Document:

exv10w04

 

Exhibit
10.04

LEASE AGREEMENT

          THIS LEASE, made this 5th day of July 1999, between WESTPORT JOINT VENTURE, a California joint
venture, hereinafter called Landlord, and DIGITAL FINISH, INC., a California corporation,
hereinafter called Tenant.

WITNESSETH:

          Landlord hereby leases to Tenant and Tenant hereby hires and takes from Landlord those certain
premises (the “Premises”) outlined in red on Exhibit “A”, attached hereto and incorporated herein
by this reference thereto more particularly described as follows.

          A portion of that certain 48,384+ square foot, two-story building located at 2800
Bridge Parkway, Redwood City, California 94065, consisting of approximately 22,694+ square
feet on the first floor of the building. Said Premises is more particularly shown within the area
outlined in Red on Exhibit A attached hereto. The entire parcel, of which the Premises is
a part, is shown within the area outlined in Green on Exhibit A attached. The Premises
shall be improved by Landlord as shown on Exhibit B to be attached hereto, and is leased on
an “as-is” basis, in its present condition, and in the configuration as shown in Red on Exhibit
B to be attached hereto.

          As used herein the Complex shall mean and include all of the land outlined in Green and
described in Exhibit “A”, attached hereto, common area private roads within the Complex, and all of
the buildings, improvements, fixtures and equipment now or hereafter situated on said land.

          Said letting and hiring is upon and subject to the terms, covenants and conditions hereinafter
set forth and Tenant covenants as a material part of the consideration for this Lease to perform
and observe each and all of said terms, covenants and conditions. This Lease is made upon the
conditions of such performance and observance.

1.      USE. Tenant shall use the Premises only in conformance with applicable governmental laws,
regulations, rules and ordinances for the purpose of general office, light manufacturing, research
and development, and storage and other uses necessary for Tenant to conduct Tenant’s business,
provided that such uses shall be in accordance with all applicable governmental laws and ordinances
and for no other purpose. Tenant shall not do or permit to be done in or about the Premises or the
Complex nor bring or keep or permit to be brought or kept in or about the Premises or the Complex
anything which is prohibited by or will in any way increase the existing rate of (or otherwise
affect) fire or any insurance covering the Complex or any part thereof, or any of its contents, or
will cause a cancellation of any insurance covering the Complex or any part thereof, or any of its
contents. Tenant shall not do or permit to be done anything in, on or about the Premises or the
Complex which will in any way obstruct or interfere with the rights of other tenants or occupants
of the Complex or injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises or the Complex. No sale by auction shall be permitted on the
Premises. Tenant shall not place any loads upon the floors, walls, or ceiling, which endanger the
structure, or place any harmful fluids or other materials in the drainage system of the building,
or overload existing electrical or other mechanical systems. No

 

 

waste materials or refuse shall be dumped upon or permitted to remain upon any part of the Premises
or outside of the building in which the Premises are a part, except in trash containers placed
inside exterior enclosures designated by Landlord for that purpose or inside of the building proper
where designated by Landlord. No materials, supplies, equipment, finished products or
semi-finished products, raw materials or articles of any nature shall be stored upon or permitted
to remain outside the Premises or on any portion of common area of the Complex. No loudspeakers or
other device, system or apparatus which can be heard outside the Premises shall be used in or at
the Premises without the prior written consent of Landlord. Tenant shall not commit or suffer to
be committed any waste in or upon the Premises. Tenant shall indemnify, defend and hold Landlord
harmless against any loss, expense, damage, attorneys’ fees or liability arising out of failure of
Tenant to comply with any applicable law. Tenant shall comply with any covenant, condition, or
restriction (“CC&R’s”) affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any tenant or occupant
of the Complex.

2.      TERM.1

          A.      The term of this Lease shall be for a period of Five (5) years (unless sooner terminated as
hereinafter provided) and, subject to Paragraphs 2(B) and 3, shall commence on the 1st day of
August, 1999 and end on the 31st day July, of 2004.

          B.      Possession of the Premises shall be deemed tendered and the term of this Lease shall
commence when the first of the following occurs:

                    (a)      One day after a Certificate of Occupancy is granted by the proper governmental agency, or,
if the governmental agency having jurisdiction over the area in which the Premises are situated
does not issue certificates of occupancy, then the same number of days after certification by
Landlord’s architect or contractor that Landlords’ construction work has been completed; or

                    (b)      Upon the occupancy of the Premises by any of Tenant’s operating personnel; or

                    (c)      When the Tenant Improvements have been substantially completed for Tenant’s use and
occupancy, in accordance and compliance with Exhibit B of this Lease Agreement; or

                    (d)      As otherwise agreed in writing.

3.      POSSESSION. If Landlord, for any reason whatsoever, cannot deliver possession of said premises
to Tenant at the commencement of the said term, as hereinbefore specified, this Lease shall not be
void or voidable; no obligation of Tenant shall be affected thereby; nor shall
Landlord’s agents be liable to Tenant for any loss or damage resulting therefrom; but in that

 

1 It is agreed in the event said Lease
commences on a date other than the first day of the month the term of the Lease
will be extended to account for the number of days in the partial month. The
Basic Rent during the resulting partial month will be pro-rated (for the number
of days in the partial month) at the Basic Rent scheduled for the projected
commencement date as shown in Paragraph 43.

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event the commencement and termination dates of the Lease, and all other dates affected thereby shall be
revised to conform to the date of Landlord’s delivery of possession, as specified in Paragraph
2(b), above. The above is, however, subject to the provisions that the period of delay, of
delivery of the premises shall not exceed 60 days from the commencement date herein (except those
delays caused by Acts of God, strikes, war, utilities, governmental bodies, weather, unavailable
materials, and delays beyond Landlord’s control shall be excluded in calculating such period) in
which instance Tenant, at its option, may, by written notice to Landlord, terminate this Lease.

4.      RENT.

          A.      Basic Rent. Tenant agrees to pay to Landlord at such place as Landlord may designate
without deduction, offset, prior notice, or demand, and Landlord agrees to accept as Basic Rent for
the leased Premises the total number of FOUR MILLION ONE HUNDRED ONE THOUSAND NINE HUNDRED FIFTY
FOUR AND NO/100 ($4,101,954.00) Dollars in lawful money of the United States of America, payable as
follows:

          SEE PARAGRAPH 43 FOR BASIC RENT SCHEDULE.

          B.      Time for Payment. In the event that the term of this Lease commences on a date other than
the first day of a calendar month, on the date of commencement of the term hereof Tenant shall pay
to Landlord as rent for the period from such date of commencement to the first day of the next
succeeding calendar month that proportion of the monthly rent hereunder which the number of days
between such date of commencement and the first day of the next succeeding calendar month bears to
thirty (30). In the event that the term of this Lease for any reason ends on a date other than the
last day of a calendar month, on the first day of the last calendar month of the term hereof Tenant
shall pay to Landlord as rent for the period from said first day of said last calendar month to and
including the last day of the term hereof that proportion of the monthly rent hereunder which the
number of days between said first day of said last calendar month and the last day of the term
hereof bears to thirty (30).

          C.      Late Charge. Notwithstanding any other provision of this Lease, if Tenant is in default in
the payment of rental as set forth in this Paragraph 4 when due, or any part thereof, Tenant agrees
to pay Landlord, in addition to the delinquent rental due, a late charge for each rental payment in
default ten (10) days. Said late charge shall equal ten (10%) percent of each rental payment so in
default.

          D.      Additional Rent. Beginning with the commencement date of the term of this Lease, Tenant
shall pay to Landlord in addition to the Basic Rent and as Additional Rent the following:

                    (a)      Tenant’s proportionate share of all Taxes relating to the Complex as set forth in
Paragraph 12, and

                    (b)      Tenant’s proportionate share of all insurance premiums and deductibles relating to the
Complex, as set forth in Paragraph 15, and

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                    (c)      Tenant’s proportionate share of expenses for the operation, management, maintenance and
repair of the Building (including common areas of the Building) and Common Areas of the Complex in
which the Premises are located as set forth in Paragraph 7, and

                    (d)      All charges, costs and expenses, which Tenant is required to pay hereunder, together with
all interest and penalties, costs and expenses including attorneys’ fees and legal expenses, that
may accrue thereto in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of Tenant or failure on
Tenant’s part to comply with the terms of this Lease. In the event of nonpayment by Tenant of
Additional Rent Landlord shall have all the rights and remedies with respect thereto as Landlord
has for nonpayment of rent.

The Additional Rent due hereunder shall be paid to Landlord or Landlord’s agent (i) within five
days for taxes and insurance and within thirty days for all other Additional Rent items after
presentation of invoice from Landlord or Landlord’s agent setting forth such Additional Rent and/or
(ii) at the option of Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of any amount estimated by Landlord to be Landlord’s approximate average monthly expenditure
for such Additional Rent items, which estimated amount shall be reconciled within 120 days of the
end of each calendar year or more frequently if Landlord so elects to do so at Landlord’s sold and
absolute discretion, compared to Landlord’s actual expenditure for said Additional Rent items, with
Tenant paying to Landlord, upon demand, any amounts of actual expenses expended by Landlord in
excess of said estimated amount, or Landlord crediting to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this Lease) any amount
of estimated payments made by Tenant in excess of Landlord’s actual expenditures for said
Additional Rent items.

          The respective obligations of Landlord and Tenant under this paragraph shall survive the
expiration or other termination of the term of this Lease, and if the term hereof shall expire or
shall otherwise terminate on a day other than the last day of a calendar year, the actual
Additional Rent incurred for the calendar year in which the term hereof expires or otherwise
terminates shall be determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number of days in such
calendar year preceding such expiration or termination bears to 365.

          E.      Fixed Management Fee. Beginning with the Commencement Date of the Term of this Lease,
Tenant shall pay, in addition to the Basic Rent and Additional Rent, a fixed monthly management fee
(“Management Fee”) equal to three percent (3%) of the Basic Rent due for each month during the
Lease Term. Said Management Fee shall be paid by Tenant to A&P Property Management Company at 2560
Mission College Blvd., Suite 101, Santa Clara, CA 95054.

          F.      Place of Payment of Rent and Additional Rent. All Basic Rent hereunder and all payments
hereunder for Additional Rent shall be paid to Landlord at the office of Landlord at
2560 Mission College Blvd., Suite 101, Santa Clara, CA 95054 or to such other person or to
such other place as Landlord may from time to time designate in writing.

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          G.      2Security Deposit. Concurrently with Tenant’s execution of this Lease, Tenant
shall deposit with Landlord the sum of ONE HUNDRED FIFTY FOUR THOUSAND THREE HUNDRED NINETEEN AND
20/100 ($154,319.20) Dollars. Said sum shall be held by Landlord as a Security Deposit for the
faithful performance by Tenant of all of the term, covenants, and conditions of this Lease to be
kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any
provision of this Lease, including, but not limited to, the provisions relating to the payment of
rent and any of the monetary sums due herewith, Landlord may (but shall not be required to) use,
apply or retain all or any part of this Security Deposit for the payment of any other amount which
Landlord may spend by reason of Tenant’s default or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant’s default. If any portion of said Deposit is
so used or applied. Tenant shall, within ten (10) days after written demand therefore, deposit
cash with Landlord in the amount sufficient to restore the Security Deposit to its original amount.
Tenant’s failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs every provision of
this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to
Tenant (or at Landlord’s option, to the last assignee of Tenant’s interest hereunder) at the
expiration of the Lease term and after Tenant has vacated the Premises. In the event of
termination of Landlord’s interest in this Lease, Landlord shall transfer said Deposit to
Landlord’s successor in interest whereupon Tenant agrees to release Landlord from liability for the
return of such Deposit or the accounting therefore.

5.      RULES AND REGULATIONS AND COMMON AREA. Subject to the terms and conditions of this Lease and
such Rules and Regulations as Landlord may from time to time prescribe, Tenant and Tenant’s
employees, invitees and customers shall, in common with other occupants of the Complex in which the
Premises are located, and their respective employees, invitees and customers, and other entitled to
the use thereof, have the non-exclusive right to use the access roads, parking areas and facilities
provided and designated by Landlord for the general use and convenience of the occupants of the
Complex in which the Premises are located, which areas and facilities are referred to herein as
“Common Area”. This right shall terminate upon the termination of this Lease. Landlord reserves
the right from time to time to make changes in the shape, size, location, amount and extent of
Common Area. Landlord further reserves the right to promulgate such reasonable rules and
regulations relating to the use of the Common Area, and any part or parts thereof, as Landlord may
deem appropriate for the best interests of the occupants of the Complex. The Rules and Regulations
shall be binding upon Tenant upon deliver of a copy of them to Tenant, and Tenant shall abide by
them and cooperate in their observance. Such Rules and Regulations may be amended by Landlord from
time to time, with or without advance notice, and all amendments shall be effective upon delivery
of a copy to Tenant. Landlord shall not be responsible to Tenant for the non-performance by any
other tenant or occupant of the Complex of any of said Rules and Regulations.

          Landlord shall operate, manage and maintain the Common Area. The manner in which the Common
Area shall be maintained and the expenditures for such maintenance shall be at the discretion of
Landlord.

 

2     $77,159.60 cash due upon Lease execution.

$77,159.60 Promissory Note due August 1, 2000.

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6.      PARKING. Tenant shall have the right to use with other tenants or occupants of the Complex 102
parking spaces in the common parking areas of the Complex. Tenant agrees, that Tenant, Tenant’s
employees, agents, representatives and/or invitees shall not use parking spaces in excess of said
102 spaces allocated to Tenant hereunder. Landlord shall have the right, at Landlord’s sole
discretion, to specifically designate the location of Tenant’s parking spaces within the common
parking areas of the Complex in the event of a dispute amount the tenants occupying the building
and/or Complex referred to herein, in which event Tenant agrees that Tenant, Tenant’s employees,
agents, representatives and/or invitees shall not use any parking spaces other than those parking
spaces specifically designated by Landlord for Tenant’s use. Said parking spaces, if specifically
designated by Landlord to Tenant, may be relocated by Landlord at any time, and from time to time.
Landlord reserves the right, at Landlord’s sole discretion, to rescind any specific designation of
parking spaces, thereby returning Tenant’s parking spaces to the common parking area. Landlord
shall give Tenant written notice of any change in Tenant’s parking spaces, Tenant shall not, at any
time, park or permit to be parked, any trucks or vehicles adjacent to the loading areas so as to
interfere in any way with the use of such areas, nor shall Tenant at any time park, or permit the
parking of Tenant’s trucks or other vehicles or the trucks and vehicles of Tenant’s suppliers or
others, in any portion of the common area not designated by Landlord for such use by Tenant.
Tenant shall not park nor permit to be parked, any inoperative vehicles or equipment on any portion
of the common parking area or other common areas of the Complex. Tenant agrees to assume
responsibility for compliance by its employees with the parking provision contained herein. If
Tenant or its employees park in other than such designated parking areas, then Landlord may charge
Tenant, as an additional charge, and Tenant agrees to pay, ten ($10.00) Dollars per day for each
day or partial day each such vehicles is parked in any area other than that designated. Tenant
hereby authorizes Landlord at Tenant’s sole expense to tow away from the Complex any vehicle
belonging to Tenant or Tenant’s employees parked in violation of these provisions, or to attach
violation stickers or notices to such vehicles. Tenant shall use the parking areas for vehicle
parking only, and shall not use the parking areas for storage.

7.      EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF THE COMPLEX AND
BUILDING IN WHICH THE PREMISES ARE LOCATED. As Additional Rent and in accordance with Paragraph 4D
of this Lease, Tenant shall pay to Landlord Tenant’s proportionate share (calculated on a square
footage or other equitable basis as calculated by Landlord) of all expenses of operation,
management, maintenance and repair of the Common Areas of the Complex including, but not limited
to, license, permit, and inspection fees; security, utility charges associated with exterior
landscaping and lighting (including water and seer charges); all charges incurred in the
maintenance and replacement of landscaped areas, lakes, private roads within the Complex and roads
with reciprocal easement areas; parking lots, and paved areas (including repairs, replacement,
resealing and restriping), sidewalks, driveways; maintenance, repair and replacement of all
fixtures and electrical, mechanical, and plumbing systems; structural elements and exterior
surfaces of the buildings; salaries and employee benefits of personnel and payroll taxes
applicable thereto; supplies, materials, equipment and tools; the cost of capital expenditures
which have the effect of reducing operating expenses, provided, however, that in the event Landlord
makes such capital improvements, Landlord may amortize its investment in said improvements
(together with interest at the rate of fifteen (15%) percent per annum on the unamortized balance)
as an operating expense in accordance with standard accounting practices,

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provided, that such
amortization is not at a rate greater than the anticipated savings in the operating expenses.

          “Additional Rent” as used herein shall not include Landlord’s debt repayment; interest on
charges; expenses directly or indirectly incurred by Landlord for the benefit of any other tenant;
cost for the installation of partitioning or any other tenant improvements; cost of attracting
tenants; depreciation; interest, or executive salaries

          As Additional Rent and in accordance with paragraph 4D of this Lease, Tenant shall pay its
proportionate share (calculated on a square footage or other equitable basis as calculated by
Landlord) of the cost of operation (including common utilities), management, maintenance, and
repair of the building (including common areas such as lobbies, restrooms, janitor’s closets,
hallways, elevators, mechanical and telephone rooms, stairwells, entrances, spaces above the
ceilings and janitorization of said common areas) in which the Premises are located. The
maintenance items herein referred to include, but are not limited to, all windows, window frames,
plate glass, glazing, truck doors, main plumbing systems of the building (such as water and drain
lines, sinks, toilets, faucets, drains, showers and water fountains), main electrical systems (such
as panels and conduits), heating and airconditioning systems (such as compressors, fans, air
handlers, ducts, boilers, heaters), store fronts, roofs, downspouts, building common area interiors
(such as wall coverings, window coverings and partitioning), ceilings, building exterior doors,
skylights (if any), automatic fire extinguishing systems, and elevators; license, permit, and
inspection fees; security; salaries and employee benefits of personnel and payroll taxes applicable
thereto; supplies, materials, equipment and tools; the cost of capital expenditures which have the
effect of reducing operating expenses, provided, however, that in the event Landlord makes such
capital improvements, Landlord may amortize its investment in said improvements (together with
interest at the rate of fifteen (15%) percent per annum on the unamortized balance) as an operating
expense in accordance with standard accounting practices, provided, that such amortization is not
at a rate greater than the anticipated savings in the operating expenses. Tenant hereby waives all
rights under, and benefits of, subsection 1 of Section 1932 and Sections 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or hereafter in effect.

8.      ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts the Premises as being
in good and sanitary order, condition and repair and accepts the building and improvements included
in the Premises in their present condition and without representation or warranty by Landlord as to
the condition of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord and Tenant. Tenant
agrees on the last day of the Lease term, or on the sooner termination of this Lease, to surrender
the Premises promptly and peaceably to Landlord in good condition and repair (damage by Acts of
God, fire, normal wear and tear excepted), with all interior walls painted or cleaned so that they
appear freshly painted, and
repaired and replaced, if damaged; all floors cleaned and waxed; all carpets cleaned and shampooed;
the airconditioning and heating equipment services by a reputable and licensed service firm and in
good operating condition (provided the maintenance of such equipment has been Tenant’s
responsibility during the term of this Lease) together with all alterations, additions, and
improvements which may have been made in, to, or on the Premises (except movable trade fixtures
installed at the expense of Tenant) except that Tenant shall ascertain from

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Landlord within thirty
(30) days before the end of the term of this Lease whether Landlord desires to have the Premises or
any part or parts thereof restored to their condition and configuration as when the Premises were
delivered to Tenant and if Landlord shall so desire, then Tenant shall restore said Premises or
such part or parts thereof before the end of this Lease at Tenant’s sole cost and expense. Tenant,
on or before the end of the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises, and all property not so removed on or
before the end of the term or sooner termination of this Lease shall be deemed abandoned by Tenant
and title to same shall thereupon pass to Landlord without compensation to Tenant. Landlord may,
upon termination of this Lease, remove all moveable furniture and equipment so abandoned by Tenant,
at Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s sole cost. If the
Premises be not surrendered at the end of the term or sooner termination of this Lease, Tenant
shall indemnify Landlord against loss or liability resulting from the delay by Tenant in so
surrendering the Premises including, without limitation, any claims made by any succeeding tenant
founded on such delay. Nothing contained herein shall be construed as an extension of the term
hereof or as a consent of Landlord to any holding over by Tenant. The voluntary or other surrender
of this Lease or the Premises by Tenant or a mutual cancellation of this Lease shall not work as a
merger and, at the option of Landlord, shall either terminate all or any existing subleases or
subtenancies or operate as an assignment to Landlord of all or any such sublease or subtenancies.

9.      ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made, any alteration or
addition to the Premises, or any part hereof, without the written consent of Landlord first had and
obtained by Tenant, but at the cost of Tenant, and any addition to, or alteration of, the Premises,
except moveable furniture and trade fixtures, shall at once become a part of the Premises and
belong to Landlord. Landlord reserves the right to reasonably approve all contractors and
mechanics proposed by Tenant to make such alterations and additions. Tenant shall retain title to
all movable furniture and trade fixtures placed in the Premises. All heating, lighting, electrical
airconditioning, floor to ceiling partitioning, drapery, carpeting, and floor installations made by
Tenant, together with all property that has become as integral part of the Premises, shall not be
deemed trade fixtures. Tenant agrees that it will no proceed to make such alteration or additions,
without having obtained consent from Landlord to do so (which consent shall not be unreasonably
withheld) and until five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers for payment for
Tenant’s improvements. Tenant will at all times permit such notices to be posted and to remain
posted until the completion of work. Tenant shall, if required by Landlord, secure at Tenant’s own
cost and expense, a completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic’s lien filed against the Premises or against
the Complex for work claimed to have been done for, or materials claimed to have been furnished to
Tenant, will be discharged by Tenant,
by bond or otherwise, within ten (10) days after the filing thereof, at the cost and expense of
Tenant. Any exceptions to the foregoing must be made in writing and executed by both Landlord and
Tenant. Notwithstanding anything to the contrary herein, under no circumstances shall Tenant be
authorized to penetrate the soil to a depth that exceeds three and one-half feet from the uppermost
surface of the soil.

10.      TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and maintain the Premises
(including appurtenances) and every part thereof in a high standard of maintenance

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and repair, and
in good and sanitary condition. Tenant’s maintenance and repair responsibilities herein referred
to include, but are not limited to, janitorization, plumbing systems within the non-common areas of
the Premises (such as water and drain lines, sinks), electrical systems within the non-common areas
of the Premises (such as outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating and
airconditioning controls within the non-common areas of the Premises (such as mixing boxes,
thermostats, time clocks, supply and return grills), all interior improvements within the premises
including but not limited to; wall coverings, window coverings, acoustical ceilings, vinyl tile,
carpeting, partitioning, doors (both interior and exterior, including closing mechanisms, latches,
locks), and all other interior improvements of any nature whatsoever. Tenant agrees to provide
carpet shields under all rolling chairs or to otherwise be responsible for wear and tear of the
carpet causes by such rolling chairs if such wear and tear exceeds that caused by normal foot
traffic in surrounding areas. Areas of excessive wear shall be replaced at Tenant’s sole expense
upon Lease termination.

11.      UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED. As Additional Rent and in
accordance with paragraph 4D of this Lease, Tenant shall pay its proportionate share (calculated on
a square footage or other equitable basis as calculated by Landlord) of the cost of all utility
charges such as water, gas, electricity, telephone, telex and other electronic communications
service, sewer service, waste-pick-up and any other utilities, materials or services furnished
directly to the building in which the Premises are located, including, without limitation, any
temporary or permanent utility surcharge or other exactions whether or not hereinafter imposed.

          Landlord shall not be liable for and Tenant shall not be entitled to any abatement or
reduction of rent by reason of any interruption or failure of utility services to the Premises when
such interruption or failure is caused by accident, breakage, repair, strikes, lockouts, or other
labor disturbances or labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.

          Provided that Tenant is not in default in the performance or observance or any of the terms,
covenants or conditions of this Lease to be performed or observed by it, Landlord shall furnish to
the Premises between the hours of 8:00AM and 6:00PM, Mondays through Fridays (holdings excepted)
and subject to the rules and regulations of the Complex hereinbefore referred to, reasonable
quantities of water, gas and electricity suitable for the intended use of the Premises and heat and
airconditioning required in Landlord’s judgment for the comfortable use and occupation of the
Premises for such purposes. Tenant may, from time to time, have its staff and equipment operate on
a twenty-four (24) hour-a-day, seven (7) day-a-week schedule, and Tenant shall pay for any extra
utilities used by Tenant. Tenant agrees that at all times it will cooperate
fully with Landlord and abide by all regulations and requirements that Landlord may prescribe
for the proper functioning and protection of the building heating, ventilating and airconditioning
systems. Whenever heat generating machines, equipment, or any other devices (including exhaust
fans are used in the Premises by Tenant which affect the temperature or otherwise maintained by the
airconditioning system, Landlord shall have the right to install supplementary airconditioning
units in the Premises and the cost thereof, including the cost on installation and the cost of
operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus or device in the
Premises (including, without limitation), electronic data processing machines or

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machines using
current in excess of 110 Volts which will in any way increase the amount of electricity, gas, water
or airconditioning usually furnished or supplied to premises being used as general office space, or
connect with electric current (except through existing electrical outlets in the Premises), or with
gas or water pipes any apparatus or device for the purposes of using electric current, gas, or
water. If Tenant shall require water, gas, or electric current in excess of that usually furnished
or supplied to premises being used as general office space, Tenant shall first obtain the written
consent of Landlord, which consent shall not be unreasonably withheld and Landlord may cause an
electric current, gas, or water meter to be installed in the Premises in order to measure the
amount of electric current, gas or water consumed for any such excess use. The cost of any such
meter and of the installation, maintenance and repair thereof, all charges for such excess water,
gas and electric current consumed (as shown by such meters and at the rates then charged by the
furnishing public utility); and any additional expense incurred by Landlord in keeping amount of
electric current, gas, or water so consumed shall be paid by Tenant, and Tenant agrees to pay
Landlord therefore promptly upon demand by Landlord.

12.      TAXES. A. As Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share of all Real Property Taxes, which prorata share shall
be allocated to the leased Premises by square footage or other equitable basis, as calculated by
Landlord. The term “Real Property Taxes”, as used herein, shall mean (i) all taxes, assessments,
levies and other charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay any general or
special assessments for public improvements and any increases resulting from reassessments caused
by any change in ownership of the Complex) now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the value, occupancy or use
of, all or any portion of the Complex (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord’s interest therein; any improvement located
within the Complex (regardless of ownership); the fixtures, equipment and other property of
Landlord, real or personal, that are an integral part of and located in the Complex; or parking
areas, public utilities, or energy within the Complex; (ii) all charges, levies or fees imposed by
reason of environmental regulation or other governmental control of the Complex; and (iii) all
costs and fees (including attorneys’ fees) incurred by Landlord in contesting any Real Property Tax
and in negotiating with public authorities as to any Real Property Tax. If at any time during the
term of this Lease the taxation or assessment of the Complex prevailing as of the commencement date
of this Lease shall be altered so that in lieu of or in addition to any Real Property Tax described
above there shall be levied, assessed or
imposed (whether by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate or additional tax or charge (i) on the value, use
or occupancy of the Complex or Landlord’s interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Complex, on Landlord’s business of leasing the Complex, or
computed in any manner with respect to the operation of the Complex, then any such tax or charge,
however designated, shall be included within the meaning of the term “Real Property Taxes” for
purposes of this Lease. If any Real Property Tax is based upon property or rents unrelated to the
Complex, then only that part of such real Property Tax that is fairly allocable to the Complex
shall be included within the meaning or the term “Real Property Tax”. Notwithstanding the
foregoing, the term “Real Property Taxes” shall not include estate, inheritance, gift or franchise
taxes or city or county transfer taxes of Landlord or the federal or

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state net income tax imposed
on Landlord’s income from all sources. The term “Real Estate Taxes” shall also include
supplemental taxes related to the period of Tenant’s Lease Term whenever levied, including any such
taxes that may be levied after the Lease Term has expired.

          B.      Taxes on Tenant’s Property

                    (a)      Tenant shall be liable for and shall pay ten days before delinquency, taxes levied against
any personal property or trade fixtures placed by Tenant in or about the Premises. If any such
taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s
property or if the assessed value of the Premises is increased by the inclusion therein of a value
placed upon such personal property or trade fixtures of Tenant and if Landlord, after written
notice to Tenant, pays the taxes based on such increased assessment, which Landlord shall have the
right to do regardless of the validity thereof, but only under proper process if requested by
Tenant, Tenant shall upon demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the assessment; provided
that in any such event Tenant shall have the right, in the name of Landlord and with Landlord’s
full cooperation, to bring suit in any court of competent jurisdiction to recover the amount of any
such taxes so paid under protest, and any amount so recovered shall belong to Tenant.

                    (b)      if the Tenant improvements in the Premises, whether installed, and/or paid for by Landlord
or Tenant and whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than the valuation at which standard
office improvements in other space in the Complex are assessed, then the real property taxes and
assessments levied against Landlord or the Complex by reason of such excess assessed valuation
shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the
provision of 12Ba, above. If the records of the County Assessor are available and sufficiently
detailed to serve as a basis for determining whether said Tenant improvements are assessed at a
higher valuation than standard office improvements in other space in the Complex, such records
shall be binding on both the Landlord and Tenant. If the records of the County Assessor are not
available or sufficiently detailed to serve as a basis for making said determination, the actual
cost of construction shall be used.

13.      LIABILITY INSURANCE. Tenant, at Tenant’s expense, agrees to keep in force during the term of
this Lease a policy of commercial general liability insurance with a combined single
limit coverage of not less than Two Million Dollars ($2,000,000) per occurrence for injuries to or
death of persons occurring in, on or about the Premises or the Complex, and property damage. The
policy or policies affecting such insurance, certificates of insurance of which shall be furnished
to Landlord, shall name Landlord as additional insureds, and shall insure any liability of
Landlord, contingent or otherwise, as respects acts or omissions of Tenant, its agents, employees
or invitees or otherwise by any conduct or transactions of any of said persons in or about or
concerning the Premises, including any failure of Tenant to observe or perform any of its
obligations hereunder, shall be issued by an insurance company admitted to transact business in the
State of California; and shall provide that the insurance effected thereby shall not be canceled,
except upon thirty (30) days’ prior written notice to Landlord. If, during the term of this Lease,
in the considered opinion of Landlord’s Lender, insurance advisor, or counsel, the amount of
insurance described in this paragraph 13 is not adequate, Tenant agrees to increase

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said coverage
to such reasonable amount as Landlord’s Lender, insurance advisor, or counsel shall deem adequate.

14.      TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION INSURANCE. Tenant shall
maintain a policy or policies of fire and property damage insurance in “all risk” form with a
sprinkler leakage endorsement insuring the personal property, inventory, trade fixtures, and
leasehold improvements within the leased Premises for the full replacement value thereof. The
proceeds from any such policies shall be used for the repair or replacement of such items so
insured.

          Tenant shall also maintain a policy or policies of workman’s compensation insurance and any
other employee benefit insurance sufficient to comply with all laws.

15.      PROPERTY INSURANCE. Landlord shall purchase and keep in force and as Additional Rent and in
accordance with Paragraph 4D of this Lease. Tenant shall pay to Landlord (or Landlord’s agent if
so directed by Landlord) Tenant’s proportionate share (calculated on a square footage or other
equitable basis as calculated by Landlord) of the deductibles on insurance claims and the cost of
policy or policies of insurance covering loss or damage to the Premises and Complex in the amount
of the full replacement value thereof, providing protection against those perils included within
the classification of “all risks” insurance and flood and/or earthquake insurance, if available,
plus a policy of rental income insurance in the amount of one hundred (100%) percent of twelve (12)
months Basic Rent, plus sums paid as Additional Rent. If such insurance cost is increased due to
Tenant’s use of the Premises or the Complex, Tenant agrees to pay to Landlord the full cost of such
increase. Tenant shall have no interest in nor any right to the proceeds of any insurance procured
by Landlord for the Complex.

          Landlord and Tenant do each hereby respectively release the other, to the extent of insurance
coverage of the releasing party, from any liability for loss or damage caused by fire or any of the
extended coverage casualties included in the releasing party’s insurance policies, irrespective of
the cause of such fire or casualty; provided, however, that if the insurance policy of either
releasing party prohibits such waiver, then this waiver shall not take effect until consent to such
waiver is obtained. If such waiver is so prohibited, the insured party affected shall promptly
notify the other party hereof.

16.      INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant hereby waives all claims
against Landlord for any injury to or death of any person or damage or destruction of property in
or about the Premises or the Complex by or from any cause whatsoever, including, without
limitation, gas, fire, oil, electricity or leakage of any character from the roof, walls,
basement or other portion of the Premises or the Complex but excluding, however, the willful
misconduct or negligence of Landlord, or agents, servants, employees, invitees, or contractors of
which negligence Landlord has knowledge and reasonable time to correct. Except as to injury to
persons or damage to property to the extent arising from the willful misconduct or the negligence
of Landlord, its agents, servants, employees, invitees, or contractors. Tenant shall hold Landlord
harmless from and defend Landlord against any and expenses, including reasonable attorneys’ fees,
in connection therewith, arising out of any injury to or death of any person or damage to or
destruction of property occurring in, on or about the Premises, or any part thereof, from any cause
whatsoever.

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17.      COMPLIANCE. Tenant, at its sole cost and expense, shall promptly comply with all laws,
statutes, ordinances and governmental rules, regulations or requirements now or hereafter in
effect; with the requirement of any board of fire underwriters or other similar body now or
hereafter constituted; and with any direction or occupancy certificate issued pursuant to law by
any public officer, provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or rectify said failure.
The judgment of any court of competent jurisdiction or the admission of Tenant in any action
against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such law,
statute, ordinance or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This paragraph shall not be interpreted as
requiring Tenant to make structural changes or improvements, except to the extent such changes or
improvements are required as a result of Tenant’s use of the Premises. Tenant shall, at its sole
cost and expense, comply with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of reasonable fire and public
liability insurance covering the Premises.

18.      LIENS. Tenant shall keep the Premises and the Complex free from any liens arising out of any
work performed, materials furnished or obligation incurred by Tenant. In the event that Tenant
shall not, within ten (10) days following the imposition of such lien, cause the same to be
released of record, Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but no obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All sums paid by Landlord for
such purpose, and all expenses incurred by it in connection therewith, shall be payable to Landlord
by Tenant on demand with interest at the prime rate of interest as quoted by the Bank of America.

19.      ASSIGNMENT AND SUBLETTING. Tenant shall not assign, transfer, or hypothecate the leasehold
estate under this Lease, or any interest therein, and shall not sublet the Premises, or any part
thereof, or any right or privilege appurtenant thereto, or suffer any other person or entity to
occupy or use the Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. As a condition for granting
this consent to any assignment, transfer, or subletting, Landlord shall require Tenant to
pay to Landlord, as additional Rent seventy five percent of all rents and/or additional
consideration due Tenant from its assignees, transferees, or subtenants in excess of the Rent
payable by Tenant to Landlord hereunder for the assigned, transferred and/or subleased space;
provided however, that before sharing such excess rent, Tenant shall first be entitled to recover
from such excess rent the amount of any reasonable leasing commissions paid by Tenant to third
parties not affiliated with Tenant. Tenant shall, by thirty (30) days written notice, advise
Landlord of its intent to assign or transfer Tenant’s interest in the Lease or sublet the Premises
or any portion thereof for any part of the term hereof. Within thirty (30) days after receipt of
said written notice, Landlord may, in its sole discretion, elect to terminate this Lease as to the
portion of the Premises described in Tenant’s notice on the date specified in Tenant’s notice,
except for Permitted Transfers, by giving written notice of such election to terminate. If no such
notice to terminate is given to Tenant within said thirty (30) day period, Tenant may proceed to
locate an acceptable sublessee, assignee, or other transferee for presentment to Landlord for
Landlord’s approval, all in accordance with the terms, covenants, and conditions of this paragraph
19. If Tenant intends to sublet the entire Premises and Landlord elects to terminate this Lease,
this

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Lease shall be terminated on the date specified in Tenant’s notice. If, however, this Lease
shall terminate pursuant to the foregoing with respect to less than all the Premises, the rent, as
defined and reserved hereinabove shall be adjusted on a pro rata basis to the number of square feet
retained by Tenant, and this Lease as so attended shall continue in full force and effect. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of the Premises, with
the prior written consent of Landlord, no assignee, transferee or subtenant shall assign or
transfer this Lease, either in whole or in part, or sublet the whole or any part of the Premises,
without also having obtained the prior written consent of Landlord. A Consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other person shall not
release Tenant from any of Tenant’s obligations hereunder or be deemed to be a consent to any
subsequent similar or dissimilar assignment, transfer, hypothecation, subletting, occupation or use
by any other person. Any such assignment, transfer, hypothecation, subletting, occupation or use
without such consent shall be void and shall constitute a breach of this Lease by Tenant and shall,
at the option of Landlord exercised by written notice to Tenant, terminate this Lease. The
leasehold estate under this Lease shall not, nor shall any interest therein, be assignable for any
purpose by operation of law without the written consent of Landlord. As a condition to its
consent, Landlord shall require Tenant to pay all expenses in connection with the assignment, and
Landlord shall require Tenant’s assignee or transferee (or other assignees or transferees) to
assume in writing all of the obligations under this Lease and for Tenant to remain liable to
Landlord under the Lease.

          Notwithstanding the above, in no event will Landlord consent to a sub-sublease.

20.      SUBORDINATION AND MORTGAGES. In the event Landlord’s title or leasehold interest is now or
hereafter encumbered by a deed of trust, upon the interest of Landlord in the land and buildings in
which the demised Premises are located, to secure a loan from a lender (hereinafter referred to as
“Lender”) to Landlord, Tenant shall, at the request of landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of trust, or, if so
requested, agreeing that the lien of Lender’s deed of trust shall be or remain subject and
subordinate to the rights of Tenant under this Lease. Notwithstanding any such subordination,
Tenant’s possession under this Lease shall not be disturbed if Tenant is not
in default and so long as Tenant shall pay all rent and observe and perform all of the provisions
set forth in this Lease.

21.      ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times after at least 24
hours notice (except in emergencies) have the right to enter the Premises to inspect them; to
perform and services to be provided by Landlord hereunder; to submit the Premises to prospective
purchasers, mortgagers or tenants; to post notices of nonresponsibility; and to alter, improve or
repair the Premises and any portion of the Complex, all without abatement of rent; and may erect
scaffolding and other necessary structures in or through the Premises where reasonably required by
the character of the work to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. For each of the foregoing
purposes, any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall
not under any circumstances be construed or deemed to be a forcible or unlawful entry into or a
detainer of the Premises or an eviction, actual or constructive, of Tenant from the Premises or any
portion thereof. Landlord shall also have the right at any time to change the arrangement of
location of entrances or passageways, doors and doorways, and

14

 

corridors, elevators, stairs, toilets
or other public parts of the Complex and to change the name, number or designation by which Complex
is commonly known, and none of the foregoing shall be deemed an actual or constructive eviction of
Tenant, or shall Tenant to any reduction of rent hereunder.

22.      BANKRUPTCY AND DEFAULT. The commencement of a bankruptcy action or liquidation action or
reorganization action or insolvency action or an assignment of or by Tenant for the benefit of
creditors, or any similar action undertaken by Tenant, or the insolvency of Tenant, shall, at
Landlord’s option, constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency or similar action
elects to reject Tenant’s unexpired Lease, the trustee or receiver shall notify Landlord in writing
of its election within thirty (30) days after an order for relief in a liquidation action or within
thirty (30) days after the commencement of any action.

          Within thirty (30) days after court approval of the assumption of this lease, the trustee or
receiver shall cure (or provide adequate assurance to the reasonable satisfaction of Landlord that
the trustee or receiver shall cure) any and all previous defaults under the unexpired Lease and
shall compensate Landlord for all actual pecuniary loss and shall provide adequate assurances of
future performance under said Lease to the reasonable satisfaction of Landlord. Adequate assurance
of future performance, as used herein, includes but shall not be limited to: (i) assurance of
source and payment of rent, and other consideration due under this Lease; (ii) assurance that the
assumption or assignment of this Lease will not breach substantially any provision, such as radius,
location, use, or exclusivity provision, in any agreement relating to the above described Premises.

          Nothing contained in this section shall affect the existing right of Landlord to refuse to
accept an assignment upon commencement of or in connection with a bankruptcy, liquidation,
reorganization nor insolvency action or an assignment of Tenant for the benefit of creditors or
other similar act. Nothing contained in this Lease shall be construed as giving or granting or
creating an equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or involuntary bankruptcy
proceeding without the prior written consent of Landlord. In no event shall this Lease or any
rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings.

          The failure to perform or honor any covenant, condition or representation made under this
Lease shall constitute a default hereunder by Tenant upon expiration of the appropriate grace
period hereinafter provided. Tenant shall have a period of five (5) days from the date of written
notice from Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written notice from
Landlord within which to cure any other default under this Lease. Upon an uncured default of this
Lease by Tenant, Landlord shall have the following rights and remedies in addition to any other
rights or remedies available to Landlord at law or in equity.

                    (a)      The rights and remedies provided for by California Civil Code Section 1951.2 including but
not limited to, recovery of 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

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rental loss for the same
period that Tenant proves could be reasonably avoided, as computed pursuant to subsection (b) of
said Section 1951.2. Any proof by Tenant under subparagraphs (2) and (3) of Section 1951.2 of the
California Civil Code of the amount of rental loss that could be reasonably avoided shall be made
in the following manner: Landlord and Tenant shall each select a licensed real estate broker in
the business of renting property of the same type and use as the Premises and in the same
geographic vicinity. Such two real estate brokers shall select a third licensed real estate
broker, and the three licensed real estate brokers so selected shall determine the amount of rental
loss that could be reasonably avoided from the balance of the term of this Lease after the time of
award. The decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto.

                    (b)      The rights and remedies provided by California Civil Code Section which allows Landlord to
continue the Lease in effect and to enforce all of its rights and remedies under this Lease,
including the right to recover rent as it becomes due, for so long as Landlord does not terminate
Tenant’s right to possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its interest under this
Lease shall not constitute a termination of Tenant’s right to possession.

                    (c)      The right to terminate this Lease by giving notice to Tenant in accordance with applicable
law.

                    (d)      To the extent permitted by law the right and power to enter the Premises and remove
therefrom all persons and property, to store such property in a public warehouse or elsewhere at
the cost of and for the account of Tenant, and to sell such property and apply such proceeds
therefrom pursuant to applicable California law. Landlord may from time to time sublet the
Premises or any part thereof for such term or terms (which may extend beyond the term of this
Lease) and at such rent and such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each subletting, (i) Tenant
shall be immediately liable to pay Landlord, in addition to indebtedness
other than rent due hereunder, the cost of such subletting, including, but not limited to,
reasonable attorneys’ fees, and any real estate commissions actually paid, and the cost of such
alterations and repairs incurred by Landlord and the amount, if any, by which the rent hereunder
for the period of such subletting (to the extent such period does not exceed the term hereof)
exceeds the amount to be paid as rent for the Premises for such period or (ii) at the option of
Landlord, rents received from such subletting shall be applied first to payment of indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs of such
subletting and of such alterations and repairs; third to payment of rent due and unpaid hereunder;
and the residue, if any, shall be held by Landlord and applied in payment of future rent as the
same becomes due hereunder. If Tenant has been credited with any rent to be received by such
subletting under option (i) and such rent shall not be promptly paid to Landlord by the
subtenant(s), or if such rentals received from such subletting under option (ii) during any month
be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly. For all purposes
set forth in this subparagraph d. No possession of the Premises by Landlord shall be construed as
an election on its part to terminate this Lease unless a written notice of such intention be given
to Tenant. Notwithstanding any such subletting without termination, Landlord may at any time
hereafter elect to terminate this Lease for such previous breach.

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                    (e)      The right to have a receiver appointed for Tenant upon application by Landlord, to take
possession of the Premises and to apply any rental collected from the Premises and to exercise all
other rights and remedies granted to Landlord pursuant to subparagraph d above.

23.      ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time during the term of
this Lease and if Tenant shall abandon, vacate or surrender said Premises, or be dispossessed by
the process of law, or otherwise, any personal property belonging to Tenant and left on the
Premises shall be deemed to be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord.

24.      DESTRUCTION. In the event the Premises are destroyed in whole or in part from any cause,
except for routine maintenance and repairs and incidental damage and destruction caused from
vandalism and accidents for which Tenant is responsible for under Paragraph 10, Landlord may, at
its option:

                    (a)      Rebuild or restore the Premises to their condition prior to the damage or destruction, or

                    (b)      Terminate this Lease.

          If Landlord does not give Tenant notice in writing within thirty (30) days from the
destruction of the Premises of its election to either rebuild and restore them, or to terminate
this Lease, Landlord shall be deemed to have elected to rebuild or restore them, in which event
Landlord agrees, at its expense, promptly to rebuild or restore the Premises to their condition
prior to the damage or destruction. Tenant shall be entitled to a reduction in rent while such
repair is being made in the proportion that the area of the Premises rendered untenantable by
such damage bears to the total area of the Premises. If Landlord initially estimates that the
rebuilding or restoration will exceed 180 days or If Landlord does not complete the rebuilding or
restoration within one hundred eighty (180) days following the date of destruction (such period of
time to be extended for delays caused by the fault or neglect of Tenant or because of Acts of God,
acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy
weather, inability to obtain materials, supplies or fuels, acts of contractors or subcontractors,
or delay of the contractors or subcontractors due to such causes or other contingencies beyond the
control of Landlord), then Tenant shall have the right to terminate this Lease by giving fifteen
(15) days prior written notice to Landlord. Notwithstanding anything herein to the contrary,
Landlord’s obligation to rebuild or restore shall be limited to the building and interior
improvements constructed by Landlord as they existed as of the commencement date of the Lease and
shall not include restoration of Tenant’s trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the Premises, which Tenant shall forthwith
replace or fully repair at Tenant’s sole cost and expense provided this Lease is not cancelled
according to the provisions above.

          Unless this Lease is terminated pursuant to the foregoing provisions, this Lease shall remain
in full force and effect. Tenant hereby expressly waives the provisions of Section 1932,
Subdivision 2 in Section 1933, Subdivision 4 of the California Civil Code.

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          In the event that the building in which the Premises are situated is damaged or destroyed to
the extent of not less than 331/3% of the replacement cost thereof, Landlord
may elect to terminate this Lease, whether the Premises be insured or not. Notwithstanding
anything to the contrary herein, Landlord may terminate this Lease in the event of an uninsured
event or if insurance proceeds are insufficient to cover 100% of the rebuilding costs net of the
deductible.

25.      EMINENT DOMAIN. If all or any part of the Premises shall be taken by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu thereof, this Lease
shall terminate as to any portion of the Premises so taken or conveyed on the date when title vests
in the condemnor, and Landlord shall be entitled to any and all payment, income, rent, award, or
any interest therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the value of any
unexpired term of this Lease. Notwithstanding the foregoing paragraph, any compensation
specifically awarded Tenant for loss of business, Tenant’s personal property, moving cost or loss
of goodwill, shall be and remain the property of Tenant.

          If (i) any action or proceeding is commenced for such taking of the Premises or any part
thereof, or if Landlord is advised in writing by any entity or body having the right or power of
condemnation of its intention to condemn the premises or any portion thereof, or (ii) any of the
foregoing events occur with respect to the taking of any space in the Complex not lease hereby, or
if any such spaces so taken or conveyed in lieu of such taking and Landlord shall decide to
discontinue the use and operation of the Complex, or decide to demolish, alter or rebuild the
Complex, then, in any of such events Landlord shall have the right to terminate this Lease by
giving Tenant written notice thereof within sixty (60) days of the date of receipt of said written
advice, or commencement of said action or proceeding, or taking conveyance, which termination shall
take place as of the first to occur of the last day of the calendar month next following the
month in which such notice is given or the date on which title to the Premises shall vest in
the condemnor.

          In the event of such a partial taking or conveyance of the Premises, if the portion of the
Premises taken or conveyed is so substantial that the Tenant can no longer reasonably conduct its
business, Tenant shall have the privilege of terminating this Lease within sixty (60) days from the
date of such taking or conveyance, upon written notice to Landlord of its intention to do so, and
upon giving of such notice this Lease shall terminate on the last day of the calendar month next
following the month in which such notice is given, upon payment by Tenant of the rent from the date
of such taking or conveyance to the date of termination.

          If a portion of the Premises be taken by condemnation or conveyance in lieu thereof and
neither Landlord nor Tenant shall terminate this Lease as provided herein, this Lease shall
continue in full force and effect as to the part of the Premises not so taken or conveyed, and the
rent herein shall be apportioned as of the date of such taking or conveyance so that thereafter the
rent to be paid by Tenant shall be in the ratio that the are of the portion of the Premises not so
taken or conveyed bears to the total area of the Premises prior to such taking.

26.      SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of the Complex or any
interest therein, by any owner of the reversion then constituting Landlord, the transferor shall
thereby be released from any further liability upon any of the terms,

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covenants or conditions
(express or implied) herein contained in favor of Tenant, so long as the balance of the Security
Deposit is also transferred, and in such event, insofar as such transfer is concerned, Tenant
agrees to look solely to the responsibility of the successor in interest of such transferor in and
to the Complex and this Lease. This Lease shall not be affected by any such sale or conveyance,
and Tenant agrees to attorn to the successor in interest of such transferor.

27.      ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of Landlord in the land and
buildings in which the leased Premises are located (whether such interest of Landlord is a fee
title interest or a leasehold interest) is encumbered by deed of trust, and such interest is
acquired by the lender or any third party through judicial foreclosure or by exercise of a power of
sale at private trustee’s foreclosure sale, Tenant hereby agrees to attorn to the purchaser at any
such foreclosure sale and to recognize such purchaser as the Landlord under this Lease. In the
event the lien of the deed of trust securing the loan from a Lender to Landlord is prior and
paramount to the Lease, this Lease shall nonetheless continue in full force and effect for the
remainder of the unexpired term hereof, at the same rental herein reserved and upon all the other
terms, conditions and covenants herein contained.

28.      HOLDING OVER. Any holding over by Tenant after expiration or other termination of the term of
this Lease with the written consent of Landlord delivered to Tenant shall not constitute a renewal
or extension of the Lease or give Tenant any rights in or to the leased Premises except as
expressly provided in this Lease. Any holding over after the expiration or other termination of
the term of this Lease, with the consent of Landlord, shall be construed to be a tenancy from month
to month on the same terms and conditions herein specified insofar as applicable except that the
monthly Basic Rent shall be increased to an amount equal to one
hundred fifty (150%) percent of the monthly Basic Rent required during the last month of the Lease
term.

29.      CERTIFICATE OF ESTOPPEL. Tenant shall at any time upon not less than ten (10) business days’
prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in
writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, or specifying such defaults, if any, are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the Premises. Tenant’s
failure to deliver such statement within such time shall be conclusive upon Tenant that this Lease
is in full force and effect, without modification except as may be represented by Landlord; that
there are no uncured defaults in Landlord’s performance, and that not more than one month’s rent
has been paid in advance.

30.      CONSTRUCTION CHANGES. It is understood that the description of the Premises and the location
of ductwork, plumbing and other facilities therein are subject to such minor changes as Landlord or
Landlord’s architect determines to be desirable in the course of construction of the Premises, and
no such changes, or any changes in plans for any other portions of the Complex shall affect this
Lease or entitle Tenant to any reduction of rent hereunder or result in any liability of Landlord
to Tenant. Landlord does not guarantee the accuracy of any drawings supplied to Tenant and
verification of the accuracy of such drawings rests with Tenant.

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31.      RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions of this Lease to be
performed or observed by Tenant shall be performed or observed by Tenant at Tenant’s sole cost and
expense and without any reduction of rent. If Tenant shall fail to pay any sum of money, or other
rent, required to be paid by it hereunder and such failure shall continue for five (5) days after
written notice by Landlord, or shall fail to perform any other term or covenant hereunder on its
part to be performed, and such failure shall continue for thirty (30) days after written notice
thereof by Landlord, Landlord, without waiving or releasing Tenant from any obligation of Tenant
hereunder, may, but shall not be obligated to, make any such payment or perform any such other term
or covenant on Tenant’s part to be performed. All sums so paid by Landlord and all necessary costs
of such performances by Landlord together with interest thereon at the rate of the prime rate of
interest per annum as quoted by the Bank of America from the date of such payment or performance by
Landlord, shall be paid (and Tenant covenants to make such payment) to Landlord on demand by
Landlord, and Landlord shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of nonpayment by Tenant as in the case of failure by Tenant in the
payment of rent hereunder.

32.      ATTORNEYS’ FEES.

          (A)      In the event that either Landlord or Tenant should bring suit for the possession of the
Premises, for the recovery of any sum due under this Lease, or because of the breach of any
provision of this Lease or for any other relief against the other party hereunder, then all costs
and expenses, including reasonable attorneys’ fees, incurred by the prevailing party therein shall
be
paid by the other party, which obligation on the party of the other party shall be deemed to
have accrued on the date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgement.

          (B)      Should Landlord be named as a defendant in any suit brought against Tenant in connection
with or arising out of Tenant’s occupancy hereunder, Tenant shall pay to Landlord its costs and
expenses incurred in such suit, including a reasonable attorney’s fee.

33.      WAIVER. The waiver by either party of the other party’s failure to perform or observe any
term, covenant or condition herein contained to be performed or observed by such waiving party
shall not be deemed to be a waiver of such term, covenant or condition or of any subsequent failure
of the party failing to perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the parties hereto during
the term hereof shall be deemed a waiver of, or in way affect, the right of either party to insist
upon performance and observance by the other party in strict accordance with the terms hereof.

34.      NOTICES. All notices, demands, requests, advices or designations which may be or are required
to be given by either party to the other hereunder shall be in writing. All notices, demands,
requests, advices or designations by Landlord to Tenant shall be sufficiently given, made or
delivered if personally served on Tenant by leaving the same at the Premises or if sent by United
States certified or registered mail, postage prepaid, addressed to Tenant at the Premises. All
notices demands, requests, advices or designations by Tenant to Landlord shall be sent by United
States certified or registered mail, postage prepaid, addressed to Landlord at its offices at 2560
Mission College Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request,

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demand, advice or
designation referred to in this paragraph shall be deemed received on the date of the personal
service or mailing thereof in the manner herein provided, as the case may be.

35.      EXAMINATION OF LEASE. Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for a lease, and this instrument is not effective as
a lease or otherwise until its execution and delivery by both Landlord and Tenant.

36.      DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform
obligations required of Landlord within a reasonable time, but in no event earlier than thirty (30)
days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have heretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligations; provided, however,
that if the nature of Landlord’s obligations is such that more than thirty (30) days are required
for performance, then Landlord shall not be default if Landlord commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to completion.

37.      CORPORATE AUTHORITY. If Tenant is a corporation, (or a partnership) each individual executing
this Lease on behalf of said corporation (or partnership) represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation
(or partnership) in accordance with the by-laws of said corporation (or partnership in accordance
with the partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant shall, within thirty
(30) days after execution of this Lease, deliver to Landlord a certified copy of the resolution of
the Board of Directors of said corporation authorizing or ratifying the execution of this Lease.

38.      [RESERVED]

39.      LIMITATION OF LIABILITY. In consideration of the benefits accruing hereunder, Tenant and all
successors and assigns covenant and agree that, in the event of any actual or alleged failure,
breach or default hereunder by Landlord:

          (i)      the sole and exclusive remedy shall be against Landlord’s interest in the Premises leased
herein;

          (ii)      no partner of Landlord shall be sued or named as a party in any suit or action (except as
may be necessary to secure jurisdiction of the partnership)

          (iii)      no service of process shall be made against any partner of Landlord (except as may be
necessary to secure jurisdiction of the partnership)

          (iv)      no partner of Landlord shall be required to answer or otherwise plead to any service of
process;

          (v)      no judgment will be taken against any partner of Landlord;

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          (vi)      any judgment taken against any partner of Landlord may be vacated and set aside at any
time without hearing;

          (vii)      no writ of execution will ever be levied against the assets of any partner of Landlord;

          (viii)      these covenants and agreements are enforceable both by Landlord and also by any partner
of Landlord.

          Tenant agrees that each of the foregoing covenants and agreements shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by statute or at common
law.

40.      MISCELLANEOUS AND GENERAL PROVISIONS

                    (a)      Tenant shall not, without the written consent of Landlord, use the name of the building
for any purpose other than as the address of the business conducted by Tenant in the Premises.

                    (b)      This Lease shall in all respects be governed by and construed in accordance with the laws
of the State of California. If any provision of this Lease shall be
invalid, unenforceable or ineffective for any reason whatsoever, all other provisions hereof
shall be and remain in full force and effect.

                    (c)      The term “Premises” includes the space leased hereby and any improvements now or hereafter
installed therein or attached thereto. The term “Landlord” or any pronoun used in place thereof
includes the plural as well as the singular and the successors and assigns of Landlord. The term
“Tenant” or any pronoun used in place thereof includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations and their and each of their
respective heirs, executors, administrators, successors and permitted assigns, according to the
context hereof, and the provisions of this Lease shall inure to the benefit of and bind such heirs,
executors, administrators, successors and permitted assigns.

          The term “person” includes the plural as well as the singular and individuals, firms,
associations, partnerships and corporations. Words used in any gender include other genders. If
there be more than one Tenant the obligations of Tenant hereunder are joint and several. The
paragraph headings of this Lease are for convenience of reference only and shall have no effect
upon the construction or interpretation of any provision hereof.

                    (d)      Time is of the essence of this Lease and of each and all of its provisions.

                    (e)      At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge
and deliver to Landlord, within ten (10) days after written demand from Landlord to Tenant, any
quitclaim deed or other document required by any reputable title company, licensed to operate in
the State of California, to remove the cloud or encumbrance created by this Lease from the real
property of which Tenant’s Premises are a part.

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                    (f)      This instrument along with any exhibits and attachments hereto constitutes the entire
agreement between Landlord and Tenant relative to the Premises and this agreement and the exhibits
and attachments may be altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives relative to the leasing
of the Premises are merged in or revoked by this agreement.

                    (g)      Neither Landlord nor Tenant shall record this Lease or a short form memorandum hereof
without the consent of the other.

                    (h)      Tenant further agrees to execute any amendments required by a lender to enable Landlord to
obtain financing, so long as Tenant’s rights hereunder are not substantially affected.

                    (i)      Paragraphs 43 through 54 are added hereto and are included as a part of this lease.

                    (j)      Clauses, plats and riders, if any, signed by Landlord and Tenant and endorsed on or
affixed to this Lease are a part hereof.

                    (k)      Tenant covenants and agrees that no diminution or shutting off of light, air or view by
any structure which may be hereafter erected (whether or not by Landlord) shall in any way affect
his Lease, entitle Tenant to any reduction of rent hereunder or result in any liability of Landlord
to Tenant.

41.      BROKERS. Tenant warrants that it had dealings with only the following real estate brokers or
agents in connection with the negotiation of this Lease: none

and that it knows of no other real estate broker or agent who is entitled to a commission in
connection with this Lease.

42.      SIGNS. No sign, placard, picture, advertisement, name or notice shall be inscribed, displayed
or printed or affixed on or to any part of the outside of the Premises or any exterior windows of
the Premises without the written consent of Landlord first had and obtained and Landlord shall have
the right to remove any such sign, placard, picture, advertisement, name or notice without notice
to and at the expense of Tenant. If Tenant is allowed to print or affix or in any way place a sign
in, on, or about the Premises, upon expiration or other sooner termination of this Lease, Tenant at
Tenant’s sole cost and expense shall both remove such sign and repair all damage in such a manner
as to restore all aspects of the appearance of the Premises to the condition prior to the placement
of said sign.

          All approved signs or lettering on outside doors shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person approved of by Landlord.

          Tenant shall not place anything or allow anything to be placed near the glass of any window,
door partition or wall which may appear unsightly from outside the Premises.

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          IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the day
and year last written below.

	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:
	WESTPORT JOINT VENTURE	 	DIGITAL FINISH, INC.
	a California joint venture	 	a California corporation
	 
	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	/s/ John Arrillaga
	 	By
	 	/s/ Jayne Spiegelman
	 

	 	 
	 	 	 	 
	 

	 	John Arrillaga, Trustee	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 7/28/99	 	Title: CEO
	 
	 	 	 	 	 	 
	PEERY PRIVATE INVESTMENT COMPANY-WP, L.P.,	 	 	 	 
	a California limited partnership	 	Type or Print Name: Jayne Spiegelman
	 
	 	 	 	 	 	 
	By	 	/s/ Richard T. Peery	 	Date: July 28, 1999
	 

	 	 	 	 	 	 
	 

	 	Richard T. Peery, Trustee of the Richard T. Peery	 	 	 	 
	 

	 	Separate Property Trust dated 7/20/77, as its	 	 	 	 
	 

	 	General Partner	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 7/29/99	 	 	 	 
	 
	 	 	 	 	 	 
	PEERY PUBLIC INVESTMENT COMPANY-WP L.P.,	 	 	 	 
	a California limited partnership	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	/s/
Richard T. Peery 

	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Richard T. Peery, Trustee of the Richard T. Peery	 	 	 	 
	 

	 	Separate Property Trust dated 7/20/77, as its	 	 	 	 
	 

	 	General Partner	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 7/29/99	 	 	 	 

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Paragraphs 43 through 55 to Lease Agreement dated July 5, 1999, By and Between Westport Joint
Venture, a California joint venture, as Landlord, and Digital Finish, Inc., a California
corporation, as Tenant for 22,694± Square Feet of Space Located at 2800 Bridge Parkway, Redwood
City, California.

43. BASIC RENT: In accordance with Paragraph 4A herein, the total aggregate sum of FOUR
MILLION ONE HUNDRED ONE THOUSAND NINE HUNDRED FIFTY FOUR AND NO/100 DOLLARS ($4,101,954.00), shall
be payable as follows:

     On August 1, 1999, the sum of THIRTY FOUR THOUSAND FORTY ONE AND NO/100 DOLLARS ($34,041.00)
shall be due, and a like sum due on the first day of each month thereafter, through and including
October 1, 1999.

     On November 1, 1999, the sum of FORTY TWO THOUSAND FIVE HUNDRED FIFTY TWO AND NO/100 DOLLARS
($42,552.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including January 1, 2000.

     On February 1, 2000, the sum of FIFTY ONE THOUSAND SIXTY THREE AND NO/100 DOLLARS ($51,063.00)
shall be due, and a like sum due on the first day of each month thereafter, through and including
April 1, 2000.

     On May 1, 2000, the sum of FIFTY NINE THOUSAND FIVE HUNDRED SEVENTY FOUR AND NO/100 DOLLARS
($59,574.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including July 1, 2000.

     On August 1, 2000, the sum of SEVENTY THOUSAND THREE HUNDRED FIFTY ONE AND 40/100 DOLLARS
($70,351.40) shall be due, and a like sum due on the first day of each month thereafter, through
and including July 1, 2001.

     On August 1, 2001, the sum of SEVENTY TWO THOUSAND SIX HUNDRED TWENTY AND 80/100 DOLLARS
($72,620.80) shall be due, and a like sum due on the first day of each month thereafter, through
and including July 1, 2002.

     On August 1, 2002, the sum of SEVENTY FOUR THOUSAND EIGHT HUNDRED NINETY AND 20/100 DOLLARS
($74,890.20) shall be due, and a like sum due on the first day of each month thereafter, through
and including July 1, 2003.

     On August 1, 2003, the sum of SEVENTY SEVEN THOUSAND ONE HUNDRED FIFTY NINE AND 60/100 DOLLARS
($77,159.60) shall be due, and a like sum due on the first day of each month thereafter, through
and including July 1, 2004; or until the entire aggregate sum of FOUR MILLION ONE HUNDRED ONE
THOUSAND NINE HUNDRED FIFTY FOUR AND NO/100 DOLLARS ($4,101,954.00) has been paid.

44. “AS-IS” BASIS: Subject only to Paragraph 45 and to Landlord making the improvements
shown on Exhibit B to be attached hereto, it is hereby agreed that the Premises leased
hereunder is leased strictly on an “as-is” basis and in its present condition, and in the
configuration as shown on Exhibit B to be attached hereto, and by reference made a part
hereof. Except as noted herein, it is specifically agreed between the parties that after Landlord
makes the

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interior improvements as shown on Exhibit B, Landlord shall not be required to make, nor be
responsible for any cost, in connection with any repair, restoration, and/or improvement to the
Premises in order for this Lease to commence, or thereafter, throughout the Term of this Lease.
Notwithstanding anything to the contrary within this Lease, Landlord makes no warranty or
representation of any kind or nature whatsoever as to the condition or repair of the Premises, nor
as to the use or occupancy which may be made thereof.

45. TENANT INTERIOR IMPROVEMENTS: Landlord shall, at its sole cost and expense, construct
certain interior improvements (the “Tenant Improvements”) in the Premises, as shown on Exhibit
B to be attached to the Lease and Landlord agrees to deliver the Premises leased hereunder to
Tenant, at Landlord’s expense, in the configuration shown in Red on Exhibit B to be
attached hereto and in good workmanlike condition. Notwithstanding anything to the contrary above,
it is specifically understood and agreed that Landlord shall be required to furnish only a standard
air conditioning/heating system, normal electrical outlets, standard fire sprinkler systems,
standard bathroom, standard lobby, 2’ x 4’ suspended acoustical tile drop ceiling throughout the
entire space leased, carpeting and/or vinyl-coated floor tile, and standard office partitions and
doors, as shown on Exhibit B to be attached hereto; provided however, that any special HVAC
and/or plumbing and/or electrical requirements over and above that normally supplied by Landlord
shall be 100 percent the responsibility of and be paid for 100 percent by Tenant.

     It is further agreed that Tenant shall furnish Landlord with Tenant’s required specifications
and a preliminary space plan showing the layout of the improvements to be constructed in the
Premises by July 22, 1999. At that time, Landlord shall have the final interior plans drawn by
Landlord’s architect. All of the plans and specifications shall be Exhibit B to this
Lease. If said preliminary plans and specifications for any items affecting the interior
improvements to be constructed in the building are not received by Landlord for Landlord’s approval
(which approval shall not be unreasonably withheld) by July 22, 1999, then it is agreed that,
notwithstanding anything to the contrary in this Lease, this Lease and Tenant’s obligation to
perform all terms, covenants and conditions of this Lease shall commence , regardless of whether or
not the building and interior improvements are completed on August 1, 1999, and Landlord shall
complete construction of the interior improvements as soon as reasonably possible thereafter.

     Notwithstanding anything to the contrary, it is agreed that in the event Tenant makes changes,
additions, or modifications to the plans and specifications to be constructed by Landlord as set
forth herein, or improvements are installed for Tenant in excess of those to be provided Tenant by
Landlord as set forth on Exhibit B, any increased cost(s) resulting from said changes,
additions, and/or modifications and/or improvements in excess of those to be provided Tenant shall
be contracted for with Landlord and paid for one hundred percent (100%) by Tenant.

     The interior shall be constructed in accordance with Exhibit B of the Lease, it being
agreed, however, that if the interior improvements constructed by Landlord relating thereto, do not
conform exactly to the plans and specifications as set forth in the Lease, and the general
appearance, structural integrity, and Tenant’s uses and occupancy of the Premises and interior
improvements relating thereto are not materially or unreasonably affected by such deviation, it is

26

 

agreed that the commencement date of the Lease, and Tenant’s obligation to pay rental, shall
not be affected, and Tenant hereby agrees, in such event, to accept the Premises and interior
improvements as constructed by Landlord.

     Tenant shall have thirty (30) days after the Commencement Date to provide Landlord with a
“punch list” pertaining to Landlord’s work with respect to Tenant’s interior improvements. As soon
as reasonably possible thereafter, Landlord, or one of Landlord’s representatives (if so approved
by Landlord), and Tenant shall conduct a joint walk-through of the Premises (if Landlord so
requires), and inspect such Tenant Improvements, using their best efforts to agree on the
incomplete or defective construction related to the Tenant Improvements installed by Landlord.
After such inspection has been completed, Landlord shall prepare, and both parties shall sign, a
list of all “punch list” items which the parties reasonably agree are to be corrected by Landlord
(but which shall exclude any damage or defects caused by Tenant, its employees, agents or parties
Tenant has contracted with to work on the Premises). Landlord shall have thirty (30) days
thereafter (or longer if necessary, provided Landlord is diligently pursuing the completion of the
same) to complete, at Landlord’s expense, the repairs on the “punch list” without the Commencement
Date of the Lease and Tenant’s obligation to pay Rental thereunder being affected. This Paragraph
shall be of no force and effect if Tenant shall fail to give any such notice to Landlord within
thirty (30) days after the Commencement Date of this Lease.

46. CONSENT: Whenever the consent of one party to the other is required hereunder, such
consent shall not be unreasonably withheld.

47. CHOICE OF LAW; SEVERABILITY. This Lease shall in all respects be governed by and
construed in accordance with the laws of the State of California. If any provisions of this Lease
shall be invalid, unenforceable, or ineffective for any reason whatsoever, all other provisions
hereof shall be and remain in full force and effect.

48. AUTHORITY TO EXECUTE. The parties executing this Lease Agreement hereby warrant and
represent that they are properly authorized to execute this Lease Agreement and bind the parties on
behalf of whom they execute this Lease Agreement and to all of the terms, covenants and conditions
of this Lease Agreement as they relate to the respective parties hereto.

49. ASSESSMENT CREDITS: The demised property herein may be subject to a special assessment
levied by the City of Redwood City as part of an Improvement District. As a part of said special
assessment proceedings (if any), additional bonds were or may be sold and assessments were or may
be levied to provide for construction contingencies and reserve funds. Interest shall be earned on
such funds created for contingencies and on reserve funds which will be credited for the benefit of
said assessment district. To the extent surpluses are created in said district through unused
contingency funds, interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments otherwise due
against the Leased Premises, Tenant shall pay to Landlord, as additional rent if, and at the time
of any such credit of surpluses, an amount equal to all such surpluses so credited. For example:
if (i) the property is subject to an annual assessment of $1,000.00, and (ii) a surplus of $200.00
is credited towards the current year’s assessment which reduces the assessment amount shown on the
property tax bill from $1,000.00 to $800.00, Tenant

27

 

shall, upon receipt of notice from Landlord, pay to Landlord said $200.00 credit as Additional
Rent.

50. ASSIGNMENT AND SUBLETTING (CONTINUED):

     A. Landlord hereby acknowledges that, during the first thirty six months of the Lease Term,
Tenant may desire to sublease a portion of the Leased Premises. Provided Tenant is not in default
of this Lease, and subject to Paragraph 49C below, Landlord agrees that it will not exercise its
right, as provided for in Paragraph 19, to terminate the Lease as a result of a request(s) by
Tenant to sublease less than a total of fifty percent (50%) of the Premises to one or more
subtenants for a sublease term(s) not to extend beyond July 31, 2002. In such event, Landlord
agrees to issue Landlord’s standard consent to said sublease, subject to (a) Tenant submitting to
Landlord a copy of said sublease (prior to said sublease commencing), (b) Landlord, Tenant and
Subtenant thereafter executing Landlord’s standard Consent to Sublease agreement and (c) Landlord
receives payment from Tenant of Landlord’s costs for processing said Sublease Consent
prior to said sublease commencing.

     B. Permitted Transfers: In addition to and notwithstanding anything to the contrary
in Paragraph 19 of this Lease, Landlord hereby agrees to consent to Tenant’s assigning or
subletting said Lease to: (i) any parent or subsidiary corporation, affiliate, or corporation with
which Tenant merges or consolidates, provided that the net worth of said parent or subsidiary
corporation, affiliate, or said corporation has a net worth equal to or greater than the net worth
of Tenant (a) at the time of Lease execution or (b) at the time of such assignment, merger, or
consolidation (whichever is greater); or (ii) any third party or entity to whom Tenant sells all or
substantially all of its assets; provided, that the net worth of the resulting or acquiring
corporation has a net worth after the merger, consolidation or acquisition equal to or greater than
the net worth of Tenant (a) at the time of Lease execution or (b) at the time of such merger,
consolidation or acquisition (whichever is greater) (collectively “Permitted Transfers”). No such
Permitted Transfer will release the Tenant from its liability and responsibility under this Lease
to the extent Tenant continues in existence following such transaction. Notwithstanding the above,
Tenant shall be required to (a) give Landlord written notice prior to such assignment or subletting
to any party as described in (i) and (ii) above, (b) execute Landlord’s consent document prepared
by Landlord reflecting the assignment or subletting and (c) pay Landlord’s costs for processing
said Consent prior to the effective date of said assignment or sublease.

     C. Notwithstanding the foregoing, Landlord and Tenant agree that it shall not be unreasonable
for Landlord to refuse to consent to a proposed assignment, sublease or other transfer (“Proposed
Transfer”) if the Premises or ant other portion of the Property would become subject to additional
or different Government Requirements as a direct or indirect consequence of the Proposed Transfer
and/or the Proposed Transferee’s use and occupancy of the Premises and the Property. However,
Landlord may, in its sole discretion, consent to such a Proposed Transfer where Landlord is
indemnified by Tenant and (i) Subtenant or (ii) Assignee, in form and substance satisfactory to
Landlord’s counsel, by Tenant and/or the Proposed Transferee from and against any and all costs,
expenses, obligations and liability arising out of the Proposed Transfer and/or the Proposed
Transferee’s use and occupancy of the Premises and the Property.

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     D. Any and all sublease agreement(s) between Tenant and any and all subtenant(s) (which
agreements must be consented to by Landlord, pursuant to the requirements of this Lease) shall
contain the following language:

     “If Landlord and Tenant jointly and voluntarily elect, for any reason whatsoever, to terminate
the Master Lease prior to the scheduled Master Lease termination date, then this Sublease (if then
still in effect) shall terminate concurrently with the termination of the Master Lease. Subtenant
expressly acknowledges and agrees that (1) the voluntary termination of the Master Lease by
Landlord and Tenant and the resulting termination of this Sublease shall not give Subtenant any
right or power to make any legal or equitable claim against Landlord, including without limitation
any claim for interference with contract or interference with prospective economic advantage, and
(2) Subtenant hereby waives any and all rights it may have under law or at equity against Landlord
to challenge such an early termination of the Sublease, and unconditionally releases and relieves
Landlord, and its officers, directors, employees and agents, from any and all claims, demands,
and/or causes of action whatsoever (collectively, “Claims”), whether such matters are known or
unknown, latent or apparent, suspected or unsuspected, foreseeable or unforeseeable, which
Subtenant may have arising out of or in connection with any such early termination of this
Sublease. Subtenant knowingly and intentionally waives any and all protection which is or may be
given by Section 1542 of the California Civil Code which provides as follows: “A general release
does not extend to claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially affected his settlement
with debtor.

     The term of this Sublease is therefore subject to early termination. Subtenant’s initials
here below evidence (a) Subtenant’s consideration of and agreement to this early termination
provision, (b) Subtenant’s acknowledgment that, in determining the net benefits to be derived by
Subtenant under the terms of this Sublease, Subtenant has anticipated the potential for early
termination, and (c) Subtenant’s agreement to the general waiver and release of Claims above.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Initials:
	 	 	 	 	 	Initials:
	 	 	”	 	 
	 

	 	 	 	 

Subtenant
	 	 	 	 	 	 

Tenant
	 	 
	 	 

51. BANKRUPTCY AND DEFAULT: Paragraph 22 is modified to provide that with respect to
non-monetary defaults not involving Tenant’s failure to pay Basic Rent or Additional Rent, Tenant
shall not be in default of any non-monetary obligation if (i) more than thirty (30) days is
required to cure such non-monetary default, and (ii) Tenant commences cure of such default as soon
as reasonably practicable after receiving written notice of such default from Landlord and
thereafter continuously and with due diligence prosecutes such cure to completion.

52. ABANDONMENT: Paragraph 23 is modified to provide that Tenant shall not be in default
under the Lease if it leaves all or any part of Premises vacant so long as (i) Tenant is performing
all of its other obligations under the Lease including the obligation to pay Basic Rent and
Additional Rent (ii) Tenant provides on-site security during normal business hours for those parts
of the Premises left vacant, (iii) such vacancy does not materially and adversely affect the
validity or coverage of any policy of insurance carried by Landlord with respect to the Premises,
and (iv) the utilities and heating and ventilation system are operated and maintained to the extent
necessary to prevent damage to the Premises or its systems.

29

 

53. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect to the
existence or use of “Hazardous Materials” (as defined herein) on, in, under or about the Premises
and real property located beneath said Premises and the common areas of the Complex (hereinafter
collectively referred to as the “Property”):

     A. As used herein, the term “Hazardous Materials” shall mean any material, waste, chemical,
mixture or byproduct which is or hereafter is defined, listed or designated under Environmental
Laws (defined below) as a pollutant, or as a contaminant, or as a toxic or hazardous substance,
waste or material, or any other unwholesome, hazardous, toxic, biohazardous, or radioactive
material, waste, chemical, mixture or byproduct, or which is listed, regulated or restricted by any
Environmental Law (including, without limitation, petroleum hydrocarbons or any distillates or
derivatives or fractions thereof, polychlorinated biphenyls, or asbestos). As used herein, the
term “Environmental Laws” shall mean any applicable Federal, State of California or local
government law (including common law), statute, regulation, rule, ordinance, permit, license,
order, requirement, agreement, or approval, or any determination, judgment, directive, or order of
any executive or judicial authority at any level of Federal, State of California or local
government (whether now existing or subsequently adopted or promulgated) relating to pollution or
the protection of the environment, ecology, natural resources, or public health and safety.

     B. Tenant shall obtain Landlord’s written consent, which may be withheld in Landlord’s
discretion, prior to the occurrence of any Tenant’s Hazardous Materials Activities (defined below);
provided, however, that Landlord’s consent shall not be required for normal use in compliance with
applicable Environmental Laws of customary household and office supplies (Tenant shall first
provide Landlord with a list of said materials use), such as mild cleaners, lubricants and copier
toner. As used herein, the term “Tenant’s Hazardous Materials Activities” shall mean any and all
use, handling, generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the Property, in
connection with Tenant’s use of the Property, or by Tenant or by any of Tenant’s agents, employees,
contractors, vendors, invitees, visitors or its future subtenants or assignees. Tenant agrees that
any and all Tenant’s Hazardous Materials Activities shall be conducted in strict, full compliance
with applicable Environmental Laws at Tenant’s expense, and shall not result in any contamination
of the Property or the environment. Tenant agrees to provide Landlord with prompt written notice
of any spill or release of Hazardous Materials at the Property during the term of the Lease of
which Tenant becomes aware, and further agrees to provide Landlord with prompt written notice of
any violation of Environmental Laws in connection with Tenant’s Hazardous Materials Activities of
which Tenant becomes aware. If Tenant’s Hazardous Materials Activities involve Hazardous Materials
other than normal use of customary household and office supplies, Tenant also agrees at Tenant’s
expense: (i) to install such Hazardous Materials monitoring, storage and containment devices as
Landlord reasonably deems necessary (Landlord shall have no obligation to evaluate the need for any
such installation or to require any such installation); (ii) provide Landlord with a written
inventory of such Hazardous Materials, including an update of same each year upon the anniversary
date of the Commencement Date of the Lease (“Anniversary Date”); and (iii) on each Anniversary
Date, to retain a qualified environmental consultant, acceptable to Landlord, to evaluate whether
Tenant is in compliance with all applicable Environmental Laws with respect to Tenant’s Hazardous
Materials Activities. Tenant, at its expense, shall submit to Landlord a report from such

30

 

environmental consultant which discusses the environmental consultant’s findings within two
(2) months of each Anniversary Date. Tenant, at its expense, shall promptly undertake and complete
any and all steps necessary, and in full compliance with applicable Environmental Laws, to fully
correct any and all problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.

     C. Prior to termination or expiration of the Lease, Tenant, at its expense, shall (i) properly
remove from the Property all Hazardous Materials which come to be located at the Property in
connection with Tenant’s Hazardous Materials Activities, and (ii) fully comply with and complete
all facility closure requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and repairing the
Property to the extent damaged by such closure activities, and (y) obtaining from the local Fire
Department or other appropriate governmental authority with jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws. Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and reports prepared,
received or submitted in connection with any such closure activities.

     D. If Landlord, in its sole discretion, believes that the Property has become contaminated as
a result of Tenant’s Hazardous Materials Activities, Landlord in addition to any other
rights it may have under this Lease or under Environmental Laws or other laws, may enter upon the
Property and conduct inspection, sampling and analysis, including but not limited to obtaining and
analyzing samples of soil and groundwater, for the purpose of determining the nature and extent of
such contamination. Tenant shall promptly reimburse Landlord for the costs of such an
investigation, including but not limited to reasonable attorneys’ fees Landlord incurs with respect
to such investigation, that discloses Hazardous Materials contamination for which Tenant is liable
under this Lease. Except as may be required of Tenant by applicable Environmental Laws, Tenant
shall not perform any sampling, testing, or drilling to identify the presence of any Hazardous
Materials at the Property, without Landlord’s prior written consent which may be withheld in
Landlord’s discretion. Tenant shall promptly provide Landlord with copies of any claims, notices,
work plans, data and reports prepared, received or submitted in connection with any sampling,
testing or drilling performed pursuant to the preceding sentence.

     E. Tenant shall indemnify, defend (with legal counsel acceptable to Landlord, whose consent
shall not unreasonably be withheld) and hold harmless Landlord, its employees, assigns, successors,
successors-in-interest, agents and representatives from and against any and all claims (including
but not limited to third party claims from a private party or a government authority), liabilities,
obligations, losses, causes of action, demands, governmental proceedings or directives, fines,
penalties, expenses, costs (including but not limited to reasonable attorneys’, consultants’ and
other experts’ fees and costs), and damages, which arise from or relate to: (i) Tenant’s Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by Tenant prior to the
Commencement Date of the Lease; or (iii) the breach of any obligation of Tenant under this
Paragraph 53 (collectively, “Tenant’s Environmental Indemnification”). Tenant’s Environmental
Indemnification shall include but is not limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and diminution in fair market value of the
Property. Tenant’s Environmental Indemnification shall further include but is not limited to the
obligation to diligently and properly implement to completion, at Tenant’s expense, any and all
environmental investigation, removal, remediation,

31

 

monitoring, reporting, closure activities, or other environmental response action
(collectively, “Response Actions”). Tenant shall promptly provide Landlord with copies of any
claims, notices, work plans, data and reports prepared, received or submitted in connection with
any Response Actions.

     F. Landlord hereby informs Tenant, and Tenant hereby acknowledges, that the Premises and
adjacent properties overlie a former solid waste landfill site commonly known as the Westport
Landfill (“Former Landfill”). Landlord further informs Tenant, and Tenant hereby acknowledges,
that (i) prior testing has detected the presence of low levels of certain volatile and
semi-volatile organic compounds and other contaminants in the groundwater, in the leachate from the
landfilled solid waste, and/or in certain surface waters of the Property, as more fully described
in Section 2.3.2 of the report entitled “Revised Discharge Monitoring Plan, Westport Landfill Site,
Redwood City, California” prepared by Geomatrix Consultants, dated May 1996 (“Discharge Plan”),
(ii) methane gas is or may be generated by the landfilled solid waste (item “i” immediately
preceding and this item ”ii” are hereafter collectively referred to as the “Landfill
Contamination”), and (iii) the Premises and the Former Landfill are subject to the California
Regional Water Quality Control Board’s (“Regional Board”) Waste Discharge Requirements Order No.
94-181 (the “Order”). The Order is attached hereto as Exhibit C. As evidenced by their
initials set forth immediately below, Tenant acknowledges that Landlord has provided Tenant with
copies of the environmental reports listed on Exhibit D, and Tenant acknowledges that
Tenant and Tenant’s experts (if any) have had ample opportunity to review such reports and that
Tenant has satisfied itself as to the environmental conditions of the Property and the suitability
of such conditions for Tenant’s intended use of the Property.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Initials:
	 	/s/
 

	 	 	 	Initials:
	 	/s/
 

	 	 
	 	 
	 

	 	 	 	Tenant
	 	 	 	 	 	Landlord	 	 	 	 

     G. Landlord shall indemnify, defend, and hold harmless Tenant against any and all claims
asserted by third parties (excluding any agents, employees, contractors, vendors, invitees,
visitors, future subtenants and assignees of Tenant, and excluding any other parties related to
Tenant), including all liabilities, judgments, damages, suits, orders, government directives, costs
and expenses in connection with such claims, which arise from (i) the Landfill Contamination, or
(ii) the Order, as may be amended (“Landlord’s Environmental Indemnity”); provided
however that Landlord’s Environmental Indemnity shall be subject to the following
limitations and conditions:

     (1) Landlord’s Environmental Indemnity shall not apply to any economic or consequential
damages suffered by Tenant, including but not limited to loss of business or profits.

     (2) Landlord’s Environmental Indemnity shall not apply, without limitation, to any releases
caused by Tenant’s Hazardous Materials Activities.

     (3) Tenant acknowledges that Landlord must comply with the Order, as may be amended, and with
directives of government authorities including the Regional Board, with respect to the
Contamination and the Former Landfill. Tenant further acknowledges that groundwater monitoring
wells, methane recovery wells and equipment, and other environmental

32

 

control devices are located on and about the Premises and may be modified or added to during
the term of the Lease (collectively, “Environmental Equipment”), and that environmental
investigation, monitoring, closure and post-closure activities (collectively, “Environmental
Activities”) will be performed on the Premises during the term of the Lease. Tenant shall allow
Landlord, and any other party named as a discharger under the Order, as may be amended, and their
respective agents, consultants and contractors, and agents of governmental environmental
authorities with jurisdiction (“Government Representatives”) to enter the Premises to access the
Environmental Equipment and to perform Environmental Activities during the term of the Lease,
provided that Tenant’s use and occupancy of the Premises shall not unreasonably be disturbed.

     (4) Tenant and Landlord shall reasonably cooperate with each other regarding any Environmental
Activities to be performed, and regarding any Environmental Equipment to be installed, maintained,
or removed on the Premises during the term of the Lease.

     (5) Tenant shall be responsible at its expense for repairing any Environmental Equipment
damaged due to the negligence of Tenant or Tenant’s agents, employees, contractors, vendors,
invitees, visitors, future subtenants or assignees (such terms “invitees and “visitors” as used in
this Paragraph 53 shall not include Landlord or any other party named as a discharger under the
Order as may be amended, or any of their respective agents, consultants or contractors, or any
Government Representatives).

     It is agreed that the Tenant’s responsibilities related to Hazardous Materials will survive
the expiration or termination of this Lease and that Landlord may obtain specific performance of
Tenant’s responsibilities under this Paragraph 53.

54. ADDRESS FOR LEASED PREMISES: It is understood that (i) the current address for the
building in which the Premises are located is 2800 Bridge Parkway, Redwood City, California 94065,
and that (ii) the address for the Premises will be assigned by the City of (the “City”) upon
issuance of a building permit for the Interior Improvements as defined herein. In the event the
address assigned to the Premises is changed by the City, said Lease shall thereafter be amended to
reflect the assigned address for the Premises leased hereunder.

55. EARLY ENTRY: Subject to the provisions of Paragraph 45, (“Tenant Interior
Improvements”) Tenant and its agents and contractors shall be permitted to enter the Premises prior
to the Commencement Date for the purpose of installing at Tenant’s sole cost and expense, Tenant’s
trade fixtures and equipment, telephone equipment, security systems and cabling for computers.
Such entry shall be subject to all of the terms and conditions of this Lease, except that Tenant
shall not be required to pay any Rent on account thereof. Any entry or installation work by Tenant
and its agents in the Premises pursuant to this Paragraph 55 shall (i) be undertaken at Tenant’s
sole risk, (ii) not interfere with or delay Landlord’s work in the Premises, and (iii) not be
deemed occupancy or possession of the Premises for purposes of the Lease. Tenant shall indemnify,
defend, and hold Landlord harmless from any and all loss, damage, liability, expense (including
reasonable attorney’s fees), claim or demand of whatsoever character, direct or consequential,
including, but without limiting thereby the generality of the foregoing, injury to or death of
persons and damage to or loss of property arising out of the exercise by Tenant of any early entry
right granted hereunder. In the event Tenant’s work in said Premises delays the
completion of the interior improvements to be provided by Landlord, if any,

33

 

or in the event Tenant has not completed construction of it’s interior improvements by the
scheduled Commencement Date, it is agreed between the parties that this Lease will commence on the
scheduled Commencement Date of August 1, 1999 regardless of the construction status of said
interior improvements completed or to be completed by Tenant or Landlord. It is the intent of the
parties hereto that the commencement of Tenant’s obligation to pay Rent under the Lease not be
delayed by any of such causes or by any other act of Tenant (except as expressly provided herein)
and, in the event it is so delayed, Tenant’s obligation to pay Rent under the Lease shall commence
as of the date it would otherwise have commenced absent delay caused by Tenant.

34

 

Westport 8

AMENDMENT NO. 1

TO LEASE

     THIS AMENDMENT NO. 1 is made and entered into this 11th day of January, 2000, by and
between WESTPORT JOINT VENTURE, a California joint venture as LANDLORD, and SHUTTERFLY.COM, INC., a
California corporation, as TENANT.

RECITALS

     A. WHEREAS, by Lease Agreement dated July 5, 1999 Landlord leased to Tenant approximately
22,694+ square feet of that certain 48,384+ square foot building located at 2800
Bridge Parkway, Suite 101, Redwood City, California, the details of which are more particularly set
forth in said July 5, 1999 Lease Agreement, and

     B. WHEREAS, said Lease was amended by the Commencement Letter dated September 8, 1999 which
changed the Commencement Date of the Lease from August 1, 1999 to September 1, 1999, and changed
the Termination Date from July 31, 2004 to August 31, 2004, and,

     C. WHEREAS, said Lease was amended by Letter Agreement dated December 28, 1999, whereby
Landlord acknowledged Tenant’s name change from “Digital Finish, Inc., a California corporation” to
“Shutterfly.com, Inc., a California corporation” and,

     D. WHEREAS, it is now the desire of the parties hereto to amend the Lease by (i) increasing
the square footage of the Leased Premises, (ii) amending the Basic Rent schedule and Aggregate Rent
accordingly, and (iii) increasing the Security Deposit required under said Lease Agreement as
hereinafter set forth.

AGREEMENT

     NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and
in consideration of the hereinafter mutual promises, the parties hereto do agree as follows:

     1. INCREASED PREMISES: Pursuant to Tenant’s request to construct a room within the
Common Area of the Building, it agreed between the parties that effective January 15, 2000, the
size of the Leased Premises will be increased by 47+ square feet, or from 22,694+
square feet to 22,741+ square feet of space. Total said Premises are more particularly
shown within the area outlined in Red on Exhibit A. The entire parcel, of which the Leased
Premises is a part, is shown within the area outlined in Green on Exhibit A. The
additional 47+ square feet of space is leased on an “as-is” basis, in its present condition
and configuration, as set forth in Blue on Exhibit B attached hereto, with the entire
interior leased Premises shown in Red on Exhibit B. Notwithstanding anything to the
contrary

Initial:                     

35

 

Westport 8

herein, Tenant shall be responsible for constructing said room at Tenant’s sole cost and
expense, and Landlord shall formally consent to said alterations under a separate consent document.

     2. BASIC RENT SCHEDULE: The Basic Rent schedule, as shown in Paragraph 4(A) of the
Lease Agreement, shall be amended as follows:

     Upon execution of this Amendment No. 1, the sum of SEVENTY SEVEN AND 32/100 DOLLARS ($77.32)
shall be due, representing the prorated Basic Rent for the Increased Premises for the period of
January 15, 2000 through January 31, 2000.

     On February 1, 2000, the sum of FORTY TWO THOUSAND SIX HUNDRED NINETY THREE AND NO/100 DOLLARS
($42,693.00) shall be due, representing the Basic Rent due for the month of February 2000.

     On March 1, 2000, the sum of FIFTY ONE THOUSAND TWO HUNDRED FOUR AND NO/100 DOLLARS
($51,204.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including May 1, 2000.

     On June 1, 2000, the sum of FIFTY NINE THOUSAND SEVEN HUNDRED FIFTEEN AND NO/100 DOLLARS
($59,715.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including August 1, 2000.

     On September 1, 2000, the sum of SEVENTY THOUSAND FOUR HUNDRED NINETY SEVEN AND 10/100 DOLLARS
($70,497.10) shall be due, and a like sum due on the first day of each month thereafter, through
and including August 1, 2001.

     On September 1, 2001, the sum of SEVENTY TWO THOUSAND SEVEN HUNDRED SEVENTY ONE AND 20/100
DOLLARS ($72,771.20) shall be due, and a like sum due on the first day of each month thereafter,
through and including August 1, 2002.

     On September 1, 2002, the sum of SEVENTY FIVE THOUSAND FORTY FIVE AND 30/100 DOLLARS
($75,045.30) shall be due, and a like sum due on the first day of each month thereafter, through
and including August 1, 2003.

     On September 1, 2003, the sum of SEVENTY SEVEN THOUSAND THREE HUNDRED NINETEEN AND 40/100
DOLLARS ($77,319.40) shall be due, and a like sum due on the first day of each month thereafter,
through and including August 1, 2004.

     As a result of the increase in square feet leased, the Aggregate Rental shall be increased by
$8,396.32, or from $4,101,954.00 to $4,110,350.32.

     3. SECURITY DEPOSIT: Tenant’s Security Deposit shall be increased by $319.60, or from
$154,319.20 to $154,638.80, payable upon Tenant’s execution of this Amendment No. 1.

Initial:                     

36

 

Westport 8

     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of said July 5, 1999
Lease Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1 to Lease as of the
day and year last written below.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WESTPORT JOINT VENTURE	 	 	 	SHUTTERFLY.COM, INC.	 	 
	A California joint venture	 	 	 	a California corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	By	 	 /s/ Jayne Spiegelman	 	 
	 

	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	Jayne Spiegelman / CEO	 	 
		 	 	 	 	 	 	 	 
	By	 	/s/ John Arrillaga 	 	 	 	Print or Type Name/Title	 	 
	 

	 	 	 	 	 	 	 	 	 
	John Arrillaga, Trustee	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Date:  1/25/00	 	 	Date:  2/1/00	 	 
	 

	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PEERY PRIVATE INVESTMENT
COMPANY-WP, L.P.,

A California limited partnership	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Richard T. Peery	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	Richard T. Peery, Trustee
of the
Richard T. Peery Separate
Property
Trust dated 7/20/77, as
its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	  1/20/00 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(Signatures Continued on
Following Page)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PEERY PUBLIC INVESTMENT
COMPANY-WP, L.P.,	 	 	 	 	 	 	 	 
	A California limited
partnership	 	 	 	 	 	 	 	 

Initial: JA
JS

37

 

Westport 8

	 	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Richard T. Peery	 	 	 	 	 	 	 	 
	 

	 

	 	 	 	 	 	 
	 	 
	Richard T. Peery, Trustee of the
Richard T. Peery Separate Property
Trust dated 7/20/77, as its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	1/20/00	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 

Initial:                     

38

 

1

 

2

 

Westport 8

AMENDMENT NO. 2

TO LEASE

     THIS AMENDMENT NO. 2 is made and entered into this 21st day May, 2001, by and
between WESTPORT JOINT VENTURE, a California joint venture as LANDLORD, and SHUTTERFLY, INC., a
Delaware corporation, as TENANT.

RECITALS

     E. WHEREAS, by Lease Agreement dated July 5, 1999 Landlord leased to Tenant approximately
22,694+ square feet of that certain 48,384+ square foot building located at 2800
Bridge Parkway, Suite 101, Redwood City, California, the details of which are more particularly set
forth in said July 5, 1999 Lease Agreement, and

     F. WHEREAS, said Lease was amended by the Commencement Letter dated September 8, 1999 which
changed the Commencement Date of the Lease from August 1, 1999 to September 1, 1999, and changed
the Termination Date from July 31, 2004 to August 31, 2004, and,

     G. WHEREAS, said Lease was amended by Letter Agreement dated December 28, 1999, whereby
Landlord acknowledged Tenant’s name change from “Digital Finish, Inc., a California corporation” to
“Shutterfly.com, Inc., a California corporation” and,

     H. WHEREAS, said Lease was amended by Amendment No. 1 dated January 11, 2000, which amended
the Lease by (i) increasing the square footage of the Leased Premises, (ii) amending the Basic Rent
schedule and Aggregate Rent accordingly, and (iii) increasing the Security Deposit required under
said Lease Agreement, and

     I. WHEREAS, it is now the desire of the parties hereto to amend the Lease by (i) correcting
Tenant’s state of incorporation and (ii) changing Tenant’s name from “Shutterfly.com, Inc.” to
“Shutterfly, Inc.” as hereinafter set forth.

AGREEMENT

     NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and
in consideration of the hereinafter mutual promises, the parties hereto do agree as follows:

     1. STATE OF INCORPORATION: It is acknowledged and agreed between the parties hereto
that Tenant’s state of incorporation as stated in the Lease was incorrect, and that Tenant was
incorporated in the state of Delaware on April 23, 1999.

Initial:                     

39

 

Westport 8

     2. TENANT NAME CHANGE: Pursuant to information provided to Landlord by Tenant, it is
acknowledged by Landlord that effective on or about September 20, 2000, Tenant “Shutterfly.com,
Inc.”, a Delaware corporation, has changed its’ name by Corporate Resolution to “Shutterfly, Inc.”,
a Delaware corporation; the change in name did not result in a change in ownership structure and
for all intents and purposes all the assets and liabilities of Shutterfly.com, Inc. are now the
assets and liabilities of Shutterfly, Inc., and Shutterfly, Inc. will be responsible for the full
performance of all terms, covenants, and conditions of said Lease Agreement from the date of the
Lease (July 5, 1999) through the effective Termination Date of said Lease. In the event there was
a change in ownership or there is not a complete transfer of 100% of the assets and liabilities
from Shutterfly.com, Inc. to Shutterfly, Inc. both companies agree to be jointly and severally
liable for the full terms and conditions of the Lease Agreement from through the Termination Date
of said Lease.

     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of said July 5, 1999
Lease Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2 to Lease as of the
day and year last written below.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WESTPORT JOINT VENTURE	 	 	 	SHUTTERFLY, INC.	 	 
	A California joint venture	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	By	 	/s/ Virender K. Ahluwalia 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	Virender K. Ahluwalia / CFO	 	 
	 	 	 	 	 	 	 	 	 
	By	 	/s/ John Arrillaga	 	 	 	Print or Type Name/Title	 	 
	 

	 	 	 	 	 	 	 	 	 
	John Arrillaga, Trustee	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Date:  8/10/01	 	 	Date:  8/02/01	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PEERY PRIVATE INVESTMENT
COMPANY-WP, L.P.,
A California limited partnership	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Richard T. Peery	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	Richard T. Peery, Trustee
of the	 	 	 	 	 	 	 	 

Initial:                     

40

 

Westport 8

	 	 	 	 	 	 	 	 	 	 	 
	Richard T. Peery Separate
Property
Trust dated 7/20/77, as
its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	  8/13/01 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PEERY PUBLIC INVESTMENT
COMPANY-WP, L.P.,	 	 	 	 	 	 	 	 
	A California limited
partnership	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Richard T. Peery	 	 	 	 	 	 	 	 
	 

	 

	 	 	 	 	 	 
	 	 
	Richard T. Peery, Trustee of the
Richard T. Peery Separate Property
Trust dated 7/20/77, as its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	  8/13/01 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 

Initial:                     

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Westport 8

AMENDMENT NO. 3

TO LEASE

     THIS AMENDMENT NO. 3 (“Amendment”) is made and entered into this 6th day of
July, 2004, by and between WESTPORT JOINT VENTURE, a California joint venture as LANDLORD, and
SHUTTERFLY, INC., a Delaware corporation, as TENANT.

RECITALS

     J. WHEREAS, by Lease Agreement dated July 5, 1999 Landlord leased to Tenant approximately
22,694+ square feet of that certain 48,384+ square foot building located at 2800
Bridge Parkway, Suite 101, Redwood City, California, the details of which are more particularly set
forth in said July 5, 1999 Lease Agreement, and

     K. WHEREAS, said Lease was amended by the Commencement Letter dated September 8, 1999 which
changed the Commencement Date of the Lease from August 1, 1999 to September 1, 1999, and changed
the Termination Date from July 31, 2004 to August 31, 2004, and,

     L. WHEREAS, said Lease was amended by Letter Agreement dated December 28, 1999, whereby
Landlord acknowledged Tenant’s name change from “Digital Finish, Inc., a California corporation” to
“Shutterfly.com, Inc., a California corporation” and,

     M. WHEREAS, said Lease was amended by Amendment No. 1 dated January 11, 2000, which amended
the Lease by (i) increasing the square footage of the Leased Premises, (ii) amending the Basic Rent
schedule and Aggregate Rent accordingly, and (iii) increasing the Security Deposit required under
said Lease Agreement, and

     N. WHEREAS, said Lease was amended by Amendment No. 2 dated May 21, 2001, which amended the
Lease by (i) correcting Tenant’s state of incorporation and (ii) changing Tenant’s name from
“Shutterfly.com, Inc.” to “Shutterfly, Inc.” (said Lease Agreement, Commencement Letter, Letter
Agreement, Amendment No. 1 and Amendment No. 2 are hereinafter collectively referred to as the
“Lease”), and

     O. WHEREAS, it is now the desire of the parties hereto to amend the Lease by (i) extending the
Term for a period of five (5) years, changing the Termination Date from August 31, 2004 to August
31, 2009, (ii) amending the Rent due under the Lease effective July 1, 2004 to convert the Rent
rate from a triple net rate to a gross rate, (iii) amending Lease Paragraphs 4 (“Rent”), 7
(“Expenses of Operation, Management, and Maintenance of the Common Areas of the Complex and
Building in Which the Premises are Located”), 11 (“Utilities of the Building in Which the Premises
are Located”), 12 (“Taxes”), and 15 (“Property Insurance”) as hereinafter set forth.

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Westport 8

AGREEMENT

          NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and
in consideration of the hereinafter mutual promises, the parties hereto do agree as follows:

          1. TERM OF LEASE: It is agreed between the parties that the Term of the Lease shall
be extended for an additional five (5) year period, and the Lease Termination Date shall be changed
from August 31, 2004 to August 31, 2009.

          2. RENT: Effective July 1, 2004, the Basic Rent rate due under the Lease shall be
converted to a “Gross Rent”, which shall include the expenses as detailed in this Amendment, and
all references in the Lease to “Basic Rent” shall be changed to “Gross Rent” and all references to
“Rent” under the Lease shall thereafter refer to Gross Rent and Additional Rent.

               A. Gross Rent for Extended Term: The monthly Gross Rent for the Extended Term of the
Lease shall be as follows:

          Landlord acknowledges that Tenant previously submitted payment for the Basic Rent due for the
month of July 2004 in the amount of $89,698.48. The parties hereto agree that said payment shall
be applied as follows: $39,569.34 shall be applied to the Gross Rent due for the month of July
2004; $39,569.34 shall be applied to the Gross Rent due for the month of August 2004; and
$10,559.80 shall be applied to the Gross Rent due for the month of September 2004 (and Tenant shall
submit the balance of the September Gross Rent in the amount of $29,009.54 no later than September
1, 2004).

          Subject to the preceding paragraph, on July 1, 2004, the sum of THIRTY-NINE THOUSAND FIVE
HUNDRED SIXTY-NINE AND 36/100 DOLLARS ($39,569.34) shall be due, and a like sum due on the first
day of each month thereafter through and including February 1, 2005.

          On March 1, 2005, the sum of FORTY-FOUR THOUSAND FIVE HUNDRED SEVENTY-TWO AND 36/100 DOLLARS
($44,572.36) shall be due, and a like sum due on the first day of each month thereafter through and
including August 1, 2005.

          On September 1, 2005, the sum of FORTY-FIVE THOUSAND SEVEN HUNDRED NINE AND 41/100 DOLLARS
($45,709.41) shall be due, and a like sum due on the first day of each month thereafter through and
including August 1, 2006.

          On September 1, 2006, the sum of FORTY-SIX THOUSAND EIGHT HUNDRED FORTY-SIX AND 46/100 DOLLARS
($46,846.46) shall be due, and a like sum due on the first day of each month thereafter through and
including August 1, 2007.

Initial:                     

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Westport 8

          On September 1, 2007, the sum of FORTY-SEVEN THOUSAND NINE HUNDRED EIGHTY-THREE AND 51/100
DOLLARS ($47,983.51) shall be due, and a like sum due on the first day of each month thereafter
through and including August 1, 2008.

          On September 1, 2008, the sum of FORTY-NINE THOUSAND ONE HUNDRED TWENTY AND 56/100 DOLLARS
($49,120.56) shall be due, and a like sum due on the first day of each month thereafter through and
including August 1, 2009.

          The Aggregate Basic/Gross Rent for the Lease shall be increased by $2,705,269.36 or from
$4,110,350.32 to $6,815,619.68.

               B. Fixed Management Fee: Effective July 1, 2004, no Management Fee shall be required
under the Lease, and Lease Paragraph 4.E (“Rent: Fixed Management Fee”) shall be deleted in its
entirety and shall be of no further force or effect.

               C. Security Deposit: Effective July 1, 2004, Tenant’s Security Deposit shall be
decreased by $25,413.09, or from $154,638.80 to $129,225.72. It is acknowledged and agreed between
the parties hereto that on February 26, 2004, Landlord applied a portion ($50,826.17) of Tenant’s
Security Deposit to outstanding amounts owed under the Lease (some of which amounts were disputed
by Tenant) and invoiced Tenant for the restoration of the Security Deposit. As an accommodation to
Tenant, Landlord has agreed to waive Late Fees in the amount of $25,413.09, which Late Fees
represent fifty percent (50%) of said outstanding amounts and to reduce the Security Deposit
required under the Lease by the balance of said outstanding amounts ($25,413.09). Therefore,
Landlord acknowledges Tenant’s payment of the balance of the outstanding amounts ($25,413.09)
through the reduction in the Security Deposit. Landlord further acknowledges that as of July 1,
2004, the total Security Deposit held by Landlord is $129,225.72.

          3. EXPENSES OF OPERATION, MANAGEMENT AND MAINTENANCE OF THE COMMON AREAS OF THE COMPLEX
AND BUILDING IN WHICH THE PREMISES ARE LOCATED: Effective July 1, 2004, Lease Paragraph 7
(“Expenses of Operation, Management, and Maintenance of the Common Areas of the Complex and
Building in Which the Premises are Located”) shall be amended to include the following language:

     “Subject to the terms and conditions of the Lease, it is acknowledged and agreed
between the parties hereto that the Gross Rent paid by Tenant to Landlord includes Tenant’s
proportionate share of all expenses of operation, management, maintenance and repair of the
Common Areas of the Complex and Building; provided, however, that in the event any repairs
and/or replacements are necessary as a direct result of Tenant’s direct or indirect actions, or
the direct or indirect actions of any of Tenant’s agents, employees, contractors, vendors,
invitees, visitors or its future subtenants or assignees, Tenant shall be one hundred percent
(100%) responsible for the cost of said repair and/or replacement”.

Initial:                     

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Westport 8

          4. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED: Effective July 1,
2004, Lease Paragraph 11 (“Utilities of the Building in Which the Premises are Located”) shall be
amended to include the following language:

     “Subject to the terms and conditions of the Lease, it is acknowledged and agreed between
the parties hereto that the Gross Rent paid by Tenant to Landlord includes Tenant’s estimated
proportionate share of all utility charges for the Building; provided, however, that in the
event utility charges are increased due to an increase in Tenant’s utility usage, or the usage
of any of Tenant’s future subtenants and/or assignees, if any, Tenant shall be responsible for
one hundred percent (100%) for the cost of said increased utility charges.”

          5. TAXES: Effective July 1, 2004, Lease Paragraph 12 (“Taxes”) shall be amended
to include the following language:

     “Subject to the terms and conditions of the Lease, it is acknowledged and
agreed between the parties hereto that the Gross Rent paid by Tenant to Landlord
includes Tenant’s proportionate share of all Real Property Taxes relating to the
Premises accruing with respect to the Premises during the Extended Term; provided,
however, that in the event any supplemental or other taxes are levied based
specifically on a change in Tenant’s use or a use by Tenant’s future subtenants
and/or assignees (if any) that is different from Tenant’s current use of the
Premises as referenced in the Lease and/or alterations and/or modifications to the
Premises made by or on behalf of Tenant and/or Tenant’s future subtenants and/or
assignees (if any), Tenant shall be one hundred percent (100%) responsible for the
cost of said supplemental or other taxes.”

          6. PROPERTY INSURANCE: Effective July 1, 2004, Lease Paragraph 15 (“Property
Insurance”) shall be amended to include the following:

     “Subject to the terms and conditions of the Lease, it is acknowledged and agreed
between the parties hereto that the Gross Rent paid by Tenant to Landlord includes Tenant’s
proportionate share of the deductibles on insurance claims and the cost of policy or policies of
insurance covering loss or damage to and/or destruction of the Premises; provided, however, that
if such insurance cost is increased due to a change in Tenant’s use or a use by Tenant’s future
subtenants and/or assignees (if any) that is different from Tenant’s current use of the Premises
as referenced in the Lease, Tenant agrees to pay to Landlord the full cost of such increase”.

          7. CHOICE OF LAW/VENUE; SEVERABILITY. This Amendment shall in all respects be
governed by and construed in accordance with the laws of the County of Santa Clara in the State of
California and each party specifically stipulates to venue in Santa Clara County. If any
provisions of this

Initial:                     

45

 

Westport 8

Amendment shall be invalid, unenforceable, or ineffective for any reason
whatsoever, all other provisions hereof shall be and remain in full force and effect.

          8. AUTHORITY TO EXECUTE. The parties executing this Amendment hereby warrant and
represent that they are properly authorized to execute this Amendment and bind the parties on
behalf of whom they execute this Amendment and to all of the terms, covenants and conditions of
this Amendment as they relate to the respective parties hereto.

          9. EXAMINATION OF AMENDMENT: This Amendment No. 3 shall not be effective until its
execution by both Landlord and Tenant.

          EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of said July 5, 1999
Lease Agreement shall remain in full force and effect.

          IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 3 to Lease as of the
day and year last written below.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WESTPORT JOINT VENTURE	 	 	 	SHUTTERFLY, INC.	 	 
	A California joint venture	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	By	 	/s/ Virender Ahluwalia	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	      SVP	 	 
	 	 	 	 	 	 	 	 
	By	 	/s/ John Arrillaga	 	 	Print or Type Name/Title	 	 
	 

	 	 	 	 	 	 	 	 	 
	John Arrillaga, Trustee	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Date:  9/8/04	 	 	Date:  8/26/04	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PEERY PRIVATE INVESTMENT
COMPANY-WP, L.P.,

A California limited partnership	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Jason Peery	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Jason Peery, Special Trustee
of the
Richard T. Peery Separate
Property	 	 	 	 	 	 	 	 

Initial:                     

46

 

Westport 8

	 	 	 	 	 	 	 	 	 	 	 
	Trust dated 7/20/77, as
its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	  9/8/04 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 
	PEERY PUBLIC INVESTMENT
COMPANY-WP, L.P.,	 	 	 	 	 	 	 	 
	A California limited
partnership	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	By
	 	/s/ Jason Peery	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 
	Jason Peery, Special Trustee of the
Richard T. Peery Separate Property
Trust dated 7/20/77, as its General
Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	  9/8/04 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

Initial:                     

47

 

Westport 8

AMENDMENT NO. 4

TO LEASE

     THIS AMENDMENT NO. 4 (“Amendment”) is made and entered into this 28th day of
April, 2005, by and between WESTPORT JOINT VENTURE, a California joint venture, as LANDLORD, and
SHUTTERFLY, INC., a Delaware corporation, as TENANT.

RECITALS

     P. WHEREAS, by Lease Agreement dated July 5, 1999 Landlord leased to Tenant approximately
22,694+ square feet of that certain 48,384+ square foot building located at 2800
Bridge Parkway, Suite 101, Redwood City, California, the details of which are more particularly set
forth in said July 5, 1999 Lease Agreement, and

     Q. WHEREAS, said Lease was amended by the Commencement Letter dated September 8, 1999 which
changed the Commencement Date of the Lease from August 1, 1999 to September 1, 1999, and changed
the Termination Date from July 31, 2004 to August 31, 2004, and,

     R. WHEREAS, said Lease was amended by Letter Agreement dated December 28, 1999, whereby
Landlord acknowledged Tenant’s name change from “Digital Finish, Inc., a California corporation” to
“Shutterfly.com, Inc., a California corporation” and,

     S. WHEREAS, said Lease was amended by Amendment No. 1 dated January 11, 2000, which amended
the Lease by (i) increasing the square footage of the Leased Premises by 47± square feet, or from
22,694± square feet to 22,741± square feet of space, (ii) amending the Basic Rent schedule and
Aggregate Basic Rent accordingly, and (iii) increasing the Security Deposit required under said
Lease Agreement, and

     T. WHEREAS, said Lease was amended by Amendment No. 2 dated May 21, 2001, which amended the
Lease by (i) correcting Tenant’s state of incorporation and (ii) changing Tenant’s name from
“Shutterfly.com, Inc.” to “Shutterfly, Inc.,” and

     F. WHEREAS, said Lease was amended by Amendment No. 3 dated July 6, 2004, which amended the
Lease by (i) extending the Term for a period of five (5) years, changing the Termination Date from
August 31, 2004 to August 31, 2009, (ii) amending the Rent due under the Lease effective July 1,
2004 to convert the Rent rate from a triple net rate to a gross rate, and (iii) amending Lease
Paragraphs 4 (“Rent”), 7 (“Expenses of Operation, Management, and Maintenance of the Common Areas
of the Complex and Building in Which the Premises are Located”), 11 (“Utilities of the Building in
Which the Premises are Located”), 12 (“Taxes”), and 15 (“Property Insurance”) (said Lease

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Westport 8

Agreement, Commencement Letter, Letter Agreement, Amendment No. 1, Amendment No. 2 and Amendment
No. 3 are hereinafter collectively referred to as the “Lease”), and

     G. WHEREAS, it is now the desire of the parties hereto to further amend the Lease effective
June 1, 2005 by (i) increasing the square footage of the Leased Premises by 25,643± square feet, or
from 22,741± square feet to 48,384± square feet (or one hundred percent (100%) of the Building)
effective June 1, 2005, (ii) providing for certain Tenant Improvements in the Increased Premises to
be completed by Landlord, at Landlord’s cost and expense, (iii) extending the Lease Term for an
additional nine (9) month period, changing the Termination Date from August 31, 2009 to May 31,
2010, (iv) amending the Rent due under the Lease effective June 1, 2005 to convert the Gross Rent
rate to triple net rate, (v) amending the Basic Rent schedule and Aggregate Basic Rent accordingly,
(vi) deleting the following Paragraphs of Amendment No. 3: (a) Paragraph 2.B (“Fixed Management
Fee”), (b) Paragraph 3 (“Expenses of Operation, Management and Maintenance of the Common Areas of
the Complex and Building in which the Premises are Located”), (c) 4 (“Utilities of the Building in
which the Premises are Located”), (d) 5 (“Taxes”) and (e) 6 (“Property Insurance”), (vii)
reinstating the Management Fee charged to Tenant effective June 1, 2005, (viii) increasing Tenant’s
non-exclusive parking spaces, (ix) reaffirming the Security Deposit required under the Lease, and
(x) replacing Lease Paragraphs 9 (“Alterations and Additions”), 10 (“Tenant Maintenance”), 7
(“Expenses of Operation, Management, and Maintenance of the Common Areas of the Complex and
Building in which the Premises are Located”), 11 (“Utilities of the Building in which the Premises
are Located”), 13 (“Liability Insurance”), 15 (“Property Insurance”), 19 (“Assignment and
Subletting”) and 53 (“Hazardous Materials”), as hereinafter set forth.

AGREEMENT

     NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and
in consideration of the hereinafter mutual promises, the parties hereto do agree as follows:

     1. INCREASED PREMISES: Effective June 1, 2005 (the “Effective Date”), the size of the
Leased Premises will be increased by 25,643+ square feet (the “Increased Premises”), or
from 22,741+ square feet to 48,384+ square feet of space (one hundred percent
(100%) of the Building and hereinafter referred to as the “Premises”). Total said Premises are
more particularly shown within the area outlined in Red on Exhibit A. The entire parcel,
of which the Premises is a part, is shown within the area outlined in Green on Exhibit A.
Except as hereinafter provided in Paragraph 1.A (“Tenant Improvements to be made by Landlord”) and
Paragraph 1.B (“Punch List”), the Increased Premises is leased on an “as-is” basis, in its present
condition and configuration, as set forth in Blue on Exhibit B attached hereto, with the
entire interior Premises shown in Red on Exhibit B.

     A. Tenant Improvements to be made by Landlord: Notwithstanding anything to the
contrary above, Landlord has agreed to complete, at Landlord’s cost and expense, the tenant
improvements specifically listed below (“Tenant Improvements”), and Landlord shall not be
responsible for providing any additional interior improvements:

	 	1)	 	Remove the walls and related doors as shown in Pink dashed
lines on Exhibit B

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49

 

Westport 8

	 	 	 	attached hereto;
	 
	 	2)	 	Landlord shall provide one (1) 4-port voice and data outlet
(two (2) voice and two (2) data outlet) to a maximum of one hundred (100)
office cubicles to be installed within
the Increased Premises by Tenant;
	 
	 	3)	 	Landlord shall have the electrical system within the Increased
Premises inspected and any necessary repairs completed (including the
replacement of any broken or non-functioning lights and ballasts);
	 
	 	4)	 	Landlord shall have the HVAC system within the Increased
Premises inspected and any necessary repairs completed;
	 
	 	5)	 	Landlord shall have the roof membrane for the Building
inspected and any necessary repairs completed; and
	 
	 	6)	 	Landlord shall have the plumbing system within the Increased
Premises inspected and any necessary repairs completed.

     The Tenant Improvements referenced above shall become a part of the Premises upon installation
and Tenant shall not be required or allowed to remove said Tenant Improvements upon Lease
Termination.

     Landlord shall commence the installation and diligently pursue the completion of the Tenant
Improvements on the first business day following Landlord’s receipt from Tenant of the executed
Amendment No. 4; however, the Effective Date of the Increased Premises shall not be amended in the
event Landlord has not completed said Tenant Improvements by the Effective Date so long as Landlord
has commenced work on the Tenant Improvements in a timely manner required above. Landlord shall
use reasonable efforts to minimize the disruption to Tenant’s business during the installation of
the Tenant Improvements; however, Tenant understands that said Tenant Improvements shall be
installed during normal business hours, and Tenant agrees to cooperate with Landlord’s contractors
to insure that the Tenant Improvements are completed in an expeditious manner, including providing
Landlord’s contractors with access to the Premises by 7:00 a.m. on weekdays.

     B. Punch List: In addition to and notwithstanding anything to the contrary in
Paragraph 1.A above, Tenant shall have thirty (30) days after the Effective Date to provide
Landlord with a written “punch list” pertaining to defects in the Tenant Improvements completed by
Landlord for Tenant as referenced in Paragraph 1.A above. As soon as reasonably possible
thereafter, Landlord (or one of Landlord’s representatives if so approved by Landlord), and Tenant
shall conduct a joint walk-through of the Increased Premises (if Landlord so requires), and inspect
such Tenant Improvements, using their best efforts to agree on the incomplete or defective
installation related to the Tenant Improvements installed for Tenant by Landlord. After such
inspection has been completed, Landlord shall prepare, and both parties shall sign, a list of all
“punch list” items which the parties reasonably agree are (i) to be corrected by Landlord (but
which shall exclude any damage or defects caused by Tenant, its employees, agents or parties Tenant
has contracted with to work on the Premises) or (ii) if said defects and/or damaged item(s) are not
material, Landlord may reasonably elect with Tenant’s reasonable concurrence, not to repair such
item(s), but to acknowledge in written form the defect and/or damaged item(s); in which case,
notwithstanding anything to the contrary in said Lease Paragraph 5 (“Acceptance and Surrender of
Premises”), Tenant shall not be responsible upon Lease Termination to repair said item(s) so noted
by

Initial:                     

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Westport 8

Landlord. Landlord shall have thirty (30) days thereafter (or longer if necessary, provided
Landlord is diligently pursuing the completion of the same) to complete, at Landlord’s expense, the
“punch list” items without the Effective Date and Tenant’s obligation to pay Rent as provided
herein being affected. Landlord’s obligations under this Paragraph shall be of no force and effect
if Tenant shall fail to give any such notice to Landlord within thirty (30) days after the
Effective Date.

     C. Early Entry: Upon receipt of written notice from Landlord (by U.S. Mail, facsimile or
electronic mail) that the Increased Premises is available for Tenant’s entry, Tenant and its agents
and contractors shall be permitted to enter the Increased Premises (as shown in Blue on Exhibit
B) prior to the Effective Date for the purpose of installing at Tenant’s sole cost and expense,
Tenant’s trade fixtures and equipment, telephone equipment, security systems and cabling for
computers. Such entry shall be subject to all of the terms and conditions of the Lease, except
that Tenant shall not be required to pay any Rent on the Increased Premises, provided none of
Tenant’s operating personnel occupy said Increased Premises. Any entry or installation work by
Tenant and its agents in the Increased Premises pursuant to this Paragraph 1.C shall (i) be
undertaken at Tenant’s sole risk, (ii) not interfere with or delay Landlord’s work in the
Increased Premises (if any), and (iii) not be deemed occupancy or possession of the Increased
Premises for purposes of this Amendment. Tenant shall indemnify, defend, and hold Landlord
harmless from any and all loss, damage, liability, expense (including reasonable attorney’s fees),
claim or demand of whatsoever character, direct or consequential, including, but without limiting
thereby the generality of the foregoing, injury to or death of persons and damage to or loss of
property arising out of the exercise by Tenant of any early entry right granted hereunder. In the
event Tenant’s work in said Increased Premises delays the completion of the Tenant Improvements to
be provided by Landlord pursuant to Paragraph 1.A (“Increased Premises: Tenant Improvements to be
made by Landlord”), or in the event Tenant has not completed construction of its interior
improvements, if any, by the Effective Date, it is agreed between the parties that the Effective
Date is not subject to change. It is the intent of the parties hereto that Tenant’s obligation to
pay Rent on the Increased Premises shall commence on the Effective Date.

     2. TERM OF LEASE: It is agreed between the parties that the Term of the Lease shall
be extended for an additional nine (9) month period (the “Extended Term”), and the Lease
Termination Date shall be changed from August 31, 2009 to May 31, 2010.

     3. RENT: Effective June 1, 2005, the Gross Rent rate shall no longer be applicable;
therefore, Lease Paragraph 4 (“Rent”) as amended by Paragraph 2 (“Rent”) of Amendment No. 3 is
amended as follows:

          A. Basic Rent Schedule. The Basic Rent schedule, as shown in Paragraph 4(A) (“Rent:
Basic Rent”) of the Lease and as amended by Paragraph 2.A (“Rent: Gross Rent for Extended Term”) of
Amendment No. 3, shall be amended as follows effective June 1, 2005:

          On June 1, 2005, the sum of FORTY THOUSAND EIGHT HUNDRED NINETY-SEVEN AND 45/100 DOLLARS
($40,897.45) shall be due, and a like sum due on the first day of each month thereafter, through
and including August 1, 2005.

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

     On September 1, 2005, the sum of FORTY-TWO THOUSAND SIX HUNDRED SEVENTY-FIVE AND 60/100
DOLLARS ($42,675.60) shall be due, and a like sum due on the first day of each month thereafter,
through and including August 1, 2006.

     On September 1, 2006, the sum of FORTY-FOUR THOUSAND FOUR HUNDRED FIFTY-THREE AND 75/100
DOLLARS ($44,453.75) shall be due, and a like sum due on the first day of each month thereafter,
through and including November 1, 2006.

     On December 1, 2006, the sum of SIXTY THOUSAND FOUR HUNDRED EIGHTY AND NO/100 DOLLARS
($60,480.00) shall be due, and a like sum due on the first day of each month thereafter, through
and including May 1, 2007.

     On June 1, 2007, the sum of SIXTY-TWO THOUSAND EIGHT HUNDRED NINETY-NINE AND 20/100 DOLLARS
($62,899.20) shall be due, and a like sum due on the first day of each month thereafter, through
and including May 1, 2008.

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

     On June 1, 2008, the sum of SIXTY-FIVE THOUSAND THREE HUNDRED EIGHTEEN AND 40/100 DOLLARS
($65,318.40) shall be due, and a like sum due on the first day of each month thereafter, through
and including May 1, 2009.

     On June 1, 2009, the sum of SIXTY-SEVEN THOUSAND SEVEN HUNDRED THIRTY-SEVEN AND 60/100 DOLLARS
($67,737.60) shall be due, and a like sum due on the first day of each month thereafter, through
and including May 1, 2010.

     As a result of the Increased Premises leased and the Extended Term, the Aggregate Basic Rent
shall be increased by $1,072,866.84, or from $6,815,619.68 to $7,888.486.52 (subject to the terms
of Paragraph 1.C (“Tender of Possession of Increased Premises”) above).

          B. Management Fee. Effective June 1, 2005, Lease Paragraph 4.E (“Rent: Fixed
Management Fee”) and Paragraph 2.B (“Fixed Management Fee”) of Amendment No. 3 shall be deleted in
their entirety and replaced with the following:

               “4.E. Fixed Management Fee. Effective June 1, 2005, Tenant shall pay to Landlord, in
addition to the Basic Rent and Additional Rent, a fixed monthly management fee (“Management Fee”)
equal to one and one-half percent (1-1/2%) of the Basic Rent due for each month during the Term.
Tenant shall be responsible for calculating the monthly Management Fee based on the Basic Rent
schedule shown in Lease Paragraph 4.A (“Rent: Basic Rent”), and for paying said Management Fee by
the first day of each month during the remaining Term of this Lease. Tenant’s failure to pay the
monthly Management Fee by the due date will result in a Late Charge being assessed pursuant to the
terms of Lease Paragraph 4.C (“Rent: Late Charge”). Said Management Fee shall be paid by Tenant to
A&P Property Management Company at 2560 Mission College Blvd., Suite 101, Santa Clara, California
95054.”

     4. PARKING: Effective June 1, 2005, Lease Paragraph 6 (“Parking”) shall be amended to
increase Tenant’s non-exclusive parking spaces by 59 spaces, or from 102 spaces to 161 spaces.

     5. SECURITY DEPOSIT: The required Security Deposit as referenced in Lease Paragraph
4.G (“Rent: Security Deposit”) and as amended by Paragraph 2.C (“Rent: Security Deposit”) of
Amendment No. 3 shall remain $129,225.72.

     6. ALTERATIONS AND ADDITIONS: Effective June 1, 2005, Lease Paragraph 9 (“Alterations
and Additions”) shall be deleted in its entirety and replaced with the following:

          “9. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made, any
Alterations to the Premises, or any part thereof, without the written consent of Landlord first had
and obtained by Tenant; such consent shall not be unreasonably withheld and such consent to
Alterations shall not be valid until such time as said consent is executed by both Landlord and
Tenant and a fully executed copy delivered by Landlord to Tenant (“Consent to Alterations”).
Provided Tenant requests in writing such predetermination from Landlord, said Consent to
Alterations shall specify whether Landlord shall require removal of said Alterations. Any
Alteration of the Premises except moveable furniture and trade fixtures, shall at once become a
part of the Premises and belong to Landlord. Any such Alterations shall be paid for one hundred
percent (100%) by Tenant. Landlord reserves the right to approve all contractors

			
	 	 	 
	 
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and mechanics proposed by Tenant to make such Alterations. As a pre-condition to Landlord granting its
consent to any Alterations, Tenant shall deliver plans and specifications for Landlord’s review and
approval, and within five business days of completion of said Alterations, Tenant shall deliver to
Landlord an original 1/8” scaled sepia or an other electronic format as solely determined by
Landlord. Tenant shall retain title to all moveable furniture and trade fixtures placed in the
Premises. All heating, lighting, electrical, air conditioning, security systems, floor to ceiling
partitioning, drapery, carpeting, and floor installations made by Tenant, together with all
property that has become an integral part of the Premises, shall not be deemed trade fixtures.
Tenant agrees that it will not proceed to make such Alterations, without having obtained consent
from Landlord to do so, and until five (5) business days from the receipt of such consent, in order
that Landlord may post appropriate notices to avoid any liability to contractors or material
suppliers for payment for Tenant’s Alterations. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work. As a condition of Landlord’s Consent to
Alterations to the Premises, after Landlord provides written Consent to Alterations and prior to
any work commencing on the Alterations, Landlord may, at its sole and absolute discretion, require
Tenant to secure and provide to Landlord at Tenant’s own cost and expense, a completion and lien
indemnity letters of credit, satisfactory to Landlord in the amount of one hundred fifty percent
(150%) of the cost to fund the original construction of any Alterations (“Letter of Credit A”) and,
if Landlord does not agree in the Consent to Alterations that said Alterations are to remain at the
end of the Lease Term, an additional letter of credit in the amount of one hundred fifty
percent (150%) of the cost to fund the subsequent cost of the removal of said Alterations and the
restoration of the Premises at the Termination Date (“Letter of Credit B”). Said performance
Letters of Credit shall be kept in place as follows: for Letter of Credit A, for sixty (60) days
after the completion of the original construction of said Alterations; and for Letter of Credit B,
the later of (a) sixty (60) days after the Termination Date or (b) sixty (60) days after the
completion of the restoration work and Tenant has provided Landlord with proof of payment to
respective vendors and copies of recorded full unconditional lien release related to the
Alterations and/or restoration work. Tenant further covenants and agrees that any mechanic’s lien
filed against the Premises for work claimed to have been done for, or materials claimed to have
been furnished to Tenant, will be discharged by Tenant, by bond or otherwise, within ten (10) days
after notice of filing thereof, at the cost and expense of Tenant. As a further condition to its
Consent to Alterations to the Premises, Landlord shall require Tenant to pay all expenses in
connection with any and all requests for alterations and additions and Landlord’s Consent to
Alterations related thereto, including but not limited to Landlord’s costs, fees and expenses for
the processing and administration of the consent documentation and Landlord’s attorneys’ fees (if
any). Any exceptions to the foregoing must be made in writing and executed by both Landlord and
Tenant.”

     7. TENANT MAINTENANCE: Effective June 1, 2005, Lease Paragraph 10 (“Tenant
Maintenance”) shall no longer be applicable and shall be deleted in its entirety and replaced with
the following:

          “10. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and
maintain the Building (including appurtenances) and every part thereof in a high standard of
maintenance and repair, or replacement, and in good and sanitary condition. Tenant’s maintenance,
repair and replacement responsibilities herein referred to include, but are not limited to,
janitorization, all windows (interior and exterior), window frames, plate glass and glazing
(destroyed by accident or act of third parties), truck doors, plumbing systems (such as water and
drain lines, sinks, toilets, faucets, drains,

			
	 	 	 
	 
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showers and water fountains), electrical systems
(such as panels, conduits, outlets, lighting fixtures, lamps, bulbs, tubes and ballasts), heating
and air conditioning systems (such as compressors, fans, air
handlers, ducts, mixing boxes, thermostats, time clocks, boilers, heaters, supply and return
grills), structural elements and exterior surfaces of the Building, store fronts, roofs,
downspouts, all interior improvements within the Premises including but not limited to wall
coverings, window coverings, carpet, floor coverings, partitioning, ceilings, doors (both interior
and exterior), including closing mechanisms, latches and locks, skylights (if any), automatic fire
extinguishing systems, and elevators and all other interior improvements of any nature whatsoever.
Tenant hereby waives all rights under, and benefits of, Subsection 1 of Section 1932 and Section
1941 and 1942 of the California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect. In the event any of the above maintenance responsibilities apply to any other
tenant(s) of Landlord where there is common usage with other tenant(s), such maintenance
responsibilities and charges shall be allocated to the Premises by square footage or other
equitable basis as calculated and determined by Landlord.”

     8. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF THE COMPLEX
IN WHICH THE PREMISES ARE LOCATED: Effective June 1, 2005, Lease Paragraph 7 (“Expenses of
Operation, Management, and Maintenance of the Common Areas of the Complex and Building in which the
Premises are Located”) and Paragraph 3 (“Expenses of Operation, Management, and Maintenance of the
Common Areas of the Complex and Building in which the Premises are Located”) of Amendment No. 3
shall be deleted in their entirety and replaced with the following:

          “7. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF THE
COMPLEX. Landlord shall operate, manage and maintain the Common Areas of the Complex.
Effective June 1, 2005, as Additional Rent and in accordance with Paragraph 4D of the Lease, Tenant
shall pay to Landlord Tenant’s Proportionate Share (which Proportionate Share shall be allocated to
the Premises by square footage or other equitable basis, as calculated by Landlord) of all expenses
of operation, management, maintenance and repair of the Common Areas of the Complex including, but
not limited to, license, permit, and inspection fees; security; utility charges associated with
exterior landscaping and lighting (including water and sewer charges); all charges incurred in the
maintenance and replacement of landscaped areas, lakes, private roads within the Complex and roads
with reciprocal easement areas, parking lots and paved areas (including repair, replacement,
resealing and restriping), sidewalks, driveways; maintenance, repair, and replacement of all
fixtures and electrical, mechanical and plumbing systems; structural elements and exterior surfaces
of the Buildings; supplies, materials, equipment and tools; the cost of capital expenditures which
have the effect of reducing operating expenses, provided, however, that in the event Landlord makes
such capital improvements, Landlord may amortize its investment in said improvements (together with
interest at the rate of ten percent (10%) per annum on the unamortized balance) (“Amortized Cost”)
as an operating expense in accordance with standard accounting practices, provided, that such
amortization is not at a rate greater than the anticipated savings in the operating expenses.

     “Additional Rent” as used herein shall not include Landlord’s debt repayments, interest on
charges; expenses directly or indirectly incurred by Landlord for the benefit of any other tenant;
cost for the installation of partitioning or any other tenant improvements; cost of attracting
tenants; depreciation; interest, or executive salaries.

			
	 	 	 
	 
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     9. UTILITIES: Effective June 1, 2005, Lease Paragraph 11 (“Utilities of the Building
in which the Premises are Located”) and Paragraph 4 (“Utilities of the Building in which the
Premises are Located”) of Amendment No. 3 shall be deleted in their entirety and replaced with the
following:

          “11. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED: Effective June 1,
2005, Tenant shall be responsible for paying, directly to the service provider, for all utilities
servicing the Premises. Prior to June 1, 2005, Landlord shall notify utility companies servicing
the Premises and request that Landlord’s accounts be closed as of the date which is thirty days
following Landlord’s notification (“Account Closure Date”), and Landlord concurrently shall notify
Tenant of the Account Closure Date. Tenant shall be responsible for contacting the service
provider and having all utilities servicing the Premises transferred into Tenant’s name prior to
the Account Closure Date in order to avoid the utilities to the Premises being terminated. Tenant
understands and acknowledges that Landlord shall not be liable to Tenant if the utilities to the
Premises are disconnected and/or terminated. Thereafter, Tenant shall pay promptly, as the same
become due, all charges for water, gas, electricity, telephone, telex and other electronic
communication service, sewer service, waste pick-up and any other utilities, materials or services
furnished directly to or used by Tenant on or about the Premises during the Term of this Lease,
including, without limitation, any temporary or permanent utility surcharge or other exactions
whether or not hereinafter imposed. In the event the above charges apply to any other tenant(s) of
Landlord (i.e. for utilities servicing the Common Areas of the Complex), Landlord shall pay for
such services related to the Common Areas, and such charges shall be allocated to the Premises by
square footage or other equitable basis as calculated and determined by Landlord.

          Landlord shall not be liable for and Tenant shall not be entitled to any abatement or
reduction of Rent by reason of any interruption or failure of utility services to the Premises when
such interruption or failure is caused by (i) Tenant’s failure (a) to transfer said utilities into
its name and/or (b) to pay the respective utility bills by the respective due dates and/or (ii)
accident, breakage, repair, strikes, lockouts, or other labor disturbances or labor disputes of any
nature, or by any other cause, similar or dissimilar, beyond the reasonable control of Landlord.”

     10. TAXES: Effective June 1, 2005, Lease Paragraph 12 (“Taxes”) and Paragraph 5
(“Taxes”) of Amendment No. 3 shall be deleted in their entirety and replaced with the following:

               “12. TAXES.

     A. Real Property Taxes. As Additional Rent and in accordance with Paragraph 4D of this Lease,
Tenant shall pay to Landlord, monthly in advance or as they become due pursuant to statements
submitted by Landlord, Tenant’s proportionate share (which proportionate share shall be allocated
to the Premises by square footage or other equitable basis, as calculated by Landlord) of all Real
Property Taxes relating to the Premises accruing with respect to the Premises during the Term of
this Lease and the Extended Term (if any). The term “Real Property Taxes” shall also include
supplemental taxes related to the period of Tenant’s Term whenever levied, including such taxes
that may be levied after the Term has expired. The term “Real Property Taxes”, as used herein,
shall mean (i) all taxes, assessments, levies and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of principal and interest
required to pay any general or special assessments for public

			
	 	 	 
	 
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improvements and any increases
resulting from reassessments caused by any change in ownership of the Premises; however, for the
period from June 1, 2005 through June 30, 2006 (Cap Period), Landlord
agrees to limit Tenant’s Proportionate Share of increase in Real Property Taxes resulting from
change of ownership in the Premises to no more than $0.05 per square foot per month) now or
hereafter imposed by any governmental or quasi-governmental authority or special district having
the direct or indirect power to tax or levy assessments, which are levied or assessed against, or
with respect to the value, occupancy or use of, all or any portion of the Complex (as now
constructed or as may at any time hereafter be constructed, altered, or otherwise changed) or
Landlord’s interest therein; any improvements located within the Complex (regardless of ownership);
the fixtures, equipment and other property of Landlord, real or personal, that are an integral part
of and located in the Complex; or parking areas, public utilities, or energy within the Complex;
(ii) all charges, levies or fees imposed by reason of environmental regulation or other
governmental control of the Complex and (iii) all costs and fees (including reasonable attorneys’
fees) incurred by Landlord in reasonably contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If at any time during the Term of this Lease the
taxation or assessment of the Complex prevailing as of the Commencement Date of this Lease shall be
altered so that in lieu of or in addition to any Real Property Tax described above there shall be
levied, assessed or imposed (whether by reason of a change in the method of taxation or assessment,
creation of a new tax or charge, or any other cause) an alternate or additional tax or charge (i)
on the value, use or occupancy of the Complex or Landlord’s interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Complex, on Landlord’s business of leasing the
Complex, or computed in any manner with respect to the operation of the Complex, then any such tax
or charge, however designated, shall be included within the meaning of the term “Real Property
Taxes” for purposes of this Lease. If any Real Property Tax is based upon property or rents
unrelated to the Complex, then only that part of such Real Property Tax that is fairly allocable to
the Complex shall be included within the meaning of the term “Real Property Taxes.”
Notwithstanding the foregoing, the term “Real Property Taxes” shall not include estate,
inheritance, gift or franchise taxes of Landlord or the federal or state net income tax imposed on
Landlord’s income from all sources.

Notwithstanding anything to the contrary above , it is agreed that if any special assessments for
capital improvements are assessed, and if Landlord has the option to either pay the entire
assessment in cash or go to bond, and if Landlord elects to pay the entire assessment in cash in
lieu of going to bond, the entire portion of the assessment assigned to Tenant’s Leased Premises
will be prorated over the same period that the assessment would have been prorated had the
assessment gone to bond (including interest) and Tenant shall pay its Proportionate Share over the
Term remaining in the Lease (including the Extended Lease Term if said Lease Term is extended for
any reason whatsoever) as Additional Rent on the first day of the remaining months in the Lease
Term (as may be extended).

          B. Taxes on Tenant’s Property.

     (a) Tenant shall be liable for and shall pay ten days before delinquency, taxes levied against
any personal property or trade fixtures placed by Tenant in or about the Premises. If any such
taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s
property or if the assessed value of the Premises is increased by the inclusion therein of a value
placed upon such personal property or trade fixtures of Tenant and if Landlord, after written
notice to Tenant, pays the taxes based on such increased assessment, which Landlord shall have the
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but only under proper protest if requested by
Tenant, Tenant shall upon demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the assessment; provided
that in any such event Tenant shall have the right, in the name of
Landlord and with Landlord’s full cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of such taxes so paid under protest, and any amount so recovered
shall belong to Tenant.

     (b) If the Tenant improvements in the Premises, whether installed, and/or paid for by Landlord
or Tenant and whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than the valuation at which standard
office improvements in other space in the Complex are assessed, then the real property taxes and
assessments levied against the Landlord or the Complex by reason of such excess assessed valuation
shall be deemed to be taxies levied against personal property of the Tenant and shall be governed
by the provisions of 13B(a) above. If the records of the County Assessor are available and
sufficiently detailed to serve as a basis for determining whether said Tenant improvements are
assessed at a higher valuation than standard office space improvements in other space in the
Complex, such records shall be binding on both the Landlord and the Tenant. If the records of the
County Assessor are not available or sufficiently detailed to serve as a basis for making said
determination, the actual cost of construction shall be used.”

     11. LIABILITY INSURANCE: Effective June 1, 2005, Lease Paragraph 13 (“Liability
Insurance”) shall be deleted in its entirety and replaced with the following:

          “13. LIABILITY INSURANCE. Tenant, at Tenant’s expense, agrees to keep in force
during the Term of this Lease a policy of commercial general liability insurance with combined
single limit coverage of not less than Two Million Dollars ($2,000,000) per occurrence for injuries
to or death of persons occurring in, on, or about the Premises or the Complex and property damage.
Such insurance shall be primary and noncontributory as respects any insurance carried by Landlord.
The policy or policies affecting such insurance, certificates of insurance of which shall be
furnished to Landlord, shall name Landlord, Richard T. Peery, as Trustee of the Richard T. Peery
Separate Property Trust dated July 20, 1977, as amended; the Richard T. Peery Separate Property
Trust; Richard T. Peery as an individual; John Arrillaga, as Trustee under the John Arrillaga
Survivor’s Trust dated July 20, 1977, as amended; the John Arrillaga Survivor’s Trust; John
Arrillaga, as an individual; the Peery Private Investment Company-WP, a California Limited
Partnership; Richard T. Peery Separate Property Trust as general partner under the Peery Private
Investment Company-WP; the Peery Charitable Remainder Trust-WP for Private Charities, as limited
partner under the Peery Private Investment Company-WP; Roger Fields as Trustee under the Peery
Charitable Remainder Trust-WP for Private Charities; Peery Public Investment Company-WP, a
California Limited Partnership; Richard T. Peery Separate Property Trust as general partner under
the Peery Public Investment Company-WP; the Peery Charitable Remainder Trust-WP for Public
Charities, as limited partner under the Peery Public Investment Company-WP; Roger Fields as Trustee
under the Peery Charitable Remainder Trust-WP for Public Charities; Roger Fields, as an individual;
and any beneficiaries, trustees and successor trustees, other partners or co-venturers of Landlord
or said trusts as additional insureds (collectively “Landlord Entities”), and shall insure any
liability of the Landlord Entities, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or transactions of any of
said persons in or about or concerning the Premises, including any failure of Tenant to observe or
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obligations hereunder; shall be issued by an insurance company admitted to
transact business in the State of California; and shall provide that the insurance effected thereby
shall not be canceled, except upon thirty (30) days’ prior written notice to Landlord. Tenant’s
insurance shall be primary as respects to the Landlord Entities, or if excess, shall stand in an
unbroken chain of coverage. In either event, any other
insurance maintained by the Landlord Entities shall be in excess of Tenant’s insurance and shall
not be called upon to contribute with any insurance required to be provided by Tenant. The
required insurance shall be reflected on a certificate of insurance of said policy, which
certificate shall be delivered to Landlord concurrently with Tenant’s return of this executed Lease
to Landlord. If, during the Term of this Lease, in the reasonable considered opinion of Landlord’s
Lender, insurance advisor, or counsel, the amount of insurance described in this Paragraph 15 is
not adequate, Tenant agrees to increase said coverage to such reasonable amount as Landlord’s
Lender, insurance advisor, or counsel shall deem adequate.”

     12. PROPERTY INSURANCE: Effective June 1, 2005, Lease Paragraph 15 (“Property
Insurance”) and Paragraph 6 (“Property Insurance”) of Amendment No. 3 shall be deleted in their
entirety and replaced with the following:

               “15. PROPERTY INSURANCE. Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall pay to Landlord (or
Landlord’s agent if so directed by Landlord) Tenant’s proportionate share (which proportionate
share shall be allocated to the Premises by square footage or other equitable basis, as calculated
by Landlord) of the deductibles on insurance claims and the cost of, policy or policies of
insurance covering loss or damage to the Premises and Complex (excluding routine maintenance and
repairs and incidental damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 11) in the amount of the full replacement value thereof, providing
protection against those perils included within the classification of “all risks” insurance and
flood and/or earthquake insurance, if available, plus a policy of rental income insurance in the
amount of one hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as Additional
Rent and any deductibles related thereto. If such insurance cost is increased due to Tenant’s use
of the Premises or the Complex, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Complex.

     In addition and notwithstanding anything to the contrary in this Paragraph 17, each party to
this Lease hereby waives all rights of recovery against the other party or its officer, employees,
agents and representatives for loss or damage to its property or the property of others under its
control, arising from any cause insured against under the fire and extended coverage (excluding,
however, any loss resulting from Hazardous Material contamination of the Property) required to be
maintained by the terms of this Lease to the extent full reimbursement of the loss/claim is
received by the insured party. Each party required to carry property insurance hereunder shall
cause the policy evidencing such insurance to include a provision permitting such release of
liability (“waiver of subrogation endorsement”); provided, however, that if the insurance policy of
either releasing party prohibits such waiver, then this waiver shall not take effect until consent
to such waiver is obtained. If such waiver is so prohibited, the insured party affected shall
promptly notify the other party thereof. In the event the waivers are issued to the parties and
are not valid under current policies and/or subsequent insurance policies, the non-complying party
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subrogation waiver, in which case neither party will provide such subrogation waiver thereafter and
this paragraph will be null and void. The foregoing waiver of subrogation shall not include any
loss resulting from Hazardous Material contamination of the Property or any insurance coverage
relating thereto.”

     13. ASSIGNMENT AND SUBLETTING: Effective June 1, 2005, Lease Paragraph 19
(“Assignment and Subletting”) shall be deleted in its entirety and replaced with the following:

          “19. ASSIGNMENT AND SUBLETTING. 

          A. Requirements. Tenant shall not assign, transfer, or hypothecate the leasehold estate under
this Lease, or any interest therein, and shall not sublet the Premises, or any part thereof, or any
right or privilege appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written consent of Landlord
which consent will not be unreasonably withheld. Notwithstanding the above, in the event Tenant
enters into a merger and/or acquisition agreement whereby fifty percent (50%) or more of Tenant’s
stock and/or assets are transferred to a third party entity (“Change in Control”), said Change in
Control will require Landlord’s consent pursuant to the terms of this Paragraph 19.A, and Landlord
may, at Landlord’s option, require that said acquiring entity also be named as a Tenant under this
Lease. Tenant shall not sublet the Premises, or any part thereof, to more than two subtenants at
any one point in time without Landlord’s prior written consent, which consent may be withheld at
Landlord’s sole and absolute discretion. Tenant’s failure to obtain Landlord’s prior written
consent before entering into any such assignment, transfer and/or subletting shall be considered a
default under this Lease and Landlord shall retain all of its rights under the Lease, including the
right to elect, at Landlord sole and absolute discretion, to terminate either the Lease and/or the
related sublease. As a condition for Landlord granting consent to any subletting, Landlord shall
require that: (i) the sublease be a triple net sublease and that the basic rent due under any such
sublease be no less than the then current market rent for subleases with annual increases at the
then prevailing market rent for subleases; (ii) the sublease shall require that the security
deposit due under the sublease be in the form of a letter of credit drawn upon an institutional
lender acceptable and accessible to Landlord in form and content reasonably acceptable to Landlord,
with said letter of credit being assignable to Landlord, at no cost to Landlord, upon notice to
said financial institution of a default by Tenant under the Lease; (iii) the sublease shall not
provide for subtenant to have an option to extend the term of the sublease or an option to expand
the sublet space; and (vi) the Tenant shall pay to Landlord, monthly throughout the term of any
approved sublease, fifty percent (50%) of all rents and/or additional consideration due Tenant from
its subtenant in excess of the Rent payable by Tenant to Landlord hereunder for the subleased space
(“Excess Rent”) (with said Excess Rent subject to the terms of Lease Paragraph 4.C (“Late Charge”)
and Lease Paragraph 24 (“Bankruptcy and Default”); provided, however, that before sharing of
payment to Landlord of such Excess Rent, Tenant shall first be entitled to recover from such Excess
Rent the amount of the reasonable leasing commission related to said transaction paid by Tenant to
a third party broker not affiliated with Tenant. Tenant shall, by thirty (30) days written notice,
advise Landlord of its intent to assign or transfer Tenant’s interest in the Lease or sublet the
Premises or any portion thereof for any part of the Term hereof. Within thirty (30) days after
receipt of said written notice, Landlord may, in its sole discretion, elect to terminate this Lease
as to the portion of the Premises described in Tenant’s notice on the date specified in Tenant’s
notice by giving written notice of such election to terminate. If no such notice to terminate is
given to Tenant within said thirty (30) day period, Tenant may proceed to locate an acceptable
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presentment to Landlord for Landlord’s approval, all
in accordance with the terms, covenants, and conditions of this Paragraph 19. Tenant shall provide
Landlord with (a) a copy of the assignment and/or other transfer agreement and a copy of the
certification of the change in corporate identity from the Secretary of State in the case of an
assignment, or (b) a copy of the sublease in the case of a sublease for Landlord’s review, and upon
Landlord’s approval of Tenant’s request to sublease and/or assign, Tenant
and the assignee, transferee or subtenant shall execute Landlord’s standard written consent.
If Tenant intends to sublet the entire Premises and Landlord elects to terminate this Lease, this
Lease shall be terminated on the date specified in Tenant’s notice. If, however, this Lease shall
terminate pursuant to the foregoing with respect to less than all the Premises, the Rent, as
defined and reserved hereinabove shall be adjusted on a pro rata basis to the number of square feet
retained by Tenant, and this Lease as so amended shall continue in full force and effect and
Landlord, at its cost and expense, shall separately demise the remaining portion of the Premises
leased to Tenant. In the event Tenant is allowed to assign, transfer or sublet the whole or any
part of the Premises, with the prior written consent of Landlord, no assignee, transferee or
subtenant shall assign or transfer this Lease, either in whole or in part, or sublet the whole or
any part of the Premises, without also having obtained the prior written consent of Landlord.
Notwithstanding the above, in no event shall Landlord consent to a sub-sublease. A consent of
Landlord to one assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be deemed to be a
consent to any subsequent similar or dissimilar assignment, transfer, hypothecation, subletting,
occupation or use by any other person. Any such assignment, transfer, hypothecation, subletting,
occupation or use without such consent shall be void and shall constitute a breach of this Lease by
Tenant and shall, at the option of Landlord exercised by written notice to Tenant, terminate this
Lease. The leasehold estate under this Lease shall not, nor shall any interest therein, be
assignable for any purpose by operation of law without the written consent of Landlord. As a
condition to its consent, Landlord shall require Tenant to pay all expenses in connection with any
and all subleases and/or assignments and/or any amendments related thereto, including but not
limited to Landlord’s fees for the processing and administration of the consent documentation and
Landlord’s attorneys’ fees (if any), and Landlord shall require Tenant’s subtenant, assignee or
transferee (or other assignees or transferees) to assume in writing all of the obligations under
this Lease and for Tenant to remain liable to Landlord under the Lease.

          B. Grounds to Refuse Proposed Transfer. Notwithstanding the foregoing, Landlord and Tenant
agree that it shall not be unreasonable for Landlord to refuse to consent to a proposed assignment,
sublease or other transfer (“Proposed Transfer”) if the Premises or any other portion of the
Property would become subject to additional or different Government Requirements as a direct or
indirect consequence of the Proposed Transfer and/or the Proposed Transferee’s use and occupancy of
the Premises and the Property. However, Landlord may, in its sole discretion, consent to such a
Proposed Transfer where Landlord is indemnified by Tenant and (i) the subtenant or (ii) the
assignee, in form and substance satisfactory to Landlord and/or to Landlord’s counsel, by Tenant
and/or Proposed Transferee from and against any and all costs, expenses, obligations and liability
arising out of the Proposed Transfer and/or the Proposed Transferee’s use and occupancy of the
Premises and the Property.

          C. Voluntary Termination of Lease – Required Sublease Language. Any and all sublease
agreement(s) between Tenant and any and all subtenant(s) (“Subtenant”) (which agreements must be
consented to by Landlord, pursuant to the requirements of this Lease) shall contain the following
language:

			
	 	 	 
	 
	 	Initial:                     

61

 

Westport 8

     “If Landlord and Tenant jointly and voluntarily elect, for any reason
whatsoever, to terminate the Master Lease prior to the scheduled Master Lease
termination date, then, if Landlord so elects, this Sublease (if then still in
effect) shall terminate concurrently with the termination of the Master Lease.
Subtenant expressly acknowledges and agrees that (1) the voluntary termination of
the Master Lease by Landlord and Tenant and the
resulting termination of this Sublease shall not give Subtenant any right or
power to make any legal or equitable claim against Landlord, including without
limitation any claim for interference with contract or interference with prospective
economic advantage, and (2) Subtenant hereby waives any and all rights it may have
under law or at equity against Landlord to challenge such an early termination of
the Sublease, and unconditionally releases and relieves Landlord, and its officers,
directors, employees and agents, from any and all claims, demands, and/or causes of
action whatsoever (collectively, “Claims”), whether such matters are known or
unknown, latent or apparent, suspected or unsuspected, foreseeable or unforeseeable,
which Subtenant may have arising out of or in connection with any such early
termination of this Sublease. Subtenant knowingly and intentionally waives any and
all protection which is or may be given by Section 1542 of the California Civil Code
which provides as follows: “A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
debtor.

          The term of this Sublease is therefore subject to early termination.
Subtenant’s initials here below evidence (a) Subtenant’s consideration of and
agreement to this early termination provision, (b) Subtenant’s acknowledgment that,
in determining the net benefits to be derived by Subtenant under the terms of this
Sublease, Subtenant has anticipated the potential for early termination, and (c)
Subtenant’s agreement to the general waiver and release of Claims above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Initials:
	 	 	 	 	 	Initials:
	 	 	 	”
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Subtenant
	 	 	 	 	 	Tenant	 	 

          D. State of Incorporation Change; Name Change. Notwithstanding anything to the contrary
above, Tenant’s re-incorporation in another jurisdiction and/or the act of Tenant changing Tenant’s
legal name shall not be considered an assignment; however, (i) Tenant shall provide Landlord with
notice of such change in Tenant’s name and/or state of incorporation, which notice shall include a
copy of the certification from the Secretary of State and (ii) Tenant and Landlord shall execute
Landlord’s standard acknowledgement for any such change in Tenant’s name and/or state of
incorporation.

          E. Permitted Transfers. In addition to and notwithstanding anything to the contrary in
Paragraph 19.A above, and provided Tenant is not in default of this Lease beyond the applicable
cure period, Landlord hereby agrees to: (1) consent to Tenant’s assigning or subletting said Lease
to: (i) any

			
	 	 	 
	 
	 	Initial:                     

62

 

Westport 8

parent or subsidiary corporation, or corporation with which Tenant merges or
consolidates provided that (a) said affiliate or successor owns all or substantially all of the
assets of Tenant, (b) the net worth of said parent or subsidiary corporation, or said corporation
has a net worth equal to or greater than the net worth of Tenant (x) at the time of Lease execution
or (y) at the time of such assignment, merger, or consolidation, whichever is greater (collectively
“Permitted Transfers”), and (c) Tenant shall give Landlord written notice at least thirty (30) days
prior to the effective date of the proposed purchase, merger, consolidation or reorganization; or
(ii) any third party or entity to whom Tenant, as an ongoing concern, sells all or substantially
all of its assets; provided that (a) said affiliate or successor owns all or
substantially all of the assets of Tenant, (b) the net worth of the resulting or acquiring
corporation has a net worth after the merger, consolidation or acquisition equal to or greater than
the net worth of Tenant (x) at the time of Lease execution or (y) at the time of such merger,
consolidation or acquisition, whichever is greater (collectively “Permitted Transfers”), and (c)
Tenant shall give Landlord written notice at least thirty (30) days prior to the effective date of
the proposed purchase, merger, consolidation or reorganization; and (2) waive its right to
terminate the Lease due to a Permitted Transfer. No such assignment or subletting will release the
Tenant from its liability and responsibility under this Lease to the extent Tenant continues in
existence following such transaction. Notwithstanding the above, Tenant shall be required to (a)
give Landlord written notice prior to such assignment or subletting to any party as described in
(i) and (ii) above, (b) execute Landlord’s consent document prepared by Landlord reflecting the
assignment or subletting and (c) pay Landlord’s costs for processing said Consent prior to the
effective date of said assignment or sublease. Nothing herein shall be deemed to permit (i) any
assignee to further assign this Lease or sublet all or any portion of the Premises or (ii) any
subtenant to assign its interest in the sublease to any other party without Landlord’s prior
written consent.”

     14. HAZARDOUS MATERIALS: Effective June 1, 2005, Lease Paragraph 53 (“Hazardous
Materials”) shall be deleted in its entirety and replaced with the following:

          “53. HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with respect to the
existence or use of “Hazardous Materials” (as defined herein) on, in, under or about the Premises
and real property located beneath said Premises and the common areas of the Complex (hereinafter
collectively referred to as the “Property”):

     A. As used herein, the term “Hazardous Materials” shall mean any material, waste, chemical,
mixture or byproduct which is or hereafter is defined, listed or designated under Environmental
Laws (defined below) as a pollutant, or as a contaminant, or as a toxic or hazardous substance,
waste or material, or any other unwholesome, hazardous, toxic, biohazardous, or radioactive
material, waste, chemical, mixture or byproduct, or which is listed, regulated or restricted by any
Environmental Law (including, without limitation, petroleum hydrocarbons or any distillates or
derivatives or fractions thereof, polychlorinated biphenyls, or asbestos). As used herein, the
term “Environmental Laws” shall mean any applicable Federal, State of California or local
government law (including common law), statute, regulation, rule, ordinance, permit, license,
order, requirement, agreement, or approval, or any determination, judgment, directive, or order of
any executive or judicial authority at any level of Federal, State of California or local
government (whether now existing or subsequently adopted or promulgated) relating to pollution or
the protection of the environment, ecology, natural resources, or public health and safety.

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

     B. Tenant shall obtain Landlord’s written consent, which may be withheld in Landlord’s
discretion, prior to the occurrence of any Tenant’s Hazardous Materials Activities (defined below)
(and Tenant shall first provide Landlord with a list of said materials used and specify the
location in the Premises where said materials are used and stored, the method of storage and
disposal of the same, and a copy of the related permits); provided, however, that Landlord’s
consent shall not be required for normal use in compliance with applicable Environmental Laws of
customary household and office supplies, such as mild cleaners, lubricants and copier toner. As
used herein, the term “Tenant’s Hazardous Materials Activities” shall mean any and all use,
handling, generation, storage, disposal, treatment, transportation, release, discharge, or emission
of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, or by Tenant or by any of Tenant’s agents, employees, contractors, vendors,
invitees, visitors or its future subtenants or assignees. Tenant agrees that any and all Tenant’s
Hazardous Materials Activities shall be conducted in strict, full compliance with applicable
Environmental Laws at Tenant’s expense, and shall not result in any contamination of the Property
or the environment. Tenant agrees to provide Landlord with prompt written notice of any spill or
release of Hazardous Materials at the Property during the term of the Lease of which Tenant becomes
aware, and further agrees to provide Landlord with prompt written notice of any violation of
Environmental Laws in connection with Tenant’s Hazardous Materials Activities of which Tenant
becomes aware. If Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at Tenant’s expense: (i)
to install such Hazardous Materials monitoring, storage and containment devices as Landlord
reasonably deems necessary (Landlord shall have no obligation to evaluate the need for any such
installation or to require any such installation); (ii) provide Landlord with a written inventory
of such Hazardous Materials, including an update of same each year upon the anniversary date of the
Commencement Date of the Lease (“Anniversary Date”); and (iii) on each Anniversary Date, to retain
a qualified environmental consultant, acceptable to Landlord, to evaluate whether Tenant is in
compliance with all applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities. Tenant, at its expense, shall submit to Landlord a report from such environmental
consultant which discusses the environmental consultant’s findings within two (2) months of each
Anniversary Date. Tenant, at its expense, shall promptly undertake and complete any and all steps
necessary, and in full compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies identified by the environmental consultant, and promptly provide Landlord
with documentation of all such corrections.

     C. Prior to termination or expiration of the Lease, Tenant, at its expense, shall (i) properly
remove from the Property all Hazardous Materials which come to be located at the Property in
connection with Tenant’s Hazardous Materials Activities, and (ii) fully comply with and complete
all facility closure requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and repairing the
Property to the extent damaged by such closure activities, and (y) obtaining from the local Fire
Department or other appropriate governmental authority with jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws. Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and reports prepared,
received or submitted in connection with any such closure activities.

     D. If Landlord, in its sole discretion, believes that the Property has become contaminated as
a result of Tenant’s Hazardous Materials Activities, Landlord in addition to any other rights it
may have under this Lease or under Environmental Laws or other laws, may enter upon the Property
and conduct

			
	 	 	 
	 
	 	Initial:                     

64

 

Westport 8

inspection, sampling and analysis, including but not limited to obtaining and analyzing
samples of soil and groundwater, for the purpose of determining the nature and extent of such
contamination. Tenant shall promptly reimburse Landlord for the costs of such an investigation,
including but not limited to reasonable attorneys’ fees Landlord incurs with respect to such
investigation, that discloses Hazardous Materials contamination for which Tenant is liable under
this Lease. Notwithstanding the above, Landlord may, at its option and in its sole and absolute
discretion, choose to perform remediation and obtain reimbursement for cleanup costs as set forth
herein from Tenant. Any cleanup costs incurred by Landlord as the result of Tenant’s Hazardous
Materials Activities shall be reimbursed by Tenant within thirty (30) days of presentation of
written documentation of the expense to Tenant by Landlord. Such reimbursable costs shall include,
but not be limited to, any reasonable consultants’ and attorneys’ fees
incurred by Landlord. Tenant shall take all actions necessary to preserve any claims it has
against third parties, including, but not limited to, its insurers, for claims related to its
operation, management of Hazardous Materials or contamination of the Property. Except as may be
required of Tenant by applicable Environmental Laws, Tenant shall not perform any sampling,
testing, or drilling to identify the presence of any Hazardous Materials at the Property, without
Landlord’s prior written consent which may be withheld in Landlord’s discretion. Tenant shall
promptly provide Landlord with copies of any claims, notices, work plans, data and reports
prepared, received or submitted in connection with any sampling, testing or drilling performed
pursuant to the preceding sentence.

     E. Tenant shall indemnify, defend (with legal counsel acceptable to Landlord, whose consent
shall not unreasonably be withheld) and hold harmless Landlord, its employees, assigns, successors,
successors-in-interest, agents and representatives from and against any and all claims (including
but not limited to third party claims from a private party or a government authority), liabilities,
obligations, losses, causes of action, demands, governmental proceedings or directives, fines,
penalties, expenses, costs (including but not limited to reasonable attorneys’, consultants’ and
other experts’ fees and costs), and damages, which arise from or relate to: (i) Tenant’s Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by Tenant prior to the
Commencement Date of the Lease; or (iii) the breach of any obligation of Tenant under this
Paragraph 53 (collectively, “Tenant’s Environmental Indemnification”). Tenant’s Environmental
Indemnification shall include but is not limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and diminution in fair market value of the
Property. Tenant’s Environmental Indemnification shall further include but is not limited to the
obligation to diligently and properly implement to completion, at Tenant’s expense, any and all
environmental investigation, removal, remediation, monitoring, reporting, closure activities, or
other environmental response action (collectively, “Response Actions”). Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and reports prepared,
received or submitted in connection with any Response Actions.

     F. Landlord hereby informs Tenant, and Tenant hereby acknowledges, that the Premises and
adjacent properties overlie a former solid waste landfill site commonly known as the Westport
Landfill (“Former Landfill”). Landlord further informs Tenant, and Tenant hereby acknowledges,
that (i) prior testing has detected the presence of low levels of certain volatile and
semi-volatile organic compounds and other contaminants in the groundwater, in the leachate from the
landfilled solid waste, and/or in certain surface waters of the Property, as more fully described
in Section 2.3.2 of the report entitled “Revised Discharge Monitoring Plan, Westport Landfill Site,
Redwood City, California” prepared by Geomatrix Consultants, dated May 1996 (“Discharge Plan”),
(ii) methane gas is or may be generated by

			
	 	 	 
	 
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Westport 8

the landfilled solid waste (item “i” immediately
preceding and this item “ii” are hereafter collectively referred to as the “Landfill
Contamination”), and (iii) the Premises and the Former Landfill are subject to the California
Regional Water Quality Control Board’s (“Regional Board”) Waste Discharge Requirements Order No.
94-181 (the “Order”). The Order is attached hereto as Exhibit C. As evidenced by their
initials set forth immediately below, Tenant acknowledges that Landlord has previously provided
Tenant with copies of the environmental reports listed on Exhibit D, and Tenant
acknowledges that Tenant and Tenant’s experts (if any) have had ample opportunity to review such
reports and that Tenant has satisfied itself as to the environmental conditions of the Property and
the suitability of such conditions for Tenant’s intended use of the Property.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Initial:
	 	 	 	 	 	Initial:
	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Tenant
	 	 	 	 	 	Landlord	 	 

     G. Landlord shall indemnify, defend, and hold harmless Tenant against any and all claims
asserted by third parties (excluding any agents, employees, contractors, vendors, invitees,
visitors, future subtenants and assignees of Tenant, and excluding any other parties related to
Tenant), including all liabilities, judgments, damages, suits, orders, government directives, costs
and expenses in connection with such claims, which arise from (i) the Landfill Contamination, or
(ii) the Order, as may be amended (“Landlord’s Environmental Indemnity”); provided
however that Landlord’s Environmental Indemnity shall be subject to the following
limitations and conditions:

	 	(1)	 	Landlord’s Environmental Indemnity shall not apply to any economic or
consequential damages suffered by Tenant, including but not limited to loss of business
or profits.
	 
	 	(2)	 	Landlord’s Environmental Indemnity shall not apply, without limitation, to any
releases caused by Tenant’s Hazardous Materials Activities.
	 
	 	(3)	 	Tenant acknowledges that Landlord must comply with the Order, as may be
amended, and with directives of government authorities including the Regional Board,
with respect to the Contamination and the Former Landfill. Tenant further acknowledges
that groundwater monitoring wells, methane recovery wells and equipment, and other
environmental control devices are located on and about the Premises and may be modified
or added to during the term of the Lease (collectively, “Environmental Equipment”), and
that environmental investigation, monitoring, closure and post-closure activities
(collectively, “Environmental Activities”) will be performed on the Premises during the
term of the Lease. Tenant shall allow Landlord, and any other party named as a
discharger under the Order, as may be amended, and their respective agents, consultants
and contractors, and agents of governmental environmental authorities with jurisdiction
(“Government Representatives”) to enter the Premises to access the Environmental
Equipment and to perform Environmental Activities during the term of the Lease,
provided that Tenant’s use and occupancy of the Premises shall not unreasonably be
disturbed.

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

	 	(4)	 	Tenant and Landlord shall reasonably cooperate with each other regarding any
Environmental Activities to be performed, and regarding any Environmental Equipment to
be installed, maintained, or removed on the Premises during the term of the Lease.
	 
	 	(5)	 	Tenant shall be responsible at its expense for repairing any Environmental
Equipment damaged due to the negligence of Tenant or Tenant’s agents, employees,
contractors, vendors, invitees, visitors, future subtenants or assignees (such terms
“invitees” and “visitors” as used in this paragraph shall not include Landlord or any
other party named as a discharger under the Order as may be amended, or any of their
respective agents, consultants or contractors, or any Government Representatives).

     It is agreed that the Tenant’s responsibilities related to Hazardous Materials will survive
the expiration or termination of this Lease and that Landlord may obtain specific performance of
Tenant’s responsibilities under this Paragraph 53.”

     15. BROKERS: Tenant represents and warrants that it has not dealt with any real
estate brokers, agents, or finders in connection with this Amendment, and knows of no real estate
broker, agent or finder who is entitled to a commission in connection with this Amendment (“Lease
Amendment Commission”). Tenant agrees to defend, protect, indemnify and hold Landlord harmless
from and against all claims for Lease Amendment Commissions, finder’s fees, and other compensation
made by any broker, agent, or finder as consequence of the Tenant’s actions or dealings with such
broker, agent or finder.

     16. CHOICE OF LAW/VENUE; SEVERABILITY. This Amendment shall in all respects be
governed by and construed in accordance with the laws of the County of Santa Clara in the State of
California and the venue shall be in Santa Clara County. If any provisions of this Amendment shall
be invalid, unenforceable, or ineffective for any reason whatsoever, all other provisions hereof
shall be and remain in full force and effect.

     17. AUTHORITY TO EXECUTE. The parties executing this Amendment hereby warrant and
represent that they are properly authorized to execute this Amendment and bind the parties on
behalf of whom they execute this Amendment and to all of the terms, covenants and conditions of
this Amendment as they relate to the respective parties hereto.

     18. EXAMINATION OF AMENDMENT: This Amendment No. 4 shall not be effective until its
execution by both Landlord and Tenant.

     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of the Lease shall
remain in full force and effect.

/

/

/

/

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

/

/

/

/

/

(Signatures on Next Page)

/

/

/

/

/

/

/

/

/

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 4 to Lease as of the
day and year last written below.

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 
	WESTPORT JOINT VENTURE	 	 	 	SHUTTERFLY, INC.
	A California joint venture	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	By	 	/s/ Stephen E. Recht
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Steve Recht, Chief Financial Officer
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Jason Peery	 	 	 	Date:	 	6/9/05
	 

	 	 
	 	 	 	 	 	 
	 

	 	Jason Peery, as the Attorney-in-Fact	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PEERY PRIVATE INVESTMENT	 	 	 	 	 	 
	COMPANY-WP, L.P.,	 	 	 	 	 	 
	A California limited partnership	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By
	 	/s/ Jason Peery	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Jason Peery, as Special Trustee of the	 	 	 	 	 	 
	Richard T. Peery Separate Property	 	 	 	 	 	 
	Trust dated 7/20/77, as its General	 	 	 	 	 	 
	Partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PEERY PUBLIC INVESTMENT	 	 	 	 	 	 
	COMPANY-WP, L.P.,	 	 	 	 	 	 
	A California limited partnership	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By
	 	/s/ Jason Peery	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Jason Peery, as Special Trustee of the	 	 	 	 	 	 
	Richard T. Peery Separate Property	 	 	 	 	 	 
	Trust dated 7/20/77, as its General	 	 	 	 	 	 
	Partner	 	 	 	 	 	 

			
	 	 	 
	 
	 	Initial:                     

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Westport 8

	 	 	 	 	 	 	 	 	 
	Date:

	 	6/10/05	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 	 	 

			
	 	 	 
	 
	 	Initial:                     

70exv10w05

 

Exhibit 10.05

AGREEMENT OF LEASE

This Agreement of Lease (‘Lease’) between the parties set forth below incorporates the Basic
Lease Provisions and the General Lease Provisions attached hereto. In addition to other terms
elsewhere defined in this Lease, the following terms whenever used in this Lease shall have only
the meanings set forth in this Section, unless such meanings are expressly modified, limited or
expanded elsewhere herein.

1. BASIC LEASE PROVISIONS

	 	 	 	 	 	 	 
	1.

	 	Effective Date
	 	 	 	July ___, 2005
	 
	 	 	 	 	 	 
	2.

	 	Tenant:
	 	 	 	Shutterfly, Inc., a Delaware corporation
	 
	 	 	 	 	 	 
	3.

	 	Landlord:
	 	 	 	DCT-CA 2004 RN Portfolio L, LP, a Delaware limited partnership
	 
	 	 	 	 	 	 
	4.

	 	Premises:
	 	 	 	The space in the Building cross-hatched on Exhibit A, containing
approximately 9,635 rentable square feet (‘Rentable Area’) (more or
less) or area referred herein as Suite 3157.
	 
	 	 	 	 	 	 
	5.

	 	Building:
	 	 	 	That certain approximately 35,960 square foot warehouse building
located at 3157-3167 Corporate Avenue, Hayward, California.
	 
	 	 	 	 	 	 
	6.

	 	Land:
	 	 	 	That certain approximately 2.545 acre tract of real property more
particularly described on Exhibit B hereto.
	 
	 	 	 	 	 	 
	7.

	 	Property:
	 	 	 	The Land and the Building
	 
	 	 	 	 	 	 
	8.

	 	Initial Term:
	 	 	 	Fourteen (14) months
	 
	 	 	 	 	 	 
	9.

	 	Estimated Commencement Date (Section 2):
	 	 	 	August 1, 2005
	 
	 	 	 	 	 	 
	10.

	 	Estimated Expiration Date (Section 2):
	 	 	 	September 30, 2006
	 
	 	 	 	 	 	 
	11.

	 	Base Rent (Section 4):	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Months:	 	Monthly rate per Rentable Area:	 	Monthly rate:
	 

	 	 	1	 	 	through     1          , inclusive
	 	$	0.00	 	 	$	0.00	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2	 	 	through     14          , inclusive
	 	$	0.60	 	 	$	5,781.00	 

	 	 	 	 	 	 	 
	12.

	 	Installment Payable Upon Execution:
	 	 	 	$10,293.00 (Security Deposit 1st months’ Estimated Initial
Monthly Expenses)
	 
	 	 	 	 	 	 
	13.

	 	Tenant’s Pro Rata Share (Section 4):
	 	 	 	26.79% (9,635/35,960)
	 
	 	 	 	 	 	 
	14.

	 	Estimated Initial Monthly Expenses (Section 4):
	 	 	 	Taxes = $750, Insurance = $247, CAM
= $1,259, Total - $2,256
	 
	 	 	 	 	 	 
	15.

	 	Security Deposit (Section 26):
	 	 	 	$8,037.00 (last month’s Base Rent plus one (1) month’s Estimated
Initial Monthly Expenses)
	 
	 	 	 	 	 	 
	16.

	 	Rent Payment Address:
	 	 	 	DCT-CA 2004 RN Portfolio LLP

Eden Rock 9 – 3157-67 Corporate Avenue

CC# LB20, Dept. 70905

Los Angeles, California 90084-0905
	 
	 	 	 	 	 	 
	17.

	 	Tenant Improvements:
	 	 	 	As is.
	 
	 	 	 	 	 	 
	18.

	 	Permitted Use of the Premises (Section 3):
	 	 	 	General warehouse production and distribution
	 
	 	 	 	 	 	 
	19.

	 	Tenant’s Business:
	 	 	 	General warehouse, production and distribution

1

 

	 	 	 	 	 	 	 
	20.

	 	Landlord’s Address:
	 	 	 	518 17th Street, Suite 1700

Denver, Colorado 80202
	 
	 	 	 	 	 	 
	 

	 	With a copy to:
	 	 	 	CB Richard Ellis

Attn. Sandra Lund

24301 Southland Drive, Suite 404

Hayward, California
	 
	 	 	 	 	 	 
	21.

	 	Tenant’s Address:
	 	 	 	2800 Bridge Parkway
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Redwood City, California 94065
	 
	 	 	 	 	 	 
	 

	 	With a copy to:
	 	 	 	Premises
	 
	 	 	 	 	 	 
	22.

	 	Guarantor:
	 	 	 	N/A
	 
	 	 	 	 	 	 
	 

	 	Guarantor’s Address:
	 	 	 	N/A
	 
	 	 	 	 	 	 
	23.

	 	Landlord’s Broker(s) (Section 31):
	 	 	 	CB Richard Ellis

Attn. Doug Norton

555 12th Street, Suite 900

Oakland, California 94612
	 
	 	 	 	 	 	 
	24.

	 	Tenant’s Broker:
	 	 	 	Attn: Steve Barker

Studley Inc. and CBRE

505 Montgomery St. #1200

San Francisco, California 94111
	 
	 	 	 	 	 	 
	25.

	 	Additional Agreements:
	 	 	 	None

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	DCT-CA 2004 RN Portfolio L, LP	 	 	 	Shutterfly, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

	DCT-CA 2004 RN Portfolio GP, LLC, a Delaware	 	 	 	 	 	 	 	 
	 

	limited liability company, its general partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

	Dividend Capital Operating Partnership LP, a	 	 	 	 	 	 	 	 
	 

	Delaware limited partnership, its sole member	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

	Dividend Capital Trust Inc.,	 	 	 	 	 	 	 	 
	 

	a Maryland corporation, its general partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

	/s/ Daryl H. Mechem	 	 	 	By: 	/s/ Stephen E. Recht	 	 
	 

	 
	 	 	 	 	 	 	 
	 	Daryl H. Mechem	 	 	 	 	Stephen E. Recht	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	Senior Vice President
	 	 	 	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: 
	8/01/05	 	 	 	Date: 	7/29/05	 	 
	 
	 	 	 	 	 	 	 	 	 	 

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Exhibit 10.05

TABLE OF CONTENTS

	 	 	 	 	 	 
	1.	BASIC LEASE PROVISIONS
	 	 	1	 
	2.	COMMENCEMENT
	 	 	4	 
	3.	USE
	 	 	4	 
	4.	RENT
	 	 	5	 
	5.	LATE CHARGE
	 	 	7	 
	6.	UTILITIES
	 	 	7	 
	7.	LANDLORD’S REPAIRS AND MAINTENANCE
	 	 	7	 
	8.	TENANT’S REPAIRS AND MAINTENANCE
	 	 	7	 
	9.	ALTERATIONS
	 	 	8	 
	10.	DESTRUCTION
	 	 	8	 
	11.	INSPECTION
	 	 	9	 
	12.	SIGNS
	 	 	9	 
	13.	ASSIGNMENT AND SUBLETTING
	 	 	9	 
	14.	DEFAULT
	 	 	11	 
	15.	HOLDOVER
	 	 	13	 
	16.	RIGHT TO CURE TENANT’S DEFAULT
	 	 	13	 
	17.	HOLD HARMLESS
	 	 	13	 
	18.	CONDEMNATION
	 	 	14	 
	19.	INSURANCE
	 	 	14	 
	20.	MORTGAGES
	 	 	15	 
	21.	LIENS
	 	 	15	 
	22.	GOVERNMENT REGULATIONS
	 	 	15	 
	23.	NOTICES
	 	 	16	 
	24.	PARKING
	 	 	16	 
	26.	SECURITY DEPOSIT
	 	 	16	 
	27.	ESTOPPEL CERTIFICATES
	 	 	17	 
	28.	CONDITION OF PREMISES
	 	 	17	 
	29.	SUBSTITUTE PREMISES
	 	 	17	 
	30.	PERSONAL PROPERTY TAXES
	 	 	18	 
	31.	BROKERAGE
	 	 	18	 
	32.	SEVERABILITY
	 	 	18	 
	33.	HAZARDOUS MATERIALS
	 	 	18	 
	34.	MISCELLANEOUS
	 	 	18	 

EXHIBIT A – PREMISES

EXHIBIT B – LEGAL DESCRIPTION OF PROPERTY

EXHIBIT C – INTENTIONALLY DELETED

EXHIBIT D – RULES AND REGULATIONS

EXHIBIT E – HVAC MAINTENANCE CONTRACT

EXHIBIT F – MOVE-OUT CONDITIONS

EXHIBIT G – RENEWAL OPTION

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Exhibit 10.05

GENERAL LEASE PROVISIONS

     2. COMMENCEMENT. Landlord leases to Tenant and Tenant leases from Landlord, for the Lease
Term and upon the covenants and conditions set forth in this Lease, the Premises. The Initial Term
of this Lease shall be for the period shown in Item 8 of the Basic Lease Provisions (the ‘Lease
Term’), commencing on August I, 2005. Unless earlier terminated in accordance with the provisions
hereof, the Initial Term of this Lease shall be the period shown in Item 8 of the Basic Lease
Provisions. As used herein, ‘Lease Term’ shall mean the Initial Term referred to in Item 8 of the
Basic Lease Provisions, subject to any extension of the Initial Term hereof exercised in accordance
with the terms and conditions expressly set forth herein. This Lease shall be a binding contractual
obligation effective upon execution hereof by Landlord and Tenant, notwithstanding the later
commencement of the Initial Term of this Lease. Tenant accepts the Premises in its current ‘AS-IS’,
‘WHERE-IS’ condition and in accordance with the conditions described in Exhibit F and Landlord
shall have no obligation to refurbish or otherwise improve the Premises for the Lease Term.

If the facilities providing electrical, plumbing, water and sewer services to the Premises
(‘Services’) are not in good working order on the Effective Date, then Landlord, at its sole cost
and expense, shall be obligated to make such repairs to the facilities providing the Services to
the Premises as are required so that facilities providing Services to the Premises are in good
working order. Landlord further agrees that if Tenant notifies Landlord in writing within sixty
(60) days following the Effective Date that the facilities providing the Services to the Premises
are not in good working order, then Landlord, at its sole expense, shall repair such facilities
providing the Services to the Premises within thirty (30) days of such notice, provided that if
more than thirty (30) days are needed for such repairs, Landlord shall have such additional time as
is necessary to complete such repairs.

     3. USE.

     (a) The
Premises shall be used only for the purpose set forth in Item 18 of the Basic Lease
Provisions and for reasonable and customary uses ancillary thereto, and shall not be used for any
other purpose. Landlord shall have the right to deny its consent to any change in the permitted use
of the Premises in its sole and absolute discretion.

     (b) Outside storage including, without limitation, drop shipments, dock storage, trucks and
other vehicles, is prohibited without Landlord’s prior written consent. Tenant shall obtain, at
Tenant’s sole cost and expense, any and all licenses and permits necessary for Tenant’s
contemplated use of the Premises. Tenant shall comply with all existing and future governmental
laws, ordinances and regulations applicable to the use of the Premises, as well as all requirements
of Landlord’s insurance carrier. Tenant shall not permit any objectionable or unpleasant odors,
smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take any other action which
would constitute a nuisance or which would disturb or endanger any other tenants of the Property,
or unreasonably interfere with such other tenants’ use of their respective space. Tenant shall not
receive, store or otherwise handle any product, material or merchandise which is explosive or
highly inflammable.

     (c) If any Legal Requirement shall, by reason of the nature of Tenant’s particular use or
occupancy of the Premises (as opposed to laws that generally apply to use of the Premises or
Property), impose any duty upon Tenant or Landlord with respect to (i) modification or other
maintenance of the Premises or the Property, or (ii) the use, alteration or occupancy thereof,
Tenant shall comply with such Legal Requirements at Tenant’s sole cost and expense. Notwithstanding
the foregoing, Tenant, at its sole cost and expense, shall be responsible for the Premises
complying with all sprinkler and high pile storage Legal Requirements. If the Building (including
the Premises) is determined by applicable governmental agencies to not be in compliance with Legal
Requirements applicable to the Property as of the Commencement Date, then Landlord shall be fully
responsible, at its sole cost and expense (which shall not be included in CAM), for making all
alterations and repairs to the Property (including the Premises) required by such governmental
agencies so that the Property (including the Premises) complies with all such Legal Requirements.
The term ‘Legal Requirements’ shall mean all covenants and restrictions of record (if any), laws,
statutes, building and zoning codes, ordinances, and governmental orders, conditions of approval,
rules and regulations (including, but not limited to, Title III of the Americans With Disabilities
Act of 1990 and all requirements of Title 24 of the State of California Code), as well as the same
may be amended and supplemented from time to time, including, without limitation, all Legal
Requirements that pertain to the building structure. Notwithstanding the foregoing sentence, if
there is a ‘new’ Legal Requirement (a Legal Requirement first enacted or

4

 

made applicable to the Property after the Commencement Date of this Lease) affecting the
Property (including the Premises), which require Landlord to make capital expenditures or repairs
to the Property (including the Premises) (a ‘New Legal Requirement’), the annual amortized portion
of such capital expenditures or repairs shall be included in CAM which shall be reimbursed by the
tenants in the Property over a commercially reasonable period not to exceed 10 years. Subject to
applicable New Legal Requirements (including any ‘grandfather’ provisions pertaining thereto),
Landlord agrees to maintain the Property (including the Premises) in compliance with all Legal
Requirements.

     (d) Tenant shall not at any time use or occupy the Premises in violation of the certificates
of occupancy issued for or restrictive covenants pertaining to the Building or the Premises, and in
the event that any architectural control committee or department of the State or the city or county
in which the Property is located shall at any time contend or declare that the Premises are used or
occupied in violation of such certificate or certificates of occupancy or restrictive covenants,
Tenant shall, upon five (5) days’ notice from Landlord or any such governmental agency, immediately
discontinue such use of the Premises (and otherwise remedy such violation). The failure by Tenant
to discontinue such use shall be considered a default under this Lease and Landlord shall have the
right to exercise any and all rights and remedies provided herein or by Law. Tenant shall not place
weight upon any portion of the Premises exceeding the structural floor load (per square foot of
area) which such area was designated (and is permitted by Legal Requirements) to carry or otherwise
use any Building system in excess of its capacity or in any other manner which may damage such
system or the Building. Tenant shall not create within the Premises a working environment with a
density of greater than five (5) persons per 1,000 square feet of rentable area.

     4. RENT.
Tenant shall pay the Base Rent (as defined in Item 11 of the Basic Lease
Provisions), Additional Rent (hereinafter defined) and any other amounts required to be paid by
Tenant to Landlord under this Lease (collectively referred to as ‘Rent’) during the Lease Term, in
advance, on the first day of each calendar month, or as otherwise set forth in this Lease, without
setoff or deduction, at the address set forth in Item 16 of the Basic Lease Provisions. In the
event any Rent is due for a partial calendar month or year, the Rent shall be equitably adjusted to
reflect that portion of the Lease Term within such month or year. All accrued Rent shall survive
the expiration or earlier termination of the Lease Term. The obligation of Tenant to pay Rent and
other sums to Landlord and the obligations of Landlord under this Lease are independent
obligations. The first full monthly installment of Base Rent (as set forth in Item 12 of the Basic
Lease Provisions) shall be payable upon Tenant’s execution of this Lease.

     (a) Base Rent. Tenant shall pay to Landlord, as Base Rent, the sums and amounts set forth in
Item 11 of the Basic Lease Provisions.

     (b) Additional Rent. Tenant shall pay to Landlord, as Additional Rent, Tenant’s Pro Rata Share
of the Taxes, Insurance and CAM charges (as such terms are hereinafter defined) incurred by
Landlord for and on behalf of the Property.

     (i) Taxes. Taxes shall include, without limitation, any tax, assessment (both general and
special), trustees’ fee, impositions, license fees, or governmental charge (herein collectively
referred to as ‘Tax’) imposed against the Property, or against any of Landlord’s personal property
located therein. Taxes, as herein defined, are predicated upon the present system of taxation in
the State of California. Therefore, if due to a future change in the method of taxation any rent,
franchise, use, profit or other tax shall be levied against Landlord in lieu of any Tax which would
otherwise constitute a ‘real estate tax’, such rent, franchise, use, profit or other tax shall be
deemed to be a Tax for the purposes herein. In the event Landlord is assessed with a Tax which
Landlord, in its sole discretion, deems excessive, Landlord may challenge said Tax or may defer
compliance therewith to the extent legally permitted; and, in the event thereof; Tenant shall be
liable for Tenant’s Pro Rata Share of all reasonable costs in connection with such challenge. The
estimated monthly amount of Tenant’s Pro Rata Share of Taxes is set forth in Item 14 of the Basic
Lease Provisions, which amount is subject to increase as provided for herein.

     (ii) Insurance. Insurance shall include, without limitation, premiums for liability, property
damage, fire, workers compensation, rent and any and all other insurance (herein collectively
referred to as ‘Insurance’) which Landlord deems necessary to carry on, for, or in connection with
Landlord’s operation of the Property. In addition thereto, in the event Tenant’s use of the
Premises shall result in an increase of any of Landlord’s Insurance premiums, Tenant shall pay to
Landlord, upon demand, as Additional Rent, an amount equal to such increase in

5

 

Insurance. Such payments of Insurance shall be in addition to all premiums of insurance which
Tenant is required to carry pursuant to Paragraph 19 of this Lease. The estimated monthly amount of
Tenant’s Pro Rata Share of Insurance is set forth in Item 14 of the Basic Lease Provisions, which
amount is subject to increase as provided for herein.

     (iii) Common Area Maintenance. Common area maintenance charges (hereinafter referred to as
‘CAM’) shall mean any and all costs, expenses and obligations incurred by Landlord in connection
with the operation, ownership, management, and repair if necessary, of the Building and the
Property, including, without limitation, the following: the maintenance, repair and replacement, if
necessary, of the downspouts, gutters and the non-structural portions of the roof; the paving of
all parking facilities, access roads, driveways, truck ways, sidewalks and passageways; loading
docks and access ramps, trunk-line plumbing (as opposed to branch-line plumbing); common utilities
and exterior lighting; landscaping; snow removal; fire protection; exterior painting and interior
painting of the common areas of the Property; management fees; additions or alterations made by
Landlord to the Property or the Building in order to comply with Legal Requirements (other than
those expressly required herein to be made by Tenant) or that are appropriate to the continued
operation of the Property or the Building as a bulk warehouse facility in the market area, provided
that the cost of additions or alterations that are required to be capitalized for federal income
tax purposes shall be amortized on a straight line basis over a period equal to the lesser of the
useful life thereof for federal income tax purposes or 10 years; and all other expenses incurred by
Landlord for or on behalf of the Property, and all other similar maintenance and repair expenses
incurred by Landlord for or on behalf of the Property. Additionally, CAM does not include costs,
expenses, depreciation or amortization for capital repairs and capital replacements required to be
made by Landlord under Paragraph 7 of this Lease, debt service under mortgages or ground rent under
ground leases, costs of restoration to the extent of net insurance proceeds received by Landlord
with respect thereto, leasing commissions, or the costs of renovating space for tenants. The
estimated monthly amount of Tenant’s Pro Rata Share of CAM is set forth in Item 14 of the Basic
Lease Provisions, which amount is subject to increase as provided for herein.

     (iv) Payment of Additional Rent. Landlord shall have the right to invoice Tenant monthly,
quarterly, or otherwise from time to time, for Tenant’s Pro Rata Share of the actual Taxes,
Insurance and CAM expenses payable by Tenant under this Lease; and Tenant shall pay to Landlord, as
Additional Rent, those amounts for which Tenant is invoiced within thirty (30) days after receipt
of said invoice.

     Alternatively, at Landlord’s election, Landlord shall have the right to invoice Tenant monthly
for Tenant’s Pro Rata Share of such Taxes, Insurance and CAM expenses, as reasonably estimated by
Landlord. Any monies paid in advance to Landlord by Tenant shall not accrue interest thereon. At
the end of each calendar year or property fiscal year, Landlord shall deliver a statement to Tenant
setting forth the difference between Tenant’s actual Pro Rata Share of Taxes, Insurance and/or CAM
expenses and the total amount of monthly payments, paid by Tenant to Landlord. Tenant shall
thereafter pay to Landlord the full amount of any difference between Tenant’s actual obligation
over the total amount of Tenant’s estimated payments, within thirty (30) days after receipt of said
statement; conversely, in the event Tenant’s estimated payments exceed Tenant’s actual obligation,
Landlord shall either refund the overpayment to Tenant or credit said overpayment against Tenant’s
monthly obligation in the forthcoming year.

     For purposes of this Lease, Tenant’s Pro Rata Share is hereinafter defined as a fraction, the
numerator of which shall be the square footage of the Premises, and the denominator of which shall
be the square footage of the rentable area of the Property, which Pro Rata Share is hereby agreed
to be as set forth in Item 13 of the Basic Lease Provisions. In the event this Lease expires on a
date other than the end of a billing period, Tenant’s obligation with respect to any amounts owed
to Landlord shall survive the expiration of the Lease Term, and shall be invoiced to Tenant when
the same have been accurately determined or, at Landlord’s option, such amounts shall be reasonably
estimated by Landlord to reflect the period of time the Lease was in effect during such billing
period.

     Landlord shall maintain complete and accurate records of all Taxes, Insurance and CAM expenses
incurred in connection with the Property. Tenant shall have the right to inspect such records at
Tenant’s sole cost and expense, at the office of Landlord’s managing agent during said agent’s
normal business hours, upon five (5) days prior written notice. Landlord shall not be obligated to
provide Tenant with detailed summaries or receipts for any expenses incurred by or on behalf of the
Property; but Landlord shall provide Tenant with one or more statements setting forth such
expenses, categorized by class and amount. Notwithstanding the aforesaid, unless Tenant asserts

6

 

specific errors within ninety (90) days after receipt of any invoice, or year-end statement,
it shall be deemed that said invoice, or year-end statement, is correct.

     The terms and provisions of this Article 4 shall survive the expiration or earlier termination
of this Lease.

     5. LATE CHARGE. In the event Tenant is late in the payment of any Rent or other charge due
Landlord, Tenant shall be assessed a late charge for Landlord’s increased administrative expenses,
which late charge shall be equal to five percent (5%), per month, of all outstanding amounts owed
Landlord.

     6. UTILITIES. Landlord agrees to supply water, gas, electricity and sewer connections to the
Premises. Tenant shall pay for all gas, electricity, water and sewer used by Tenant within the
Premises, together with any taxes, penalties, surcharges or the like pertaining thereto, and Tenant
shall be liable for all maintenance and equipment with respect to the continued operation thereof
including, without limitation, all electric light bulbs and tubes. In no event shall Landlord be
liable for any interruption or failure of any utility servicing the Property. Landlord may cause at
Tenant’s expenses any utilities used by Tenant to be separately metered or charged directly to
Tenant by the provider.

     7. LANDLORD’S REPAIRS AND MAINTENANCE. Landlord, at Landlord’s sole cost and expense, shall
maintain, repair and replace, if necessary, the foundation, the structural portions of the roof and
the exterior walls. Notwithstanding the aforesaid, in the event any such maintenance or repairs are
caused by the negligence of Tenant or Tenant’s employees, agents or invitees, Tenant shall
reimburse to Landlord, as Additional Rent, the cost of all such maintenance and repairs within
thirty (30) days after receipt of Landlord’s invoice for same. For purposes of this Paragraph, the
term ‘exterior walls’ shall not include windows, plate glass, office doors, dock doors, dock
bumpers, office entries, or any exterior improvement made by Tenant. Landlord reserves the right to
designate all sources of services in connection with Landlord’s obligations under this Lease.
Tenant hereby expressly waives all rights to make repairs at the expense of Landlord or to
terminate this Lease, as provided for in California Civil Code Sections 1941 and 1942, and 1932(1),
respectively, and any similar or successor statute or law in effect or any amendment thereof during
the Lease Term.

     8. TENANT’S REPAIRS AND MAINTENANCE. Tenant, at Tenant’s sole cost and expense, shall at all
times during the Lease Term and in accordance with all Legal Requirements, maintain, service,
repair and replace, if necessary, and keep in good condition and repair all portions of the
Premises which are not expressly the responsibility of Landlord (as set forth in Paragraph 7
above), including, but not limited to, fixtures, equipment and appurtenances thereto, any windows,
plate glass, office doors, dock doors and ancillary equipment, all interior heating, ventilation
and air conditioning equipment, office entries, interior walls and finish work, floors and floor
coverings, water heaters, electrical systems and fixtures, sprinkler systems, dock bumpers, dock
levelers, trailer lights and fans, shelters/seals and restraints, branch plumbing and fixtures, and
pest extermination. In addition thereto, Tenant shall keep the Premises and the dock area servicing
the Premises in a clean and sanitary condition, and shall keep the common parking areas, driveways
and loading docks free of Tenant’s debris. Tenant shall not store materials, waste or pallets
outside of the Premises, and shall timely arrange for the removal and/or disposal of all pallets,
crates and refuge owned by Tenant which cannot be disposed of in the dumpster servicing the
Property. If replacement of equipment, fixtures, and appurtenances thereto are necessary, then
Tenant shall replace the same with equipment, fixtures and appurtenances of the same quality, and
shall repair all damage done in or by such replacement.

     The service contract must include all services suggested by the equipment manufacturer in its
operations/maintenance manual and an executed copy of such contract must be provided to Landlord
prior to the date Tenant takes possession of the Premises. Landlord shall enter into a regularly
scheduled preventative maintenance/service contract on items for and on behalf of Tenant. Such
contract may include, without limitation, all services suggested or recommended by the equipment
manufacturer in the operation and maintenance of such system. Tenant shall reimburse to Landlord,
as Additional Rent, all of Landlord’s costs in connection with said contract, as well as Landlord’s
actual costs of repair and maintenance of the HVAC system. All such contract and related costs
shall be comparable to similar contracts and services in the market place.

     Upon the expiration or earlier termination of this Lease, Tenant shall return the Premises to
Landlord in substantially the same condition as when received, reasonable wear and tear excepted.
Tenant shall perform all

7

 

repairs and maintenance in a good and workmanlike manner, using materials and labor of the
same character, kind and quality as originally employed within the Property; and all such repairs
and maintenance shall be in compliance with all governmental and quasi-governmental laws,
ordinances and regulations, as well as all requirements of Landlord’s insurance carrier. In the
event Tenant fails to properly perform any such repairs or maintenance within a reasonable period
of time, Landlord shall have the option to perform such repairs on behalf of Tenant, in which event
Tenant shall reimburse to Landlord, as Additional Rent, the costs thereof within thirty (30) days
after receipt of Landlord’s invoice for same.

     9. ALTERATIONS. Tenant shall not make any alterations, additions or improvements to the
Premises or Property (‘Alterations’) without the prior written consent of Landlord. Tenant shall
have the right at any time during the Lease Term, without needing Landlord’s prior written consent,
to make cosmetic, non-material and non-structural alterations to the Premises which cost shall not
exceed Twenty Thousand Dollars ($20,000.00) in any one calendar year. Tenant shall make no
Alterations to the Premises, including, without limitation any Alterations (i) which will adversely
impact the Building’s mechanical, electrical or heating, ventilation or air conditioning systems,
or (ii) which will adversely impact the structure of the Building, or (iii) which are visible from
the exterior of the Premises or (iv) which will result in the penetration or puncturing of the
roof, without first obtaining Landlord’s prior written consent or approval to such Alterations
(which consent or approval shall be in the Landlord’s sole and absolute discretion).
Notwithstanding the aforesaid, Tenant, at Tenant’s sole cost and expense, may install such trade
fixtures as Tenant may deem necessary, so long as such trade fixtures do not penetrate or disturb
the structural integrity and support provided by the roof, exterior walls or subfloors. All such
trade fixtures shall be constructed and/or installed by contractors approved by Landlord, in a good
and workmanlike manner, and in compliance with all applicable governmental and quasi-governmental
laws, ordinances and regulations, as well as all requirements of Landlord’s insurance carrier.

     Upon the expiration or earlier termination of this Lease, Tenant shall remove all trade
fixtures and any other Alterations installed by Tenant within the Premises; and, upon such removal,
Tenant shall restore the Premises to a condition substantially similar to that condition when
received by Tenant. However, notwithstanding the aforesaid, upon Landlord’s written election, such
Alterations shall revert to Landlord and shall remain within the Premises. In no event shall
Landlord have any right to any of Tenant’s trade fixtures; and, except as otherwise set forth in
this Lease, Tenant may remove such trade fixtures upon the termination of this Lease, provided
Tenant repairs any damage caused by such removal. If Tenant does not timely remove such property,
then Tenant shall be conclusively presumed to have, at Landlord’s election (i) conveyed such
property to Landlord without compensation or (ii) abandoned such property, and Landlord may dispose
of or store any part thereof in any manner at Tenant’s sole cost, without waiving Landlord’s right
to claim from Tenant all expenses arising out of Tenant’s failure to remove the property, and
without liability to Tenant or any other person. Landlord shall have no duty to be a bailee of any
such personal property. If Landlord elects abandonment, Tenant shall pay to Landlord, upon demand,
any expenses incurred for disposition.

     10. DESTRUCTION. If the Premises or the Property are damaged in whole or in part by casualty
so as to render the Premises untenantable, and if the damages cannot be repaired as reasonably
determined by Landlord within one hundred eighty (180) days from the date of said casualty, this
Lease shall terminate as of the date of such casualty. If the damages can be repaired within said
one hundred eighty (180) days, and Landlord does not elect within sixty (60) days after the date of
such casualty to repair same, then either party may terminate this Lease by written notice served
upon the other. In the event of any such termination, the parties shall have no further obligations
to the other, except for those obligations accrued through the effective date of such termination;
and, upon such termination, Tenant shall immediately surrender possession of the Premises to
Landlord. Should Landlord elect to make such repairs, this Lease shall remain in full force and
effect, and Landlord shall proceed with all due diligence to repair and restore the Premises to a
condition substantially similar to that condition which existed prior to such casualty. In the
event the repair and restoration of the Premises extends beyond one hundred eighty (180) days after
the date of such casualty due to causes beyond the control of Landlord, this Lease shall remain in
full force and effect, and Landlord shall not be liable therefor, but Landlord shall continue to
complete such repairs and restoration with all due diligence. Landlord and Tenant acknowledge and
agree that Rent shall abate during the period the Premises is untenantable due to a casualty loss
under this Paragraph 10. In the event only a portion of the Premises are untenantable, Tenant’s
Rent shall be equitably abated in proportion to that portion of the Premises which are so unfit.
However, there shall be no Rent abatement if said damage is due to the fault or negligence of
Tenant or Tenant’s agents, employees or invitees. Tenant hereby waives the provisions of California
Civil Code

8

 

Section 1932(2) and Section 1933(4) which permit termination of a lease upon destruction of
the leased premises, and the provisions of any similar law now or hereinafter in effect, and the
provisions of this Paragraph 10 shall govern exclusively in case of such destruction.

     11. INSPECTION. Upon prior written notice to Tenant (except in the event of an emergency when
no such notice shall be necessary). Landlord shall have the right to enter and inspect the Premises
at any reasonable time for the purpose of ascertaining the condition of the Premises, or in order
to make such repairs as may be required or permitted to be made by Landlord under the terms of this
Lease; provided, however, Landlord shall use reasonable efforts to minimize any disruption to
Tenant’s business in the Premises during such entry by Landlord. Tenant shall have the duty to
periodically inspect the Premises and notify Landlord should Tenant observe a need for repairs or
maintenance of any obligation to be performed by Landlord under this Lease. Upon receipt of
Tenant’s notice, Landlord shall have a commercially reasonable period of time to make such repairs
or maintenance. In addition thereto, during the last six (6) months of the Lease Term, Landlord
shall have the right to enter the Premises at any reasonable time for the purpose of showing the
Premises to prospective third-party tenants; and, during said six (6) months, Landlord shall have
the right to erect on the Property and/or Premises suitable signs indicating that the Premises are
available for lease.

     Tenant shall give Landlord thirty (30) days written notice prior to Tenant vacating the
Premises, for the purpose of arranging a joint inspection of the Premises with respect to any
obligation to be performed therein by Tenant, including, without limitation, the necessity of any
repair or restoration of the Premises. In the event Tenant fails to notify Landlord of such
inspection, Landlord’s inspection after Tenant vacates shall be conclusively deemed correct for
purposes of determining Tenant’s responsibility for repairs and restoration.

     12. SIGNS. Tenant shall not place or permit any signs, lights, awnings or poles in or about
the Premises or the Property, other than the standard building signage as per Landlord
specifications, without the prior written consent of Landlord; nor shall Tenant change the uniform
architecture, paint, landscape, or otherwise alter or modify the exterior of the Property without
the prior written consent of Landlord.

     13. ASSIGNMENT AND SUBLETTING.

     (a) Tenant shall not directly or indirectly, by operation of law or otherwise, assign, sublet,
mortgage, hypothecate or otherwise encumber all or any portion of its interest in this Lease or in
the Premises or grant any license in any person other than Tenant or its employees to use or occupy
the Premises or any part thereof without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed. Any such attempted assignment, subletting,
license, mortgage, hypothecation, other encumbrance or other use or occupancy without the consent
of Landlord shall be null and void and of no effect. Any mortgage, hypothecation or encumbrance of
all or any portion of Tenant’s interest in this Lease or in the Premises and any grant of a license
or sufferance of any person other than Tenant or its employees to use or occupy the Premises or any
part thereof shall be deemed to be an ‘assignment’ of this Lease. In addition, as used in this
Paragraph 13, the term ‘Tenant’ shall also mean any entity that has guaranteed Tenant’s obligations
under this Lease, and the restrictions applicable to Tenant contained herein shall also be
applicable to such guarantor. Provided no event of monetary default has occurred and is continuing
under this Lease, upon thirty (30) days prior written notice to Landlord, Tenant may, without
Landlord’s prior written consent, assign this Lease to an entity into which Tenant is merged or
consolidated or to an entity to which substantially all of Tenant’s assets are transferred or to an
entity controlled by or is commonly controlled with Tenant, provided (i) such merger,
consolidation, or transfer of assets is for a good business purpose and not principally for the
purpose of transferring Tenant’s leasehold estate, and (ii) the assignee or successor entity has a
tangible net worth, calculated in accordance with generally accepted accounting principles (and
evidenced by financial statements in form reasonably satisfactory to Landlord) at least equal to
the tangible net worth of Tenant immediately prior to such merger, consolidation, or transfer. The
term ‘controlled by’ or ‘commonly controlled with’ shall mean the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of such controlled
person or entity; the ownership, directly or indirectly, of at least fifty-one percent (51%) of the
voting securities of, or possession of the right to vote, in the ordinary direction of its affairs,
at least fifty-one percent (51%) of the voting interest in, any person or entity shall be presumed
to constitute such control.

     (b) No permitted assignment or subletting shall relieve Tenant of its obligation to pay the
Rent and to perform all of the other obligations to be performed by Tenant hereunder. The
acceptance of Rent by Landlord from

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any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease
or to be a consent to any subletting or assignment. Consent by Landlord to one subletting or
assignment shall not be deemed to constitute a consent to any other or subsequent attempted
subletting or assignment. If Tenant desires at any time to assign this Lease or to sublet the
Premises or any portion thereof, it shall first notify Landlord of its desire to do so and shall
submit in writing to Landlord all pertinent information relating to the proposed assignee or
sublessee, all pertinent information relating to the proposed assignment or sublease, and all such
financial information as Landlord may reasonably request concerning the proposed assignee or
subtenant. Any approved assignment or sublease shall be expressly subject to the terms and
conditions of this Lease.

     (c) At any time within thirty (30) days after Landlord’s receipt of the information specified
in subparagraph (b) above, Landlord may by written notice to Tenant elect to terminate this Lease
as to the portion of the Premises so proposed to be subleased or assigned (which may include all of
the Premises), with a proportionate abatement in the Rent payable hereunder.

     (d) Tenant acknowledges that it shall be reasonable for Landlord to withhold its consent to a
proposed assignment or sublease in any of the following instances:

     (i) The assignee or sublessee is not, in Landlord’s reasonable opinion, sufficiently
creditworthy to perform the obligations such assignee or sublessee will have under this Lease;

     (ii) The intended use of the Premises by the assignee or sublessee is not the same as set
forth in this Lease or otherwise reasonably satisfactory to Landlord;

     (iii) The intended use of the Premises by the assignee or sublessee would materially increase
the pedestrian or vehicular traffic to the Premises or the Property;

     (iv) Occupancy of the Premises by the assignee or sublessee would, in the good faith judgment
of Landlord, violate any agreement binding upon Landlord, or the Property with regard to the
identity of tenants, usage in the Property, or similar matters;

     (v) The assignee or sublessee is then actively negotiating with Landlord or has negotiated
with Landlord within the previous six (6) months, or is a current tenant or subtenant within the
Premises or Property;

     (vi) The identity or business reputation of the assignee or sublessee will, in the good faith
judgment of Landlord, tend to damage the goodwill or reputation of the Premises or Property; or

     (vii) In the case of a sublease, the subtenant has not acknowledged that the Lease controls
over any inconsistent provision in the sublease.

The foregoing criteria shall not exclude any other reasonable basis for Landlord to refuse its
consent to such assignment or sublease. Tenant acknowledges and agrees that the restrictions,
conditions and limitations imposed by this Paragraph 13 on Tenant’s ability to assign or transfer
this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or
assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy
or use the Premises or any portion thereof, are, for the purposes of California Civil Code Section
1951.4, as amended from time to time, and for all other purposes, reasonable at the time that the
Lease was entered into, and shall be deemed to be reasonable at the time that Tenant seeks to
assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof,
to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other
person to occupy or use the Premises or any portion thereof; and Tenant’s sole remedy in the event
Landlord unreasonably withholds its consent to an assignment, sublet or transfer in violation of
Tenant’s rights under the Lease shall be injunctive relief and Tenant hereby expressly waives
California Civil Code Sections 1995.310, which permits all remedies provided by law for breach of
contract, including the right to contract damages and the right to terminate the Lease in the event
the Landlord unreasonably withholds consent to a transfer in violation of Tenant’s rights under the
Lease, and any similar or successor statute or law in effect or any amendment thereof during the
Term.

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     (e) Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of
Tenant’s obligations under this Lease shall at all times during the Initial Term and any subsequent
renewals or extensions remain fully responsible and liable for the payment of the Rent and for
compliance with all of Tenant’s other obligations under this Lease. In the event that the Rent due
and payable by a sublessee or assignee (or a combination of the rental payable under such sublease
or assignment, plus any bonus or other consideration therefor or incident thereto) exceeds the Rent
payable under this Lease, then Tenant, after the recovery of all reasonable expenses associated
with the sublease, including tenant improvement costs, architectural fees, commissions, and any
other reasonable concessions provided, shall be bound and obligated to pay Landlord, as additional
rent hereunder, one-half of all such excess Rent and other excess consideration within ten (10)
days following receipt thereof by Tenant.

     (f) If this Lease is assigned or if the Premises is subleased (whether in whole or in part),
or in the event of the mortgage, pledge, or hypothecation of Tenant’s leasehold interest, or grant
of any concession or license within the Premises, or if the Premises are occupied in whole or in
part by anyone other than Tenant, then upon a default by Tenant hereunder Landlord may collect Rent
from the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest was
hypothecated, concessionee or licensee or other occupant and, except to the extent set forth in the
preceding paragraph, apply the amount collected to the next Rent payable hereunder; and all such
Rent collected by Tenant shall be held in deposit for Landlord and immediately forwarded to
Landlord. No such transaction or collection of Rent or application thereof by Landlord, however,
shall be deemed a waiver of these provisions or a release of Tenant from the further performance by
Tenant of its covenants, duties, or obligations hereunder.

     (g) Should Tenant request of Landlord the right to assign or sublet its rights under this
Lease, Landlord shall charge Tenant and Tenant shall pay to Landlord the actual cost of Landlord’s
legal fees up to a maximum amount of One Thousand and No/100 Dollars ($1,000.00).

     14. DEFAULT. This Lease and Tenant’s right to possession of the Premises is made subject to
and condition upon Tenant performing all of the covenants and obligations to be performed by Tenant
hereunder, at the times and pursuant to terms and conditions set forth herein. If Tenant (i) fails
to pay any Rent or other charge when the same is due and such monetary default continues to exist
in full or part at the expiration of five (5) days after written notice is given by Landlord to
Tenant; provided, however, Landlord shall only be obligated to provide such written notice to
Tenant two (2) times within any calendar year and in the event Tenant fails to timely pay Rent or
any other sums for a third time during any calendar year, then Tenant shall be in default for such
late payment and Landlord shall have no obligation or duty to provide notice of such non-payment to
Tenant prior to declaring an event of default under this Lease, (ii) fails to comply with or
observe any other provision of this Lease and such failure shall continue for thirty (30) days
after written notice to Tenant except that if such failure can not reasonably be cured within such
30 day period, Tenant shall be afforded such additional cure period as shall be reasonably
necessary to effect cure (provided that Tenant is acting in good faith and with constant diligence
to cure such failure); (iii) makes an assignment for the benefit of creditors, (iv) vacates or
abandons the Premises for more than thirty (30) days, (v) files or has filed against it a petition
in bankruptcy, (vi) has a receiver, trustee or liquidator appointed over a substantial portion of
its property, or (vii) is adjudicated insolvent (each of the foregoing each being referred to
hereafter as a ‘Default’), then Tenant shall be in default under this Lease. In the event of a
Default under this Lease by Tenant, Landlord may either (a) terminate this Lease, or (b) terminate
Tenant’s right of possession to the Premises without terminating this Lease. In either event,
Landlord shall have the right to dispossess Tenant, or any other person in occupancy, together with
their property, and re-enter the Premises. Upon such re-entry, Tenant shall be liable for all
expenses incurred by Landlord in recovering the Premises, including, without limitation, clean-up
costs, legal fees, removal, storage or disposal of Tenant’s property, and restoration costs. Tenant
agrees that any notice given by Landlord pursuant to this
Paragraph 14 shall satisfy the
requirements for notice under California Code of Civil Procedure Section 1161, and Landlord shall
not be required to give any additional notice in order to be entitled to commence an unlawful
detainer proceeding.

     All rights, powers and remedies of Landlord hereunder and under any other agreement now or
hereafter in force between Landlord and Tenant shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Landlord at law or in equity. The exercise
of any one or more of such rights or remedies shall not impair Landlord’s right to exercise any
other right or remedy, including, without limitation, any and all rights and remedies of Landlord
under California Civil Code Section 1951.8, California Code of Civil Procedure Section 1161 et
seq., or any similar, successor or related provision of law.

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     In the event Landlord elects to terminate this Lease, all Rent through the effective date of
termination shall immediately become due, together with any late fees payable to Landlord and the
aforesaid expenses incurred by Landlord to recover possession, plus an amount equal to all tenant
concessions granted to Tenant including, but not limited to, free or reduced rent, all tenant
finish constructed within the Premises, or any contribution paid to Tenant in lieu thereof.

     In the event Landlord elects not to terminate this Lease, but only to terminate Tenant’s right
of possession to the Premises, Landlord may re-enter the Premises without process of law if Tenant
has vacated the Premises or, if Tenant has not vacated the Premises by an action for ejection,
unlawful detainer, or other process of law. No such dispossession of Tenant or re-entry by Landlord
shall constitute or be construed as an election by Landlord to terminate this Lease, unless
Landlord delivers written notice to Tenant specifically terminating this Lease. Upon Landlord
recovering possession, Landlord shall use reasonable efforts to mitigate its damages and relet the
Premises upon terms and conditions satisfactory to Landlord; however, Landlord shall have no duty
to prioritize the reletting of the Premises over the leasing of other vacant space within the
Property. Tenant shall remain liable for all past due Rent and late fees, plus the aforesaid
expenses incurred by Landlord to recover possession of the Premises. In addition, Tenant shall be
liable for all Rent thereafter accruing under this Lease, payable at Landlord’s election: (a)
monthly as such Rent accrues, in an amount equal to the Rent payable under this Lease less the rent
(if any) collected from any reletting, or (b) in a lump sum within thirty (30) days after Landlord
repossesses the Premises, in an amount equal to the total Rent payable under this Lease for the
unexpired term, discounted at the rate of six percent (6%), per annum. In the event the Premises
are relet, Tenant shall also be liable for all costs of reletting, including, without limitation,
any brokers fees, legal fees, and/or tenant finish required to be paid in connection with any
reletting. Should the Rents received from such reletting, when applied in the manner and order
indicated above, at any time be less than the total amount owing from Tenant pursuant to this
Lease, then Tenant shall pay such deficiency to Landlord, and if Tenant does not pay such
deficiency within 5 days of its receipt of written notice, Landlord may bring an action against
Tenant for recovery of such deficiency or pursue its other remedies hereunder or under California
Civil Code Section 1951.8, California Code of Civil Procedure Section 1161 et seq., or any similar,
successor or related provision of applicable Laws.

     No payment of money by Tenant after the termination of this Lease, service of any notice,
commencement of any suit, or after final judgment for possession of the Premises, shall reinstate
this Lease or affect any such notice, demand or suit, or imply consent for any action for which
Landlord’s consent is required. Tenant shall pay all costs and attorney’s fees incurred by Landlord
from enforcing the covenants of this Lease. Should Landlord elect not to exercise its rights in the
event of a Default, it shall not be deemed a waiver of such rights as to subsequent Defaults.

     Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other pertinent present or future Law, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default of Tenant hereunder.

     In the event of any Default by Tenant, then in addition to any other remedies available to
Landlord at law or in equity and under this Lease, Landlord shall have the following remedies:

     (a) the remedy described in California Civil Code Section 1951.4 (Landlord may continue this
Lease in effect after Tenant’s Default and abandonment and recover Rent as it becomes due, provided
Tenant has the right to sublet or assign, subject only to reasonable limitations). In addition,
Landlord shall not be liable in any way whatsoever for its failure or refusal to relet the
Premises. For purposes of hereof, the following acts by Landlord will not constitute the
termination of Tenant’s right to possession of the Premises:

     (i) acts of maintenance or preservation or efforts to relet the Premises, including,
but not limited to, alterations, remodeling, redecorating, repairs, replacements and/or
painting as Landlord shall consider advisable for the purpose of reletting the Premises or
any part thereof, or

     (ii) The appointment of a receiver upon the initiative of Landlord to protect
Landlord’s interest under this Lease or in the Premises; and

     (b) if Landlord elects to terminate this Lease, Landlord shall be entitled to recover from
Tenant the following, as provided in Section 1951.2 of the California Civil Code:

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     (i) The worth at the time of award of the unpaid rent and charges equivalent to rent
earned as of the date of the termination hereof;

     (ii) The worth at the time of award of the amount by which the unpaid rent and charges
equivalent to rent which would have been earned after the date of termination hereof until
the time of award exceeds the amount of such Rent loss that Tenant proves could have been
reasonably avoided;

     (iii) The worth at the time of award of the amount by which the unpaid rent and charges
equivalent to rent for the balance of the Term after the time of award exceeds the amount of
such Rent loss that Tenant proves could be reasonably avoided;

     (iv) Any other amount necessary to compensate Landlord for the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which, in the
ordinary course of things, would be likely to result therefrom; and

     (v) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable Laws.

For the purposes hereof, the “time of award” shall mean the date upon which the judgment in
any action brought by Landlord against Tenant by reason of such default is entered or such
earlier date as the court may determine; the “worth at the time of award” of the amounts
shall be computed by allowing interest at the lesser of the twelve percent (12%) or the
maximum rate permitted by applicable Laws; and the “worth at the time of award” of the
amount referred shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus 1% per annum. Tenant agrees
that such charges shall be recoverable by Landlord under California Code of Civil Procedure
Section 1174(b) or any similar, successor or related provision of applicable Laws. Further,
Tenant hereby waives the provisions of California Code of Civil Procedure Section 1174(c)
and California Civil Code Section 1951.7 or any other similar, successor or related
provision of applicable Laws providing for Tenant’s right to satisfy any judgment in order
to prevent a forfeiture of this Lease or requiring Landlord to deliver written notice to
Tenant of any reletting of the Premises. No acts or efforts of Landlord to mitigate damages
caused by Tenant’s breach or default shall be construed to operate or waive or reduce any
damages or other sums recoverable by Landlord hereunder

     15. HOLDOVER. Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord, without demand, in as good condition as when delivered to
Tenant, reasonable wear and tear excepted. If Tenant shall remain in possession of the Premises
after the termination of this Lease, and hold over for any reason, Tenant shall be deemed guilty of
unlawful detainer; or, at Landlord’s election, Tenant shall be deemed a holdover tenant and shall
pay to Landlord monthly Rent equal to one hundred fifty percent (150%) of the total Rent payable
hereunder during the last month prior to any such holdover. In addition, Tenant shall be liable for
all damages incurred by Landlord as a result of such holding over. Should any of Tenant’s property
remain within the Premises after the termination of this Lease, it shall be deemed abandoned, and
Landlord shall have the right to store or dispose of it at Tenant’s cost and expense.

     16. RIGHT TO CURE TENANT’S DEFAULT. In the event Tenant is in Default under any provision of
this Lease, other than for the payment of Rent, and Tenant has not cured same within ten (10) days
after receipt of Landlord’s written notice, Landlord may cure such Default on behalf of Tenant, at
Tenant’s expense. Landlord may also perform any obligation of Tenant, without notice to Tenant,
should Landlord deem the performance of same to be an emergency. Any monies expended by Landlord to
cure any such Default(s), or resolve any deemed emergency shall be payable by Tenant as Additional
Rent. If Landlord incurs any expense, including reasonable attorney’s fees, in prosecuting and/or
defending any action or proceeding by reason of any emergency or Default, Tenant shall reimburse
Landlord for same, as Additional Rent, with interest thereon at twelve percent (12%) annually from
the date such payment is due Landlord.

     17. HOLD HARMLESS. Except to the extent attributable to the negligence or willful misconduct
of Landlord, Landlord shall not be liable to Tenant for any damages to the Premises or the
Property, nor for any damages to Tenant on or about the Property, nor for any other damages arising
from the action of Landlord, Tenant,

13

 

co-tenants or other occupants of the Property; and Tenant hereby releases, discharges and
shall indemnify, hold harmless and defend Landlord, at Tenant’s sole cost and expense, from all
losses, claims, liability, damages, and expenses (including reasonable attorney’s fees) due to any
damage or injury to persons or property of the parties hereto or of third persons, caused by
Tenant’s use or occupancy of the Premises, Tenant’s breach of any covenant under this Lease, or
Tenant’s use of any equipment, facilities or property in, on, or adjacent to the Property. In the
event any suit shall be instituted against Landlord by any third person for which Tenant is hereby
indemnifying and holding Landlord harmless, Tenant shall defend such suit at Tenant’s sole cost and
expense with counsel reasonably satisfactory to Landlord; or, in Landlord’s discretion, Landlord
may elect to defend such suit, in which event Tenant shall pay Landlord, as Additional Rent,
Landlord’s costs of such defense. This Paragraph shall survive the expiration or earlier
termination of this Lease.

     18. CONDEMNATION. If the whole or any part of the Property or the Premises shall be taken in
condemnation, or transferred by agreement in lieu of condemnation, either Tenant or Landlord may
terminate this Lease by serving the other party with written notice of same, effective as of the
taking date; provided in the case of termination by Tenant that at least 50% of the Premises is so
taken and the remaining portion of the Premises is not adequate for the purpose set forth in Item
18 of the Basic Lease Provisions of this Lease. If neither Tenant nor Landlord elect to terminate
this Lease as aforesaid, then this Lease shall terminate on the taking date only as to that portion
of the Premises so taken, and the Rent and other charges payable by Tenant shall be reduced
proportionally. Landlord shall be entitled to the entire condemnation award for all realty and
improvements. Tenant shall only be entitled to an award for Tenant’s fixtures, personal property,
and reasonable moving expenses, provided Tenant independently petitions the condemning authority
for same. Notwithstanding the aforesaid, if any condemnation takes a portion of the parking area
the result of which does not reduce the minimum required parking ratio below that established by
local code os ordinance, this Lease shall continue in full force and effect without modification.
The provisions of California Code of Civil Procedure Section 1265.130, which allows either party to
petition the Superior Court to terminate the Lease in the event of a partial taking of the Premises
or the Property or the parking areas for the Premises or the Property, and any other applicable law
now or hereafter enacted, are hereby waived by Tenant

     19. INSURANCE. Landlord shall maintain in full force and effect policies of insurance covering
the Property in an amount not less than one hundred percent (100%) of the
Property’s “replacement cost”, as such term is deemed in the Replacement Cost Endorsement attached
to such policy, insuring against physical loss or damage generally included in the classification
of ‘all risk’ coverage. Except as set forth below, such insurance shall be for the sole benefit of
Landlord, and under Landlord’s sole control.

     Tenant shall maintain in full force and effect throughout the term of this Lease policies
providing ‘all risk’ insurance coverage protecting against physical damage (including, but not
limited to, fire, lightning, extended coverage perils, vandalism, sprinkler leakage, water damage,
collapse, and other special extended perils) to the extent of 100% of the replacement cost of
Tenant’s property and improvements, as well as broad form comprehensive or commercial general
liability insurance, in an occurrence form, insuring Landlord and Tenant jointly against any
liability (including bodily injury, property damage and contractual liability) arising out of
Tenant’s use or occupancy of the Premises, with a combined single limit of not less than
1,000,000 per occurrence and $2,000,000 in the aggregate, or for a greater
amount as may be reasonably required by Landlord from time to time. All such policies shall be of a
form and content satisfactory to Landlord; and Landlord, its Property Manager, and any Mortgagee,
shall be named as an additional insured on all such policies. All policies shall be with companies
licensed to do business in the State of California, with financial ratings not lower than VII in
Best’s Insurance Guide (most current edition). Tenant shall furnish Landlord with certificates of
all policies at least ten (10) days prior to occupancy; and, further, such policies shall provide
that not less than thirty (30) days written notice be given to Landlord before any such policies
are canceled or substantially changed to reduce the insurance provided thereby. All such policies
shall be primary and non-contributing with or in excess of any insurance carried by Landlord.
Tenant shall not do any act which may make void or voidable any insurance on the Premises or
Property. In the event Tenant’s use of the Premises shall result in an increase
in Landlord’s insurance premiums during the Term of this Lease and so long as Tenant is a
holdover under this Lease, Tenant shall pay to Landlord upon demand, as Additional Rent, an
amount equal to such increase in insurance.

     Landlord, Tenant, and all parties claiming under them, each mutually release and discharge
each other from responsibility for that portion of any loss or damage paid or reimbursed by an
insurer of Landlord or Tenant under

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any fire, extended coverage or other property insurance policy maintained by Tenant with
respect to its Premises or by Landlord with respect to the Building or the Property (or which would
have been paid had the insurance required to be maintained hereunder been in full force and
effect), no matter how caused, including negligence, and each waives any right of recovery from the
other including, but not limited to, claims for contribution or indemnity, which might otherwise
exist on account thereof. Any fire, extended coverage or property insurance policy maintained by
Tenant with respect to the Premises, or Landlord with respect to the Building or the Property,
shall contain, in the case of Tenant’s policies, a waiver of subrogation provision or endorsement
in favor of Landlord, and in the case of Landlord’s policies, a waiver of subrogation provision or
endorsement in favor of Tenant, or, in the event that such insurers cannot or shall not include or
attach such waiver of subrogation provision or endorsement, Tenant and Landlord shall obtain the
approval and consent of their respective insurers, in writing, to the terms of this Lease. Tenant
agrees to indemnify, protect, defend and hold harmless Landlord, and its agents, officers,
employees and contractors from and against any claim, suit or cause of action asserted or brought
by Tenant’s insurers for, on behalf of, or in the name of Tenant, including, but not limited to,
claims for contribution, indemnity or subrogation, brought in contravention of this paragraph. The
mutual releases, discharges and waivers contained in this provision shall apply EVEN IF THE LOSS OR
DAMAGE TO WHICH THIS PROVISION APPLIES IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD OR
TENANT.

     Landlord shall not be responsible for, and Tenant releases and discharges Landlord from, and
Tenant further waives any right of recovery from Landlord for, any loss for or from business
interruption or loss of use of the Premises suffered by Tenant in connection with Tenant’s use or
occupancy of the Premises, EVEN IF SUCH LOSS IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF
LANDLORD, except as to Landlord’s intentional willful misconduct.

     20. MORTGAGES. This Lease is subject and subordinated to any mortgages, deeds of trust or
underlying leases, as well as to any extensions or modifications thereof (hereinafter collectively
referred to as ‘Mortgages’), now of record or hereafter placed of record. In the event Landlord
exercises its option to further subordinate this Lease, Tenant shall at the option of the holder of
said Mortgage attorn to said holder. Any subordination shall be self-executing, but Tenant shall,
at the written request of Landlord, execute such further assurances as Landlord deems desirable to
confirm such subordination. In the event Tenant should fail or refuse to execute any instrument
required under this Paragraph, within fifteen (15) days after Landlord’s request, Landlord shall be
granted a limited power of attorney to execute such instrument in the name of Tenant. In the event
any existing or future lender, holding a mortgage, deed of trust or other commercial paper,
requires a modification of this Lease which does not increase Tenant’s Rent hereunder, or does not
materially change any obligation of Tenant hereunder, Tenant agrees to execute appropriate
instruments to reflect such modification, upon request by Landlord.

     21. LIENS. Tenant shall not mortgage or otherwise encumber or allow to be encumbered its
interest herein without obtaining the prior written consent of Landlord. Should Tenant cause any
mortgage, lien or other encumbrance (hereinafter singularly or collectively referred to as
“Encumbrance”) to be filed, against the Premises or the Property, Tenant shall dismiss or bond
against same within fifteen (15) days after the filing thereof. If Tenant fails to remove said
Encumbrance within said fifteen (15) days, Landlord shall have the absolute right to remove said
Encumbrance by whatever measures Landlord shall deem convenient including, without limitation,
payment of such Encumbrance, in which event Tenant shall reimburse Landlord, as Additional Rent,
all costs expended by Landlord, including reasonable attorneys fees, in removing said Encumbrance.
Tenant shall indemnify Landlord and its agents, employees and contractors against any damages,
losses or costs arising out of any such claim. Tenant’s indemnification of Landlord contained in
this Paragraph shall survive the expiration or earlier termination of this Lease. All of the
aforesaid rights of Landlord shall be in addition to any remedies which either Landlord or Tenant
may have available to them at law or in equity.

     22. GOVERNMENT REGULATIONS. Tenant, at Tenant’s sole cost and expense, shall conform with all
laws and requirements of any Municipal, State, or Federal, authorities now in force, or which may
hereafter be in force, pertaining to the Premises, as well as any requirement of Landlord’s
insurance carrier with respect to Tenant’s use of the Premises. The judgment of any court, or an
admission of Tenant in any action or proceeding at law, whether Landlord be a party thereto or not,
shall be conclusive of the fact as between Landlord and Tenant. Notwithstanding anything to the
contrary contained in this Lease, Tenant is not liable or responsible (financially, legally or
otherwise) for violations of, or non-compliance with, any of the laws and requirements, etc.,
previously identified in this Section 22 if such violation or non-compliance existed as of the
Commencement Date.

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     23. NOTICES. All notices which are required to be given hereunder shall be in writing, and
delivered by either (a) United States registered or certified mail, or (b) an overnight commercial
package courier/delivery service with a follow-up letter sent by United States mail; and such
notices shall be sent postage prepaid, addressed to the parties hereto at their respective
addresses set forth in Items 20 and 21 of the Basic Lease Provisions. Either party may designate a
different address by giving notice to the other party of same at the address set forth above.
Notices shall be deemed received on the date of the return receipt. If any such notices are
refused, or if the party to whom any such notice is sent has relocated without leaving a forwarding
address, then the notice shall be deemed received on the date the notice-receipt is returned
stating that the same was refused or is undeliverable at such address.

     24. PARKING. Tenant shall be liable for all vehicles owned, rented or used by Tenant or
Tenant’s agents, employees, contractors and invitees in or about the Property. Tenant shall not
store any equipment, inventory or other property in any trucks, nor store any trucks on the parking
lot of the Property. Notwithstanding the aforesaid, in the event the Premises have access to a
loading dock which exclusively services the Premises, and no other space. In the event the Premises
have access to a loading dock which does not exclusively service the Premises, Tenant shall not
park its trucks in the dock area longer than the time it takes to reasonably load or unload its
trucks. In no event shall Tenant park any vehicle in or about a loading dock which exclusively
services another tenant within the Property, or in a thoroughfare, driveway, street, or other area
not specifically designated for parking. Landlord reserves the right to establish uniform rules and
regulations for the loading and unloading of trucks upon the Property, which rules may include the
right to designate specific parking spaces for tenants’ use. Upon request by Landlord, Tenant shall
move its trucks and vehicles if, in Landlord’s reasonable opinion, said vehicles are in violation
of any of the above restrictions.

     25. OWNERSHIP.

     (a) In the event of a sale or conveyance by Landlord of the Building or the Property, Landlord
shall be released from any and all liability under this Lease. If the Security Deposit has been
made by Tenant prior to such sale or conveyance, Landlord shall transfer the Security Deposit to
the purchaser, and upon delivery to Tenant of notice thereof, Landlord shall be discharged from any
further liability in reference thereto.

     (b) Landlord shall not be in default of any obligation of Landlord hereunder unless Landlord
fails to perform any of its obligations under this Lease within thirty (30) days after receipt of
written notice of such failure from Tenant; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its performance, Landlord shall
not be in default if Landlord commences to cure such default within the thirty (30) day period and
thereafter diligently prosecutes the same to completion. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of its ownership of the Premises and not
thereafter. All obligations of Landlord hereunder shall be construed as covenants, not conditions;
and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this
Lease for breach of Landlord’s obligations hereunder.

     (c) Any liability of Landlord for a default by Landlord under this Lease, or a breach by
Landlord of any of its obligations under the Lease, shall be limited solely to its interest in the
Property, and in no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of Landlord.
Tenant’s sole and exclusive remedy for a default or breach of this Lease by Landlord shall be
either (i) an action for damages, or (ii) an action for injunctive relief; Tenant hereby waiving
and agreeing that Tenant shall have no offset rights or right to terminate this Lease on account of
any breach or default by Landlord under this Lease. Under no circumstances whatsoever shall
Landlord ever be liable for punitive, consequential or special damages under this Lease and Tenant
waives any rights it may have to such damages under this Lease in the event of a breach or default
by Landlord under this Lease.

     26. SECURITY DEPOSIT. Tenant has deposited with Landlord a Security Deposit as set forth in
Item 15 of the Basic Lease Provisions, as security for the full and faithful performance of
Tenant’s obligations under this Lease. The parties agree that, unless otherwise required by law,
Landlord shall not be required to keep said Security Deposit separate from its general funds, nor
pay any interest thereon to Tenant. Such Security Deposit shall not be construed as an advance
Rent payment, or as a measure of Landlord’s damages in the event of a Default by Tenant. If Tenant
should be placed in Default with respect to any provision of this Lease, Landlord may apply all

16

 

or a portion of said Security Deposit for the payment of any sum in Default or for the payment
of any amount which Landlord expends by reason of such Default. If any portion of said Security
Deposit is so applied, Tenant shall deposit with Landlord, within five (5) days after receipt of
Landlord’s written demand, an amount sufficient to restore said Security Deposit to its original
amount. Upon the expiration or earlier termination of this Lease, Landlord shall return said
Security Deposit to Tenant, provided Tenant has paid to Landlord all sums owing to Landlord under
this Lease, and Tenant has returned the Premises to Landlord in as good order and satisfactory
condition as when Tenant took possession.

     27. ESTOPPEL CERTIFICATES. Upon Landlord’s written request, Tenant shall execute and return
to Landlord, within fifteen (15) days, a statement in writing certifying that this Lease is
unmodified and in full force and effect, that Tenant has no defenses, offsets or counterclaims
against its obligations to pay any Rent or to perform any other covenants under this Lease, that
there are no uncured Defaults of Landlord or Tenant, and setting forth the dates to which the Rent
and other charges have been paid, and any other information reasonably requested by Landlord. In
the event Tenant fails to return such statement within said fifteen (15) days, setting forth the
above or, alternatively, setting forth those lease modifications, defenses and/or uncured Defaults,
Tenant shall be in default hereunder or, at Landlord’s election, it shall be deemed that Landlord’s
statement is correct with respect to the information therein contained. Any such statement
delivered pursuant to this Paragraph may be relied upon by any prospective purchaser, mortgagee, or
assignee of any mortgagee of the Property.

     28. CONDITION OF PREMISES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS LEASE, LANDLORD
HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY THAT THE PREMISES ARE SUITABLE
FOR TENANT’S INTENDED PURPOSE OR USE, WHICH DISCLAIMER IS HEREBY ACKNOWLEDGED BY TENANT. THE TAKING
OF POSSESSION BY TENANT SHALL BE CONCLUSIVE EVIDENCE THAT TENANT:

	 	(i)	 	ACCEPTS THE PREMISES, THE BUILDING AND LEASEHOLD IMPROVEMENTS
AS SUITABLE FOR THE PURPOSES FOR WHICH THE PREMISES WERE LEASED;
	 
	 	(ii)	 	ACCEPTS THE PREMISES AND PROPERTY AS BEING IN GOOD AND
SATISFACTORY CONDITION;
	 
	 	(iii)	 	WAIVES ANY DEFECTS IN THE PREMISES AND ITS APPURTENANCES
EXISTING NOW OR IN THE FUTURE, EXCEPT THAT TENANT’S TAKING OF POSSESSION SHALL
NOT BE DEEMED TO WAIVE LANDLORD’S COMPLETION OF MINOR FINISH WORK ITEMS THAT DO
NOT INTERFERE WITH TENANT’S OCCUPANCY OF THE PREMISES; AND
	 
	 	(iv)	 	WAIVES ALL CLAIMS BASED ON ANY IMPLIED WARRANTY OF SUITABILITY
OR HABITABILITY.

Notwithstanding the foregoing provisions of this Paragraph 28, Landlord agrees that if Tenant
notifies Landlord in writing within sixty (60) days following the Substantial Completion of the
Tenant Improvements (the ‘60 Day Period’) of any material latent defects in the Premises discovered
by Tenant (and not caused by Tenant, its employees, agents, contractors or business invitees),
which materially affect the use, occupancy or aesthetic appearance of the Premises (‘Defects’),
then Landlord, at its sole expense, shall repair such Defects within thirty (30) days after receipt
of such notice from Tenant, provided that if more than thirty (30) days is needed to adequately
repair such Defect, then as long as Landlord diligently proceeds with such repairs, Landlord shall
have such additional time as is necessary to complete such repairs. Tenant covenants to Landlord
that it shall notify Landlord promptly of Tenant’s or its agent’s, representative’s or contractor’s
discovery of any Defects in the Premises, and hereby agrees that it will waive any and all claims
for damages against Landlord due to such Defects if Tenant does not timely and within the 60 Day
Period notify Landlord of the same. Nothing contained in this Paragraph 28 shall be construed to
limit Landlord’s obligation to maintain the Property as set forth in Paragraph 7 hereof.

     29. Intentionally Deleted.

17

 

     30. PERSONAL PROPERTY TAXES. Tenant shall timely pay all taxes assessed against Tenant’s
personal property and all improvements to the Premises in excess of Landlord’s standard
installations. If said personal property and improvements are assessed with the property of
Landlord, Tenant shall pay to Landlord an amount equal to Tenant’s share of such taxes, within ten
(10) days after receipt of Landlord’s statement for same.

     31. BROKERAGE. Landlord and Tenant each warrant to the other that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this Lease, excepting only
those referred to in Items 23 and 24 of the Basic Lease Provisions (“Brokers”) and that it knows of
no other real estate broker or agent who is or might be entitled to a commission in connection with
this Lease. Landlord and Tenant each hereby agree to indemnify, defend and hold the other harmless
from and against all claims for any brokerage commissions, finders’ fees or similar payments by any
persons other than those Brokers listed above and all costs, expenses and liabilities incurred in
connection with such claims, including reasonable attorneys’ fees and costs.

     32. SEVERABILITY. In the event any provision of this Lease is invalid or unenforceable, the
same shall not affect or impair the validity or enforceability of any other provision.

     33. HAZARDOUS MATERIALS. Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or about the Property by
Tenant, its agents, employees, contractors, sublessees or invitees without the prior written
consent of Landlord. Landlord shall be entitled to take into account such other factors or facts as
Landlord may reasonably determine to be relevant to determining whether to grant or withhold
consent to Tenant’s proposed activity with respect to Hazardous Material. In no event, however,
shall Landlord be required to consent to the installation or use of any storage tanks on the
Property. Tenant, at its sole cost and expense, shall remediate in a manner satisfactory to
Landlord any Hazardous Materials released on or from the Property by Tenant, its agents, employees,
contractors, subtenants or invitees. Tenant shall complete and certify to disclosure statements as
requested by Landlord from time to time relating to Tenant’s transportation, storage, use,
generation, manufacture or release of Hazardous Materials on the Premises. As defined in any
applicable laws, Tenant is and shall be deemed to be the “operator” of Tenant’s “facility” and the
“owner” of all Hazardous Materials brought on the Premises by Tenant, its agents, employees,
contractors or invitees, and the wastes, by-products, or residues generated, resulting, or produced
therefrom. As used in the Lease, the term “Hazardous Materials” means any flammable items,
explosives, radioactive materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of “hazardous
substance”, “hazardous wastes,” “hazardous material”, or “toxic substances” now or subsequently
regulated under any applicable federal, state or local laws or regulations, including without
limitation petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar compounds,
and including any different products and materials which are subsequently found to have adverse
effects on the environment or the health and safety of persons. Each of the covenants and
agreements of Tenant set forth in this Paragraph shall survive the expiration or earlier
termination of this Lease. Hazardous Materials shall include materials regulated under the
California Health and Safety Code or the California Water.

     34. MISCELLANEOUS.

     (a) In addition to the terms and conditions set forth herein, Landlord and Tenant shall be
bound by those certain Rules and Regulations, set forth on Exhibit D, attached hereto and made a
part hereof.

     (b) All of the covenants of Tenant hereunder shall be deemed and construed to be “conditions”
as well as ‘covenants’ as though both words were used in each separate instance.

     (c) This Lease shall not be recorded by Tenant without the prior written consent of Landlord.

     (d) The paragraph headings appearing in this Lease are inserted only as a matter of
convenience, and in no way define or limit the scope of any paragraph.

     (e) Except with respect to Tenant’s obligation for the payment of Rent hereunder, in the event
any obligation to be performed by either Landlord or Tenant is prevented or delayed due to labor
disputes, acts of God,

18

 

inability to obtain materials, government restrictions, casualty, or other causes beyond the
control of the parties hereto, the party liable to perform such obligation shall be excused from
performing same for a period of time equal to any aforesaid delay.

     (f) Submission of this Lease shall not be deemed to be an offer, or an acceptance, or a
reservation of the Premises; and Landlord shall not be bound hereby until Landlord has delivered to
Tenant a fully executed copy of this Lease, signed by both of the
parties on the last page of this
Lease in the spaces herein provided. Until such delivery, Landlord reserves the right to exhibit
and lease the Premises to other prospective tenants. Notwithstanding anything contained herein to
the contrary, Landlord may withhold possession of the Premises from Tenant until such time as
Tenant has paid to Landlord the Security Deposit required by Paragraph 26 of this Lease, and the
first month of Base Rent as set forth in Paragraph 4 of this Lease.

     (g) All of the terms of this Lease shall extend to and be binding upon the parties hereto and
their respective heirs, executors, administrators, successors and assigns.

     (h) This Lease and the parties’ respective rights hereunder shall be governed by the laws of
the State of California. In the event of litigation, suit shall be brought in Alameda County,
California. LANDLORD AND TENANT HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY ON ANY ISSUE TO
ENFORCE ANY TERM OR CONDITION OF THIS LEASE, OR WITH RESPECT TO LANDLORD’S RIGHT TO TERMINATE THIS
LEASE, OR TERMINATE TENANT’S RIGHT OF POSSESSION. Tenant hereby agrees that this Lease constitutes
a written consent to waiver of trial by jury pursuant to the provisions of California Code of Civil
Procedure Section 631, and Tenant does hereby constitute and appoint Landlord its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and Tenant does hereby authorize
and empower Landlord, in the name, place and stead of Tenant, to file this Lease with the clerk or
judge of any court of competent jurisdiction as a statutory written consent to waiver of trial by
jury.

     (i) In the event of any legal action or proceeding brought by either party against the other
arising out of this Lease, the prevailing party shall be entitled to recover reasonable attorneys’
fees and costs (including, without limitation, court costs and expert witness fees) incurred in
such action. Such amounts shall be included in any judgment rendered in any such action or
proceeding.

     (j) No waiver by Landlord of any provision of this Lease or of any breach by Tenant hereunder
shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach by
Tenant. Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or
approval under this Lease shall not be deemed to render unnecessary the obtaining of Landlord’s
consent to or approval of any subsequent act of Tenant. No act or thing done by Landlord or
Landlord’s agents during the Lease Tenn shall be deemed an acceptance of a surrender of the
Premises, unless in writing signed by Landlord. The delivery of the keys to any employee or agent
of Landlord shall not operate as a termination of the Lease or a surrender of the Premises. The
acceptance of any Rent by Landlord following a breach of this Lease by Tenant shall not constitute
a waiver by Landlord of such breach or any other breach unless such waiver is expressly stated in a
writing signed by Landlord.

     (k) Landlord shall be the sole determinant of the type and amount of any access control or
courtesy guard services to be provided to the Property, if any. IN ALL EVENTS, LANDLORD SHALL NOT
BE LIABLE TO TENANT, AND TENANT HEREBY WAIVES ANY CLAIM AGAINST LANDLORD, FOR (I) ANY UNAUTHORIZED
OR CRIMINAL ENTRY OF THIRD PARTIES INTO THE PREMISES, THE BUILDING OR THE PROPERTY, (II) ANY DAMAGE
TO PERSONS, OR (III) ANY LOSS OF PROPERTY IN AND ABOUT THE PREMISES, THE BUILDING OR THE PROPERTY,
BY OR FROM ANY UNAUTHORIZED OR CRIMINAL ACTS OF THIRD PARTIES, REGARDLESS OF ANY ACTION, INACTION,
FAILURE, BREAKDOWN, MALFUNCTION AND/OR INSUFFICIENCY OF THE ACCESS CONTROL OR COURTESY GUARD
SERVICES PROVIDED BY LANDLORD.

     (l) Upon Tenant’s paying the Rent reserved hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant’s part to be observed and performed hereunder,
Tenant shall have quiet possession of the Premises for the term hereof without hindrance or
ejection by any person lawfully claiming under Landlord, subject to the provisions of this Lease
and to the provisions of any (i) covenants, conditions and restrictions, (ii) master lease, or
(iii) Mortgages to which this Lease is subordinate or may be subordinated.

19

 

     (m) Time is of the essence of this Lease and each and all of its provisions.

     (n) If Tenant is a corporation, each individual executing this Lease on behalf of Tenant
hereby covenants and warrants that Tenant is a duly authorized and existing corporation, that
Tenant has and is qualified to do business in the State, that the corporation has full right and
authority to enter into this Lease, and that each person signing on behalf of the corporation is
authorized to do so. If Tenant is a partnership or trust, each individual executing this Lease on
behalf of Tenant hereby covenants and warrants that he is duly authorized to execute and deliver
this Lease on behalf of Tenant in accordance with the terms of such entity’s partnership or trust
agreement. Tenant shall provide Landlord on demand with such evidence of such authority as Landlord
shall reasonably request, including, without limitation, resolutions, certificates and opinions of
counsel.

     (o) If two or more individuals, corporations, partnerships or other business associations (or
any combination of two or more thereof) shall sign this Lease as Tenant, the liability of each such
individual, corporation, partnership or other business association to pay Rent and perform all
other obligations hereunder shall be deemed to be joint and several, and all notices, payments and
agreements given or made by, with or to any one of such individuals, corporations, partnerships or
other business associations shall be deemed to have been given or made by, with or to all of them.
In like manner, if Tenant shall be a partnership or other business association, the members of
which are, by virtue of statute or federal law, subject to personal liability, then the liability
of each such member shall be joint and several.

     (p) This Agreement is the result of arms-length negotiations between Landlord and Tenant and
their respective attorneys. Accordingly, neither party shall be deemed to be the author of this
Lease and this Lease shall not be construed against either party.

     (q) Upon Landlord’s written request but not more than one time in any calendar year, Tenant
shall promptly furnish Landlord, from time to time, with the most current audited financial
statements prepared in accordance with generally accepted accounting principles, certified by
Tenant and an independent auditor to be true and correct, reflecting Tenant’s then current
financial condition.

     (r) This Lease may be executed in several counterparts, each of which shall be deemed an
original, and all of which shall constitute but one and the same instrument.

     (s) By signing this Lease, Tenant represents that Tenant has read and understood the required
disclosures, in any of Landlord set forth below:

     California law requires landlords to disclose to tenants the existence of certain Hazardous
Materials. Accordingly, the existence of gasoline and other automotive fluids, maintenance fluids,
copying fluids and other office supplies and equipment, certain construction and finish materials,
tobacco smoke, cosmetics and other personal items, and asbestos-containing materials (“ACM”) must
be disclosed. Gasoline and other automotive fluids will likely be found in the garage area of the
Building. Cleaning, lubricating and hydraulic fluids used in the operation and maintenance of the
Building will likely be found in the utility areas of the Building not generally accessible to
Building occupants or the public. Many Building occupants will use copy machines and printers with
associated fluids and toners, and pens, markers, inks, and office equipment that may contain
Hazardous Materials. Certain adhesives, paints and other construction materials and finishes which
will be used in portions of the Building may contain Hazardous Materials. Building occupants and
other persons entering the Building from time-to-time may use or carry prescription and
non-prescription drugs, perfumes, cosmetics and other toiletries, and foods and beverages, some of
which may contain Hazardous Materials. Although Landlord is not aware of the presence of any ACM
which would be cause for concern, ACM may be exposed in the course of remodeling.

20

 

     WHEREFORE, Landlord and Tenant have respectively executed this Lease the day and year first
above written.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	DCT-CA 2004 RN Portfolio L, LP	 	 	 	Shutterfly, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 	DCT-CA 2004 RN Portfolio GP, LLC, a Delaware	 	 	 	 	 	 	 	 
	 

	limited liability company, its general partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 	Dividend Capital Operating Partnership LP,	 	 	 	 	 	 	 	 
	 

	a Delaware limited partnership, its sole member	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 	Dividend Capital Trust Inc.,	 	 	 	 	 	 	 	 
	 

	a Maryland corporation, its general partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:  

	 	 	 	By:  
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Daryl H. Mechem	 	 	 	      Stephen E. Recht	 	 
	Senior Vice President	 	 	 	      Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	Date:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

21

 

Exhibit 10.05

EXHIBIT A

PREMISES

A-1

 

Exhibit 10.05

EXHIBIT B

LEGAL DESCRIPTION OF PROPERTY

Group I

Site No. 15

NBU 020401527

3167 Corporate Place

THE LAND REFERRED TO HEREIN IS SITUATE IN THE CITY OF HAYWARD, COUNTY OF ALAMEDA, STATE OF
CALIFORNIA, AND MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS, PAGE 10, ALAMEDA
COUNTY RECORDS.

TOGETHER WITH:

ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON “PARCEL MAP NO. 939”, WHICH
MAP IS FILED IN BOOK 76 OF PARCEL MAPS, AT PAGE 10, ALAMEDA COUNTY RECORDS, SAID REAL PROPERTY
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF CORPORATE PLACE, AS
SHOWN ON THE ABOVE MENTIONED PARCEL MAP; THENCE FROM SAID POINT OF BEGINNING ALONG SAID NORTHERLY
LINE, SOUTH 76° 38’ 05” WEST, 8.22 FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE
PARALLEL TO AND 7.806 FEET SOUTHWESTERLY, AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2, NORTH 31° 37’ 51” WEST, 205.78 FEET; THENCE LEAVING SAID PARALLEL LINE, NORTH 58°
22’ 09” EAST, 7.806 FEET TO SAID DIVIDING LINE; THENCE ALONG THE LAST SAID LINE, SOUTH 31° 3T 51”
EAST, 208.356 FEET TO THE POINT OF BEGINNING.

SAID REAL PROPERTY IS THE SAME AS “LOT LINE ADJUSTMENT NO. 77-4” APPROVED BY THE CITY OF HAYWARD
PLANNING COMMISSION ON SEPTEMBER 22, 1977.

ASSESSOR’S PARCEL NO. 461-0015-021-01

B-1

 

Exhibit 10.05

EXHIBIT C

INTENTIONALLY DELETED

C-1

 

Exhibit 10.05

EXHIBIT D

RULES AND REGULATIONS

     Tenant agrees to comply with the following rules and regulations, and any subsequent rules or
regulations which Landlord may reasonably adopt or modify from time to time. Tenant shall be bound
by such rules and regulations to the same extent as if such rules and regulations were covenants of
this Lease; and any non-compliance thereof shall constitute grounds for Default under this Lease.
Landlord shall not be liable for the non-observance of said rules and regulations by any other
tenant.

     (1) Tenant shall not use any picture or likeness of the Property in any notices or
advertisements, without Landlord’s prior written consent.

     (2) In the event Tenant requires any telegraph, telephone or satellite dish connections,
Landlord shall have the right to prescribe additional rules and regulations regarding the same
including, but not limited to, the size, manner, location and attachment of such equipment and
connections.

     (3) No additional locks shall be placed upon any door of the Premises, and Tenant shall not
permit any duplicate keys to be made, without the prior consent of Landlord. Upon the expiration
or earlier termination of this Lease, Tenant shall surrender to Landlord all keys to the Premises
and Property.

     (4) Tenant shall not install or operate any steam or internal combustion engine, boiler,
machinery, or carry on any mechanical business within the Premises. Tenant shall not use any fuel
source within the Premises other than the fuel source(s) provided by Landlord.

     (5) Tenant shall not permit within the Premises any animals other than service animals; nor
shall Tenant create or allow any foul or noxious gas, noise, odors, sounds, and/or vibrations to
emanate from the Premises, or create any interference with the operation of any equipment or radio
or television broadcasting/reception from within or about the Property, which may obstruct or
interfere with the rights of other tenant(s) in the Property.

     (6) All sidewalks, loading areas, stairways, doorways, corridors, and other common areas shall
not be obstructed by Tenant or used for any purpose other than for ingress and egress. Landlord
retains the right to control all public and other areas not specifically designated as the
Premises, provided nothing herein shall be construed to prevent access to the Premises or the
common areas of the Property by Tenant or Tenant’s invitees.

     (7) Tenant shall not install any window treatments other than existing treatments or otherwise
obstruct the windows of the Premises without Landlord’s prior written consent.

     (8) After business hours, Tenant shall lock all doors and windows of the Premises which enter
upon any common areas of the Property; and Tenant shall be liable for all damages sustained by
Landlord or other tenants within the Property resulting from Tenant’s default or carelessness in
this respect.

     (9) Any person(s) who shall be employed by Tenant for the purpose of cleaning the Premises
shall be employed at Tenant’s cost. Tenant shall indemnify and hold Landlord harmless from all
losses, claims, liability, damages, and expenses for any injury to person or damage to property of
Tenant, or third persons, caused by Tenant’s cleaning contractor.

     (10) Tenant shall not canvass or solicit business, or allow any employee of Tenant to canvass
or solicit business, from other tenants in the Property, unless the same is within the scope of
Tenant’s normal business.

     (11) Landlord reserves the right to place into effect a “no smoking” policy within all or
selected portions of the common areas of the Property, wherein Tenant, its agents, employees and
invitees shall not be allowed to smoke. Tenant shall not be allowed to smoke in any common
stairwells, elevators or bathrooms; nor shall Tenant dispose of any smoking material including,
without limitation, matches, ashes and cigarette butts on the

D-1

 

floors of the Property, about the grounds of the Property, or in any receptacle other than a
specifically designated receptacle for smoking.

D-2

 

Exhibit 10.05

EXHIBIT E

HVAC MAINTENANCE CONTRACT

Paragraph 8 of the Lease, captioned “TENANT REPAIRS AND MAINTENANCE,” is revised to include the
following provisions:

Landlord agrees to enter into and maintain through the Term of the Lease, a regularly scheduled
preventative maintenance/service contract for servicing all hot water, heating and air conditioning
systems and equipment within the Premises. Landlord shall retain a qualified HVAC contractor to
perform this work. A copy of the service contract must be provided to the Tenant within sixty (60)
days upon occupancy of the Premises.

The service contract must become effective within thirty (30) days of Tenant’s occupancy, and
service visits should be performed on a quarterly basis. Tenant agrees that Landlord may utilize
Landlord’s HVAC contractor at the rate Landlord would pay for such contract at market rates. The
following items would generally be covered in such contract:

	1)	 	Adjust belt tension;
	 
	2)	 	Lubricate all moving parts, as necessary;
	 
	3)	 	Inspect and adjust all temperature and safety controls;
	 
	4)	 	Check refrigeration system for leaks and operation;’
	 
	5)	 	Check refrigeration system for moisture;
	 
	6)	 	Inspect compressor oil level and crank case heaters;
	 
	7)	 	Check head pressure, suction pressure and oil pressure;
	 
	8)	 	Inspect air filters and replace when necessary;
	 
	9)	 	Check space conditions;
	 
	10)	 	Check condensate drains and drain pans and clean, if necessary;
	 
	11)	 	Inspect and adjust all valves;
	 
	12)	 	Check and adjust dampers; and
	 
	13)	 	Run machine through complete cycle.

E-1

 

Exhibit 10.05

EXHIBIT F

MOVE-OUT CONDITIONS

Notwithstanding anything to the contrary in this Lease, Tenant is obligated to check and address
prior to move-out of the facility the following items. Landlord expects to receive the space in a
well maintained condition, with normal wear and tear of certain areas acceptable. The following
list is designed to assist Tenant in the move-out procedures but is not intended to be all
inclusive.

	1.	 	All lighting is to be placed into good working order. This includes replacement of bulbs,
ballasts, and lenses as needed.
	 
	2.	 	All truck doors and dock levelers should be serviced and placed in good operating order.
This would include the necessary replacement of any dented truck door panels and adjustment of
door tension to insure proper operation. All door panels which are replaced need to be painted
to match the building standard.
	 
	3.	 	All structural steel columns in the warehouse and office should be inspected for damage and
Tenant shall be responsible for repairing any damage to such structural steel columns caused
by or attributable to Tenant, its agents, employees or invitees. Repairs of this nature
should be pre-approved by the Landlord prior to implementation.
	 
	4.	 	Heating/air-conditioning systems should be placed in good working order, including the
necessary replacement of any parts to return the unit to a well maintained condition. This
includes warehouse heaters and exhaust fans. Upon move-out, Landlord will have an exit
inspection performed by a certified mechanical contractor to determine the condition.
	 
	5.	 	All holes in the sheetrock walls should be repaired prior to move-out.
	 
	6.	 	The carpets and vinyl tiles should be in a clean condition and should not have any holes or
chips in them. Landlord will accept normal wear on these items provided they appear to be in a
maintained condition.
	 
	7.	 	Facilities should be returned in a clean condition which would include cleaning of the coffee
bar, restroom areas, windows, and other portions of the space.
	 
	8.	 	The warehouse should be in broom clean condition with all inventory and racking removed.
There should be no protrusion of anchors from the warehouse floor and all holes should be
appropriately patched. If machinery/equipment is removed, the electrical lines should be
properly terminated at the nearest junction box.
	 
	9.	 	All exterior windows with cracks or breakage should be replaced.
	 
	10.	 	The Tenant shall provide to Landlord the keys for all locks on the Premises, including front
doors, rear doors, and interior doors.
	 
	11.	 	Items that have been added by the Tenant and affixed to the Property (excluding personal
property and equipment that are not fixtures) will remain the property of Landlord, unless
agreed otherwise in this Lease. This would include but is not limited to mini-blinds, air
conditioners, electrical, water heaters, cabinets, flooring, etc, normal wear and tear
excepted. Except as otherwise set forth in this Lease, please note that if modifications have
been made to the space, such as the addition of office areas, Landlord retains the right to
have the Tenant remove these at Tenant’s expense.
	 
	12.	 	All electrical systems should be left in a safe condition that conforms to code. Bare wires
and dangerous installations should be corrected prior to move-out.

F-1

 

	13.	 	All plumbing fixtures should be in good working order, including the water heater. Faucets
and toilets should not leak.
	 
	14.	 	All dock bumpers must be left in place and well secured.

Notwithstanding the foregoing and except as otherwise set forth in this Lease, Tenant agrees to
surrender the Premises to Landlord in substantially the same condition as exists at the time that
Tenant occupies the Premises and opens for business.

F-2

 

Exhibit 10.05

EXHIBIT G

RENEWAL OPTION

     (a) Provided that as of the time of the giving of the Extension Notice and the Commencement
Date of the Extension Term, (i) Tenant is the Tenant originally named herein, (ii) Tenant actually
occupies all of the Premises initially demised under this Lease and any space added to the
Premises, and (iii) no Event of Default exists or would exist but for the passage of time or the
giving of notice, or both; then Tenant shall have the right to extend the Lease Term for an
additional term of one (1) year (such additional term is hereinafter called the “Extension Term”)
commencing on the day following the expiration of the Lease Term (hereinafter referred to as the
“Commencement Date of the Extension Term”). Tenant shall give Landlord notice (hereinafter called
the “Extension Notice”) of its election to extend the term of the Lease Term at least three (3)
months prior to the scheduled expiration date of the Lease Term.

     (b) The Base Rent payable by Tenant to Landlord during the Extension Term shall be the greater
of (i) the Base Rent applicable to the last year of the initial Lease Term and (ii) the then
prevailing market rate for comparable space in the Property and comparable buildings in the
vicinity of the Property taking into account the size of the Lease, the length of the renewal term,
market escalations and the credit of Tenant. The Base Rent shall not be-reduced by reason of any
costs or expenses saved by Landlord by reason of Landlord’s not having to find a new tenant for
such premises (including, without limitation, brokerage commissions, costs of improvements, rent
concessions or lost rental income during any vacancy period). In the event Landlord and Tenant
fail to reach an agreement on such rental rate and execute the Amendment (defined below) at least
two (2) months prior to the expiration of the Lease Term, then Tenant’s exercise of this renewal
option shall be deemed withdrawn and the Lease shall terminate on its original expiration date.

     (c) The determination of Base Rent does not reduce the Tenant’s obligation to pay or reimburse
Landlord for Additional Rent and other reimbursable items as set forth in the Lease, and Tenant
shall reimburse and pay Landlord as set forth in the Lease with respect to such Additional Rent and
other items with respect to the Premises during the Extension Term without regard to any cap on
such expenses set forth in the Lease.

     (d) Except for the Base Rent as determined above, Tenant’s occupancy of the Premises during
the Extension Term shall be on the same terms and conditions as are in effect immediately prior to
the expiration of the initial Lease Term; provided, however, Tenant shall have no further right to
any allowances, credits or abatements or any options to expand, contract, terminate, renew or
extend the Lease.

     (e) If Tenant does not give the Extension Notice within the period set forth in Paragraph (a)
above, Tenant’s right to extend the Lease Term shall automatically terminate. Time is of the
essence as to the giving of the Extension Notice.

     (f) Landlord shall have no obligation to refurbish or otherwise improve the Premises for the
Extension Term. The Premises shall be tendered on the Commencement Date of the Extension Term in
‘as-is’ condition.

     (g) If the Lease is extended for the Extension Term, then Landlord shall prepare and Tenant
shall execute an amendment to the Lease confirming the extension of the Lease Term and the other
provisions applicable thereto (the “Amendment”).

     (h) If Tenant exercises its right to extend the term of the Lease for the Extension Term
pursuant to this Addendum, the term “Lease Term” as used in the Lease, shall be construed to
include, when practicable, the Extension Term except as provided in Paragraph (d) above.

G-1

 

Exhibit 10.05

     EXHIBIT A

 

 

AMENDMENT

TO

AGREEMENT OF LEASE

     This Amendment to Agreement of Lease (the “Amendment”) is entered into as of May ___, 2006 (the
“Effective Date”) by and between DCT-CA 2004 RN Portfolio L, LP, a Delaware limited partnership,
(“Landlord”), and Shutterfly, Inc., a Delaware corporation (“Tenant”), and amends that certain
Agreement of Lease dated August 1,2005 between Landlord and Tenant (the “Lease”).

     Each term not otherwise defined herein shall have the meaning ascribed to it in the Lease.

     WHEREAS, the Lease currently provides for the lease of the Premises located at 3157 Corporate
Avenue, Hayward, California and described on Exhibit A to the Lease — “Suite 3157”.

     WHEREAS, Tenant desires to lease additional property located at 3167 Corporate Avenue,
Hayward, California, as described on Exhibit A to this Amendment “Suite 3167”).

     WHEREAS, the parties desire to extend the Lease Term as it relates to Suite 3157, so that the
Expiration Date of the Lease Term for both Suite 3157 and Suite 3167 are co-terminus.

     NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:

1. Premises. The Premises under the Lease, as amended by this Amendment, include both Suite
3157 and Suite 3167, and therefore, consist of a total square footage of approximately 25,206
rentable square feet, as more fully described on Exhibit A attached hereto and made a part hereof.

2. Term.

     a. Suite 3167: The Lease Term for Suite 3167 shall commence upon full execution and delivery
of this Amendment and continue through and include September 30, 2007 (“Suite 3167 Lease Term”).
Landlord shall deliver Suite 3167 to Tenant for Tenant’s access to perform Tenant’s work in
preparation for use and occupancy. Tenant shall not use the Premises prior to August 1, 2006 for
the purpose of conducting its normal business operations. The base Rental Rate schedule below
shall commence August 1, 2006.

     b. Suite 3157: The-Lease Term for Suite 3157, as amended by this Amendment, shall be extended
for a period of twelve (12) months commencing October 1, 2006 and continuing through and including
September 30, 2007.

3. Rental Rate.

     a. Suite 3167: $.62 NNN per month, commencing on August 1, 2006.

     b. Suite 3157: $.60 NNN per month for Suite 3157 through September 30, 2006, then adjusting
to $.62 NNN through September 30, 2007.

4. Option to Extend.

 

 

     a. Provided that as of the time of the giving of the Extension Notice and the Commencement
Date of the Extension Term, (i) Tenant is the Tenant originally named herein, (ii) Tenant actually
occupies all of the Premises initially demised under this Lease and any space added to the
Premises, and (iii) no Event of Default exists or would exist but for the passage of time or the
giving of notice, or both; then Tenant shall have the right to extend the Lease Term for one (1)
additional term of five (5) years (such additional term is hereinafter called the “Extension Term”)
commencing on October 1, 2007 (hereinafter referred to as the “Commencement Date of the Extension
Term”). Tenant shall give Landlord notice (hereinafter called the “Extension Notice”) of its
election to extend the term of the Lease Term no later than April 1, 2007.

     b. The Base Rent payable by Tenant to Landlord during the Extension Term shall be the greater
of (i) the Base Rent in effect as of the expiration of September 30, 2007, or (ii) 95% of the then
prevailing market rate for comparable space in the Property and comparable buildings in the
vicinity of the Property taking into account the size of the Lease, the length of the renewal term,
market escalations and the credit of Tenant. The Base Rent shall not be reduced by reason of any
costs or expenses saved by Landlord by reason of Landlord’s not having to find a new tenant for
such premises (including, without limitation, brokerage commissions, costs of improvements, rent
concessions or lost rental income during any vacancy period). In the event Landlord and Tenant
fail to reach an agreement on such rental rate and execute the Amendment (defined below) by June 1,
2007, then Tenant’s exercise of this renewal option shall be deemed withdrawn and the Lease shall
terminate on its original expiration date.

     c. The determination of Base Rent does not reduce the Tenant’s obligation to pay or reimburse
Landlord for Additional Rent and other reimbursable items as set forth in the Lease, and Tenant
shall reimburse and pay Landlord as set forth in the Lease with respect to such Additional Rent and
other items with respect to the Premises during the Extension Term without regard to any cap on
such expenses set forth in the Lease.

     d. Except for the Base Rent as determined above, Tenant’s occupancy of the Premises during the
Extension Term shall be on the same terms and conditions as are in effect on September 30, 2007;
provided, however, Tenant shall have no further right to any allowances, credits or abatements or
any options to expand, contract, terminate, renew or extend the Lease.

     e. If Tenant does not give the Extension Notice within the period set forth in Paragraph (a)
above, Tenant’s right to extend the Lease Term shall automatically terminate. Time is of the
essence as to the giving of the Extension Notice.

     f. Landlord shall have no obligation to refurbish or otherwise improve the Premises for the
Extension Term. The Premises shall be tendered on the Commencement Date of the Extension Term in
“as-is” condition.

     g. If the Lease is extended for the Extension Term, then Landlord shall prepare and Tenant
shall execute an amendment to the Lease confirming the extension of the Lease Term and the other
provisions applicable thereto (the “Amendment”).

 

 

     h. If Tenant exercises its right to extend the term of the Lease for the Extension Term
hereunder, the term “Lease Term” as used in the Lease, shall be construed to include, when
practicable, the Extension Term except as provided in Paragraph (d) above.

5. Improvements. All existing systems and attributes with respect to Suite 3167 will be delivered
by Landlord on August 1, 2006 in good, clean, and fully operational condition, including, but not
limited to carpet, paint, lighting (warehouse and office), rolling and man doors, electrical,
plumbing, roof membrane, exterior glass, windows and window coverings, sprinkler systems, required
fire extinguishers, and janitorial.

6. A First Right of Refusal. Tenant shall be provided a first right of refusal on any immediate
adjacent contiguous space subject to any existing tenant agreements. Tenant shall have five (5)
business days to respond upon receipt of notice under this first right of refusal.

     a. “Offered Space” shall mean any immediate adjacent contiguous space to Suite 3167 or Suite
3157.

     b. Provided that as of the date of the giving of the Offer Notice, (x) Tenant is the Tenant
originally named herein, (y) Tenant actually occupies all of the Premises originally demised under
this Lease and any premises added to the Premises, and (z) no event of default or event which but
for the passage of time or the giving of notice, or both, would constitute an event of default has
occurred and is continuing, if at any time during the Lease Term any portion of the Offered Space
is vacant and unencumbered by any rights of any third party, and such Offered Space is vacant, and
if Landlord intends to enter into a lease (the “Proposed Lease”) for all or a portion of the
Offered Space with anyone (a “Proposed Tenant”) other than the tenant then occupying such space (or
its affiliates, subtenants or assignees), then Landlord shall first offer to Tenant the right to
lease such Offered Space upon all the terms and conditions of the Proposed Lease for the Offered
Space. Notwithstanding anything to the contrary in the Lease, the right of first refusal granted
to Tenant hereunder shall be subject and subordinate to (i) the rights of all tenants at the
Property under existing leases, and (ii) the herein reserved right of Landlord to renew or extend
the term of any lease with the tenant then occupying such space (or any of its affiliates,
subtenants or assignees), whether pursuant to a renewal or extension option in such lease or
otherwise.

     c. Such offer shall be made by Landlord to Tenant in a written notice (hereinafter called the
“Offer Notice”) which offer shall designate the space being offered and shall specify the terms for
such Offered Space which shall be the same as those set forth in the Proposed Lease. Tenant may
accept the offer set forth in the Offer Notice by delivering to Landlord an unconditional
acceptance (hereinafter called “Tenant’s Notice”) of such offer within five (5) business days after
delivery by Landlord of the Offer Notice to Tenant. Time shall be of the essence with respect to
the giving of Tenant’s Notice. If Tenant does not accept (or fails to timely accept) an offer made
by Landlord pursuant to the provisions hereunder with respect to the Offered Space designated in
the Offer Notice and execute the Amendment (defined below) within thirty (30) days after the
delivery of the Offer Notice, then Landlord shall be under no further obligation with respect to
such space by reason of this Right of First Refusal as granted hereunder. In order to send the
Offer Notice, Landlord does not need to have negotiated a complete lease with the Proposed Tenant
but may merely have agreed upon the material

 

 

economic terms for the Proposed Lease, and Tenant must make its decision with respect to the
Offered Space as long as it has received a description of such material economic terms.

     d. Tenant must accept all Offered Space offered by Landlord at any one time if it desires to
accept any of such Offered Space and may not exercise its right with respect to only part of such
space. In addition, if Landlord desires to lease more than just the Offered Space to one tenant,
Landlord may offer to Tenant pursuant to the terms hereof all such space which Landlord desires to
lease, and Tenant must exercise its rights hereunder with respect to all such space and may not
insist on receiving an offer for just the Offered Space.

     e. If Tenant at any time declines any Offered Space offered by Landlord, Tenant shall be
deemed to have irrevocably waived all further rights hereunder, and Landlord shall be free to lease
the Offered Space to the Proposed Tenant including on terms which may be less favorable to Landlord
than those set forth in the Proposed Lease.

     f. In the event that Tenant exercises its rights to any Offered Space pursuant to this Right
of First Refusal hereunder, then Landlord shall prepare, and Tenant shall execute, an amendment to
the Lease which confirms such expansion of the Premises and the other provisions applicable thereto
(the “Amendment”).

7. Terms of Lease Binding. All other terms of the Lease not otherwise amended by this Amendment
are as set forth in the Lease and shall be binding on the parties.

 

 

Executed and agreed as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	DCT-CA 2004 RN Portfolio L, LP,	 	Shutterfly, Inc.
	a Delaware limited partnership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	DCT – CA 2004 RN Portfolio GP LLC,	 	 	 	 
	 	 	a Delaware limited liability company,	 	By:	/s/ Stephen E. Recht
	 

	 	 	 	 	 	 	 	 

	 	 	its general partner	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	Stephen E. Recht
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Dividend Capital Operating	 	 	 	 
	 	 	 	 	Partnership LP,	 	Title:	 	Chief Financial Officer
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	a Delaware limited partnership,	 	 	 	 
	 	 	 	 	its sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Dividend Capital Trust Inc.,	 	 	 	 
	 

	 	 	 	 	 	a Maryland corporation,	 	 	 	 
	 

	 	 	 	 	 	its general partner	 	 	 	 

	 	 	 	 	 
	By:
	 	/s/ Daryl H. Mechem	 	 
	 

	 	 

	 	 
	Name: Daryl H. Mechem	 	 
	 
	 	 	 	 
	Title: Managing Director	 	 

 

 

Exhibit 10.05

Exhibit A

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