Document:

exv10w06

 

Exhibit 10.06

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. Basic Provisions (“Basic Provisions”).

     1.1
Parties: This Lease (“Lease”), dated for reference purposes only March 7, 
     
              
 , 2000, is made by and between 3168 Corporate Place Associates, LLC (“Lessor”)
and Shutterfly.com, Inc., a Delaware corporation (“Lessee”), (collectively the
“Parties”, or individually a “Party”).

     1.2 (a) Premises: That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by
the street address of 3180 Corporate Place located in the City of Hayward, County
of Alameda, State of California, with zip code                     , as outlined on Exhibit A
attached hereto (“Premises”) and generally described as (describe briefly the nature of the
Premises): an approximately 19,995 square foot single—story building

In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along
with all other buildings and improvements thereon, are herein collectively referred to as the
“Project” (See also Paragraph 2)

     1.2(b) Parking: 40 unreserved vehicle parking spaces (“Unreserved Parking Spaces”);
and no (0) reserved vehicle parking spaces (“Reserved Parking Spaces”). (See also Paragraph
2.6)

     1.3 Term: five (5) years and no (0) months (“Original
Term”) commencing May 1, 2000 (“Commencement Date”) and ending April 30, 2005
(“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession: upon Substantial Completion (“Early Possession Date”).

(See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $19,220.00 per month (“Base Rent”), payable on the first (1st)
day of each month commencing (See Addendum Paragraph 51). (See also Paragraph 4)

þ : If this box is checked, there are provisions in this Lease for the Base Rent to be
adjusted.

     1.6 Lessee’s Share of Common Area Operating Expenses: 23 and 10/100s percent (23.1 %)
(“Lessee’s Share”).

     1.7 Base Rent and Other Monies Paid Upon Execution:

          (a) Base Rent: $19,220.00 for the period first year of the term

          (b)
Common Area Operating Expenses: $2,995.25 monthly for the period calendar year 2000

          (c) Security Deposit: $19,220.00(“Security Deposit”). (See also Paragraph 5)

          (d) Other: $96,100.00 for additional Security Deposit in form of Letter of Credit (See Paragraph 54)

          (e) Total Due Upon Execution of this Lease: $41,435.25

     1.8 Agreed Use: general office, warehouse, storage and related uses, including photo
processing. (See also Paragraph 6)

     1.9 Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)

     1.10 Real Estate Brokers: (See also Paragraph 15)

          (a) Representation: The following real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction (check applicable boxes):

þ : Cornish & Carey Commercial represents Lessor exclusively (“Lessor’s Broker”);

þ : Wayne Mascia Associates represents Lessee exclusively (“Lessee’s Broker”); or

þ :                                         represents both Lessor and Lessee (“Dual Agency”).

          (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor
shall pay to the Brokers the brokerage fee agreed to in a separate written agreement (or if there
is no such agreement, the sum of                      or                                         % of the total Base

					
	 
	 	 	 
	 
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     Rent for the brokerage services rendered by the Brokers).

     1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by
N/A (“Guarantor”). (See also Paragraph 37).

     1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs
50 through 57 and Exhibits A through B, all of which constitute a
part of this Lease.

2. Premises.

     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual
size is more or less.

     2.2 Condition. Lessor shall deliver that portion of the Premises contained within the Building
(“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early Possession
Date, whichever first occurs (“Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and
all other such elements in the Unit, other than those constructed by Lessee, shall be in good
operating condition on said date and that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should malfunction or fail
within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly after, receipt of written notice
from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as follows:
(i) 12 6 months as to the HVAC systems and roof, and (ii) 30 days as to the remaining systems and
other elements of the Unit. If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls — see Paragraph 7).

     2.3 Compliance. Lessor warrants that the improvements on the Premises and the Common Areas
comply with the building codes that were in effect at the time that each such improvement, or
portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable Requirements”). Said
warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee
is responsible for determining whether or not the Applicable Requirements, and especially the
zoning, are appropriate for Lessee’s intended use, and acknowledges that past uses of the Premises
may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with this warranty within 6 months
following the Start Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee’s sole cost and expense. If the Applicable Requirements are hereafter changed so as to
require during the term of this Lease the construction of an addition to or an alteration of the
Unit, Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or
other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor
and Lessee shall allocate the cost of such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use’of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires
such Capital Expenditure and deliver to Lessor written notice specifying a termination date at
least 90 days thereafter. Such termination date shall, however, in no event be earlier than the
last day that Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however, that if such
Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this
Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right
to terminate this Lease upon 30 days written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this
Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set forth in this

					
	 
	 	 	 	 
	 
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Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties conceming Lessee’s ability to honor the Lease or suitability to occupy the
Premises, and (ii) it is lessor’s sole responsibility to investigate the financial capability
and/or suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of
no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.

     2.6 Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Lessor may
regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in
Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area
without the prior written permission of Lessor.

          (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee
or Lessee’s employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such activities.

          (b) lessee shall not service or store any vehicles in the Common Areas.

          (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph
2.6, then Lessor shall-have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

     2.7 Common Areas — Definition. The term “Common Areas” is defined as all areas and facilities
outside the Premises and within the exterior boundary line of the Project and interior utility
raceways and installations within the Unit that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and
landscaped areas.

     2.8 Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its
employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease,
the non-exclusive right to use, in common with others entitled to such use, the Common Areas as
they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or restrictions governing
the use of the Project. Under no circumstances shall the right herein granted to use the Common
Areas be deemed to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

     2.9 Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may appoint
shall have the exclusive control and management of the Common Areas and shall have the right, from
time to time, to establish, modify, amend and enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the  convenience of other
occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by
and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to
Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project.

     2.10 Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time:

          (a) To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;

          (b) To close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

          (c) To designate other land outside the boundaries of the Project to be a part of the Common
Areas;

          (d) To add additional buildings and improvements to the Common Areas;

          (e) To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

          (f) To do and perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.

3. Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any such early possession
shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent until it receives possession of the Premises.

					
	 
	 	 	 	 
	 
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If possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor
and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.

4. Rent

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).

     4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:

          (a) “Common Area Operating Expenses” are defined, for purposes of this Lease, as all costs
incurred by Lessor relating to the ownership and operation of the Project, including, but not
limited to, the following:

	 	(i)	 	The operation, repair and maintenance, in neat,
clean, good order and condition of the following:

(aa) The Common Areas and Common Area improvements, including parking
areas, loading and unloading areas, trash areas, roadways, parkways,
walkways, driveways, landscaped areas, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators, roofs,
and roof drainage systems.

(bb) Exterior signs and any tenant directories.

(cc) Any fire detection and/or sprinkler systems.

	 	(ii)	 	The cost of water, gas, electricity and
telephone to service the Common Areas and any utilities not separately
metered.
	 
	 	(iii)	 	Trash disposal, pest control services,
property management of 5% of rent, security services, and the costs of
any environmental _______ inspections.
	 
	 	(iv)	 	Reserves set aside for maintenance and repair
of Common Areas.
	 
	 	(v)	 	Real Property Taxes (as defined in Paragraph
10).
	 
	 	(vi)	 	The cost of the premiums for the insurance
maintained by Lessor pursuant to Paragraph 8.
	 
	 	(vii)	 	Any deductible portion of an insured loss
concerning the Building or the Common Areas.
	 
	 	(viii)	 	The cost of any Capital Expenditure to the Building or the Project
not covered under the provisions of Paragraph 2.3 provided; however,
that Lessor shall allocate the cost of any such Capital Expenditure
over a 12 year period and Lessee shall not be required to pay more than
Lessee’s Share of 1/144th of the cost of such Capital Expenditure (net
of any reserves therefor) in any given month.
	 
	 	(ix)	 	Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating
Expense.

          (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project or to the operation,
repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other
building. However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the operation, repair and
maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project.

          (c) The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.

          (d) Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within 30 40
days after a reasonably detailed statement of actual expenses is presented to Lessee. At Lessor’s
option, however, an amount may be estimated by Lessor from time to time of Lessee’s Share of annual
Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each 12 month period of the Lease term, on the same day as the Base Rent is due
hereunder. Lessor shall deliver to Lessee within 60 days after the expiration of each calendar year
a reasonably detailed statement showing Lessee’s Share of the actual Common Area Operating Expenses
incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d) during the
preceding year exceed Lessee’s Share as indicated on such statement, Lessor shall be credited the
amount of such over-payment against Lessee’s Share of Common Area Operating Expenses next becoming
due. If Lessee’s payments under this Paragraph 4.2(d) during the preceding year were less than
Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 301-g days after delivery by Lessor to Lessee of the statement.

     4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted in this Lease), on
or before the day on which it is due. Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of days of said month.
Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing. Acceptance of a payment which is less
than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees
to pay to Lessor the sum of $25 in addition to any late charges which may be due.

					
	 
	 	 	 	 
	 
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5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as
security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to
pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with
Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion
to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit
to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and
tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be
paid by Lessee under this Lease.

6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in the Agreed Use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to
any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to, the installation (and removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee’s expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the Premises or
neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or
for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and
consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance under the Premises from
areas outside of the Project). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment created or suffered
by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and
shall survive the expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this
Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at
the time of such agreement.

					
	 
	 	 	 	 
	 
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          (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when required
by the Applicable Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the expiration or termination
of this Lease.

          (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to the Start Date, unless
such remediation measure is required as a result of Lessee’s use (including “Alterations”, as
defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may. at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $200,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to
Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such
Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory
assurance thereof within 30 days following such commitment. In such event, this Lease shall
continue in full force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided, this Lease shall
terminate as of the date specified in Lessor’s notice of termination.

     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely’ manner,
materially comply with all Applicable Requirements, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or
consultants which relate in any manner to the Premises, without regard to whether said requirements
are now in effect or become effective after the Start Date. Lessee shall, within 10 days after
receipt of Lessor’s written request, provide Lessor with copies of all permits and other documents,
and other information evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

     7.1 Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order, condition and state of
repair.

          (b) Service Contracts. Lessee shalt, at Lessee’s sole expense, procure and maintain contracts,
with copies to Lessor, in customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii) clarifiers,
and (iv) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right,
upon notice to Lessee, to procure and maintain any or all of such service contracts, and if Lessor
so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

          (c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph
7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in
the case of an emergency, in which case no notice shall be required), perform such obligations on
Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall
promptly reimburse Lessor for the cost thereof.

          (d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relieving Le see of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if an item

					
	 
	 	 	 	 
	
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described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost
thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month
during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount
equal to the product of multiplying the cost of such replacement by a fraction, the numerator of
which is one, and the denominator of which is 144 (ie. 1/144th of the cost per month). Lessee shall
pay interest on the unamortized balance at a rate that is commercially reasonable in the judgment
of Lessor’s accountants. Lessee may, however, prepay its obligation at any time.

     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage
or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,
shall keep in good order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or_smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways,
landscaping, fences,, signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior
walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of
the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect to the
extent it • is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term “Utility Installations” refers to all floor and window coverings,
air lines, power panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed
without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or
deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or
Utility Installations made by Lessee that are’not yet owned by Lessor pursuant to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost thereof during this
Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum
equal to one month’s Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not
make or permit any roof penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to
utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor shall be presented to
Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the
permits and the plans and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a prompt and expeditious
manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with
good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built
plans and specifications. For work which costs an amount in excess of $50,000, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150%
of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.

          (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialman’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal
to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

          (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee,
but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of
all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the property of Lessor
and be surrendered by Lessee with the Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12
months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any
and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Project) even if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by

					
	 
	 	 	 	 
	 
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Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.

     8.1 Payment of Premiums. The cost of the premiums for the insurance policies required to be
carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area
Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term
of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be
on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall include coverage
for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.

     8.3 Property Insurance — Building, Improvements and Rental Value.

          (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-tessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but in no event more than the commercially reasonable and available insurable value
thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee under Paragraph 8.4. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause, the deductible amount
shall not exceed $1,000 per occurrence.

          (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one
year with an extended period of indemnity for an additional 180 days (“Rental Value insurance”).
Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and
the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable
by Lessee, for the next 12 month period.

          (c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings in the Project if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

          (d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to
insure Lessee Owned Alterations and Utility Installations unless the item in question has become
the property of Lessor under the terms of this Lease.

     8.4 Lessee’s Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business
operations or obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current isue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the
remaining term

					
	 
	 	 	 	 
	 
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of this Lease, whichever is less. If either Party shall fail to procure and maintain the
insurance required to be carried by it, the other Party may, but shall not be required to, procure
and maintain the same.

     8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have
first paid any such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the
person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors,
invitees, customers, or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC
or lighting fixtures, or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the Building, or from other sources
or places. Lessor shall not be liable for any damages arising from any act or neglect of any other
tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

9. Damage or Destruction.

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 6 3 months or less from the date of the damage or
destruction.  Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage is Partial or
Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 6 3 months or less from the date of the damage or destruction
and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

          (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a) irrespective of any
deductible amounts or coverage limits involved.

          (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of -the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.

          (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises.

     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $5,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was not commercially
reasonable and — available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance
thereof within said 10 day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds
or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of
any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage
due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be made available for the
repairs if made by either Party.

     9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give written notice

					
	 
	 	 	 	 
	 
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to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement
from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within
30 days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or
destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have
the right tarecover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last 12 S months of this Lease there is
damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage
by giving a written termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing, if Lessee pt that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date
which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises
such option during such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the termination notice
and Lessee’s option shall be extinguished.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g)
or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.

10. Real Property Taxes.

     10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance,. personal income, transfer or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s
right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the
direct or indirect power to tax and where the funds are generated with reference to the Project
address and where the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The term “Real Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Project or any portion thereof or a change in the improvements
thereon. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any
real estate tax year shall be included in the calculation of Real Property Taxes for such calendar
year based upon the number of days which such calendar year and tax year have in common.

     10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and
except as otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

     10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property
Taxes specified in the tax assessor’s records and work sheets as being caused by additional
improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of
such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request.

     10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes
allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such proportion to be determined
by Lessor from the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.

					
	 
	 	 	 	 
	 
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     10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against
and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee contained in the Premises. When possible, Lessee
shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of
a written statement setting forth the taxes applicable to Lessee’s property.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises, together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity or other commonly
metered utilities, or that Lessee is generating such a large volume of trash as to require an
increase in the size of the dumpster and/or an increase in the number of times per month that the
dumpster is emptied, then Lessor may increase Lessee’s Base Rent by an amount equal to such
increased costs.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease
or in the Premises without Lessor’s prior written consent.

          (b) A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 507.25% or more of the voting control of Lessee shall
constitute a change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.

          (d) An assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any
notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either. (i) terminate this Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in
effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased to 110% of the scheduled adjusted rent.

          (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (Hi) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

          (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against
any other person or entity responsible therefore to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$1,000 or 10% of the current monthly Base Rent applicable to the portion of the Premises which is
the subject of the proposed assignment or sublease, whichever is greater, as consideration for
Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other
or additional information and/or documentation as may be reasonably requested.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

          (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly incorporated therein:

					
	 
	 	 	 	 
	 
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          (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable
on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations
under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee
shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee. ‘

13. Default; Breach; Remedies.

     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease.. A
“Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity of the remaining
provisions.

          (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor
was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within 60 days following written notice of any such event, to provide written alternative assurance
or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case’ of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the

					
	 
	 	 	 	 
	 
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amount by which the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental loss that the Lessee
proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result therefrom, including but
not limited to the cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion
of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired
term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of
the immediately preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are located at the time
of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this
Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a notice and grace
period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall also constitute the
notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph
13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure
the Default within the greater of the two such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

          (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.

          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee’s occupancy of the Premises.

     13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions”, shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lessor at the time of such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to 6% 10%
of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of
Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of
the other rights and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be equal to the prime rate reported in the Wall Street
Journal as published closest prior to the date when due plus 4%, but shall not exceed the maximum
rate allowed by law. Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.

     13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breach if performance is
commenced within such 30 day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than
25% of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option,
to be exercised in writing

					
	 
	 	 	 	 
	 
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within 10 days after Lessor shalt have given Lessee written notice of such taking (or in the
absence of such notice, within 10 days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such possession. If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the pertion of the Premises remaining, except that the Base Rent shall be reduced
in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation
awards and/or payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part taken, or for
severance damages; provided, however, that Lessee shall be entitled to any compensation for
Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to
whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All
Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation
only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all
compensation which is payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.

15. [RESERVED]

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within 10 business days after written notice from
the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current “Estoppel Certificate” form published
by the American Industrial Real Estate Association, plus such additional information, confirmation
and/or statements as may be reasonably requested by the Requesting Party.

          (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 business day period, the Requesting Party may execute an Estoppel Certificate stating that:
(i) the Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrances may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.

          (c) If Lessor desires to finance, refinance, or sell’the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past 3 years. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20
below, the original Lessor under this Lease; and all subsequent holders of the Lessor’s interest in
this Lease shall remain liable and responsible with regard to the potential duties and liabilities
of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

18. 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.

19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.

20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.

					
	 
	 	 	 	 
	 
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22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the
Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or modification hereto
shalt be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be
that Party’s address for delivery or mailing of notices. Either Party may by written notice to the
other specify a different address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given 48 hours after the same is addressed as required herein and
mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier
that guarantee next day delivery shall be deemed given 24 hours after delivery of the same to the
Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is
sufficient), provided a copy is also delivered via delivery or mail. If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof
by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

          (a) When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:

               (i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as
the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings with the Lessor. To the Lessee and the Lessor. (a) Diligent exercise of
reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair
dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the diligent attention
and observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the affirmative
duties set forth above.

               (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent acting only
for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the
Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts
known to the agent materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from the other Party
which does not involve the affirmative duties set forth above.

               (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the
dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated
above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not
without the express permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that the Lessee is willing
to pay a higher rent than that offered. The above duties of the agent in a real estate transaction
do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor
and Lessee should carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to advise about real
estate. If legal or tax advice is desired, consult a competent professional.

					
	 
	 	 	 	 
	 
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          (b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to any
breach of duty, error or omission relating to this Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

          (c) Buyer and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according
to its fair_meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates
of the documentation or recordation thereof.

     30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attom
to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the
election of such new owner, this Lease shall automatically become a new Lease between Lessee and
such new owner, upon all of the terms and conditions hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new
owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not: (a)
be liable for any act or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against
any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for
the return of any security deposit paid to any prior lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device which is-secured by
the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate
for the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on
the Premises any ordinary “For Sublease” sign.

					
	 
	 	 	 	 
	 
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33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises,
Lessee shall not place any sign upon the Project without Lessor’s prior written consent. All signs
must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response
to, a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee
upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee
of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or
Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such
consent. The failure to specify herein any particular condition to Lessor’s consent shall not
preclude the imposition by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is being given. In the event
that either Party disagrees with any determination made by the other hereunder and reasonably
requests the reasons for such determination, the determining party shall furnish its reasons in
writing and in reasonable detail within 10 business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect. 

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term
hereof.

39. Options. If Lessee is granted an option, as defined below, then the following provisions shall
apply.

     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first
refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to
purchase or the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee and any Permitted Transferee, and cannot be assigned or exercised
by anyone other than said original Lessee or Permitted Transferee and only while the original
Lessee or Permitted Transferee is in full possession of the Premises and, if requested by Lessor,
with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly
exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of Default and continuing until said Default is cured, (ii) during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month
period immediately preceding the exercise of the Option.

          (b) The period of time within which an Option may be exercised shalt not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of
Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.

41. Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the
recordation of parcel maps and restrictions, and (iii) to create and/or install new utility
raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways
do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights.

42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “under protest” and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on

					
	 
	 	 	 	 
	 
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the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

43. Authority. If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each party shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.

44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.

45. Offer. Preparation of this Lease by either party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to
be binding until executed and delivered by all Parties hereto.

46. Amendments: This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

47. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have joint and several responsibility to comply with the terms of this
Lease.

48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any
action or proceeding involving the Property or arising out of this Agreement.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease o is þ is
not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO: THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES
FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE
LOCATED.

The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.

					
	 
	 	 	 	 
	 
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	Executed at:  
	 	 	 	Executed at:  
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	on:  

	 	 	 	on:  

	 
	 
	By LESSOR:	 	 	 	By LESSEE:	 	 	 	 
	3168 Corporate Place Associates	 	 	 	Shutterfly.com, Inc., a Delaware
	a California limited liability company	 	 	 	Corporation
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:   /s/ Robert H. Goldsmith 

	 	 	 	By:   /s/ James F. Healey 

	 
	 	 	 	 	 	 	 	 	 	 	 
	Name
Printed:   Robert H. Goldsmith 
	 	 	 	Name
Printed:     James F. Healey 
	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	Title: 

	 	Managing Member	 	 	 	Title:	 	Vice President, Operations	 	 
	 	 	 	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:  /s/ Jay Mancini

	 	 	 	By:  /s/ John L. Roberts	 	 
	 
	 	 	 	 
	 	 
	Name
Printed:    Jay Mancini	 	 	 	Name
Printed:          John L. Roberts	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 	 	 
	Title:
	 	Managing Member	 	 	 	Title:	 	Senior Logistics Mgr	 	 
	 	 	 	 	 	 	 
	 	 
	Address: In care of Goldsmith & Mancini LLC	 	 	 	Address:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	465 California Street	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	San Francisco, California 94104	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: (415) 362-2100	 	 	 	Telephone:	 	( )	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 
	Facsimile: (415) 362-0937	 	 	 	Facsimile:	 	( )	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 
	Federal ID No.	 	 	 	Federal ID No.	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 

These forms are often modified to meet changing requirements of law and needs of the industry.
Always write or call to make sure you are utilizing the most current form: American Industrial Real
Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.

©Copyright 1999 By American Industrial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

					
	 
	 	 	 	 
	 
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ADDENDUM

TO

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

     This Addendum (“Addendum”), containing Paragraphs 50 through 57, forms an integral part of the
Standard Industrial/Commercial Multi-Lease — Net (“Lease”), dated for reference purposes only March
7, 2000, between 3168 Corporate Place Associates LLC, a California limited liability company
(“Lessor”), and Shutterfly.com, Inc. a Delaware corporation (“Lessee”), demising premises located
at 3150 Corporate Place, Hayward, California (“Premises”). Words and phrases used in this Addendum
and not separately defined herein shall have the meanings given them in the Lease.

     50. Option to Extend Term. Subject to satisfaction of the conditions set forth in Paragraph
50.7 below, Lessor hereby grants Lessee one (1) option (“Option to Extend Term”) to extend the
initial term of the Lease as specified in Paragraph 1.3 above (the “Initial Term”) in accordance
with the terms of this Paragraph 50. The Option to Extend Term, if duly exercised in accordance
with this Paragraph 50, shall extend the term of the Lease for an additional five (5) years
(“Extended Term”) commencing upon the expiration of the Initial Term.

          50.1 If Lessee exercises the Option to Extend Term, then all of the terms contained in this
Lease shall continue in full force and effect during the Extended Term, except with respect to the
following:

               (a) Base Rent for the Extended Term shall be adjusted on the first day of the Extended Term to
the then Fair Market Rental Value of the Premises, including escalations, as of the commencement of
the Extended Term, but in no event less than one hundred four percent (104%) of the Base Rent
payable in the last month of the Initial Term (but without regard to any temporary abatement or
reduction thereof of permitted by this Lease). The term “Fair Market Rental Value of the Premises”
shall be established based on all other monetary payments and other considerations of value and
escalations that Lessor could attain in a new lease of the Premises entered into in an arm’s length
transaction with an unrelated third party, without deducting costs associated with Lessor’s entry
into such new lease.

               (b) Lessee shall have no further right to extend the term of this Lease whether pursuant to
the provisions of this Paragraph 50 or otherwise.

          50.2 The Option to Extend shall be exercised, if at all, only by written notice (“Notice to
Extend Term”) delivered by Lessee to Lessor at least twelve (12) months, but not more than eighteen
(18) months, prior to the expiration of the Initial Term. If Lessee does not deliver the Notice to
Extend Term within the time period set forth herein, the Option to Extend Term shall lapse, Lessee
shall have no right to extend the Lease term, and this Lease shall expire upon the expiration of
the Initial Term, unless sooner terminated pursuant to the provisions of this Lease.

     50.3 Within thirty (30) days after Lessor’s receipt of the Notice to Extend Term, Lessor shall
provide Lessee written notice setting forth the Fair Market Rental Value of the Premises for the
Extended Term (“Extension Rental Notice”). Within ten (10) days following the date Lessor delivers
the Extension Rental Notice to Lessee, Lessee shall, by.written notice delivered to Lessor, either
(a) accept the Fair Market Rental Value of the Premises as stated in the Extension Rental Notice
(“Notice of Acceptance”), or-(b) reject the-Fair Market Rental Value of the Premises as stated in
the Extension Rental Notice (“Notice of Rejection”).

     50.4 If Lessee delivers the Notice of Acceptance within ten (10) days following delivery of
Lessor’s Extension Rental Notice, this Lease shall be deemed extended for the Extended Term at the
Base Rent and upon the terms specified in this Paragraph 50 without the need for any further notice
or documentation. If Lessee does not deliver to Lessor either the Notice of Acceptance or the
Notice of Rejection within such ten (10) day period, the same shall constitute Lessee’s Notice of
Acceptance and Lessor shall be deemed to have received the Notice of Acceptance upon the tenth
(10th) day after Lessor’s delivery of the Extension Rental Notice.

     50.5 If Lessee delivers the Notice of Rejection to Lessor within the ten (10) days following
delivery of Lessor’s Extension Rental Notice, then Lessor and Lessee shall mutually select a member
of the Appraisal Institute (or its successor) holding the designation “MAI” (or its equivalent) and
having at least five years experience appraising commercial properties comparable to the Premises
in Alameda County, California. If Lessor and Lessee are unable to agree upon the name of an
appraiser having such qualifications within such thirty (30) day period, then within fifteen (15)
days after the expiration of the thirty (30) day period, Lessor shall select a qualified appraiser
and Lessee shall select another qualified appraiser. The two (2) appraisers shall then within
fifteen (15) days thereafter mutually select a third qualified appraiser (the “Arbitrator”). After
selection of a single appraiser or of the Arbitrator in accordance with the provisions of this
paragraph, Lessor shall submit Lessor’s determination of Fair Market Rental Value and Lessee shall
submit Lessee’s determination of Fair Market Rental Value to the appraiser or to the Arbitrator, at
such time or times and in such manner as Lessor and Lessee shall agree (or as directed by the
appraiser; or if Lessor and Lessee do not agree on one appraiser and an Arbitrator is appointed,
then as directed by the Arbitrator, if Lessor and Lessee do not promptly agree). If Lessor and
Lessee have agreed upon one appraiser, the appraiser shall select either Lessor’s or Lessee’s
determination as the Fair Market Rental Value, based on which of those two determinations most
closely approximates such appraiser’s own independent determination of the Fair Market Rental Value
of the Premises, and such determination shall be binding on Lessor and Lessee. If Lessor and Lessee
have not agreed upon one appraiser, and there is an Arbitrator appointed, then the Arbitrator shall
hold a hearing of the matter in accordance with the commercial rules of the American Arbitration
Association and, at the conclusion thereof, the Arbitrator shall select either Lessor’s or Lessee’s
determination as the Fair Market Rental Value, based on which of those two determinations most
closely approximates such appraiser’s own determination (based on the evidence presented) of the

 

 

Fair Market Rental Value of the Premises, and such determination shall be binding on Lessor and
Lessee. If Lessee’s determination is selected as the Fair Market Rental Value, then Lessor shall
bear all costs and fees of all of the appraisers (including the Arbitrator. If Lessor’s
determination is selected as the Fair Market Rental Value, then Lessee shall bear all of all costs
and fees of all of the appraisers (including the Arbitrator). The appraiser or Arbitrator may
select only between the two (2) determinations of Fair Market Rental Value submitted by Lessor and
Lessee, and shall not have the right to average the two determinations of Fair Market Rental Value,
or to make any determination of Fair Market Rental Value other than to select between the two
determinations submitted by Lessor and Lessee.

     50.6 If within thirty (30) days following Lessor’s receipt of the Notice of Acceptance, or a
determination of the Fair Market Rental Value under Paragraph 50.5, either party requests that both
parties enter into an amendment documenting the Extended Term and Base Rent during the Extended
Term, then Lessor shall prepare an amendment to this Lease setting forth the Extended Term and Base
Rent for the Extended Term pursuant to this Paragraph 50 (“Extended Term Amendment”). The Extended
Term Amendment shall be submitted to Lessee for execution and Lessee shall have thirty (30) days
following receipt thereof from Lessor in which to execute and deliver the Extended Term Amendment
to Lessor and Lessor shall have thirty (30) days after receipt of the same in which to execute the
Extended Term Amendment and to deliver one fully-executed copy to Lessee. The failure of either or
both Lessor or Lessee to execute the Extended Term Amendment shall not have the effect of
nullifying Lessee’s Notice of Acceptance, or a determination of the Fair Market Rental Value under
Paragraph 50.5, and the Lease shall nevertheless be extended for the Extended Term as herein
provided.

     50.7 The Option to Extend Term shall be available to Lessee only if Lessee or a Permitted
Transferee (as defined below) occupies the entire Premises on both the date Lessee delivers the
Notice to Extend Term and the date the Extended Term is scheduled to commence. Lessee’s ability to
exercise the Option to Extend Term is further subject to,the conditions set forth in Paragraph 39.

     51. Base Rent Commencement. Lessee shall commence paying rent, including Base Rent as provided
in Paragraph 1.5 on the first to occur of (i) the date of Substantial Completion of the Tenant
Improvements (as defined below) in the Premises, (ii) the date the Tenant Improvements would have
been Substantially Completed but for a delay caused by Lessee, or (iii) the date on which Lessee
first occupies any portion of the Premises for the conduct of Lessee’s business.

     52. Base Rent Adjustments. On each anniversary of the Commencement Date, the total monthly
rent payable under this Lease shall be increased to one hundred four percent (104%) of the total
monthly rent in effect immediately prior to such anniversary date (but without regard to any
temporary abatement or reduction of rent under this Lease).

     53. Tenant Improvements.

          53.1 Lessor shall cause a general contractor, to be selected by Lessor and reasonably approved
by Lessee (the “Contractor”) to construct the Tenant Improvements in the Premises. The “Tenant
Improvements” shall mean those improvements to the existing Building shell which are required to
ready the Premises for Lessee’s occupancy, as shown on the Final Plans (as defined below). The
Tenant Improvements shall be considered substantially completed, and the “Substantial Completion”
date shall be, when the Tenant Improvements have been constructed in accordance with the Final
Plans except for finishing details, minor omissions, decorations and mechanical adjustments of the
type normally found on an architectural “punch list.”

          53.2 Lessor has retained Fee Munson Ebert (“Space Planner”) to provide the following services
in connection with the Tenant Improvements: interior space planning, programming, construction
documentation, and procurement of a building permit and all other approvals from applicable
governmental authorities for the construction of Tenant Improvements. Lessor shall cause the Space
Planner to prepare a conceptual space plan for the Premises (“Space Plan”).

          53.3 Within three (3) days after receipt of the Space Plan, Lessee shall either (i) approve
the Space Plan, which approval shall not be unreasonably withheld, or (ii) notify Lessor in writing
of specific requests for changes and corrections as may be reasonably required by Lessee.

          53.4 After Lessee’s approval of the final Space Plan, Lessor shall cause the Space Planner to
prepare detailed plans and specifications (“Final Plans”) in conformance with the Space Plan. Upon
receipt of the Final Plans, Contractor will bid on the work contained in the Final Plans. Lessee
shall approve or disapprove the bid within three (3) days after receipt; provided, however, that
Lessee may only disapprove such cost estimate if Lessee delivers to Contractor and Lessor, within
such three (3) day period, specific changes proposed by Lessee that are consistent with the Space
Plan and do not constitute changes that would result in any of the circumstances described in items
(i) through (iv) in Paragraph 53.5 below. The cost estimate, as approved by Lessee and Lessor, is
referred to as the “Final Cost Estimate”.

          53.5 Lessee shall make no changes or modifications to the Final Plans except with Lessor’s
prior written consent. Lessor may withhold consent to any change or modification if (x) in Lessor’s
sole discretion such change or modification would result in any of the circumstances described in
items (iii) or (iv) below, or (y) in Lessor’s reasonable discretion such change or modification
would result in any of the circumstances described in items (i) or (ii) below. Any change requested
by Lessee to the Final Plans and approved by Lessor is hereby defined as a “Change Order,” and
collectively called “Change Orders.” The items referenced above are as follows:

 

 

               (i) The change would directly or indirectly delay Substantial Completion of the Premises (or
any portion thereof) (provided, however, before consenting to any such changes, Lessor may require
Lessee to acknowledge in writing the number of days of Lessee Delay that Lessor estimates will
result from having such changes made);

               (ii) The change would increase the cost of designing or constructing the Tenant Improvements
above the cost of the Tenant Improvements depicted on the Final Plans (unless within five (5)
Business Days after receipt thereof Lessee agrees in writing to pay any such increase in the cost
of designing and constructing Tenant Improvements);

               (iii) The change would result in the Tenant Improvements being of lower quality than those
originally shown in the Final Plans. and/or

               (iv) The change would require any changes to the Building’s shell.

          53.6 Lessor shall contribute $14.50 per rentable square foot in the Premises, for a total of
$289,927.50 (the “Allowance”), toward the total hard and soft costs of construction and
installation of the Tenant Improvements. The amount by which the cost of the Tenant Improvements
exceeds the Allowance is referred to as the “Additional Cost.” Within ten (10) business days after
Lessee’s receipt of the Final Cost Estimate, Lessee shall pay to Lessor, in cash or other
immediately available funds, the full amount of the estimated Additional Cost. Within ten (10)
business days following receipt of an invoice from Contractor, Lessee shall pay to Lessor the cost
of any Change Orders and the amount (if any) by which the actual Additional Cost exceeds the
estimated Additional Cost previously paid by Lessee.

          53.7 Any delay by Lessee in performing its obligations under this Paragraph 53 shall be
considered in determining the date on which the Substantial Completion of the Tenant Improvements
would have occurred in the absence of delay by Lessee.

     54. Letter of Credit. Within five (5) days after the execution of this Lease, Lessee shall
deliver to Lessor an unconditional, transferable and negotiable standby letter of credit (the
“Letter of Credit”) issued by a bank or trust company (“Issuer”) and in form and content acceptable
to Lessor, in its sole and absolute discretion. A Letter of Credit in the form attached hereto as
Exhibit B is hereby approved by Lessor. The Letter of Credit shall name Lessor as beneficiary
thereunder and provide that draws, including partial draws, at Lessor’s election, will be honored
upon the delivery to the Issuer of a certificate signed by Lessor, or its authorized agent, that
Lessee has failed to perform its obligations under the Lease. The Letter of Credit shall also
provide that it will be automatically extended upon each renewal date unless the Issuer thereof
delivers to Lessor, no later than forty-five (45) days prior to the stated expiration date of the
Letter of Credit, written notice of Issuer’s intent not to extend or renew the Letter of Credit.
During any period that Lessee is required to maintain the Letter of Credit, Lessee shall, at least
thirty (30) days prior to any expiration or termination of the Letter of Credit, provide Lessor
either with written confirmation that the existing Letter of Credit will be automatically extended
and renewed or with a new Letter of Credit that satisfies all of the requirements for the Letter of
Credit in this Section 54. In addition, upon a proposed sale or other transfer of any interest in
the Building, the Project, this Lease or Lessor (including consolidations, mergers, or other entity
changes), Lessee, at its sole cost and expense and upon ten (10) Business Days’ notice, shall,
concurrent with Lessor’s delivery to Lessee of the then outstanding Letter of Credit, deliver to
any such transferees, successors, or assigns a replacement Letter of Credit on identical terms
(except for the stated beneficiary) from the same Issuer or another bank or trust company
acceptable to Lessor, in Lessor’s sole discretion, naming the new landlord as the beneficiary
thereof. Lessee’s failure to perform or observe any of the covenants set forth in this Paragraph 54
for any reason shall entitle Lessor to draw on the Letter of Credit in an amount necessary to cure
such failure (which shall be the entire amount where such failure involves the timely renewal or
replacement of the Letter of Credit) and shall constitute an Event of Default under this Lease
without the requirement of any notice from Lessor. Any amount(s) drawn under the Letter of Credit
shall be held or used by Lessor in accordance with the terms of Paragraph 5 of this Lease. Lessee
acknowledges that Lessor has agreed to accept a letter of credit in lieu of an additional cash
deposit as an accommodation to Lessee and Lessee agrees that the letter of credit and all amounts
drawn thereunder shall be treated for all purposes under this Lease as if a cash deposit had been
tendered to Lessor upon the execution of this Lease.

     55. Permitted Transfers. Notwithstanding anything to the contrary in this Lease, but subject
to the requirements of this Paragraph 55, Lessee may upon not less than ten (10) days prior written
notice to Lessor, but without Lessor’s prior written consent, sublet the Premises or assign the
Lease to: (i) a corporation controlling, controlled by or under common control with Lessee; (ii) a
successor corporation related to Lessee by merger, consolidation, or non-bankruptcy reorganization;
or (iii) a purchaser of substantially all of Lessee’s assets as a going concern. An assignee or
subtenant which qualifies under clause (i), (ii) or (iii) above is a “Permitted Transferee.”
However, as a condition to assigning this Lease or subletting all or any part of the Premises to a
Permitted Transferee, the following requirements must be satisfied: (a) the Permitted Transferee
must retain its qualification as such throughout the term of this Lease (or, in the case of a
sublease, for the sublease term); (b) the Permitted Transferee must assume the obligations of
Lessee under this Lease for the remainder of the term of this Lease (or, in the case of a sublease,
for the sublease term); (c) at the time the Permitted Transferee goes into possession, there must
be no Default under Paragraph 13.1 and no event or condition which, with the giving of notice or
the passage of time or both, would constitute a Default under Paragraph 13.1; and (d) the Permitted
Transferee must have a tangible net worth equal to the greater of (x) Lessee’s then current
tangible net worth or (y) $1,000,000. For the purpose of Paragraph 12.1(b) of this Lease, sale of
Lessee’s capital stock through any public exchange or the issuance of capital stock in connection
with an initial public offering of Lessee shall not be deemed an assignment of this Lease.

     56. Lessee’s Right to Audit. Not more often than once each calendar year, Lessee, upon thirty
(30) days advance written notice thereof to Lessor, at Lessee’s sole cost and expense, may retain
an independent Certified Public Accountant

 

 

reasonably acceptable to Lessor, to review and audit Lessor’s books and records with regard to
the Common Area Operating Expenses for the Building and the calculations of Lessee’s proportionate
share thereof. If it is reasonably determined by such auditors that Lessee overpaid its share of
any Common Area Operating Expenses, Lessor shall refund to Lessee the amount of such overpayment
within thirty (30) days. If it is reasonably determined by such auditors that Lessee underpaid its
share of any Increase in Common Area Operating Expenses, Lessee shall pay to Lessor the amount of
such deficiency within thirty (30) days. If it is reasonably determined by such auditors that
Lessee overpaid its share of any Common Area Operating Expenses by more than five percent (5%),
Lessor shall reimburse Lessee for the reasonable costs of Lessee’s audit, not to exceed $5,000. If
Lessor disagrees with the determination of Lessee’s auditor, no adjustment shall be made under this
Paragraph 56 until such dispute is resolved by litigation or otherwise.

     57. Conflicts Between Lease and Addendum. In case of conflict between the form Lease and this
Addendum, the latter shall control. Unless otherwise stated or required by the context, references
to “this Lease,” “herein,” and words of similar import shall refer to the form Lease as modified
and supplemented by this Addendum.

     IN WITNESS WHEREOF, Lessor and Lessee execute this Addendum concurrently with their execution
of the Lease, intending it to be an integral part thereof.

	 	 	 	 	 
	 	LESSOR

3168 Corporate Place Associates LLC, 

a California limited liability company

 	 
	 	By:  	/s/ Robert H. Goldsmith
 	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Jay Mancini
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	LESSEE

Shutterfly.com, Inc.

a Delaware corporation

 	 
	 	By:  	/s/ James F. Healey
 	 
	 	 	James F. Healey 	 
	 	 	Vice President, Operations 	 
	 

	 	 	 	 	 
	 	 	 
	 	Attest:  	/s/ John L. Roberts
 	 
	 	 	                    Secretary 	 
	 	 	John L. Roberts

Sr. Logistics Mgr 	 
	 

 

 

EXHIBIT B

ATTACHED TO AND FORMING A PART OF

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

DATED AS OF February 11, 2000

BETWEEN

3168 CORPORATE PLACE ASSOCIATES LLC, AS LESSOR,

AND

SHUTTERFLY.COM., INC., AS LESSEE (“LEASE”)

APPROVED LETTER OF CREDIT FORM

[Letterhead of Issuing Bank]

[must be a Bank whose location, credit and practices Lessor has approved]

	 	 	 
	RE:

	 	STAND-BY LETTER OF CREDIT NO. _____________
	 
	TO:

	 	3168 Corporate Place Associates LLC (“Lessor”), in care of Goldsmith & Mancini LLC, 465

California Street, San Francisco, California 94104

Gentlemen:

We hereby issue our Stand-by Letter of Credit in your favor, for the account of Shutterfly.com,
Inc., a Delaware corporation (“Lessee”), in the amount of                                                              Dollars ($                     ). This amount is available to
you on presentation of your sight draft drawn upon us referring to the above letter of credit
number, date and amount being drawn hereunder, accompanied by the signed statement of you or your
authorized agent, that the amount drawn hereunder is being drawn pursuant to the terms of the
Standard Industrial/Commercial Multi-Lessee Lease — Net dated as of March 7, 2000, between Lessee
and Lessor for certain premises located at 3168 Corporate Place, Hayward, California (the “Lease”)
and that Lessee is in default under the Lease.

Any draft presented for payment must be presented on or before                      [term should be at least one year],
the date this Letter of Credit expires. Partial drawings are permitted.

If you sell or otherwise transfer any interest in the “Building” (as defined in the Lease) , in the
land upon which the same is located, in the Lease, or in Lessor (including consolidations, mergers
or other entity changes), you shall have the right to transfer this Letter of Credit to your
transferee(s), successors or assigns.

We hereby certify that this is an unconditional and irrevocable Letter of Credit and agree that a
draft drawn under and in compliance with the terms hereof will be honored upon presentation at our
office at                                                             .

This Letter of Credit shall automatically be extended and renewed for successive one year periods
at the end of the stated expiration date and each anniversary thereof unless we notify you in
writing, no later than forty-five (45) days prior to the then applicable expiration date, that we
will not extend and renew the Letter of Credit for another one year term.

Except to the extent inconsistent with the express provisions hereof, this Letter of Credit is
subject to and governed by Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce publication number 500.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	[Name of Bank]	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signature	 	 

 

 

AMENDMENT TO LEASE

(3180 Corporate Place)

     This Amendment to Lease (“Amendment”) is executed as of August 4, 2004 by and between 3168
Corporate Place Associates, LLC , a California limited liability company (“Lessor”), and
Shutterfly.com, Inc., a Delaware corporation (“Lessee”).

     A. Lessor and Lessee entered into that certain Standard Industrial/Commercial Multi-Tenant
Lease — Net dated for reference purposes March 7, 2000 (the “3180 Lease”), pursuant to which Lessee
leased approximately 19,995 rentable square feet of space (the “3180 Premises”) the building which
is located at 3180 Corporate Place, in Hayward, California (the “3180 Building”).

     B. Lessor and Lessee also entered into that certain Standard Industrial/Commercial
Multi-Tenant Lease — Net dated for reference purposes April 6,2000 (the “3150 Lease”), pursuant to
which Lessee leased approximately 16,398 rentable square feet of space (the “Original 3150
Premises”) in the building which is located at 3150 Corporate Place, in Hayward, California (the
“3150 Building”).

     C. All references to the “Lease” shall mean the Original 3180 Lease as modified and
supplemented by this Amendment. Capitalized words and phrases used in this Amendment and not
separately defined herein shall have the meanings given such words and phrases in the Original 3180
Lease. In case of any inconsistency between the provisions of the Original 3180 Lease and this
Amendment, the latter provisions shall govern and control.

AGREEMENT

     In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt of which are hereby acknowledged, the Lessor and Lessee agree
as follows:

     1. Term;
Section 1.3. Section 1.3 of the Lease is hereby amended to extend the
Initial Term to July 31, 2010.

     2. Option to Extend; Section 50. Lessor and Lessee acknowledge that the extension of
the Initial Term set forth in Section 1 above, supersedes the extension option provisions of
Section 50 of the Lease. Accordingly, Section 50 of the Lease is hereby deleted in its entirety.

     3. Base Rent Adjustments; Section 52. Section 52 of the Lease is hereby amended to
reduce the annual Base Rent adjustment percentage from one hundred and four percent (104%) to one
hundred and three percent (103%).

     4. Early Termination. Lessee shall have a one-time option to advance the Expiration
Date of the Lease to a date (the “Early Termination Date”) of Lessee’s choice between August 1,
2008 to July 31, 2009,provided: (i) Lessee gives Lessor written notice of the Early Termination
Date at least twelve (12) months prior to the Early Termination Date, which written notice shall be
irrevocable by Lessee; and (ii) Lessee concurrrently exercises, by irrevocable written notice, its
right to advance the expiration date of the 3150 Lease to same Early Termination Date. If Lessee
exercises its early termination option, Lessee shall reimburse Lessor, at least five (5) business
days prior to the Early Termination Date, for the unamortized portion of the Tenant Improvement
Allowance (calculated by multiplying the Tenant Improvement Allowance by a fraction, the numerator
of which is the number of months between (and including) the month in which the Early Termination
Date occurs through (and including) July 2010, and the denominator of which is 60. (For example,
if the Early Termination Date is January 15, 2009, the unamortized portion of the Tenant
Improvement Allowance payable by Lessee would be $111,000 ($370,000 x 18/60). The provisions of
this Section 13 shall be subject to Section 39.2 and 39.4(a) of the Lease.

 

 

     5. Entire Agreement. This Amendment sets forth the entire agreement between the
parties with respect to the matters set forth herein. There have been no additional oral or
written representations or agreements concerning any part of the Premises.

     6. Ratification. Except as amended herein, all terms and conditions of the Original
3150 Lease shall remain in full force and effect and are ratified by the parties to this Amendment
and shall apply to the Additional Premises except as modified herein.

     7. Authority. Each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each party shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

     8. Not an Offer. Submission of this Amendment by Lessor to Lessee is not an offer to
enter into this Amendment, but a solicitation for such an offer from Lessee. Lessor shall not be
bound by this Amendment until Lessor has executed and delivered the same to Lessee.

     9. Lender’s Consent. Lessor’s execution and delivery of this Amendment shall be
conditional on receipt of Lessor’s consent to this Amendment which consent may be conditioned upon,
among other things, Lessee’s execution and delivery of lender’s standard non-disturbance and
subordination agreement and lender’s receipt and approval of Lessee’s current financial statements.

     10. Conditions Precedent to Effectiveness of Amendment. The effectiveness of this
Amendment is conditioned upon Lessee’s execution of an amendment to the 3180 Lease, in form and
content acceptable to Lessor, Lessor’s lender’s consent thereto. At Lessee’s request, Lessor shall
provide written confirmation of the effective date.

[Signatures on following page]

2

 

     IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Amendment as of the date set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	LESSOR	 	LESSEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	3168 CORPORATE PLACE ASSOCIATES, LLC,	 	SHUTTERFLY, INC.,	 	 
	a California limited liability company	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 	 	Goldsmith & Mancini LLC	 	 	 	 	 	 
	 	 	Its General Manager	 	By: 
	/s/ Virender Ahluwalia	 	 
	 

	 	 	 	 
	 	  	 	 	 	 
	 
	 	 	 	 	 	Name:	Virender Ahluwalia	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Robert Goldsmith
	 	Title: 	 SVP	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	Name: 	Robert Goldsmith
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Title: 	Member
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	/s/ Jay Mancini	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name: 	Jay Mancini	 	 	 	 	 	 
	 

	 	Title: 	Member	 	 	 	 	 	 

3

 

SECOND AMENDMENT TO LEASE

(3180 Corporate Place)

     This Second Amendment to Lease (“Second Amendment”) is executed as of September 7, 2004, by and
between 3168 Corporate Place Associates, LLC, a California limited liability company (“Lessor”),
and Shutterfly, Inc. f/k/a/ Shutterfly.com, Inc., a Delaware corporation (“Lessee”).

RECITALS

     A. Lessor
and Lessee entered into that certain Standard Industrial/Commercial Multi-Tenant
Lease — Net dated for reference purposes March 7, 2000, as amended by that certain Amendment to
Lease dated as of August 4, 2004 (as amended, the “3180 Lease”), pursuant to which Lessee leases
approximately 19,995 rentable square feet of space (the “3180 Premises”) in the building which is
located at 3180 Corporate Place, in Hayward, California (the “3180 Building”).

     B. Lessor and Lessee also entered into that certain Standard Industrial/Commercial
Multi-Tenant Lease — Net dated for reference purposes April 6, 2000, as amended by that certain
Amendment to Lease dated as of August 4, 2004 (as amended, the “3150 Lease”), pursuant to which
Lessee leases approximately 26,507 rentable square feet of space (the “3150 Premises”) in the
building which is located at 3150 Corporate Place, in Hayward, California.

     C. Lessee has notified Lessor that Lessee changed its name to Shutterfly, Inc.

     D. All references to the “Lease” shall mean the 3180 Lease as modified and supplemented by
this Second Amendment. Capitalized words and phrases used in this Second Amendment and not
separately defined herein shall have the meanings given such words and phrases in the 3180 Lease.
In case of any inconsistency between the provisions of the 3180 Lease and this Second Amendment,
the latter provisions shall govern and control.

AGREEMENT

     In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt of which are hereby acknowledged, the Lessor and Lessee agree
as follows:

     11. Lessee Name. The Lease is hereby amended to reflect Lessee’s name change to
Shutterfly, Inc., a Delaware corporation.

     12. Entire Agreement. This Second Amendment sets forth the entire agreement between
the parties with respect to the matters set forth herein. There have been no additional oral or
written representations or agreements concerning any part of the Premises.

     13. Ratification. Except as amended herein, all terms and conditions of the 3180
Lease shall remain in full force and effect and are ratified by the parties to this Second
Amendment except as modified herein.

     14. Authority. Each individual executing this Second Amendment on behalf of such
entity represents and warrants that he or she is duly authorized to execute and deliver this Second
Amendment on its behalf. Each party shall, within thirty (30) days after request, deliver to the
other party satisfactory evidence of such authority.

     15. Not an Offer. Submission of this Second Amendment by Lessor to Lessee is not an
offer to enter into this Second Amendment, but a solicitation for such an offer from Lessee.
Lessor shall not be bound by this Second Amendment until Lessor has executed and delivered the same
to Lessee.

     16. Lender’s Consent. Lessor’s execution and delivery of this Second Amendment shall
be conditioned on receipt of Lessor’s lender’s consent to this Second Amendment.

1

 

     17. Counterparts. This Second Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and when taken together shall constitute one and the same
instrument.

[Signatures on following page.]

2

 

     IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Second Amendment as of the date set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	LESSOR	 	LESSEE
	 
	 	 	 	 	 	 	 	 
	3168 CORPORATE PLACE ASSOCIATES, LLC,	 	SHUTTERFLY, INC.,
	a California limited liability company	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	By: 	 	Goldsmith & Mancini LLC	 	 	 	 	 	 
	 	 	Its General Manager	 	By: 
	/s/ Stephen E. Recht	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	Name: 	Stephen E. Recht	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Robert Goldsmith
	 	Title: 	Chief Financial Officer	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	Name: 	Robert Goldsmith
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Title: 	Member
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	/s/ Jay Mancini	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name: 	Jay Mancini	 	 	 	 	 	 
	 

	 	Title: 	Member	 	 	 	 	 	 

3exv10w07

 

Exhibit 10.07

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. Basic Provisions (“Basic Provisions”).

     1.1 Parties: This Lease (“Lease”), dated for reference purposes only April 6, 2000,
is made by and between 3168 Corporate Place Associates, LLC (“Lessor”)
and Shutterfly.com, Inc., a Delaware corporation (“Lessee”), _________ (“Lessee”), collectively the “Parties”, or individually a “Party”).

     1.2(a) Premises: That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under
the terms of this Lease, commonly known by the street address of 3150 Corporate Place,
located in the City of Hayward, County of Alameda, State of California, with zip code 94545, as outlined on Exhibit A attached
hereto (“Premises”) and
generally described as (describe briefly the nature of the Premises): approximately 16,398 rentable square feet located in the single story building located at 3150 Corporate Place, Hayward, California.
In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along
with all other buildings and improvements thereon, are herein collectively referred to as the
“Project.” (See also Paragraph 2)

     1.2(b) Parking: 33 unreserved vehicle parking spaces
(“Unreserved Parking Spaces”); and no reserved vehicle parking spaces (“Reserved
Parking Spaces”). (See also Paragraph 2.6)

     1.3 Term: five (5) years and no (0) months (“Original Term”)
commencing August 1, 2000 (“Commencement Date”) and ending July 31, 2005 (“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession: upon Substantial Completion (“Early Possession Date”).
(See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $12,298.50 per month (“Base Rent”), payable on the first (1st) day of each month commencing (See Addendum Paragraph 51). (See also Paragraph 4)

þ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

     1.6 Lessee’s Share of Common Area Operating Expenses: 18 and 90/100s percent (18.9 %) (“Lessee’s Share”).

     1.7 Base Rent and Other Monies Paid Upon Execution:

	 	(a)	 	Base Rent: $12,298.50 for the period first month of the term.
	 
	 	(b)	 	Common Area Operating Expenses: $2,459.70 monthly for the period calendar year 2000.
	 
	 	(c)	 	Security Deposit: $88,549.20 (“Security Deposit”). (See also Paragraph 5)
	 
	 	(d)	 	Other: $ N/A for
	 
	 	(e)	 	Total Due Upon Execution of this Lease: $103,307.40 

     1.8 Agreed Use: general office, warehouse, storage and related uses, including
photo processing. (See also Paragraph 6)

     1.9 Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)

     1.10 Real Estate Brokers: (See also Paragraph 15)

          (a) Representation: Check following real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction (check applicable boxes):

þ Cornish & Carey Commercial represents Lessor exclusively
(“Lessor’s Broker”);

þ Wayne Mascia Associates represents Lessee
exclusively (“Lessee’s Broker”); or

o________ represents both Lessor and Lessee (“Dual Agency”).

          (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties,
Lessor shall pay to the Brokers the
Brokers fee agreed to in a separate written agreement (or if there is no such agreement, the sum of ________ or ________ % of the total Base
Rent for the brokerage services rendered by the Brokers).

     1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”). (See also Paragraph 37)

     1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs
50 through 57 and
Exhibits A, all of which constitute a part of this Lease.

2. Premises.

     2.1 Letting. Lessor hereby teases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual
size is more or less.

1

 

     2.2 Condition. Lessor shall deliver that portion of the Premises contained within the
Building (“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early
Possession Date, whichever first occurs (“Start Date”), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty
days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and
all other such elements in the Unit, other than those constructed by Lessee, shall be in good
operating condition on said date and that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should malfunction or fail
within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as follows:
(i) 12 months as to the HVAC systems and roof, and (ii) 30 days as to the remaining systems and
other elements of the Unit. If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls — see Paragraph 7).

     2.3 Compliance. Lessor warrants that the improvements on the Premises and the Common Areas
comply with the building codes that were in effect at the time that each such improvement, or
portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable Requirements”). Said
warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee
is responsible for determining whether or not the Applicable Requirements, and especially the
zoning, are appropriate for Lessee’s intended use, and acknowledges that past uses of the Premises
may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with this warranty within 6 months
following the Start Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee’s sole cost and expense. If the Applicable Requirements are hereafter changed so as to
require during the term of this Lease the construction of an addition to or an alteration of the
Unit, Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or
other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor
and Lessee shall allocate the cost of such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires
such Capital Expenditure and deliver to Lessor written notice specifying a termination date at
least 90 days thereafter. Such termination date shall, however, in no event be earlier than the
last day that Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however, that if such
Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this
Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right
to terminate this Lease upon 30 days written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this
Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or
warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises,
and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of
no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.

     2.6 Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Lessor may
regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in
Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area
without the prior written permission of Lessor.

          (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee
or Lessee’s employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such activities.

          (b) Lessee shall not service or store any vehicles in the Common Areas.

          (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph
2.6, then Lessor shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

     2.7 Common Areas — Definition. The term “Common Areas” is defined as all areas and facilities
outside the Premises and within the exterior boundary line of the Project and interior utility
raceways and installations within the Unit that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and
landscaped areas.

     2.8 Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its
employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease,
the non-exclusive right to use, in common with others entitled to such use, the Common Areas

2

 

as
they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or restrictions governing
the use of the Project. Under no circumstances shall the right herein granted to use the Common
Areas be deemed to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

     2.9 Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may appoint
shall have the exclusive control and management of the Common Areas and shall have the right, from
time to time, to establish, modify, amend and enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the convenience of other
occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by
and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to
Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project.

     2.10 Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time:

          (a) To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;

          (b) To close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

          (c) To designate other land outside the boundaries of the Project to be a part of the Common
Areas;

          (d) To add additional buildings and improvements to the Common Areas;

          (e) To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

          (f) To do and perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.

3. Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any such early possession
shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent until it receives possession of the Premises. If possession of the Premises
is not delivered within 4 months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.

4. Rent.

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).

     4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:

          (a) “Common Area Operating Expenses” are defined, for purposes of this Lease, as all costs
incurred by Lessor relating to the ownership and operation of the Project, including, but not
limited to, the following:

	 	(i)	 	The operation, repair and maintenance, in neat, clean, good order and condition of the
following:
	 
	 	 	 	(aa) The Common Areas and Common Area improvements, including parking
areas, loading and unloading areas, trash areas, roadways, parkways,
walkways, driveways, landscaped areas, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators, roofs, and
roof drainage systems.
	 
	 	 	 	(bb) Exterior signs and any tenant directories.

	 
	 	 	 	
(cc) Any fire detection and/or sprinkler systems.
	 
	 	(ii)	 	The cost of water, gas, electricity and telephone to service the Common Areas and any
utilities not separately metered.
	 
	 	(iii)	 	Trash disposal, pest control services,
property management of 5% of rent, security services, and the costs of
any inspections.
	 
	 	(iv)	 	Reserves set aside for maintenance and repair of Common Areas.
	 
	 	(v)	 	Real Property Taxes (as defined in Paragraph 10).
	 
	 	(vi)	 	The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8.
	 
	 	(vii)	 	Any deductible portion of an insured loss concerning the Building or the Common Areas.
	 
	 	(viii)	 	The cost of any Capital Expenditure to the Building or the Project
not covered under the provisions of Paragraph 2.3 provided; however,
that Lessor shall allocate the cost of any such Capital Expenditure
over a 12 year period and Lessee shall not be required to pay more than
Lessee’s Share of 1/144th of the cost of such Capital Expenditure (net
of any reserves therefor) in any given month.
	 
	 	(ix)	 	Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating
Expense.

          (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project or to the operation,
repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other
building.

3

 

However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the operation, repair and
maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project.

          (c) The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.

          (d) Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within 30 days
after a reasonably detailed statement of actual expenses is presented to Lessee. At Lessor’s
option, however, an amount may be estimated by Lessor from time to time of Lessee’s Share of annual
Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each 12 month period of the Lease term, on the same day as the Base Rent is due
hereunder. Lessor shall deliver to Lessee within 60 days after the expiration of each calendar year
a reasonably detailed statement showing Lessee’s Share of the actual Common Area Operating Expenses
incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d) during the
preceding year exceed Lessee’s Share as indicated on such statement, Lessor shall be credited the
amount of such over-payment against Lessee’s Share of Common Area Operating Expenses next becoming
due. If Lessee’s payments under this Paragraph 4.2(d) during the preceding year were less than
Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 30 days after delivery by Lessor to Lessee of the statement.

     4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted in this Lease), on
or before the day on which it is due. Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of days of said month.
Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing. Acceptance of a payment which is less
than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees
to pay to Lessor the sum of $25 in addition to any late charges which may be due.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as
security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to
pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. if Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with
Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion
to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit
to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and
tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be
paid by Lessee under this Lease.

6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in the Agreed Use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to
any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to, the installation (and removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee’s expense, take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises during the term of
this Lease, by or for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground Lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and

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consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance under the Premises from
areas outside of the Project). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment created or suffered
by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and
shall survive the expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this
Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at
the time of such agreement.

          (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when required
by the Applicable Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the expiration or termination
of this Lease.

          (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to the Start Date, unless
such remediation measure is required as a result of Lessee’s use (including “Alterations”, as
defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $200,000,
whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate
this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to
give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of
Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within 30 days following such commitment. In such event, this Lease shall continue in full force
and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after
the required funds are available. If Lessee does not give such notice and provide the required
funds or assurance thereof within the time provided, this Lease shall terminate as of the date
specified in Lessor’s notice of termination.

     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said requirements are now in
effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other documents, and other
information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor,
and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

     7.1 Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order, condition and state of
repair.

          (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts,
with copies to Lessor, in customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii) clarifiers,
and (iv) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right,
upon notice to Lessee, to procure and maintain any or all of such service contracts, and if Lessor
so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

          (c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph
71, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the
case of an emergency, in which case no notice shall be required), perform such obligations on
Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall
promptly reimburse Lessor for the cost thereof.

          (d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing such item, then such item
shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of this Lease, on the
date on which Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie.
1/144th of the cost per month). Lessee shall pay interest on the unamortized balance at a rate that
is commercially reasonable in the judgment of Lessor’s accountants. Lessee may, however, prepay its
obligation at any time.

     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage
or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,

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shall keep in good order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways,
landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior
walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of
the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect to the
extent it is inconsistent with the terms of this Lease.

7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term “Utility Installations” refers to all floor and window coverings,
air lines, power panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed
without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or
deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or
Utility installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost thereof during this
Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum
equal to one month’s Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not
make or permit any roof penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to
utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor shall be presented to
Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the
permits and the plans and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a prompt and expeditious
manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with
good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built
plans and specifications. For work which costs an amount in excess of $50,000 , Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150%
of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.

          (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialman’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. if Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal
to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

          (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee,
but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of
all or any specified part of the Lessee Owned-Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the property of Lessor
and be surrendered by Lessee with the Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12
months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any
and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Project) even if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

8. Insurance; Indemnity.

     8.1 Payment of Premiums. The cost of the premiums for the insurance policies required to be
carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area
Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term
of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be
on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall include coverage
for a liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.

     8.3 Property Insurance — Building, Improvements and Rental Value.

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          (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but in no event more than the commercially reasonable and available insurable value
thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee under Paragraph 8.4. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause, the deductible amount
shall not exceed $1,000 per occurrence.

          (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one
year with an extended period of indemnity for an additional 180 days (“Rental Value
insurance”). Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period.

          (c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings in the Project if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

          (d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to
insure Lessee Owned Alterations and Utility Installations unless the item in question has become
the property of Lessor under the terms of this Lease.

     8.4 Lessee’s Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business
operations or obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain
the insurance required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same.

     8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have
first paid any such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the
person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors,
invitees, customers, or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC
or lighting fixtures, or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the Building, or from other sources
or places. Lessor shall not be liable for any damages arising from any act or neglect of any other
tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

9. Damage or Destruction.

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as to whether or not
the damage is Partial or Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 6 months or less from the date of the damage or destruction and/or
the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not the damage is
Partial or Total.

          (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

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          (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.

          (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises.

     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $5,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance
thereof within said 10 day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds
or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of
any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage
due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be made available for the
repairs if made by either Party.

     9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not an insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30
days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If, Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such Destruction. if the damage or
destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have
the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last 12 months of this Lease there is
damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage
by giving a written termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date
which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises
such option during such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the termination notice
and Lessee’s option shall be extinguished.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g)
or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.

10. Real Property Taxes.

     10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income, transfer or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s
right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the
direct or indirect power to tax and where the funds are generated with reference to the Project
address and where the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The term “Real Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease,
including but not limited to, a change in the ownership of the Project or any portion thereof
or a change in the improvements thereon. In calculating Real Property Taxes for any calendar year,
the Real Property Taxes for any real estate tax year shall be included in the calculation of Real
Property Taxes for such calendar year based upon the number of days which such calendar year and
tax year have in common.

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     10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and
except as otherwise provided in Paragraph 10.3. Any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

     10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property
Taxes specified in the tax assessor’s records and work sheets as being caused by additional
improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of
such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request.

     10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes
allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such proportion to be determined
by Lessor from the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.

     10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against
and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee contained in the Premises. When possible, Lessee
shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of
a written statement setting forth the taxes applicable to Lessee’s property.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises, together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity or other commonly
metered utilities, or that Lessee is generating such a large volume of trash as to require an
increase in the size of the dumpster and/or an increase in the number of times per month that the
dumpster is emptied, then Lessor may increase Lessee’s Base Rent by an amount equal to such
increased costs.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease
or in the Premises without Lessor’s prior written consent.

          (b) A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 50’% or more of the voting control of Lessee shall constitute
a change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.

          (d) An assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any
notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in
effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased to 110% of the scheduled adjusted rent.

          (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

          (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against
any other person or entity responsible therefore to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$1,000 or 10% of the current monthly Base Rent applicable to the portion of the Premises which is
the subject of the proposed assignment or sublease, whichever is greater, as consideration for
Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other
or additional information and/or documentation as may be reasonably requested.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

          (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly incorporated therein:

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable
on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of
Lessee’s obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed
liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a Breach exists in the performance of

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Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor
without any obligation or right to inquire as to whether such Breach exists, notwithstanding any
claim from Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A
“Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity of the remaining
provisions.

          (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor
was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within 60 days following written notice of any such event, to provide written alternative assurance
or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

     13.2 Remedies. if Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) 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
rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time
of award of the amount by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment proximately caused by the
Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary renovation and alteration of
the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor
in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately preceding sentence shall
be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the
District within which the Premises are located at the time of award plus one percent. Efforts by
Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right
to recover damages under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding
any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. If a notice and grace period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee
under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In
such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute
shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.

          (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.

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          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee’s occupancy of the Premises.

     13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions”, shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions paragraph unless specifically so stated in writing
by Lessor at the time of such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to 6% of
each such overdue amount or $100, whichever is greater. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of
Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of
the other rights and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be equal to the prime rate reported in the Wall Street
Journal as published closest prior to the date when due plus 4%, but shall not exceed the maximum
rate allowed by law. Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.

13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has hot been performed;
provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breach if performance is
commenced within such 30 day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than
25% of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option,
to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within 10 days after the condemning authority shall
have taken possession) terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes
of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled
to any and all compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by
such Condemnation.

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within 10 business days after written notice from
the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current “Estoppel Certificate” form published
by the American Industrial Real Estate Association, plus such additional information, confirmation
and/or statements as may be reasonably requested by the Requesting Party.

          (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 business day period, the Requesting Party may execute an Estoppel Certificate stating that:
(i) the Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrances may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past 3 years. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants
under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon
the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of
Paragraph 20 below, the original

11

 

Lessor under this Lease, and all subsequent holders of the
Lessor’s interest in this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2
above.

18. 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.

19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.

20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the
Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or modification hereto
shall be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be
that Party’s address for delivery or mailing of notices. Either Party may by written notice to the
other specify a different address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient),
provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday
or legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof
by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

     (a) When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:

          (i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as
the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of
reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair
dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the diligent attention
and observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the affirmative
duties set forth above.

          (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent acting only
for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the
Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts
known to the agent materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from the other Party
which does not involve the affirmative duties set forth above.

          (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the
dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated
above in subparagraphs (i) or (ii). in representing both Lessor and Lessee, the agent may not
without the express permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that the Lessee is willing
to pay a higher rent than that offered. The above duties of the agent in a real estate transaction
do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor
and Lessee should carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to advise about real
estate. If legal or tax advice is desired, consult a competent professional.

     (b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to any
breach of duty, error or omission relating to this Lease shall not exceed the fee received by such
Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

12

 

     Buyer and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according
to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates
of the documentation or recordation thereof.

     30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn
to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the
election of such new owner, this Lease shall automatically become a new Lease between Lessee and
such new owner, upon all of the terms and conditions hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new
owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not: (a)
be liable for any act or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against
any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for
the return of any security deposit paid to any prior lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by
the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate
for the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on
the Premises any ordinary “For Sublease” sign.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises,
Lessee shall not place any sign upon the Project without Lessor’s prior written consent. All signs
must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response
to, a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee
upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee
of this
Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor’s consent shall not preclude the
imposition by lessor at the time

13

 

of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being given. In the event
that either Party disagrees with any determination made by the other hereunder and reasonably
requests the reasons for such determination, the determining party shall furnish its reasons in
writing and in reasonable detail within 10 business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term
hereof.

39. Options. If Lessee is granted an option, as defined below, then the following provisions shall
apply.

     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first
refusal or first offer to lease either the Premises or other property of Lessor, (c) the right to
purchase or the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee and any Permitted Transferee, and cannot be assigned or exercised
by anyone other than said original Lessee or Permitted Transferee and only while the original
Lessee or Permitted Transferee is in full possession of the Premises and, if requested by Lessor,
with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly
exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of Default and continuing until said Default is cured, (ii) during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month
period immediately preceding the exercise of the Option.

          (b) The period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of
Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.

41. Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the
recordation of parcel maps and restrictions, and (iii) to create and/or install new utility
raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways
do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights.

42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “under protest” and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

43. Authority. If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each party shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.

44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.

45. Offer. Preparation of this Lease by either party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to
be binding until executed and delivered by all Parties hereto.

46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest
at the time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

47. Multiple Parties. If more than one person or entity is named herein as either Lessor or
Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms
of this Lease.

48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any
action or proceeding involving the Property or arising out of this Agreement.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ois
þis not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

14

 

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES
FOR LESSEE’S INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE
LOCATED.

The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executed at:	 	San Francisco	 	 	 	Executed at:	 	 	 	 
	on:

	 	April 12, 2000
	 	 	 	on:
	 	 

	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By LESSOR:	 	 	 	 	 	BY LESSEE:	 	 	 	 
	3168 Corporate Place Associates,	 	 	 	Shutterfly.com, Inc., a Delaware	 	 
	a California limited liability company	 	 	 	Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By: 

	 	/s/ Jay Mancini	 	 	 	By: 	 	/s/ James F. Healey
	 	 	 	 	 	 	 	 	 
	Name Printed:	 	Jay Mancini	 	 	 	Name Printed:	 	James F. Healey	 	 
	Title: 

	Managing Member
	 	 	 	Title: 
	VP, Operations
	 	 
	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By: 

	 	/s/ Robert H. Goldsmith	 	 	 	By: 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Name Printed:	 	Robert H. Goldsmith	 	 	 	Name Printed:	 	 	 	 
	Title: 

	Managing Member
	 	 	 	Title: 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Address: In care of Goldsmith & Mancini LLC	 	 	 	Address: 2800 Bridge Parkway	 	 
	465 California Street	 	 	 	Redwood City, California 94065	 	 
	San Francisco, Califoronia 94104	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: (415) 362-2100	 	 	 	Telephone: (650) 610-5257	 	 
	Facsimile:   (415) 362-0937	 	 	 	Facsimile:   (650) 654-1299	 	 
	Federal ID No:	 	 	 	 	 	Federal ID No:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 

	 	 

These forms are often modified to meet changing requirements of law and needs of the industry.
Always write or call to make sure you are utilizing the most current form: American Industrial Real
Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.

@Copyright 1999 By American Industrial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

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ADDENDUM

TO

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

     This
Addendum (“Addendum”), containing Paragraphs 50 through 57, forms an integral
part of the Standard Industrial/Commercial Multi-Lease — Net (“Lease”),
dated for reference purposes only April 6, 2000, between 3168 Corporate Place
Associates LLC, a California limited liability company (“Lessor”),
and Shutterfly.com, Inc. a Delaware corporation (“Lessee”),
 demising premises located at 3150 Corporate Place, Hayward, California (“Premises”).
Words and phrases used in this Addendum and not separately defined herein shall have
the meanings given them in the Lease.

     50.
 Option to Extend Term. Subject to satisfaction of the conditions set forth
in Paragraph 50.7 below, Lessor hereby grants Lessee one (1) option
(“Option to Extend Term”) to extend the initial term of the Lease as
specified in Paragraph 1.3 above (the “Initial Term”) in accordance
with the terms of this Paragraph 50. The Option to Extend Term, if duly exercised in
accordance with this Paragraph 50, shall extend the term of the Lease for an
additional five (5) years (“Extended Term”) commencing upon the expiration
of the Initial Term.

          50.1 If
Lessee exercises the Option to Extend Term, then all of the terms contained in this
Lease shall continue in full force and effect during the Extended Term, except with
respect to the following:

               (a) Base
Rent for the Extended Term shall be adjusted on the first day of the Extended Term to
the then Fair Market Rental Value of the Premises, including escalations, as of the
commencement of the Extended Term, but in no event less than one hundred four percent
(104%) of the Base Rent payable in the last month of the Initial Term (but without regard to
any temporary abatement or reduction thereof of permitted by this Lease). The term
“Fair Market Rental Value of the Premises” shall be established based on all
other monetary payments and other considerations of value and escalations that Lessor could
attain in a new lease of the Premises entered into in an arm’s length transaction with
an unrelated third party, without deducting costs associated with Lessor’s entry into
such new lease.

               (b) Lessee
shall have no further right to extend the term of this Lease whether pursuant to the provisions
of this Paragraph 50 or otherwise.

          50.2 The Option to Extend shall be exercised, if at all, only by written notice (“Notice to Extend Term”) delivered by Lessee to Lessor at least twelve (12) months, but not more than eighteen (18) months, prior to the expiration of the Initial Term. If Lessee does not deliver the Notice to
Extend Term within the time period set forth herein, the Option to Extend Term shall lapse, Lessee shall have no right to extend the Lease term, and this Lease shall expire upon the expiration of the Initial Term, unless sooner terminated pursuant to the provisions of this Lease.

          50.3 Within
thirty (30) days after Lessor’s receipt of the Notice to Extend Term, Lessor
shall provide Lessee written notice setting forth the Fair Market Rental Value of the
Premises for the Extended Term (“Extension Rental Notice”). Within ten (10) days
following

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the date Lessor delivers the Extension Rental Notice to Lessee, Lessee shall, by written
notice delivered to Lessor, either (a) accept the Fair Market Rental Value of the Premises as
stated in the Extension Rental Notice (“Notice of Acceptance”), or (b) reject the Fair Market
Rental Value of the Premises as stated in the Extension Rental Notice (“Notice of Rejection”).

          50.4 If Lessee delivers the Notice of Acceptance within ten (10) days following delivery of
Lessor’s Extension Rental Notice, this Lease shall be deemed extended for the Extended Term at the
Base Rent and upon the terms specified in this Paragraph 50 without the need for any further notice
or documentation. If Lessee does not deliver to Lessor either the Notice of Acceptance or the
Notice of Rejection within such ten (10) day period, the same shall constitute Lessee’s Notice of
Acceptance and Lessor shall be deemed to have received the Notice of Acceptance upon the tenth
(10th) day after Lessor’s delivery of the Extension Rental Notice.

          50.5 If Lessee delivers the Notice of Rejection to Lessor within the ten (10) days following
delivery of Lessor’s Extension Rental Notice, then Lessor and Lessee shall mutually select a member
of the Appraisal Institute (or its successor) holding the designation “MAI” (or its equivalent) and
having at least five years experience appraising commercial properties comparable to the Premises
in Alameda County, California. If Lessor and Lessee are unable to agree upon the name of an
appraiser having such qualifications within such thirty (30) day period, then within fifteen (15)
days after the expiration of the thirty (30) day period, Lessor shall select a qualified appraiser
and Lessee shall select another qualified appraiser. The two (2) appraisers shall then within
fifteen (15) days thereafter mutually select a third qualified appraiser (the “Arbitrator”). After
selection of a single appraiser or of the Arbitrator in accordance with the provisions of this
paragraph, Lessor shall submit Lessor’s determination of Fair Market Rental Value and Lessee shall
submit Lessee’s determination of Fair Market Rental Value to the appraiser or to the Arbitrator, at
such time or times and in such manner as Lessor and Lessee shall agree (or as directed by the
appraiser; or if Lessor and Lessee do not agree on one appraiser and an Arbitrator is appointed,
then as directed by the Arbitrator, if Lessor and Lessee do not promptly agree). If Lessor and
Lessee have agreed upon one appraiser, the appraiser shall select either Lessor’s or Lessee’s
determination as the Fair Market Rental Value, based on which of those two determinations most
closely approximates such appraiser’s own independent determination of the Fair Market Rental Value
of the Premises, and such determination shall be binding on Lessor and Lessee. If Lessor and Lessee
have not agreed upon one appraiser, and there is an Arbitrator appointed, then the Arbitrator shall
hold a hearing of the matter in accordance with the commercial rules of the American Arbitration
Association and, at the conclusion thereof, the Arbitrator shall select either Lessor’s or Lessee’s
determination as the Fair Market Rental Value, based on which of those two determinations most
closely approximates such appraiser’s own determination (based on the evidence presented) of the
Fair Market Rental Value of the Premises, and such determination shall be binding on Lessor and
Lessee. If Lessee’s determination is selected as the Fair Market Rental Value, then Lessor shall
bear all costs and fees of all of the appraisers (including the Arbitrator. If Lessor’s
determination is selected as the Fair Market Rental Value, then Lessee shall bear all of all costs
and fees of all of the appraisers (including the Arbitrator). The appraiser or Arbitrator may
select only between the two (2) determinations of Fair Market Rental Value submitted by Lessor and
Lessee, and shall not have the right to average the two determinations of Fair Market Rental Value,
or to make any determination of Fair Market Rental Value other than to select between the two
determinations submitted by Lessor and Lessee.

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          50.6 If within thirty (30) days following Lessor’s receipt of the Notice of Acceptance, or a
determination of the Fair Market Rental Value under Paragraph 50.5, either party requests that both
parties enter into an amendment documenting the Extended Term and Base Rent during the Extended
Term, then Lessor shall prepare an amendment to this Lease setting forth the Extended Term and Base
Rent for the Extended Term pursuant to this Paragraph 50 (“Extended Term Amendment”). The Extended
Term Amendment shall be submitted to Lessee for execution and Lessee shall have thirty (30) days
following receipt thereof from Lessor in which to execute and deliver the Extended Term Amendment
to Lessor and Lessor shall have thirty (30) days after receipt of the same in which to execute the
Extended Term Amendment and to deliver one fully-executed copy to Lessee. The failure of either or
both Lessor or Lessee to execute the Extended Term Amendment shall not have the effect of
nullifying Lessee’s Notice of Acceptance, or a determination of the Fair Market Rental Value under
Paragraph 50.5, and the Lease shall nevertheless be extended for the Extended Term as herein
provided.

          50.7 The Option to Extend Term shall be available to Lessee only if Lessee or a Permitted
Transferee (as defined below) occupies the entire Premises on both the date Lessee delivers the
Notice to Extend Term and the date the Extended Term is scheduled to commence. Lessee’s ability to
exercise the Option to Extend Term is further subject to the conditions set forth in Paragraphs 39
and 56.3.

     51. Base Rent Commencement. Lessee shall commence paying rent, including Base Rent as
provided in Paragraph 1.5 on the first to occur of (i) the date of Substantial Completion of the
Tenant Improvements (as defined below) in the Premises, (ii) the date the Tenant Improvements would
have been Substantially Completed but for a delay caused by Lessee, (iii) the date on which Lessee
first occupies any portion of the Premises for the conduct of Lessee’s business, or (iv) August 1,
2000. Lessee acknowledges that its obligation to pay rent may commence before the date the Tenant
Improvements are substantially completed.

     52. Base Rent Adjustments. On each anniversary of the Commencement Date, the total monthly
rent payable under this Lease shall be increased to one hundred four percent (104%) of the total
monthly rent in effect immediately prior to such anniversary date (but without regard to any
temporary abatement or reduction of rent under this Lease).

     53. Tenant Improvements.

          53.1 Lessor shall cause a general contractor, to be selected by Lessor and reasonably approved
by Lessee (the “Contractor”) to construct the Tenant Improvements in the Premises. The “Tenant
Improvements” shall mean those improvements to the existing Building shell which are required to
ready the Premises for Lessee’s occupancy, as shown on the Final Plans (as defined below). The
Tenant Improvements shall be considered substantially completed, and the “Substantial Completion”
date shall be, when the Tenant Improvements have been constructed in accordance with the Final
Plans except for finishing details, minor omissions, decorations and mechanical adjustments of the
type normally found on an architectural “punch list.”

          53.2 Lessor has retained Fee Munson Ebert (“Space Planner”) to provide the following services
in connection with the Tenant Improvements: interior space planning,

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programming, construction documentation, and procurement of a building permit and all other
approvals from applicable governmental authorities for the construction of Tenant Improvements.
Lessor shall cause the Space Planner to prepare a conceptual space plan for the Premises (“Space
Plan”).

          53.3 Within three (3) days after receipt of the Space Plan, Lessee shall either (i) approve
the Space Plan, which approval shall not be unreasonably withheld, or (ii) notify Lessor in writing
of specific requests for changes and corrections as may be reasonably required by Lessee.

          53.4 After Lessee’s approval of the final Space Plan, Lessor shall cause the Space Planner to
prepare detailed plans and specifications (“Final Plans”) in conformance with the Space Plan. Upon
receipt of the Final Plans, Contractor will bid on the work contained in the Final Plans. Lessee
shall approve or disapprove the bid within three (3) days after receipt; provided, however, that
Lessee may only disapprove such cost estimate if Lessee delivers to Contractor and Lessor, within
such three (3) day period, specific changes proposed by Lessee that are consistent with the Space
Plan and do not constitute changes that would result in any of the circumstances described in items
(i) through (iv) in Paragraph 53.5 below. The cost estimate, as approved by Lessee and Lessor, is
referred to as the “Final Cost Estimate”.

          53.5 Lessee shall make no changes or modifications to the Final Plans except with Lessor’s
prior written consent. Lessor may withhold consent to any change or modification if (x) in Lessor’s
sole discretion such change or modification would result in any of the circumstances described in
items (iii) or (iv) below, or (y) in Lessor’s reasonable discretion such change or modification
would result in any of the circumstances described in items (i) or (ii) below. Any change requested
by Lessee to the Final Plans and approved by Lessor is hereby defined as a “Change Order,” and
collectively called “Change Orders.” The items referenced above are as follows:

                   (i) The change would directly or indirectly delay Substantial Completion of the Premises (or
any portion thereof) (provided, however, before consenting to any such changes, Lessor may require
Lessee to acknowledge in writing the number of days of Lessee Delay that Lessor estimates will
result from having such changes made);

                   (ii) The change would increase the cost of designing or constructing the Tenant Improvements
above the cost of the Tenant Improvements depicted on the Final Plans (unless within five (5)
Business Days after receipt thereof Lessee agrees in writing to pay any such increase in the cost
of designing and constructing Tenant Improvements);

                   (iii) The change would result in the Tenant Improvements being of lower quality than those
originally shown in the Final Plans. and/or

                   (iv) The change would require any changes to the Building’s shell.

          53.6 Lessor shall contribute $9.50 per rentable square foot in the Premises, for a total of
$155,781.00 (the “Allowance”), toward the total hard and soft costs of construction and
installation of the Tenant Improvements. The amount by which the cost of the Tenant Improvements
exceeds the Allowance is referred to as the “Additional Cost.” Within ten (10)

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business days after Lessee’s receipt of the Final Cost Estimate, Lessee shall pay to Lessor,
in cash or other immediately available funds, the full amount of the estimated Additional Cost.
Within ten (10) business days following receipt of an invoice from Contractor, Lessee shall pay to
Lessor the cost of any Change Orders and the amount (if any) by which the actual Additional Cost
exceeds the estimated Additional Cost previously paid by Lessee.

          53.7 Any delay by Lessee in performing its obligations under this Paragraph 53 shall be
considered in determining the date on which the Substantial Completion of the Tenant Improvements
would have occurred in the absence of delay by Lessee.

     54. Permitted Transfers. Notwithstanding anything to the contrary in this Lease, but subject
to the requirements of this Paragraph 54, Lessee may upon not less than ten (10) days prior written
notice to Lessor, but without Lessor’s prior written consent, sublet the Premises or assign the
Lease to: (i) a corporation controlling, controlled by or under common control with Lessee; (ii) a
successor corporation related to Lessee by merger, consolidation, or non-bankruptcy reorganization;
or (iii) a purchaser of substantially all of Lessee’s assets as a going concern. An assignee or
subtenant which qualifies under clause (i), (ii) or (iii) above is a “Permitted Transferee.”
However, as a condition to assigning this Lease or subletting all or any part of the Premises to a
Permitted Transferee, the following requirements must be satisfied: (a) the Permitted Transferee
must retain its qualification as such throughout the term of this Lease (or, in the case of a
sublease, for the sublease term); (b) the Permitted Transferee must assume the obligations of
Lessee under this Lease for the remainder of the term of this Lease (or, in the case of a sublease,
for the sublease term); (c) at the time the Permitted Transferee goes into possession, there must
be no Default under Paragraph 13.1 and no event or condition which, with the giving of notice or
the passage of time or both, would constitute a Default under Paragraph 13.1; and (d) the Permitted
Transferee must have a tangible net worth equal to the greater of (x) Lessee’s then current
tangible net worth or (y) $1,000,000. For the purpose of Paragraph 12.1(b) of this Lease, sale of
Lessee’s capital stock through any public exchange or the issuance of capital stock in connection
with an initial public offering of Lessee shall not be deemed an assignment of this Lease.

     55. Lessee’s Right to Audit. Not more often than once each calendar year, Lessee, upon thirty
(30) days advance written notice thereof to Lessor, at Lessee’s sole cost and expense, may retain
an independent Certified Public Accountant reasonably acceptable to Lessor, to review and audit
Lessor’s books and records with regard to the Common Area Operating Expenses for the Building and
the calculations of Lessee’s proportionate share thereof. If it is reasonably determined by such
auditors that Lessee overpaid its share of any Common Area Operating Expenses, Lessor shall refund
to Lessee the amount of such overpayment within thirty (30) days. If it is reasonably determined by
such auditors that Lessee underpaid its share of any Increase in Common Area Operating Expenses,
Lessee shall pay to Lessor the amount of such deficiency within thirty (30) days. If it is
reasonably determined by such auditors that Lessee overpaid its share of any Common Area Operating
Expenses by more than five percent (5%), Lessor shall reimburse Lessee for the reasonable costs of
Lessee’s audit, not to exceed $5,000. If Lessor disagrees with the determination of Lessee’s
auditor, no adjustment shall be made under this Paragraph 55 until such dispute is resolved by
litigation or otherwise.

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     56. Other Lease. Lessor and Lessee previously entered into a lease dated March 7, 2000 (the
“3/7/00 Lease”) demising premises located in another building in the Project. With respect thereto,
Lessor and Lessee covenant and agree as follows:

          56.1 The Premises demised by the 3/7/00 Lease are erroniously described therein as having a
street address of 3150 Corporate Place, Hayward, California. The correct address for the premises
demised by the 3/7/00 Lease is 3180 Corporate Place, Hayward, California.

          56.2 Any Default or Breach by Lessee under the 3/7/00 Lease shall constitute a Default or
Breach, respectively, under this Lease with no requirement of separate notice, demand or cure
period under this Lease. Conversely, any Default or Breach by Lessee under this Lease shall
constitute a Default or Breach, respectively, under the 3/7/00 Lease with no requirement of
separate notice, demand or cure period under the 3/7/00 Lease.

          56.3 [RESERVED]

          56.4 Lessee’s right to audit Lessor’s books and records pertaining to Common Area Expenses, as
provided in Paragraph 55 above, may not be exercised more than one (1) time each calendar year
despite that fact that such audit right arises under both this Lease and the 3/7/00 Lease.

          56.5 [RESERVED]

     57. Conflicts Between Lease and Addendum. In case of conflict between the form Lease and this
Addendum, the latter shall control. Unless otherwise stated or required by the context, references
to “this Lease,” “herein,” and words of similar import shall refer to the form Lease as modified
and supplemented by this Addendum.

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     IN WITNESS WHEREOF, Lessor and Lessee execute this Addendum concurrently with their execution
of the Lease, intending it to be an integral part thereof.

	 	 	 	 	 	 	 
	 	 	LESSOR	 	 
	 
	 	 	 	 	 	 
	 	 	3168 Corporate Place Associates LLC,	 	 
	 	 	a California limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jay Mancini
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert H. Goldsmith
 

	 	 
	 
	 	 	 	 	 	 
	 	 	LESSEE	 	 
	 
	 	 	 	 	 	 
	 	 	Shutterfly.com, Inc.	 	 
	 	 	a Delaware corporate	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James F. Healey	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James F. Healey	 	 
	 

	 	 	 	Vice President, Operations	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	Attest:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Secretary	 	 
	 

	 	 	 	 	 	 	 	 

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Exhibit A

	 	 	 	 	 	 	 	 	 
	CORPORATE PLACE

	 	GOLDSMITH & MANCINI, LLC
	 	STATISTICS
	 	 	 	FeeMunsonEbert

James Stephen Titus A/A
	Hayward, California

	 	465 California Street, Suite 1227
	 	Site
	 	193,275 sf (4.437 oc)	 	 
	 

	 	San Francisco, California 94104
	 	Bldg
	 	  86,745 sf
	 	Architecture
	28 October 1998

	 	 	 	FAR
	 	.449
	 	Interior Design
	 

	 	 	 	Parking
	 	  86  STANDARD
	 	500 Montgomery Street
	 

	 	 	 	 	 	  85  COMPACT
	 	San Francisco
	 

	 	 	 	 	 	    6 ACCESSIBLE
	 	California 94111

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	177 TOTAL	 	415 434-0320
	 

	 	 	 	 	 	       (2.04/1000)	 	 

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AMENDMENT TO LEASE

(3150 Corporate Place)

     This Amendment to Lease (“Amendment”) is executed as of August 4, 2004, by and between 3168
Corporate Place Associates, LLC, a California limited liability company (“Lessor”), and
Shutterfly.com, Inc., a Delaware corporation (“Lessee”).

RECITALS

     A. Lessor and Lessee entered into that certain Standard Industrial/Commercial Multi-Tenant
Lease — Net dated for reference purposes April 6, 2000 (the “3150 Lease”), pursuant to which Lessee
leased approximately 16,398 rentable square feet of space (the “Original 3150 Premises”) in the
building which is located at 3150 Corporate Place, in Hayward, California (the “3150 Building”).

     B. Lessor and Lessee also entered into that certain Standard Industrial/Commercial
Multi-Tenant Lease — Net dated for reference purposes March 7, 2000 (the “3180 Lease”), pursuant to
which Lessee leased approximately 19,995 rentable square feet of space (the “3180 Premises”) in the
building which is located at 3180 Corporate Place, in Hayward, California (the “3180 Building”).

     C. Subject to the terms and conditions set forth herein, Lessor and Lessee have agreed to
amend the Original 3150 Lease to add approximate 10,109 rentable square feet of space to the
Premises as more particularly described on Exhibit A attached hereto (the “Additional
Premises”), to extend the Initial Term and to make other revisions to the Original 3150 Lease as
reflected in this Amendment.

     D. All references to the “Lease” shall mean the Original 3150 Lease as modified and
supplemented by this Amendment. Capitalized words and phrases used in this Amendment and not
separately defined herein shall have the meanings given such words and phrases in the Original 3150
Lease. In case of any inconsistency between the provisions of the Original 3150 Lease and this
Amendment, the latter provisions shall govern and control.

AGREEMENT

     In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt of which hereby acknowledged the Lessor and Lessee agree as
follows:

     1. Delivery of Additional Premises. Lessor shall use good faith efforts to deliver
the Additional Premises to Lessee on or before September 15, 2004. Tenant acknowledges, however,
that the Additional Premises are currently occupied by another tenant on a month-to-month basis.
Landlord agrees to give the current tenant a termination notice within ten (10) days following the
effective date of this Amendment (which is subject to the conditions set forth in Sections 16 and
17 below). The date that Lessor delivers the Additional Premises to Lessee is referred to herein
as the “Additional Premises Delivery Date.”

 

 

     2. Premises; Section 1.2(a). Commencing on the Additional Premises Delivery Date, all
references in the Lease to the “Premises” shall mean collectively the Original 3150 Premises and
the Additional Premises. Section 1.2(a) of the Lease is hereby amended to reflect that commencing
on the Additional Premises Delivery Date, the Premises shall contain approximately 26,507 rentable
square feet, as outlined on Exhibit A to the Original 3150 Lease and on Exhibit A to this
Amendment.

     3. Parking; Section 1.2(b). Commencing on the Additional Premises Delivery Date, the
number of unreserved parking spaces shall be fifty-three (53) spaces and Section 1.2(b) of the
Lease is hereby amended accordingly.

     4. Term; Section 1.3. Section 1.3 of the Lease is hereby amended to extend the
Initial Term to July 31, 2010.

     5. Base Rent; Section 1.5. Base Rent for the Additional Premises shall be due and
payable by Lessee commencing on the Additional Premises Delivery Date. Section 1.5 of the Lease is
hereby amended to provide that as of the Additional Premises Delivery Date, the Base Rent for the
Premises shall be Twenty Thousand Nine Hundred Fifty-eight Dollars and Thirty-five Cents
($20,958.35) per month (which includes the $6,570.85 per month Base Rent for the Additional
Premises).

     6. Lessee’s Share of Common Area Operating Expenses; Section 1.6. Section 1.6 of the
Lease is hereby amended to provide that as of the Additional Premises Delivery Date, Lessee’s Share
of Common Area Operating Expenses shall be 30.55% (which includes 11.65% for the Additional
Premises).

     7. Agreed Use; Section 1.8. The agreed use of the Additional Premises shall be for
office, warehouse, storage and related purposes, including photo processing.

     8. Condition; Section 2.2. Lessor shall deliver and Lessee agrees to accept the
Additional Premises in its “as-is” “where-is” condition. Lessee acknowledges and agrees that the
Additional Premises are in shell condition.

     9. Option to Extend; Section 50. Lessor and Lessee acknowledge that the extension of
the Initial Term set forth in Section 4 above, supersedes the extension option provisions of
Section 50 of the Lease. Accordingly, Section 50 of the Lease is hereby deleted in its entirety.

     10. Base Rent Adjustments; Section 52. Section 52 of the Lease is hereby amended to
reduce the annual Base Rent adjustment percentage from one hundred and four percent (104%) to one
hundred and three percent (103%).

     11. Lessee Improvements. Lessee shall undertake to construct basic improvements to
the Additional Premises and to take Alterations to the Original 3150 Premises and the 3180 Premises
(collectively, the “Lessee Improvements”). Except as provided in Section 12 below, the Lessee
Improvements shall be at Lessee’s cost. Lessee Improvements to the Additional Premises shall
include the installation of ceiling insulation, electrical power connections and wiring to bring
electricity to the Additional Premises, warehouse lighting and the construction of code-required
restroom facilities. Lessee Improvements to the Original 3150 Premises shall

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include the installation of additional electrical service, air conditioning, a suspended
ceiling, lighting and VCT flooring. Construction of the Lessee Improvements shall be controlled by
Section 7.3 of the Lease and Lessor’s approval of plans and specifications shall be required.
Section 53 of the Lease shall not be applicable to the Lessee Improvements. Lessee shall notify
Lessor at least (10) days prior to the commencement of construction of any Lessee Improvement.
Lessor shall have the right to post a notice of non-responsibility on the Additional Premises,
Original 3150 Premises and/or the 3180 Premises.

     12. Tenant Improvement Allowance. Lessor shall provide to Lessee an allowance for
Lessee Improvements in the amount of Three Hundred Seventy Thousand Dollars ($370,000) (the “Tenant
Improvement Allowance”). The Tenant Improvement Allowance shall be used first to reimburse Tenant
for the cost (hard and soft) of the Lessee Improvements in the Additional Premises, then for the
cost of Lessee Improvements in the Original 3150 Premises and the remainder for the cost of Lessee
Improvements in the 3180 Premises. Lessee may request disbursement of the Tenant Improvement
Allowance following completion of each phase of construction. Lessor shall make such disbursement
to Lessee within thirty (30) days following Lessor’s receipt of Lessee’s written disbursement
request accompanied by receipted invoices and executed conditional or unconditional lien waivers
and releases from all parties performing labor and/or supplying equipment and/or materials in
connection with such Lessee Improvements. Such lien releases shall comply with the applicable
provisions of California Civil Code Section 3262.

     13. Early Termination. Lessee shall have a one-time option to advance the Expiration
Date of the Lease to a date (the “Early Termination Date”) of Lessee’s choice between August 1,
2008 to July 31, 2009, provided: (i) Lessee gives Lessor written notice of the Early Termination
Date at least twelve (12) months prior to the Early Termination Date, which written notice shall be
irrevocable by Lessee; and (ii) Lessee concurrently exercises, by irrevocable written notice, its
right to advance the expiration date of the 3180 Lease to same Early Termination Date. If Lessee
exercises its early termination option, Lessee shall reimburse Lessor, at least five (5) business
days prior to the Early Termination Date, for the unamortized portion of the Tenant Improvement
Allowance (calculated by multiplying the Tenant Improvement Allowance by a fraction, the numerator
of which is the number of months between (and including) the month in which the Early Termination
Date occurs through (and including) July 2010, and the denominator of which is 60. (For example,
if the Early Termination Date is January 15, 2009, the unamortized portion of the Tenant
Improvement Allowance payable by Lessee would be $111,000 ($370,000 x 18/60). The provisions of
this Section 13 shall be subject to Section 39 2 and 39.4(a) of the Lease,

     14. Entire Agreement. This Amendment sets forth the entire agreement between the
parties with respect to the matters set forth herein. There have been no additional oral or
written representations or agreements concerning any pan of the Premises.

     15. Ratification. Except as amended herein, all terms and conditions of the Original
3150 Lease shall remain in full force and effect and are ratified by the parties to this Amendment
and shall apply to the Additional Premises except as modified herein.

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     16. Authority. Each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each party shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

     17. Not an Offer. Submission of this Amendment by Lessor to Lessee is not an offer to
enter into this Amendment, but a solicitation for such an offer from Lessee. Lessor shall not be
bound by this Amendment until Lessor has executed and delivered the same to Lessee.

     18. Lender’s Consent. Lessor’s execution and delivery of this Amendment shall be
conditioned on receipt of Lessor’s lender’s consent to this Amendment which consent may be
conditioned upon, among other things, Lessee’s execution and delivery of lender’s standard
non-disturbance and subordination agreement and lender’s receipt and approval of Lessee’s current
financial statements.

     19. Conditions Precedent to Effectiveness of Amendment. The effectiveness of this
Amendment is conditioned upon Lessee’s execution of an amendment to the 3180 Lease, in form and
content acceptable to Lessor, and Lessor’s lender’s consent thereto. At Lessee’s request, Lessor
shall provide written confirmation of the effective date.

     WITNESS WHEREOF, Lessor and Lessee have duly executed this Amendment as of the date set forth
above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	LESSOR	 	 	 	LESSEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	3168 CORPORATE PLACE ASSOCIATES,	 	 	 	SHUTTERFLY, INC.,	 	 
	LLC, a California limited liability company	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Goldsmith & Mancini LLC	 	 	 	 	 	 	 	 
	 	 	Its General Manager	 	 	 	By:	 	/s/ Virender Ahluwalia	 	 
	 

	 	 	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	 	 	Name:	 	Virender Ahluwalia	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By: 
	 	/s/ Robert H. Goldsmith	 	 	 	Title:	 	SVP	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Name: Robert Goldsmith	 	 	 	 	 	 	 	 
	 	 	Title: Member	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jay Mancini	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name: Jay Mancini	 	 	 	 	 	 	 	 
	 	 	Title: Member	 	 	 	 	 	 	 	 

4

 

Exhibit A

	 	 	 	 	 	 	 	 	 
	CORPORATE PLACE

	 	GOLDSMITH & MANCINI, LLC
	 	STATISTICS
	 	 	 	FeeMunsonEbert

James Stephen Titus A/A
	Hayward, California

	 	465 California Street, Suite 1227
	 	Site
	 	193,275 sf (4.437 oc)	 	 
	 

	 	San Francisco, California 94104
	 	Bldg
	 	  86,745 sf
	 	Architecture
	28 October 1998

	 	 	 	FAR
	 	.449
	 	Interior Design
	 

	 	 	 	Parking
	 	  86  STANDARD
	 	500 Montgomery Street
	 

	 	 	 	 	 	  85  COMPACT
	 	San Francisco
	 

	 	 	 	 	 	    6 ACCESSIBLE
	 	California 94111

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	177 TOTAL	 	415 434-0320
	 

	 	 	 	 	 	       (2.04/1000)	 	 

 

 

SECOND AMENDMENT TO LEASE

(3150 Corporate Place)

     This Second Amendment to Lease (“Second Amendment”) is executed as of September 7, 2004, by
and between 3168 Corporate Place Associates, LLC, a California limited liability company
(“Lessor”), and Shutterfly, Inc. W a shutterfly.com, Inc., a Delaware corporation (“Lessee”).

RECITALS

     A. Lessor
and Lessee entered into that certain Standard Industrial/Commercial Multi-Tenant
Lease — Net dated for reference purposes April 6, 2000, as amended by that certain Amendment to
Lease dated as of August 4, 2004 (“First Amendment”) (as amended, the “3150 Lease”), pursuant to
which Lessee leases approximately 16,398 rentable square feet of space (the “Original 3150
Premises”) in the building which is located at 3150 Corporate Place, in Hayward, California (the
“3150 Building”).

     B. Pursuant to the First Amendment, an approximate 10,109 rentable square feet of space
(“Additional Premises”) was added to the Original 3150 Premises.

     C. Lessor and Lessee also entered into that certain Standard Industrial/Commercial
Multi-Tenant Lease — Net dated for reference purposes March 7, 2000, as amended by that certain First
Amendment to Lease dated as of August 4, 2004 (as amended, the “3180 Lease”), pursuant to which
Lessee leases approximately 19,995 rentable square feet of space (the “3180 Premises”) in the
building which is located at 3180 Corporate Place, in Hayward, California (the “3180 Building”).

     D. Lessee has notified Lessor that Lessee changed its name to Shutterfly, Inc.

     E. All references to the “Lease” shall mean the 3150 Lease as modified and supplemented by
this Second Amendment. Capitalized words and phrases used in this Second Amendment and not
separately defined herein shall have the meanings given such words and phrases in the 3150 Lease.
In case of any inconsistency between the provisions of the 3150 Lease and this Second Amendment,
the latter provisions shall govern and control.

AGREEMENT

     In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt of which are hereby acknowledged, the Lessor and Lessee agree
as follows:

     20. Lessee Name. The Lease is hereby amended to reflect Lessee’s name change
to Shutterfly, Inc., a Delaware corporation.

     21. Lessee Improvements; Electrical Service. Pursuant to the terms of the
First Amendment, Lessee will undertake to construct certain “Lessee Improvements” (as
defined in the First Amendment). As part of the Lessee Improvements, Lessee agrees to
install 200 amp

 

 

electrical service to the Additional Premises. Such electrical service
shall include a 480/277 volt, 3 phase, 4 wire extension extending from the main service
meter and breaker in the 3150 Building’s electrical panel to a 200 amp electrical
sub-panel in the Additional Premises.

     22. Construction Schedule. The order in which the Lessee Improvements are
to be constructed and the Tenant Improvement Allowance allocated is hereby revised to
allow for construction in the Premises to be prioritized at Lessee’s discretion with a
maximum of $300,000 of the Tenant Improvement Allowance allocated for Lessee
Improvements in the Original 3150 Premises. The remaining $70,000 of the Tenant
Improvement Allowance shall be allocated for Lessee Improvements in the Additional
Premises, including the installation of the 200 amp electrical service.

     23. Indemnity. Lessee hereby agrees to indemnify and hold harmless Lessor,
its members, managers, general managers, employees and agents for all loss, costs,
liability and expenses arising from the Lessee Improvements including, without
limitation, any electrical power shutoffs.

     24. Entire Agreement. This Second Amendment sets forth the entire
agreement between the parties with respect to the matters set forth herein. There have
been no additional oral or written representations or agreements concerning any part of
the Premises.

     25. Ratification. Except as amended herein, all terms and conditions of
the 3150 Lease shall remain in full force and effect and are ratified by the parties to
this Second Amendment except as modified herein.

     26. Authority. Each individual executing this Second Amendment on behalf
of such entity represents and warrants that he or she is duly authorized to execute and
deliver this Second Amendment on its behalf. Each party shall, within thirty (30) days
after request, deliver to the other party satisfactory evidence of such authority.

     27. Not an Offer. Submission of this Second Amendment by Lessor to Lessee
is not an offer to enter into this Second Amendment, but a solicitation for such an
offer from Lessee. Lessor shall not be bound by this Second Amendment until Lessor has
executed and delivered the same to Lessee.

     28. Lender’s Consent. Lessor’s execution and delivery of this Second
Amendment shall be conditioned on receipt of Lessor’s lender’s consent to this Second
Amendment.

     29. Counterparts. This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and when taken together shall
constitute one and the same instrument.

[Signatures on following page.]

2

 

     IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Second Amendment as of the date set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	LESSOR	 	 	 	LESSEE
	 
	 	 	 	 	 	 	 	 	 	 
	3168 CORPORATE PLACE ASSOCIATES, LLC,	 	 	 	SHUTTERFLY, INC.,
	a California limited liability company	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	Goldsmith & Mancini LLC	 	 	 	 	 	 
	 	 	Its General Manager	 	 	 	By: 	 	/s/ Stephen E. Recht
	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: 	Stephen E. Recht
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert H. Goldsmith	 	 	 	Title:	Chief Financial Officer
	 

	 	 	 	 
 
	 	 
	 	 	 
 
	 	 	Name: Robert Goldsmith	 	 	 	 	 	 
	 	 	Title: Member	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jay Mancini	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	Name: Jay Mancini	 	 	 	 	 	 
	 	 	Title: Member	 	 	 	 	 	 

3

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