof and
exterior glazing and facade of the Building (including the structure, floor
slab, roof and exterior glazing and facade of the enclosed bridge) with the
following services installed in, and distributed to the core of each floor of,
the Building and, as applicable, with connections for horizontal extensions
within the tenant demised areas: water, sewer, electrical, fire, life safety and
HVAC. The date upon which Landlord has substantially completed construction of
the Warm Shell shall be referred to as the “Warm Shell Completion Date”.

26. Condition Precedent. Landlord intends to obtain third-party debt financing
for a portion of the cost to construct the Building. It shall be a condition
precedent to the effectiveness of this Lease that Landlord obtain such financing
on terms and conditions acceptable to Landlord in its sole and absolute
discretion. Unless Landlord delivers to Tenant written notice of its failure to
obtain such financing by July 31, 2013, this contingency shall be deemed
satisfied and waived.

27. 2nd Floor Rent Commencement. The parties anticipate Tenant desiring to
improve and occupy the 2nd Floor Premises on or after the Commencement Date of
the Lease. Tenant shall notify Landlord in writing of the date on which Tenant
wishes the Lease to commence as to the 2nd Floor Premises, which date may not be
earlier than the Commencement Date or later than eighteen (18) months after the
Commencement Date. The earlier of the date so designated by Tenant and the date
that is eighteen (18) months after the Commencement Date shall be referred to
herein as the “2nd Floor Target Date”. Such notice shall be provided not less
than eight (8) months prior to the 2nd Floor Target Date. For the avoidance of
doubt, in the absence of any other notice, the 2nd Floor Target Date will be the
date that is eighteen (18) months after the Commencement Date. Notwithstanding
anything to the contrary in the Lease or the Work Letter Agreement—2nd Floor,
Tenant shall commence paying rent for the 2nd Floor Premises (“2nd Floor Rent
Commencement”) on the later of (i) the date Landlord delivers the 2nd Floor
Premises to Tenant in “substantially completed” condition (as defined in
Section 11 of the Work Letter Agreement—2nd Floor), and (ii) the 2nd Floor
Target Date; provided that if Landlord is ready to deliver the 2nd Floor
Premises prior the 2nd Floor Target Date and Tenant elects to take delivery
prior to the 2nd Floor Target Date, then the 2nd Floor Rent Commencement shall
occur when Landlord delivers the 2nd Floor Premises to Tenant in “substantially
completed” condition (as defined in Section 11 of the Work Letter Agreement—2nd
Floor); and provided further that if Tenant elects to have Landlord construct
tenant improvements on a portion (but not all) of the second floor of the
Building in phases, then the 2nd Floor Rent Commencement shall apply separately
to each such phase. If the 2nd Floor Rent Commencement (as adjusted pursuant to
Section 7 of Exhibit B-2) does not occur by the date that is sixty (60) days
after the 2nd Floor Target Date, then Tenant’s obligations to pay rent with
respect to the 2nd Floor shall be delayed by one (1) additional day for each day
the 2nd Floor Rent Commencement is delayed thereafter. Prior to the 2nd Floor
Rent Commencement, Tenant shall have no responsibility or liability for the 2nd
Floor Premises and references in the Lease to Premises shall mean only the 3rd
Floor Premises.

28. Right of First Refusal. So long as no Event of Default has occurred and is
then continuing, Tenant shall have a continuing right of first refusal during
the Term to lease any space on the first floor of the Building that becomes
available for lease from time to time. If Landlord receives an offer to lease
any such space on the first floor of the Building which Landlord desires to
accept (the “Offer”), Landlord shall notify Tenant of the space so offered and
the rent and other material terms so offered (the “Offer Notice”). If Tenant
desires to exercise

 

Addendum, Page 3

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

Tenant’s right of first refusal with respect to such space, then within seven
(7) business days following Tenant’s receipt of the Offer Notice, Tenant shall
deliver notice to Landlord electing to lease the space so offered on the terms
set forth in the Offer Notice. If Tenant elects to lease such space, then
Landlord and Tenant shall execute an amendment to the Lease on the terms set
forth in the Offer Notice and to the extent not inconsistent with such notice
terms, the terms of the Lease. If Tenant does not respond affirmatively in
writing within such seven (7) business day period, Landlord may lease the
subject space to a third party on terms not materially more favorable than the
terms presented to Tenant in the Offer Notice. Further, if Landlord does not so
execute a lease for the subject space within six (6) months following Tenant’s
receipt of the Offer Notice, such space will again be subject to the provisions
of this Section.

29. Building Signage. Tenant shall have the right to install, at its sole cost
and expense, one (1) exterior “eye-brow” sign on the westerly façade of the
Building. The design, size and specific location of the sign shall be subject to
Landlord’s prior written consent, which shall not be unreasonably withheld.
Tenant shall obtain all required building permits and other authorizations from
the City of Petaluma and all other agencies having jurisdiction over the
Building. The sign shall comply with Landlord’s signage program for the Building
and any applicable codes, laws, ordinances, rules and regulations. Tenant shall
maintain the sign in first class condition and repair, including repainting and
replacing as reasonably necessary. Tenant shall remove the sign upon the
expiration or earlier termination of the Lease, shall repair any damage to the
Building in connection therewith, and shall return the Building to its condition
prior the installation of the sign. Without limiting the foregoing, Tenant shall
repaint portions of the Building as necessary to eliminate any “ghosting” or
visible outline of the sign’s former location following their removal. Landlord
shall bear no cost or expense in connection with Tenant’s exterior sign, and
Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord)
and hold harmless Landlord from any and all claims, demands, liability, damages,
judgments, costs and expenses (including reasonable attorneys’ fees) that
Landlord may suffer or incur as a result or arising out of or related to the
installation, use, operation, maintenance, replacement and/or removal of the
sign, except to the extent due to the negligence, willful misconduct or
violation of this Lease by Landlord.

30. Warm Shell. Notwithstanding anything to the contrary in the Lease, including
the addenda and exhibits thereto and notwithstanding any Tenant Delays (as
defined in the Work Letters attached hereto as Exhibits B-1 and B-2), under no
circumstances shall (a) the Commencement Date or the 2nd Floor Rent Commencement
occur prior to the Warm Shell Completion Date, (b) Tenant be responsible for any
insurance or indemnity obligations under the Lease prior to the Warm Shell
Completion Date, (c) Tenant be responsible for any costs to construct the Warm
Shell or (d) Tenant be entitled to access the Premises prior to the Warm Shell
Completion Date or require Landlord to make changes to the Warm Shell.

 

Addendum, Page 4

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EXHIBIT A-1

DIAGRAM OF PREMISES

LOGO [g537373g41g03.jpg]

 

Exhibit A-1

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EXHIBIT A-2

DIAGRAM OF PROJECT

LOGO [g537373g81u75.jpg]

 

Exhibit A-2

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EXHIBIT B-1

WORK LETTER AGREEMENT – THIRD FLOOR

THIS WORK LETTER AGREEMENT – THIRD FLOOR supplements that certain lease (the
“Lease”) dated July 2, 2013, executed by REDWOOD BUSINESS CENTER 1 LLC, a
California limited liability company and AMERIVINE TOWN CENTER, LLC, a
California limited liability company (collectively, “Landlord”), and CYAN, INC.,
a Delaware corporation doing business in California as Cyan California
(“Tenant”). All capitalized terms not otherwise defined herein shall have the
same meaning as those capitalized terms contained in the Lease.

1. Landlord shall be responsible for constructing within the portion of the
Premises located on the third floor of the Building (the “3rd Floor Premises”)
private offices, open offices, kitchen room, telecommunication closets,
conference rooms and break out rooms (the “3rd Floor Tenant Improvements”) in
the same ratios, with the same design and with the same or equivalent finishes
as the space Tenant currently occupies in the portion of the second floor of the
adjacent building located at 1383 North McDowell Blvd. added pursuant to the
third amendment to Tenant’s lease thereof. Landlord and Tenant shall work
together to prepare a preliminary space plan for such third floor of the
Building within 90 days following the execution of the Lease (the “Preliminary
Space Plan”). The 3rd Floor Tenant Improvements for the 3rd Floor Premises will
be more particularly described in the plans and construction drawings (the
“Construction Drawings”) as approved below. Any additional work (the “Third
Floor Tenant Extra Improvements”), including without limitation any lab space,
security and access control measures, fixtures, cabling, or telecommunications
needs, shall be at Tenant’s sole cost and expense. Upon completion and receipt
of the Preliminary Space Plan, Tenant shall within ten (10) business days
provide approval of the Preliminary Space Plan, or, note any exceptions to or
desired revisions for the Preliminary Space Plan in a written notice to
Landlord.

2. Following the completion and approval of the Preliminary Space Plan, Landlord
shall arrange for Landlord’s architect to provide to Tenant the Construction
Drawings for the 3rd Floor Tenant Improvements and Third Floor Tenant Extra
Improvements. The Construction Drawings shall indicate the specific requirements
of the 3rd Floor Premises, outlining in detail interior partitions, floor
coverings, a reflected ceiling plan, plumbing fixtures and electrical plans
(setting forth the electrical requirements of Tenant), all in conformity with
the Preliminary Space Plan. The Construction Drawings shall include full energy
calculations as required by the State of California and the city agencies.
Following execution of the Lease and selection of the General Contractor,
Landlord shall also cause to be prepared an estimate of the total cost for the
3rd Floor Tenant Extra Improvements (the “Cost Estimate”), which Cost Estimate
shall also conform to or represent logical evolutions of or developments from
the Preliminary Space Plan.

3. Within five (5) business days after receipt of the Construction Drawings and
the Cost Estimate, Tenant shall either approve or disapprove of the Construction
Drawings and Cost Estimate by written notice to Landlord. If Tenant disapproves
of the Construction Drawings, Tenant shall specify in detail the changes or
modifications to the Construction Drawings or Cost Estimate required by Tenant.
Any such request for changes or modifications shall be subject to Landlord’s
approval, provided, however, if Tenant desires changes, Landlord shall not
unreasonably withhold its approval of such changes and the parties shall confer
and negotiate in good faith to reach agreement on modifications to the
Construction Drawings and the Cost Estimate as a consequence of such change. If
Landlord approves of Tenant’s proposed change or modification, Landlord shall
arrange for Landlord’s architect to revise the Construction Drawings and
resubmit the Construction Drawings to Tenant for its review and approval in
accordance with the procedure set forth above. Tenant acknowledges that the
Construction Drawings are subject to the approval of the appropriate government
authorities. It shall be Tenant’s responsibility to ensure that the design and
function of the 3rd Floor Tenant Improvements and Third Floor Tenant Extra
Improvements are suitable for Tenant’s business and needs. The improvements
shall be constructed in a good and workmanlike manner, in accordance with the
approved plans and current building standards, laws, regulations, ordinances and
codes. Landlord shall not be required to install any 3rd Floor Tenant
Improvements or Third Floor Tenant Extra Improvements which do not conform to
the Construction Drawings. If the parties are unable to reach agreement on the
Construction Drawings or Cost Estimate within fifteen (15) days following
delivery of the Construction Drawings and Cost Estimate to Tenant, Landlord,
Tenant and General Contractor shall meet and discuss in good faith resolution of
the cost and design issues until the issues are resolved.

 

Exhibit B-1, Page 1

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

4. Landlord shall furnish and install the 3rd Floor Tenant Improvements and the
Third Floor Tenant Extra Improvements as set forth in the Construction Drawings.
The 3rd Floor Tenant Improvements shall be furnished and installed and paid for
by Landlord and shall include, but not be limited to, the following:

(a) The costs of the Preliminary Space Plan and final Construction Drawings
(including the cost of one revision only) and engineering costs associated with
completion of the State of California energy utilization calculations under
Title 24 legislation; and

(b) The costs of obtaining building permits and other necessary authorizations
from the city, county and the State of California.

The Tenant Extra Improvements set forth on the final Construction Drawings shall
be paid for by Tenant, except as provided below. Tenant shall have no
obligations to restore any of the Tenant Improvements or Tenant Extra
Improvements.

Tenant shall pay for all Third Floor Tenant Extra Improvements within thirty
(30) days following receipt of Landlord’s written demand therefor, which
demand(s) may be submitted to Tenant prior to commencement of construction of
the Third Floor Tenant Extra Improvements based on Landlord’s estimate of such
costs. If Tenant fails to pay within such thirty-day period, Landlord may, in
addition to all other available remedies, (i) delay the commencement of
construction of the Third Floor Tenant Extra Improvements if such work has not
commenced, or (ii) stop construction of the Third Floor Tenant Extra
Improvements if such work has commenced, in either case until such time as
Tenant has paid Landlord for all Third Floor Tenant Extra Improvements for which
Tenant has received a written demand from Landlord.

5. In no event shall the 3rd Floor Tenant Improvements payable by Landlord
include (i) the costs of procuring or installing any trade fixtures, equipment,
furniture, furnishings, telephone or computer equipment or wiring or other
personal property (“Personal Property”) or (ii) any Change Orders (as the term
is defined in Paragraph 6 below) requested by Tenant or related to 3rd Floor
Tenant Extra Improvements, which increase the cost of construction of the Third
Floor Tenant Improvements. Such items shall be paid by Tenant.

6. After the Construction Drawings have been approved by Landlord and Tenant as
provided above, neither party shall have the right to require extra work or
changes to the work provided that neither party will unreasonably withhold its
consent to changes required by the City of Petaluma or any other governmental
body with jurisdiction. However, following Tenant’s approval of the Construction
Drawings, Tenant may request changes or modifications thereto (“Change Order”),
however, the cost of any Change Order(s) which increase the total construction
costs shall be borne by Tenant in the amount set forth in the approved Change
Order. If Tenant shall request any Change Order, then Landlord shall promptly
give Tenant a written estimate of (a) the cost of engineering and design
services to prepare the Change Order, (b) the cost of work to be performed
pursuant to the Change Order, and (c) the time delay in substantial completion
of the Premises expected because of such requested Change Order. Within three
(3) days after Tenant’s receipt of the written estimate, Tenant shall notify
Landlord in writing whether it approves the written estimate. Within thirty
(30) days after Landlord’s submission to Tenant of any invoice for costs
incurred in connection with such Change Order, Tenant shall pay the same to
Landlord if such Change Order increases the cost of construction. If such
written authorization is not received by Landlord, then Landlord shall not be
obligated to commence work on the 3rd Floor Premises and Tenant shall be
responsible for any delay in the completion of the 3rd Floor Premises in
accordance with Paragraph 7 below.

7. If the Commencement Date of the Lease has not occurred on or before the
Estimated Commencement Date, and if the cause of the delay in the occurrence of
the Commencement Date is attributable to Tenant, then the Lease shall begin on
the date the Commencement Date otherwise would have occurred but for the Tenant
delays (“Tenant Delays”). Tenant Delays shall mean delays in substantial
completion of the improvements beyond the Estimated Commencement Date caused by
(a) Tenant’s failure to approve the Construction Drawings within the time period
noted above, (b) Tenant’s request for special materials not available when
needed for construction in accordance with the construction schedule, (c) Change
Orders, (d) Tenant’s or Tenant’s agents’ interference with Landlord’s work

 

Exhibit B-1, Page 2

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

(provided that there shall be a grace period for the first two (2) days of
interference, which shall not constitute Tenant Delays), and (e) Tenant’s
failure to pay for Tenant Improvements and Tenant Extra Improvements within the
time period noted above. To the extent practicable, Landlord shall promptly
notify Tenant of any interference with Landlord’s work by Tenant or Tenant’s
agent.

8. Tenant may, with Landlord’s written consent, enter the 3rd Floor Premises
subsequent to the Warm Shell Completion Date but prior to the Commencement Date
solely for the purpose of installing its Personal Property, cabling, and
telecommunications equipment in the 3rd Floor Premises, as long as such entry
will not interfere with the orderly construction and completion of the 3rd Floor
Premises (hereinafter, “Tenant’s Work”). Such entry shall be subject to all of
the terms of the Lease except the obligation to pay Rent. Tenant shall notify
Landlord of its desired time(s) of entry and shall submit for Landlord’s written
approval the scope of the Tenant’s Work to be performed and the name(s) of the
contractor(s) who will perform such work. Tenant agrees to indemnify, defend and
hold harmless Landlord and any mortgagee, ground lessor or beneficiary of a deed
of trust encumbering, secured by or affecting the 3rd Floor Premises or the
Building, from and against any and all claims, actions, losses, liabilities,
damages, costs or expenses (including, without limitation, reasonable attorneys’
fees and claims for worker’s compensation) of any nature whatsoever, arising out
of or in connection with the Tenant’s Work (including, without limitation,
claims for breach of warranty, personal injury or property damage) except to the
extent due to the negligence, willful misconduct or violation of this Lease by
Landlord.

9. During the course of installation of Tenant’s Work, at Tenant’s expense,
Tenant shall obtain or maintain public liability and worker’s compensation
insurance, in amounts acceptable to Landlord, and which name Landlord and Tenant
as parties insured from and against any and all liability for death of or injury
to person or damage to property caused in or about or by reason of the
construction of the Tenant’s Work.

10. Landlord shall not be liable for any latent or patent defects therein,
except that Landlord warrants the 3rd Floor Premises against defects and
violations of law with respect to the original construction of the 3rd Floor
Tenant Improvements for a period of two (2) years from the date of substantial
completion (the “Warranty Period”).

11. The 3rd Floor Premises shall be deemed “substantially completed” as of the
date that all of the following conditions are satisfied:

(a) The 3rd Floor Tenant Improvements and Tenant Extra Improvements have been
substantially completed in accordance with the approved Construction Drawings
(except for those punch list items referenced in Paragraph 12 below), such that
Tenant can reasonably conduct business within the 3rd Floor Premises;

(b) A certificate of occupancy and/or finalized building permit has been issued
for the 3rd Floor Premises; and

(c) All building facilities and systems, including electrical, plumbing, and
mechanical, serving the 3rd Floor Premises, shall be in good operating order.

12. Tenant’s acceptance of the 3rd Floor Premises shall not be deemed a waiver
of Tenant’s right to have defects in the 3rd Floor Premises repaired at no cost
to Tenant during the Warranty Period. Tenant, assisted by Landlord’s architect,
shall inspect the 3rd Floor Premises immediately prior to occupancy and compile
and furnish Landlord with a punch list of any missing or deficient 3rd Floor
Tenant Improvements or Third Floor Tenant Extra Improvements. Landlord shall
complete the corrective work noted in the punch list in a prompt, good and
workman-like manner. Punch list corrections shall not delay the Commencement
Date, nor shall a delay in making corrections be grounds for a delay or
reduction in any rent payments due Landlord. Tenant shall also give notice to
Landlord whenever any such defect becomes reasonably apparent during the
Warranty Period, and Landlord shall repair any such defect as soon as
practicable.

 

Exhibit B-1, Page 3

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

13. All floor area calculations are from the center line of the partitions and
the outside line of the exterior and hall walls. No deduction is allowed for the
columns, sprinkler risers, roof drains, or air conditioning units serving Tenant
and located within the 3rd Floor Premises.

14. Landlord shall select the manufacturer and vendor of all building materials
and equipment with respect to the 3rd Floor Tenant Improvements and Third Floor
Tenant Extra Improvements to be constructed hereunder.

15. Notwithstanding anything to the contrary contained in the Lease or this Work
Letter, Tenant acknowledges and agrees that the 3rd Floor Premises are intended
for use by Tenant and the specification and design requirements for the 3rd
Floor Tenant Improvements are not within the special knowledge or experience of
Landlord.

16. Tenant shall not mortgage, grant a security interest in or otherwise
encumber all or any portion of the 3rd Floor Tenant Improvements.

17. Notwithstanding anything in this Lease or Addendum to the contrary, the cost
of the Third Floor Tenant Extra Improvements shall not include (and Landlord
shall be solely responsible for) the following: (a) costs to bring the Project
into compliance with applicable laws and restrictions; (b) wages, labor and
overhead for overtime and premium time; and (c) management or supervision fees
by Landlord other than actual, reasonable fees paid for construction management
services (not to exceed 4% of all other hard and soft costs of the Third Floor
Tenant Improvements and Third Floor Tenant Extra Improvements).

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

 

Exhibit B-1, Page 4

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

“Landlord”

 

“Tenant”

REDWOOD BUSINESS CENTER 1 LLC,

a California limited liability company

 

CYAN, INC.,

a Delaware corporation doing business as Cyan California

By:  

Redwood Technology Center, LLC

a California limited liability company

        Its:   Manager and Sole Member   By:  

/s/ Michael Zellner

          Name:   Michael Zellner   By:  

G&W Ventures, LLC

a California limited liability company

    Its:   CFO     Its:   Manager               By:  

 

          Name:  

 

          Its:  

 

    By:  

/s/ Matthew T. White

            Matthew T. White, Manager      

AMERIVINE TOWN CENTER, LLC,

a California limited liability company

      By: Amerivine Inc.,       a California corporation       Its: Sole Member
      By:  

/s/ David F. Coleman

        David F. Coleman       Its:   President      

 

Exhibit B-1, Page 5

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

EXHIBIT B-2

WORK LETTER AGREEMENT – SECOND FLOOR

THIS WORK LETTER AGREEMENT – SECOND FLOOR supplements that certain lease (the
“Lease”) dated July 2, 2013, executed by REDWOOD BUSINESS CENTER 1 LLC, a
California limited liability company and AMERIVINE TOWN CENTER, LLC, a
California limited liability company (collectively, “Landlord”), and CYAN, INC.,
a Delaware corporation doing business in California as Cyan California
(“Tenant”). All capitalized terms not otherwise defined herein shall have the
same meaning as those capitalized terms contained in the Lease.

1. Landlord shall be responsible for constructing within the portion of the
Premises located on the second floor of the Building (the “2nd Floor Premises”)
private offices, open offices, kitchen rooms, telecommunication closets,
conference rooms and break out rooms (the “2nd Floor Tenant Improvements”) in
the same ratios, with the same design and with the same or equivalent finishes
as the space Tenant currently occupies in the portion of the second floor of the
adjacent building located at 1383 North McDowell Blvd. added pursuant to the
third amendment to Tenant’s lease thereof. Landlord and Tenant shall work
together to prepare a preliminary space plan for such second floor of the
Building by the date that is eight (8) months prior to the 2nd Floor Target Date
(the “Preliminary Space Plan”). The 2nd Floor Tenant Improvements for the 2nd
Floor Premises will be more particularly described in the plans and construction
drawings (the “Construction Drawings”) as approved below. Any additional work
(the “2nd floor Tenant Extra Improvements”), including without limitation any
lab space, fixtures, cabling or telecommunications needs shall be at Tenant’s
sole cost and expense.

2. Following completion and approval of the Preliminary Space Plan, Landlord
shall arrange for Landlord’s architect to provide to Tenant the Construction
Drawings for the 2nd Floor Tenant Improvements and 2nd Floor Tenant Extra
Improvements. The Construction Drawings shall indicate the specific requirements
of the 2nd Floor Premises, outlining in detail interior partitions, floor
coverings, a reflected ceiling plan, plumbing fixtures and electrical plans
(setting forth the electrical requirements of Tenant), all in conformity with
the Preliminary Space Plan. The Construction Drawings shall include full energy
calculations as required by the State of California and the city agencies.
Following execution of the Lease and selection of the General Contractor,
Landlord shall also cause to be prepared an estimate of the total cost for the
2nd Floor Tenant Extra Improvements (the “Cost Estimate”), which Cost Estimate
shall also conform to or represent logical evolutions of or developments from
the Preliminary Space Plan.

3. Within five (5) business days after receipt of the Construction Drawings and
the Cost Estimate, Tenant shall either approve or disapprove of the Construction
Drawings and the Cost Estimate by written notice to Landlord. If Tenant
disapproves of the Construction Drawings, Tenant shall specify in detail the
changes or modifications to the Construction Drawings and the Cost Estimate
required by Tenant. Any such request for changes or modifications shall be
subject to Landlord’s approval, provided, however, if Tenant desires changes,
Landlord shall not unreasonably withhold its approval of such changes and the
parties shall confer and negotiate in good faith to reach agreement on
modifications to the Construction Drawings and the Cost Estimate as a
consequence of such change. If Landlord approves of Tenant’s proposed change or
modification, Landlord shall arrange for Landlord’s architect to revise the
Construction Drawings and resubmit the Construction Drawings to Tenant for its
review and approval in accordance with the procedure set forth above. Tenant
acknowledges that the Construction Drawings are subject to the approval of the
appropriate government authorities. It shall be Tenant’s responsibility to
ensure that the design and function of the 2nd Floor Tenant Improvements and 2nd
Floor Tenant Extra Improvements are suitable for Tenant’s business and needs.
The improvements shall be constructed in a good and workmanlike manner in
accordance with the approved plans and current building standards, laws,
regulations, ordinances and codes. Landlord shall not be required to install any
2nd Floor Tenant Improvements or 2nd Floor Tenant Extra Improvements which do
not conform to the Construction Drawings. If the parties are unable to reach
agreement on the Construction Drawings or Cost Estimate within fifteen (15) days
following delivery of the Construction Drawings and Cost Estimate to Tenant,
Landlord, Tenant and General Contractor shall meet and discuss in good faith
resolution of the cost and design issues until the issues are resolved.

 

Exhibit B-2, Page 1

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

4. Landlord shall furnish and install the 2nd Floor Tenant Improvements and 2nd
Floor Tenant Extra Improvements as set forth on the Construction Drawings.

(a) If the tenant improvements for the entire second floor are planned and
completed all at the same time, then Landlord shall pay for the cost of the 2nd
Floor Tenant Improvements, including the costs of the plans and permits
therefor.

(b) If the tenant improvements for the second floor are planned and completed in
two or more phases, then Landlord shall pay for the cost of the 2nd Floor Tenant
Improvements up to a maximum of $50 per rentable square foot of the 2nd Floor
Premises, for a total maximum amount (the “Landlord Allowance”) of $938,650
($50.00 x 18,773 r.s.f.), subject to adjustment to reflect to the actual size of
the 2nd Floor Premises following the construction of the Building. All costs to
furnish and install the 2nd Floor Tenant Improvements (including without
limitation, actual, reasonable fees incurred by Landlord for construction
management services (not to exceed 4% of all other hard and costs of the 2nd
Floor Tenant Improvements), design, engineering, permit, and all other soft
costs) in excess of the Landlord Allowance shall be paid by Tenant within thirty
(30) days following receipt of Landlord’s written demand therefor. If any
portion of the Landlord Allowance is remaining after completion of the 2nd Floor
Tenant Improvements, then Tenant may apply such excess to the cost of the 2nd
Floor Tenant Extra Improvements.

All costs to furnish and install the 2nd Floor Tenant Extra Improvements
(including without limitation, actual, reasonable fees incurred by Landlord for
construction management services (not to exceed 4% of all other hard and costs
of the 2nd Floor Tenant Extra Improvements), design, engineering, permit, and
all other soft costs) shall be paid by Tenant within thirty (30) days following
receipt of Landlord’s written demand therefor, which demand(s) may be submitted
to Tenant prior to commencement of construction of the 2nd Floor Tenant Extra
Improvements based on Landlord’s estimate of such costs. If Tenant fails to pay
within such 30-day period, Landlord may, in addition to all other available
remedies, (i) delay the commencement of construction of the 2nd Floor Tenant
Extra Improvements if such work has not commenced, or (ii) stop construction of
the 2nd Floor Tenant Extra Improvements if such work has commenced, in either
case until such time as Tenant pays such amounts. Tenant shall have no
obligation to restore the 2nd Floor Tenant Improvements or 2nd Floor Tenant
Extra Improvements.

5. In no event shall the 2nd Floor Tenant Improvements payable by Landlord
include (i) the costs of procuring or installing any trade fixtures, equipment,
furniture, furnishings, telephone or computer equipment or wiring or other
personal property (“Personal Property”) or (ii) any Change Orders (as the term
is defined in Paragraph 6 below) requested by Tenant or related to 2nd Floor
Tenant Extra Improvements, which increase the cost of the 2nd Floor Tenant
Improvements. Such items shall be paid by Tenant.

6. After the Construction Drawings have been approved by Landlord and Tenant as
provided above, neither party shall have the right to require extra work or
changes to the work provided that neither party will unreasonably withhold its
consent to changes required by the City of Petaluma or any other governmental
body with jurisdiction. However, following Tenant’s approval of the Construction
Drawings, Tenant may request changes or modifications thereto (“Change Order”),
however, the cost of any Change Order(s) which increase the total construction
costs shall be borne by Tenant in the amount set forth in the approved Change
Order. If Tenant shall request any Change Order, then Landlord shall promptly
give Tenant a written estimate of (a) the cost of engineering and design
services to prepare the Change Order, (b) the cost of work to be performed
pursuant to the Change Order, and (c) the time delay in substantial completion
of the Premises expected because of such requested Change Order. Within three
(3) days after Tenant’s receipt of the written estimate, Tenant shall notify
Landlord in writing whether it approves the written estimate. Within thirty
(30) days after Landlord’s submission to Tenant of any invoice for costs
incurred in connection with such Change Order, Tenant shall pay the same to
Landlord if such Change Order increases the cost of construction. If such
written authorization is not received by Landlord, then Landlord shall not be
obligated to commence work on the 2nd Floor Premises and Tenant shall be
responsible for any delay in the completion of the 2nd Floor Premises in
accordance with Paragraph 7 below.

 

Exhibit B-2, Page 2

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

7. If the 2nd Floor Rent Commencement has not occurred on or before the 2nd
Floor Target Date, and if the cause of the delay in the occurrence of the 2nd
Floor Rent Commencement is attributable to Tenant, then the 2nd Floor Rent
Commencement shall be on the date the 2nd Floor Rent Commencement otherwise
would have occurred but for the Tenant delays (“Tenant Delays”). Tenant Delays
shall mean delays in substantial completion of the improvements beyond the 2nd
Floor Target Date caused by (a) Tenant’s failure to approve the Construction
Drawings within the time period noted above, (b) Tenant’s request for special
materials not available when needed for construction in accordance with the
construction schedule, (c) Change Orders, (d) Tenant’s or Tenant’s agents’
interference with Landlord’s work (provided that there shall be a grace period
for the first two (2) days of interference, which shall not constitute Tenant
Delays), and (e) Tenant’s failure to pay for 2nd Floor Tenant Improvements and
2nd Floor Tenant Extra Improvements within the time period noted above. To the
extent practicable, Landlord shall promptly notify Tenant of any interference
with Landlord’s work by Tenant or Tenant’s agent.

8. Tenant may, with Landlord’s written consent, enter the 2nd Floor Premises
subsequent to the Warm Shell Completion Date but prior to delivery of the 2nd
Floor Premises to Tenant solely for the purpose of installing its Personal
Property, cabling, and telecommunications equipment in the 2nd Floor Premises as
long as such entry will not interfere with the orderly construction and
completion of the 2nd Floor Premises (hereinafter, “Tenant’s Work”). Such entry
shall be subject to all of the terms of the Lease except the obligation to pay
Rent. Tenant shall notify Landlord of its desired time(s) of entry and shall
submit for Landlord’s written approval the scope of the Tenant’s Work to be
performed and the name(s) of the contractor(s) who will perform such work.
Tenant agrees to indemnify, defend and hold harmless Landlord and any mortgagee,
ground lessor or beneficiary of a deed of trust encumbering, secured by or
affecting the 2nd Floor Premises or the Building, from and against any and all
claims, actions, losses, liabilities, damages, costs or expenses (including,
without limitation, reasonable attorneys’ fees and claims for worker’s
compensation) of any nature whatsoever, arising out of or in connection with the
Tenant’s Work (including, without limitation, claims for breach of warranty,
personal injury or property damage) except to the extent due to the negligence,
willful misconduct or violation of this Lease by Landlord.

9. During the course of installation of Tenant’s Work, at Tenant’s expense,
Tenant shall obtain or maintain public liability and worker’s compensation
insurance, in amounts acceptable to Landlord, and which name Landlord and Tenant
as parties insured from and against any and all liability for death of or injury
to person or damage to property caused in or about or by reason of the
construction of the Tenant’s Work.

10. Landlord shall not be liable for any latent or patent defects therein,
except that Landlord warrants the 2nd Floor Premises against defects and
violations of law with respect to the original construction of the 2nd Floor
Tenant Improvements for a period of two (2) years from the date of substantial
completion (the “Warranty Period”).

11. The 2nd Floor Premises shall be deemed “substantially completed” as of the
date that all of the following conditions are satisfied:

(a) The 2nd Floor Tenant Improvements and 2nd Floor Tenant Extra Improvements
have been substantially completed in accordance with the approved Construction
Drawings (except for those punch list items referenced in Paragraph 12 below),
such that Tenant can reasonably conduct business within the 2nd Floor Premises;

(b) A certificate of occupancy and/or finalized building permit has been issued
for the 2nd Floor Premises; and

(c) All building facilities and systems, including electrical, plumbing and
mechanical, serving the 2nd Floor Premises shall be in good operating order.

12. Tenant’s acceptance of the 2nd Floor Premises shall not be deemed a waiver
of Tenant’s right to have defects in the 2nd Floor Premises repaired at no cost
to Tenant during the Warranty Period. Tenant shall inspect the 2nd Floor
Premises immediately prior to occupancy and compile and furnish Landlord with a
punch list of any missing or deficient 2nd Floor Tenant Improvements or 2nd
Floor Tenant Extra Improvements. Landlord shall complete the corrective

 

Exhibit B-2, Page 3

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work noted in the punch list in a prompt, good and workman-like manner. Punch
list corrections shall not delay the Commencement Date, nor shall a delay in
making corrections be grounds for a delay or reduction in any rent payments due
Landlord. Tenant shall also give notice to Landlord whenever any such defect
becomes reasonably apparent during the Warranty Period, and Landlord shall
repair such defect as soon as practicable.

13. All floor area calculations are from the center line of the partitions and
the outside line of the exterior and hall walls. No deduction is allowed for the
columns, sprinkler risers, roof drains, or air conditioning units serving Tenant
and located within the 2nd Floor Premises.

14. Landlord shall select the manufacturer and vendor of all building materials
and equipment with respect to the 2nd Floor Tenant Improvements and 2nd Floor
Tenant Extra Improvements to be constructed hereunder.

15. Notwithstanding anything to the contrary contained in the Lease or this Work
Letter. Tenant acknowledges and agrees that the 2nd Floor Premises are intended
for use by Tenant and the specification and design requirements for the 2nd
Floor Tenant Improvements are not within the special knowledge or experience of
Landlord.

16. Tenant shall not mortgage, grant a security interest in or otherwise
encumber all or any portion of the 2nd Floor Tenant Improvements.

17. Notwithstanding anything in this Lease or Addendum to the contrary, the cost
of the 2nd Floor Tenant Extra Improvements shall not include (and Landlord shall
be solely responsible for) the following: (a) costs to bring the Project into
compliance with applicable laws and restrictions; (b) wages, labor and overhead
for overtime and premium time; and (c) management or supervision fees by
Landlord other than actual, reasonable fees for construction management services
(not to exceed 4% of all other hard and soft costs of the 2nd Floor Tenant
Improvement and 2nd Floor Tenant Extra Improvements).

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

 

Exhibit B-2, Page 4

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“Landlord”     “Tenant”

REDWOOD BUSINESS CENTER 1 LLC,

a California limited liability company

   

CYAN, INC.,

a Delaware corporation doing business as Cyan California

By:  

Redwood Technology Center, LLC

a California limited liability company

          Its:   Manager and Sole Member     By:  

/s/ Michael Zellner

            Name:   Michael Zellner   By:  

G&W Ventures, LLC

a California limited liability company

      Its:   CFO     Its:   Manager                 By:  

 

          Name:  

 

  By:  

 /s/ Matthew T. White

      Its:  

 

    Matthew T. White, Manager        

AMERIVINE TOWN CENTER, LLC,

a California limited liability company

        By:  Amerivine Inc.,         a California corporation         Its: Sole
Member         By:  

/s/ David F. Coleman

          David F. Coleman         Its:  President        

 

Exhibit B-2, Page 5

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

EXHIBIT C

COMMENCEMENT DATE MEMORANDUM

With respect to that certain lease (“Lease”) dated             ,             ,
between                                          
                               , a
                                    (“Tenant”), and
                                        , a
                            (“Landlord”), pursuant to which Landlord leased to
Tenant and Tenant leased from Landlord approximately
                            rentable square feet of space (“Premises”) in the
building located at                                                  , Tenant
hereby acknowledges and certifies to Landlord as follows:

 

  (1) The Commencement Date is             and the Expiration Date is
            ;

 

  (2) The Premises contain                 rentable square feet of space; and

 

  (3) Tenant has accepted and is currently in possession of the Premises and the
Premises are acceptable for Tenant’s use.

IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this
                    day of                 , 20    .

 

“Tenant”

                                                                  
                           ,

a                                                                  
                         

By:

 

 

Name:

 

 

Its:

 

 

 

Exhibit C, Page 1

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

EXHIBIT D

RULES AND REGULATIONS

It is further agreed that the following rules and regulations (these “Rules and
Regulations”) shall be and are hereby made a part of this Lease, and Tenant
agrees that Tenant’s employees and agents, or any others permitted by Tenant to
occupy or enter the Premises, will at all times abide by these Rules and
Regulations, unless otherwise specified or provided for in the Lease, to wit:

1. The driveways, entrances and exits to the Project, sidewalks, passages,
building entries, lobbies, corridors, stairways, and elevators of the Building
shall not be obstructed by Tenant, or Tenant’s agents or employees, or used for
any purpose other than ingress and egress to and from the Premises. Tenant or
Tenant’s agents or employees shall not loiter on the lawn areas or other common
areas of the Project.

(a) Furniture, freight equipment and supplies will be moved in or out of the
Building only through the rear service entrances or other entrances designated
by Landlord and then only during such hours and in such manner as may be
reasonably prescribed by Landlord. Tenant shall cause its movers to use only the
loading facilities and entrances designated by Landlord. In the event Tenant’s
movers damage any part of the Building or Project, Tenant shall pay to Landlord
the amount required to repair said damage upon Landlord’s written request.

(b) No safe or article, the weight of which may in the opinion of Landlord
constitute a hazard to or damage to the Building or the Building’s equipment,
shall be moved into the Premises without Landlord’s prior written approval, but
such consent or approval shall not be unreasonably withheld, conditioned or
delayed. Landlord and Tenant shall mutually agree to the location of such
articles in the Premises. All damage done to the Project, Building or Premises
by putting in, taking out or maintaining extra heavy equipment shall be repaired
at the expense of Tenant.

(c) Landlord reserves the right to close and keep locked any and all entrances
and exits of the Building and Project and gates or doors closing the parking
areas thereof during such hours as Landlord may deem advisable for the adequate
protection of the Project and all tenants therein; provided, Tenant shall have
reasonable access to the Premises at all times except in the event of an
emergency requiring the temporary closure of the Building.

2. Except as otherwise provided for in the Lease, no sign, advertisement or
notice shall be inscribed, painted or affixed on any part of the inside or
outside of the Building unless of such color, size and style and in such place
upon or in the Building as shall be first approved in writing by Landlord. No
furniture or other materials shall be placed in front of the Building or in any
lobby or corridor without the prior written consent of Landlord. Landlord shall
have the right to remove all non permitted signs and furniture without notice to
Tenant.

3. Tenant shall not employ any person or persons other than the janitor or
cleaning contractor of Landlord for the purpose of cleaning or taking care of
the Premises without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, conditioned or delayed. Except as otherwise
provided in the Lease, Landlord shall in no way be responsible to Tenant for any
loss of property from the Premises, however occurring. The janitor of the
Building may at all times keep a pass key, and other agents of Landlord shall at
all times be allowed admittance to the Premises in accordance with the
provisions set forth in the Lease.

4. Water closets and other water fixtures shall not be used for any purpose
other than that for which the same are intended, and any damage resulting to the
same from misuse on the part of Tenant or Tenant’s agents or employees, shall be
paid for by Tenant. No person shall waste water by tying back or wedging the
faucets or in any other manner.

5. No animals except seeing-eye dogs or other animals necessary to the
functioning of handicapped personnel shall be allowed on the lawns or sidewalks
or in the offices, halls, and corridors of the Building.

6. No persons shall disturb the occupants of this or adjoining buildings or
premises by the use of any radio, sound equipment or musical instrument or by
the making of loud or improper

 

Exhibit D, Page 2

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

noises, nor interfere in any way with the other tenants or those having business
with them. Should sound mitigation measures be required due to sounds
originating in the Premises, the costs of such measures shall be paid for by
Tenant.

7. Bicycles or other vehicles, other than wheel chairs, shall not be permitted
in the offices, halls, corridors and lobbies in the Building nor shall any
obstruction of sidewalks or entrances of the Building by such be permitted.

8. Tenant shall not allow anything to be placed on the outside of the Building,
nor shall anything be thrown by Tenant or Tenant’s agents or employees, out of
the windows or doors, or down the corridors, ventilation ducts or shafts of the
Building. Tenant, except in case of fire or other emergency, shall not open any
outside window.

9. No awnings shall be placed over any window or entrance.

10. All garbage, including wet garbage, refuse or trash shall be placed by
Tenant in the receptacles designated by Landlord for that purpose. Tenant shall
not burn any trash or garbage at any time in or about the leased Premises or any
area of the Project. Tenant and Tenant’s officers, agents, and employees shall
not throw cigar or cigarette butts or other substances or litter of any kind in
or about the Project.

11. Tenant shall not install or operate any steam or gas engine or boiler, or
other machinery or carry on any mechanical business, other than such mechanical
business which normally is identified with general use in the Premises.
Explosives or other articles of an extra hazardous nature shall not be brought
into the Building complex.

12. Any painting or decorating as may be agreed to be done by and at the expense
of Landlord shall be done during regular weekday working hours. Should Tenant
desire such work on Saturdays, Sundays, holidays or outside of regular working
hours, Tenant shall pay for the extra cost thereof, if any.

13. Tenant and Tenant’s agents and employees shall park their vehicles in areas
designated from time-to-time for employee parking.

14. Tenant shall not mark, drive nails, screw, bore, or drill into, paint or in
any way deface the common area walls, exterior walls, roof, foundations, bearing
walls, or pillars without the prior written consent of Landlord. The expense of
repairing any breakage, stoppage or damage resulting from a violation of this
rule shall be borne by Tenant.

15. No waiver of any rule or regulation by Landlord shall be effective unless
expressed in writing and signed by Landlord or his authorized agent.

16. Tenant shall be responsible for cleaning up any trash blowing around their
facility that may have been left by their customers or employees.

17. In the event of any conflict between these Rules and Regulations or any
further or modified rules and regulations from time to time issued by Landlord,
and the Lease provisions, the Lease provisions shall govern and control.

18. Landlord reserves the right at any time to change or rescind any one or more
of these Rules and Regulations, or to make such other and further reasonable
rules and regulations as in Landlord’s judgment may from time to time be
necessary for the management, safety, care and cleanliness of the Premises, and
for the preservation of good order therein, as well as for the convenience of
other tenants of the Project. Landlord shall not be responsible to Tenant or to
any other person for the non-observance or violation of these Rules and
Regulations by any other tenant or person. Tenant shall be deemed to have read
these rules and Regulations and to have agreed to abide by them as a condition
to its occupancy of the space herein leased, and Tenant shall abide by any
additional rules and regulations which are ordered or requested by Landlord or
by any governmental authority.

 

Exhibit D, Page 3