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Staff Report 2389
City of Palo Alto (ID # 2389) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/12/2011 December 12, 2011 Page 1 of 3 (ID # 2389) Summary Title: Sub lease 285 Hamilton Avenue Title: Approval of Three Year Sublease Agreement with Surveymonkey.com, LLC for office space at 285 Hamilton Avenue From:City Manager Lead Department: City Manager Recommendation Staff recommends that Council approve the sublease agreement with Surveymonkey.com, LLC (Sublandlord) and the City of Palo Alto (Subtenant) (Attachment A). Executive Summary The City leases approximately 6,000 square feet on the first floor of 285 Hamilton Avenue for the Development Center. As the Council is aware, the Development Center provides “one stop” permit services by providing facilities for each element of the permit process. Staff from Planning/Building, Utilities, Fire and Public Works all utilize the Development Center to review and issue development proposals and permit applications. Because of space limitations, staff must rotate through the Development Center. Recently, 3,100 square feet became available on the second floor above Development Center. The internet company, Survey Monkey, has vacated its leased space on the second floor because of its growth needs and has offered to sublet this space to the City. The additional space allows development review staff to be re- located in closer proximity to the Development Center facilitating better coordination of the permit process. Background The City currently pays $5.65 per square foot for first floor Development Center space for approximately 6,000 square feet for a total of $406,000 annual rent. The lease is a triple net lease meaning the lessee is responsible for janitorial service, utilities and other incidental costs which are approximately an additional $1 per square foot. The City has two years remaining on the current option. The Survey Monkey space is available at $5.75 per square foot also on a triple net basis for a total of $216,000 annual rent for the first year (12/15/2011 to 11/30/2012) of the sublease. The rent increases to $5.92 for the second year and $6.10 for the third and final year of the sublease. Either party has the ability to terminate the lease after two years by providing written notice on or before August, 2013. The sublease is for a maximum of three years and December 12, 2011 Page 2 of 3 (ID # 2389) can be cancelled by Survey Monkey or the City in November 2013. If all options are exercised the City’s financial obligation would be $648,000 exclusive of service costs estimated to be $110,000. The City’s recent survey of comparable rents shows that downtown Palo Alto office rents range from $5 to over $6 per square foot. The attached survey of available office space provides details regarding current market conditions. (See Attachment B) Discussion The downtown Palo Alto office rents are among the very highest in the nation. The availability of this office space in such close proximity to City Hall and located in the same building as the Development Center creates a unique opportunity for the City to consolidate development review services as a continuation of the service enhancements initiated with the Development Center Blueprint. Relocation of key staff closer to the Development Center would also accommodate recent staffing changes and re-organizations proposed by staff or approved by the City Council. Notable among these changes is the formation of the Sustainability Team organized within the Public Works department. Space on the 6th floor would accommodate the consolidation of the sustainability staff currently spread in numerous facilities located throughout the City. Space would also become available to locate the recently appointed Director of Emergency Operations at City Hall. Moreover, the additional space allows for flexibility with City Hall to accommodate or free up additional space to allow police and fire senior management staff to work in the same space and share resources, as well as allow public works engineering staff to be better consolidated in one space by work team. The current real estate market in downtown Palo Alto also presents some identifiable risks. The scarcity of available office space and high lease rates may make it difficult for the City to find suitable and affordable replacement space at the end of the sublease in three years or perhaps sooner if Survey Monkey were to terminate the lease early in 2013. The opportunity has presented itself and would disappear quickly since there are numerous tenants in the market to lease in downtown Palo Alto. Department related services proposed to be re-located to 285 Hamilton would tentatively include the following operations: Fire Inspection; Public Works Development Center Group; Public Works Arborist; the newly created Development Center Director; and Information Technology Staff working on Development Center applications. While these staff members would still be required to rotate on the first floor, their close proximity will provide the flexibility to draw on staff when work load demands are high and staff vacancies exist resulting in better overall customer service. Resource Impact Staff proposes that the lease payments for the additional space come from the Budget Stabilization Reserve and will submit the request in the mid year budget if Council approves the December 12, 2011 Page 3 of 3 (ID # 2389) lease. As Council is aware, service delivery costs such as rent payments can be off set by permit fees. Staff is evaluating the current fee structure and will make recommendations for possible fee increases at the mid year budget adoption. Environmental Review This project is exempt from the Calfornia Environmental Quality Act. Attachments: ·Attachment 1: Sublease Agreement (PDF) ·Attachment 2 CC Comps (PDF) Prepared By:Steve Emslie, Deputy City Manager Department Head:James Keene, City Manager City Manager Approval: ____________________________________ James Keene, City Manager WEST\225434046.1 371037-000002 - 1 - SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT (this “Sublease”) is entered into this _____ day of December, 2011 by and between SURVEYMONKEY.COM, LLC, a Delaware limited liability company (“Sublandlord”), and CITY OF PALO ALTO (“Subtenant”). Recitals A. Thoits Bros., Inc., a California corporation (“Landlord”) and Sublandlord entered into that certain AIR Commercial Real Estate Association Standard Multi-Tenant Office Lease – Net dated November 1, 2010 (the “Lease”), as amended by that certain First Amendment to Lease Agreement dated May 1, 2011 (the “First Amendment”), and that certain Second Amendment to Lease Agreement dated October 25, 2011 (the “Second Amendment” and collectively with the Lease and the First Amendment, the “Master Lease”), respecting those premises (the “Master Premises”) consisting of approximately 22,695 rentable square feet of space commonly known as Suites 280, 400 and 500, and located on the second, fourth and fifth floors of the building located at 285 Hamilton Avenue, Palo Alto, California 94301 (the “Building”), as more particularly described in the Master Lease. A copy of the Master Lease is attached to this Sublease as Exhibit “B”. B. Sublandlord desires to sublet to Subtenant, and Subtenant desires to sublet from Sublandlord, Suite 280 of the Master Premises located on the second floor of the Building and consisting of approximately 3,133 rentable square feet as more particularly shown on Exhibit “A” attached hereto (the “Sublease Premises”) on the terms and conditions set forth in this Sublease. NOW, THEREFORE, in consideration of the mutual covenants contained in this Sublease and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows: Agreement 1. Sublease. Sublandlord hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, the Sublease Premises on the terms and conditions hereinafter set forth. 2. Term. (a) The term of this Sublease shall commence on December 15, 2011 (the “Commencement Date”) and shall expire on November 30, 2014 (the “Sublease Term”), unless sooner terminated under the provisions of this Sublease or unless the Master Lease is sooner terminated. Subtenant may terminate this Sublease on November 30, 2013 by providing Sublandlord with written notice of Subtenant’s election to terminate this Sublease on such date on or before August 31, 2013. (b) If Sublandlord determines, in its sole discretion, that it wishes to reoccupy the Sublease Premises for its own use, Sublandlord shall have the right to terminate this Sublease WEST\225434046.1 371037-000002 - 2 - on November 30, 2013 by providing Subtenant with written notice of Sublandlord’s election to terminate this Sublease on or before August 31, 2013. 3. Monthly Base Rent. Commencing on the Commencement Date and continuing throughout the Sublease Term, Subtenant shall pay to Sublandlord, without prior demand therefore, in advance on the first day of each calendar month, as monthly rent (“Monthly Base Rent”) in accordance with the following: Dates (Inclusive)Rent/sq.ft./monthly Total Monthly Base Rent December 15, 2011 to November 30, 2012 $5.75 $18,014.75 December 1, 2012 to November 30, 2013 $5.92 $18,555.19 January 1, 2014 to November 31, 2014 $6.10 $19,111.85 Monthly Base Rent shall be prorated for any partial month. The Monthly Base Rent for the period from December 15, 2011 to December 31, 2011 shall be payable on or prior to the Commencement Date. 4. Additional Rent. Subtenant shall pay to Sublandlord during the Sublease Term and on or prior to the date such sums are due under the Master Lease, all sums of additional rent and expenses (“Additional Rent”) payable under the Master Lease and attributable to the Sublease Premises. Sublandlord and Subtenant agree that this Sublease is intended to pass through to Subtenant all financial obligations imposed on Sublandlord pursuant to the Master Lease relating to the Additional Rent payable for the Sublease Premises. Any ambiguity in the terms of this Sublease shall be construed in accordance with such intention. For clarity, but without limiting the foregoing, the Subtenant’s share of Operating Expenses (as defined in the Master Lease) shall be equal to the Lessee’s Share (as defined in the Master Lease) of Operating Expenses attributable to the Sublease Premises (6.9% on the Commencement Date). 5. Security Deposit. $17,000.00 shall be payable by Subtenant to Sublandlord on or prior to the Commencement Date as a Security Deposit. 6. Place of Payment of Rent. All Monthly Base Rent, Additional Rent and all other amounts payable to Sublandlord under this Sublease shall be paid to Sublandlord when due, without prior notice or demand and without deduction or offset, in lawful money of the United States of America in cash or by check payable to “SurveyMonkey”, or to such other address as Sublandlord shall designate in writing. 7. Use. The Premises shall be used and occupied only for those purposes set forth in the Master Lease, and for no other purpose. WEST\225434046.1 371037-000002 - 3 - 8. Incorporation of Master Lease Terms. (a) Except to the extent contrary to the terms of this Sublease, the Master Lease is incorporated herein in its entirety by this reference. For the purpose of this Sublease, all references in the Master Lease to “Landlord” shall be deemed to mean Sublandlord, all references to “Tenant” shall be deemed to mean Subtenant and all references to “Lease” shall mean this Sublease. Notwithstanding the foregoing incorporation of the terms and conditions of the Master Lease, Sublandlord shall not be responsible for the performance of any obligations to be performed by Landlord under the Master Lease, and Subtenant agrees to look solely to Landlord for the performance of such obligations. Sublandlord shall not be liable to Subtenant for any failure by Landlord to perform its obligations under the Master Lease, nor shall such failure by Landlord excuse performance by Subtenant of its obligations hereunder. (b) Sublandlord and Subtenant agree that as between Sublandlord and Subtenant the following terms of the Master Lease shall not apply: all of the terms set forth in the Addendum to the Lease, Paragraphs 6, 7 and 8 of the First Amendment and Paragraphs 5, 6 and 7 of the Second Amendment. 9. Parking. Commencing on the Commencement Date and continuing throughout the Sublease Term, Subtenant shall have two (2) reserved parking spaces in the Building designated as Parking Spaces No. 15 and 17. 10. Condition and Acceptance of the Premises. By execution of this Sublease, Subtenant accepts the Premises as being in good and sanitary order, condition, and repair, and accepts the Premises and appurtenances “as is” in their present condition without any representation or warranty by Sublandlord as to the condition of the Premises and appurtenances or as to the use or occupancy which may be made thereof. 11. Alterations. Subtenant shall not make any alteration, addition, improvement or change to the Premises (including, but not limited to any alteration of the paint color or carpeting in the Premises) without Sublandlord’s prior written consent, which consent may be granted subject to any reasonable conditions which Sublandlord may impose, but shall not be unreasonably withheld or delayed. 12. Assignment and Subletting. Subtenant shall have no right to assign this Sublease or sublet all or any portion of the Premises without the prior written consent of Sublandlord, subject the requirements in paragraph 15. Subtenant shall have not right to allow the Premises to be occupied by persons other than the employees or agents of Subtenant. Any assignment or sublease in violation of this Paragraph 12 shall be deemed void and shall constitute a default by Subtenant under this Sublease. 13. Notices. All notices, demands or requests which may be or are required to be given under this Sublease shall be in writing and shall be given by personal delivery, or by certified or registered mail, return receipt requested, postage prepaid, or by Federal Express or similar overnight courier, charges prepaid, and addressed as follows: Sublandlord: SurveyMonkey.com, LLC 285 Hamilton Avenue, Suite 500 WEST\225434046.1 371037-000002 - 4 - Palo Alto, CA 94301 Attention: Legal Department Fax No.: (650) 289-0335 Subtenant: City of Palo Alto 250 Hamilton Avenue, 8th Floor Palo Alto, CA 94301 Attention: City Attorney Fax No.: (650) 329-2646 The addresses of the parties may be changed from time to time by notice given in the manner set forth in this Paragraph 13. Each notice, request, demand, advice or designation given under this Sublease shall be deemed properly given only upon actual receipt or refusal of delivery. 14. Termination of Master Lease. This Sublease is, and shall at all times remain, subordinate to the Master Lease. In the event the Master Lease is terminated for any reason, then, on the date of such termination, this Sublease shall automatically terminate and be of no further force or effect. If the termination of the Master Lease (and resulting termination of this Sublease) occurs through no fault of Sublandlord, Sublandlord shall have no liability to Subtenant for the resultant termination of this Sublease. 15. Consent of the Landlord. Whenever the consent of the Landlord is required under the Master Lease, Subtenant shall obtain the consent of both Sublandlord and the Landlord, but in all instances Subtenant shall first request and obtain the consent of Sublandlord before requesting the consent of the Landlord. This Sublease shall not become effective until Landlord has provided its written consent to this Sublease. If Landlord does not consent to this Sublease within twenty-one (21) days of the parties execution of this Sublease, then this Sublease shall be deemed void and the parties shall have no further rights or obligations hereunder. 16. Holding Over. If Subtenant continues to occupy the Premises after the expiration of the Sublease Term without the express written consent of Sublandlord, such occupancy by Subtenant shall automatically, without notice, constitute a default and breach of this Sublease by Subtenant. 17. Brokers. Each party represents to the other that no brokerage commission or finder’s fee has been incurred in connection with this transaction, and each party shall indemnify the other against any such commission or fee which may be alleged to have been incurred by it in connection with this Sublease. 18. Entire Agreement. This Sublease contains all of the terms, covenants and conditions agreed to by Sublandlord and Subtenant and may not be modified orally or in any manner other than by an agreement in writing signed by all the parties to this Sublease or their respective successors in interest. 19. Exhibits. All exhibits attached hereto are incorporated in this Sublease, except as expressly excluded herein. WEST\225434046.1 371037-000002 - 6 - LANDLORD’S CONSENT Subject to the terms and conditions of the Sublease, Landlord hereby consents to the foregoing Sublease pursuant to Paragraph 12.1 of the Lease. This consent shall not constitute a waiver of Landlord’s right to withhold consent to any future assignment or sublease, nor a release of Sublandlord from any of its obligations under the Master Lease. LANDLORD: THOITS BROS., INC. a California corporation By: Print name: __________________________ Its: WEST\225434046.1 371037-000002 - 7 - EXHIBIT A DIAGRAM OF SUBLEASE PREMISES [SEE ATTACHED ON NEXT PAGE] WEST\225434046.1 371037-000002 - 8 - EXHIBIT B MASTER LEASE [SEE ATTACHED] (See also Paragraph 6) 1.9 Insuring Party. Lessor is the "Insuring Party". (See also Paragraph 8) 1.10 Real Estate Sl'9kers: (See also Para9rallR 15) ------~(-aa)HR~e9l~»'I'99169semRtat4efl: Tl'le fallewiRg-f8al-estals t1roker-s ItRe-!!Sl'9k9rs") ans t1reker~l<Hk»l&l:I\p&-el(lst-lA-tRl&4Fan~ allillisatlie t1o)(es): e repFeOeAIS-6esS9f-eKGI~sillel~6s9r's 8r&keF!!f, B rofltesen1s bes~wsively ("lAIssee's Breker"); or B represents l3ell'l besser ami bessee ("Qllal ""geMY"). -------(fIll3fT) -+P'C3IYymeAt to Brokers: Upon execution ans salllJef)' af Ihis bease l:Iy Beth PaRies, besser sl~aU ~a!f Ie Il'Ie BrekeFs far Ucle orekerage seMces roRr:lered-l:l~rokers tRe fee agrees Ie iA-lhe allasRss separate WFiIleR-'l9Rlemenl ar if no SIICR ailF9E1menl Is atfaoMS. Il'1e slim of or % of IRe Iota I 8ase Rent Ilayatlle for IRe Ori9inal Term, IRe s(,Jm of or of tRe total Base R8I'I1~I&-4~fiA!}--aAY flerios of 'Ume IhaHhe bassee assllllies IRe Premises slIliISe"lllanl la Ihe Original TaFfA, ansiar Iha SIlFR af =======--oGlr,-::===,o%lor{lo~r-GRase-pFIG&-iR4Re-eYeRt-tRa~he-besse&-eHi",ye",e-afliliateI'l-wllR-b.essee-aGqulre&-from-t.-68&9f--a",!!,· ri9Rls 10 IRa Premises. 1.11 Guarantor. The obligations of the Lessee under this Lease shall be guaranteed by ~N,-,-/-=A-=---____________ _ ____________________________________ ("Guarantor"). (See also Paragraph 37) 1.12 Business Hours for the Building: _---'6'--__ _ a.m. to _---'6'--__ _ p.m., Mondays through Fridays (except Building Holidays) and 10 a.m. to 4 p.m. on Saturdays and Sundays (except Building Holidays). "Building Holidays" shall mean the dates of observation of New Year's Day, President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and ____ _ 1.13 Lessor Supplied Services. Notwithstanding the provisions of Paragraph 11.1, Lessor is NOT obligated to provide the following within the Premises: iii Janitorial services o Electricity o Other (specify): _______________________________________ _ 1.14 Attachments. Attached hereto are the following, all of which constitute a part of this Lease: o an Addendum conSisting of Paragraphs 50 through ----.::5:..::5~ _____ _ iii a plot plan depicting the Premises; iii a current set of the Rules and Regulations; o a Work Letter; o a janitorial schedule; iii other (specify): Asbestos Notification 2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different. Note: Lessee Is advised to verify the actual size prior to executing this Lease. 2.2 Condition. Lessee is currently in possession of the Premises under a sub-sublease, and agrees to accept the Premises in its present "AS-IS" condition, as of its execution of this Lease, Lessor shall deliver the Premises to Lessee in a clean consilion on the Commencement Date or tRe early Possession Dale, • .... hisRever first OCCllrs ("Start Date"), and warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), and all other items which the Lessor is obligated to construct pursuant to the Work Letter attached hereto, if any, other than those constructed by Lessee, shall be in good operating condition on said date, that the structural elements of the roof, bearing walls and foundation of the Unit shall be free of material defects, and that the Premises do not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. 2.3 Compliance. Lessor warrants that to the best of its knowledge the improvements comprising the Premises and the Common Areas comply with the building codes that were in effect at the time that each such improvement, or portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of record, regulations, and ordinances ("Applicable Requirements") in effect on the Start Date. Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use (see Paragraph 49), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made by Lessee under the Sub-sublease or made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the zoning and other Applicable Requirements are appropriate for Lessee's intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Premises, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Premises or the Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of such work as follows: PAGE 2 OF 19 {n INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure. (b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably atlributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If, Rewever, SUGR Caplla~fIGiI~re Is requiree eluriRg-U:IEHa~ea~s Lease eF 1f Lesser feaseRa~emliRes IRat It i&-Ael:-eG&AemiGally feasiele-La pay il&-sRaFe-IRereef, Lesser sRall Rave IRe optieR I~s lease UpeR gQ eays J:lrier ..... RlteFl flellse Ie Lessee "'Riess Lessee Retlfies besser, IA WfUI~iA 1Q eays after reseipl ef leS&OFs-lafmiAalieA Rotlsa 11:lat--bessee-wl1l !lay far suGl:l--GafJilal ~fJeAeiture. II lesser aees Aet elest te ~tOr3A9-fans llil teneer 1~3F&-OHfIY-SU~-Callital ~peRelllJFe, ~ssee may aovallse sloJSR funcls aAd oeeYG-same.--witMAlera~~ I:IAtll-l:ea&or's SRare ekIJGl=l seslS ha'ie !:leeR ful~ paid. If Lessee I6-W'laBle Ie flAaRGe Lesser's sRara, oF-il IRe ealaRGe-Gf IRe Rent sue aM l1ayaele-#of IA&-relflalREler ef IRis Lease Is Ret sufflGieAl-le-MIy reimBurse Lessee-GfHln effsel Basis. bessee-&RalWlave !fie Fl~ terminale IRis Lease 1lJl9A-3G days \witteR netise te Lesser. (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-VOluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed use or intenSity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease. 2.4 Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements), and their suitability for Lessee's intended use, (c) Lessee has made such investigation as it deems necessary with reference to such matlers and assumes all responsibility therefor as the same relate to its occupancy of the Premises, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor's agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants. 2.5 be66ee a& PFl9~FI06G"paRt. TRe waFfafl/les mase By lesser IR Pa~l-be-okle farGe eF effesllf ImmeEllalaly pri&f:...lG-4Ae StaFf Date-be68a&-Wa&-I/;e-GWAef-fJ~fIHlf I/'Ie Preffilse&.-l~sll O'leRt, Lesses sl=lall 'l:Is re&pQASib~ny r::tesessaF)' serrssllve WOfk,. 2.6 Vehicle Parking. So long as tessee is not in default, and subject to the Rules and Regulations attached hereto, and as established by Lessor from time to time, Lessee shall be entitled to rent and use the number of parking spaces speCified in Paragraph 1.2(b) at the rental rate applicable from time to time for monthly parking as set by Lessor and/or its licensee. (a) If Lessee commits, permits or allows any of the prohibited activities described in the Lease or the rules then in effect, then Lessor shall have the right. without nolice, in addition to such other rights and remedies that it may have. to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. (b) The mGR!fIly reR~er flarklRg Sflas9speslfies IR Paragraph 1 .2(~ is sUBJect 10 chaRge IlpGA 3Q Gays flrieF wFilte!Hl9liGEHe bassee. TJ:I9-f6fllfer IRe flaFkiF!§-ls-payae~G~r+a4¥a~riel:-te IRe first day of !;IaeR ealenoar-meAIh-. 2.7 Common Areas -Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Premises that are provided and deSignated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including, but not limited to, common entrances, lobbies, corridors, stairwells, public restrooms, elevators, parking areas. loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas. 2.8 Common Areas -Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to lime, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property. temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor's deSignated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice. in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. 2.9 Common Areas -Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to adopt, mOdify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their invitees. The Lessee agrees to abide by and conform to all such Rules and Regulations. and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project. 2.10 Common Areas -Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time: (a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of the lobbies, windows, stairways, air shafts, elevators, escalators, restrooms, driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; (b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; PAGE 3 OF 19 '1M INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E (c) (d) (e) To designate other land outside the boundaries of the Project to be a part of the Common Areas: To add additional buildings and improvements to the Common Areas: To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and (f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment. deem to be appropriate. 3. Term. 3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3. 3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises under this Lease prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligations to pay Lessee's Share of the Operating Expenses) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed be Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. If possession of the Premises is not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 3.4 Lessee Compliance. besser sRall net Ile rel1uiFe~ te ~eliveF Ilessessien ef tRe Premises te bessee until Lessee shall comply Gemillies with its obligation to provide evidence of insurance (Paragraph 8.5) by the Commencement Date. Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 4. Rent. 4.1 . Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security DepOSit) are deemed to be rent ("Rent"). 4.2 Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share of all Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions: (a) "Operating Expenses" include all costs incurred by Lessor relating to the ownership and operation of the Project, calculated as if the Project was at least 95% occupied, including, but not limited to, the following: (i) The operation, repair, and maintenance in neat, clean, safe, good order and condition, of the following: (a a) The Common Areas, including their surfaces, coverings, decorative items, carpets, drapes and window coverings, and including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, building exteriors and roofs, fences and gates: (bb) All heating, air conditioning, plumbing, electrical systems, life safety equipment, communication systems and other equipment used in common by, or for the benefit of, lessees or occupants of the Project, including elevators and escalators, tenant directories, fire detection systems including sprinkler system maintenance and repair. (cc) All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant. (ii) The cost of trash disposal, janitorial and security services, pest control services, and the costs of any environmental inspections: (iii) The cost of any other service to be provided by Lessor that is elsewhere in this Lease stated to be an "Operating Expense": (iv) The cost of the premiums for the Insurance policies maintained by Lessor pursuant to paragraph 8 and any deductible portion of an insured loss concerning the Building or the Common Areas: (v) The amount of the Real Property Taxes payable by Lessor pursuant to paragraph 10; (vi) The cost of water, sewer, gas, electricity, and other publicly mandated services not separately metered: (vii) A Property Management Fee equal to 3i'o of the Base Rent can be charged in lieu of the inclusion of Labor, salaries, and applicable fringe benefits, accounting and management fees attributable to the operation of the Project, Operating Costs shall include the aruH:osts, materials, supplies and tools , used in maintaining and/or cleaning the Project. an~ aGSeuntiR!) an~ maRa!)ement fees allFillutallle te tRe elleratien ef tRe Prejest: (viii) The cost to replace eqUipment, er sallital 6emllenents SUGR as tRe reef, feun~atieRs, eF eJ(terier walls, the cost to replace a Common Area capital improvement, such as the parking lot paving, elevators or fences, and/or the cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 as long as such costs relate to maintaining the existing building or reducing Operating Expenses. Provided however, that if such equipment or capital component has a useful life for accounting purposes of 5 years or more that Lessor shall allocate the cost of any such capital improvement over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such capital improvement in any given month; (ix) The cost to replace equipment or improvements that have a useful life for accounting purposes of 5 years or less as long as such costs relate to maintaining the existing building or reducing Operating Expenses. ~) Reserves set asi~e fer mainteRanGe, rellair, anGIer relllaGement ef Cemmen Area imllre'/emenls an~ PAGE 4 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E violation of Applicable Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of written request therefor. 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations. 7.1 Lessee's Obligations. Notwithstanding Lessor's obligation to keep the Premises in good condition and repair, Lessee shall be responsible for payment of the cost thereof to Lessor as additional rent for that portion of the cost of any maintenance and repair of the Premises, or any equipment (wherever located) that serves only Lessee or the Premises, to the extent such cost is attributable to causes beyond normal wear and tear. Lessee shall be responsible for the cost of painting, repairing or replacing wall coverings, and to repair or replace any improvements within the Premises to "the exten"t such cos"t is a"t"tributable to causes beyond normal wear and tear. Lessor may, at its option, upon reasonable notice, elect to have Lessee perform any particular such maintenance or repairs the cost of which is otherwise Lessee's responsibility hereunder. 7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke detection systems, fire hydrants, and the Common Areas. bessee expressly waives IRe aeAefil et aAY sial bile Aew er Rereafler IA effecl Ie IRe elGeA! Il ls IAGaAsisteA! with Ihe lerrAS af IRis bease. 7.3 Utility Installations; Trade Fixtures; Alterations. (a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air lines, vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, and plumbing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's communication cabling connecting Lessee's Trade Fixtures, machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof, ceilings, floors or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed $2000. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of ooe-four month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to ~ the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to partiCipate in any such action, Lessee shall pay Lessor's attorneys' fees and costs. 7.4 Ownership; Removal; Surrender; and Restoration. (a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof clean and free of debriS, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party other than Lessor, its agents or employees, , during the Term of the Lease(except Hazardous Substances which were deposited via underground migration from areas outside of the Project) even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the PAGE 70F 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7·03/10E express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. 8. Insurance; Indemnity. 8.1 Insurance Premiums. The cost of the premiums for the insurance policies maintained by Lessor pursuant to paragraph 8 are included as Operating Expenses (see paragraph 4.2 (a)(iv)). Said costs shall include increases in the premiums resulting from additional coverage related to requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building and/or Project, and/or a general premium rate increase. Said costs shall not, however, include any premium increases resulting from the nature of the occupancy of any other tenant of the Building. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured under Paragraph 8.2(b). 8.2 liability Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises" Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. 8.3 Property Insurance -Building, Improvements and Rental Value. (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Building and/or Project. The amount of such insurance shall be equal to the full insurable replacement cost of the Building and/or Project, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demOlition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, wa iver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per occurrence. (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days ("Rental Value insurance"). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period. (c) Adjacent PremIses. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. (d) Lessee's Improvements, Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease. 8.4 Lessee's Property; Business Interruption Insurance; Worker's Compensation Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $+,QOO-$2500 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such insurance is in force. (b) Business InterruptIon. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils, (c) Worker's CompensatIon Insurance. Lessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements, (d) No RepresentatIon of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this Lease. 8.5 Insurance Policies. Insurance required herein shalt be by companies maintaining during the policy term a "General Policyholders Rating" of at least A-, VII, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. NG-&IolGh palisy shall be GaRGelable er slolbjeGI 10 modifiGatioR eXGepl alter 30 Elays prier \WilteR ReliGe to besser. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shalt be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same. 8,6 Waiver of Subrogation, Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property ariSing out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby. 8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or K PAGE 8 OF 19 TM INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. . 8.8 Exemption of Lessor and Its Agents from liability. Except to the extent caused by Lessor's gross negligence, willful misconduct, or breach, neither Lessor nor its agents shall be liable under any circumstances for Injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person In or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, Indoor air quality, the presence of mold from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said Injury or damage results from conditions on the Premises or upon other portions of the Building, or from other sources or places, Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (i) iAjlolry aF aamage ta the peFsaA aF gaaas, wares, mefGhanaise af ather pralleFly af lessee, lessee's emplayeeS;-GGAtraGlaFS, IAvitees, GlolstemElf&, Elr aAy..elheF llefsaA In aF allaloltlhe Premises, whelh9f SWGh aarnag&-eF-iAjyry is Galol6ea Ily aF reswlt&-frarn fire, steam, eleGtFisll}';-ilas, water ar rain, inaaer air qlolality, the presenGe sf mala ar fram tl:le Ilreakage, leakage, aos\rusliaR aF atfleHlef~ipes, fire sprinklers, wires, appliaAGes, pll;lmolng, ~v .... .c er lighting flx!u~ny elher Gause, ..... helher 1~a§e-FeS\:JIt&..fr9fn-GGFItlUi8H&-afisiAg Wilen IRe Prernj~pGfI-Gt~ian6 af IRe BWllGlng, ar f~FGe&-Gr ~ * (i)any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project, or {iiit (ii) injury to Lessee's business or for any loss of income or profit therefrom. Instead, it is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8. 8.9 Failure to Provide Insurance, Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee's failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease. 9. Damage or Destruction. 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Tota/. (b) "Premises Total Destruction" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved. (d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable ReqUirements, and without deduction for depreciation. (e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration. 9.2 Partial Damage Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of Which is $5,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to ;-.{i1 make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect. , ar (ii) have this lease terminale ~g Gays thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i) repair such damage as soon as PAGE 9 OF 19 INITIALS INITIALS @2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the cost of the repairs exceeds 12 times the monthly Base Rent, terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay the amount by which the cost for the repair of such damage exceeds an amount equal to 12 times the Base Rent witt:leblt r:eimebirsemeAt frem besser. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6. 9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds eRe three month's Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished. 9.6 Abatement of Rent; Lessee's Remedies. (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein. (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date speCified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. "Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor. 10. Real Property Taxes. 10.1 Definitions. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor's right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Project address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Project is located. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Project, (ii) a change in the improvements thereon, and/or (iii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease. 10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculation of Operating Expenses in accordance with the provisions of Paragraph 4.2. 10.3 Additional Improvements. Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties. 10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive. 10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, eqUipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property. 11. Utilities and Services. 11.1 Services Provided by Lessor. Lessor shall provide heating, ventilation, air conditioning, reasonable amounts of electricity for normal lighting and office machines, water for reasonable and normal drinking and lavatory use in connection with an office, aAEi rel'llaSemeAt Ii!lt:lt eblle8 aAEi/er fibieresseAt tblees aAEi eallasts fer staAEiarEi 9verReaEi fixtblr:es. Lessor shall also provide janitorial services to the Premises aAEi Common Areas 5 ~ PAGE 10 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03110E times per week, excluding Building Holidays, or pursuant to the attached janitorial schedule, if any. besser sRall ReI, Rewe>.<er, Be re~YireE! Ie pre>.<iae jaRilerial serviGes Ie kilGReRS er slerage areas iRGIYaea witRiR Ihe PrerRises. Lessee shall provide Janitorial service to the Premises comparable to that provided In other Class A buildings in downtown Palo Alto. 11 .2 Services Exclusive to Lessee. Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services specially or exclusively supplied and/or metered exclusively to the Premises or to Lessee, together with any taxes thereon. If a service is deleted by Paragraph 1.13 and such service is not separately metered to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a reasonable proportion to be determined by Lessor of all charges for such jointly metered service. 11 .3 Hours of Service. Heating, ventilation and air-conditioning Saia serviGes aRE! Ylililles shall be provided during times set forth in Paragraph 1.12. Heating. ventilation. or air conditioning Ulilities aRa serviGes required at other times shall be subject to advance request and reimbursement by Lessee to Lessor of the cost thereof, if such request is specific to Lessee. To the extent the increased hours of heating. ventilation or air conditioning is also requested by other tenants in the building as well as Lessee. the cost thereof shall be shared by all parties requesting the increase on a prorata basis, based on the square footage of the Premises of each party as contained in each party's lease agreement. Other utilities. electricity and water, shall be provided on a 24 hour basis. 11.4 Excess Usage by Lessee. Unless a pproved by Lessor, Lessee shall not make connection to the utilities except by or through existing outlets, aM Lessee shall not install or use machinery or equipment in or about the Premises that uses excess water, lighting or power, or suffer or permit any act that causes extra burden upon the utilities or services, including but not limited to security and trash services, over standard office usage for the Project. Lessor shall require Lessee to reimburse Lessor for any excess expenses or costs that may arise out of Lessee's actions which result in such excess or disproportionate usage, a BreaGh ef this SYB)3ara9ra)3h BY bessee. Lessor may, in its sole discretion, install at Lessee's expense supplemental equipment and/or separate metering applicable to Lessee's excess usage or loading, 11.5 Interruptions, There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or in cooperation with governmental request or directions. 12. Assignment and Subletting. 12.1 Lessor's Consent Required. (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent. (b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative baSiS, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose. (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buyout or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. (d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and nonfixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent. requested. (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief. (f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is (g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie. 20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or pay phone shall not constitute a subletting. 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lessor's consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach. (c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor. (e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any. , legelRer ¥lilR a fee ef $!jOO as GeRsilleralieR fer besser's GeRsilleriRg aRa )3FeGessiRg saie Fe~yesl. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36) PAGE 11 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing. (g) Lessor's consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2) 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period: (a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism. (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, where such failure continues for a period of 7 business days following written notice to Lessee, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an iI/ega I activity on the Premises by Lessee, where such actions continue for a period of 3 business days fol/owing written notice to Lessee. . (d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the seF¥is8 sentrasts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guarantee and/or Guarantor, (vii) any document requested under Paragraph 41, (viii) material data safety sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee. (e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1 (a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee's Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion. (f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the aPPointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (Ii) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an antiCipatory basis, and Lessee's failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice given after such duty or obligation was due (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an PAGE 12 OF 19 1'1'\ INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for In this Lease and/or by said statute. (b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appOintment of a receiver to protect the Lessor's interests, shall not constitute a termination of the Lessee's right to possession. (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions", shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the prOVisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges that late payment by LeSsee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within e 10 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 1()% sf easl=! 61,1SI=! sverEll,le aR'lallAt ar $1000.00. 1()(), '11l=!isl=!ever i6 greater. except that on the first occurrence of a late payment, Lessor shall provide Lessee with verbal or written notice and Lessee shall have 10 days from such notice for the payment to be received by Lessor before the Late Charge is due. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance. 13.5 Interest. Any monetary payment due to Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest ("Interest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4. 13.6 Breach by Lessor. (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such cure, provided, however, that such offset shall not exceed an amount equal to the greater of one month's Base Rent or the Security Deposit, reserving Lessee's right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or posseSSion, whichever first occurs. If more than 10% of the rentable floor area of the Premises, or more than 25% of Lessee's Reserved Parking Spaces, if any, are taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessor shall have given PAGE 13 OF 19 TM INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing , this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation paid by the condemnor for Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation. 15. BFekeFage Fees. 11U A<IdltI.ma~mi6sleR, If a sepa~l:}r-ekeFage-fee-a9feemenl Is aIIaGt:le(l1AeFHA-aGGit~e paymenl&-eweEl pllFSl:jaAt-49 Paf<l§f3llt:l1.1Q aBOlJ&;-aR9-timess lesser and !FIe Brokers att:lerwlse agrea in 'IlFlting, basseF--a§r-ees-lt:ial: fa) if lessee e)(ereises any Opt~ lessee 9f any9R8-affl"aleQ..witM,es~res-fFOOl-be~~~t:le Premises a~~la&&-Gwned By be6S9HIIld-leGateEl-wIU:!lFHl=le Pmjest, (9) if lessee r:emai~~~lse&;-Witt:i ti'le G9n~esser, after the e)(lliralien af ttll&-bease, eF (d) if 8ase Refit is ~er ~ agreemeRI or aperaliafl af an essalatJeFl slal:lse t:le~R, l esser shall pay 8(8~FS a .fee Ifl-a6GeFOanse wilt:l tt:le sshedwl& altaGt:led Ie SI:IGt:I 9rekefage fee agreement. 15.2 /l06eWJAf»hm-Qf..ObIlgat/Qn&,-A~Y'jer ar IFaRSfe~r:e8t in !FIis l ease sha~med Ie l:ia'.'e asswmelii beS&&f!& 00llg311an haFal/Adar. 8FakeFS shall Be Ihlrlii paFly BeAefiGia~~f.3{jraphs 1.1 g, 1 a, 22 and 31. If lBsser ralls to pay Ie 8r:ekers any.-amaI:jAt8-dwe as and reF-br~kera9e-rees-partalnlng-l~s-L~Aefl..E!\,I&;-IAe~Gh-0mg\.,jFlts-&Ra~.I:le-lAter:est..-lR-a{kjjtlORrif lesser fail&-ta pay-aAy-amOOAts-IG-bessee!&-BF9keF-W~eHlT8y.&eRG-wAtteA-AGliG6lG Le~!U:e~f-.wGh...fall\.,jr:e-aR4-U-l:esser-fall&-la-pay' sWGf:l..ame\.,jllls-will:llf'l-1.Q4~er-&allJ..Mlice.--kessee-sflal41ay:-&alEl-Fnan as-t~ker-aflQ-effse~~mooAta-agaiRst-Ren~ilWfI, besse&s· Sreker-sRaIl-tJEKleemeli-t~r~aIlGlBfY-e~A}'-OOffiml6Sie~9reem9At-eA!er:eG-iFlIG--9y-af191G....aelweeR-ke&&er-aflEl-le~ker-faHM IimileE! ~Mpose of collecting any brokerage fee oweGo -----'l1f-1lli.,..3s-----IRepresentations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (ather thaR IRe QrekeFS, if any) in connection with this Lease, and that no one alher IRan saia Ramed Qrakers is entitled to any commission or finder's fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred with respect thereto. 16. Estoppel Certificates. (a) Each Party (as "Responding Party") shall within 10 days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppel Certificate" form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (Ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within W 20 days after written notice from Lessor deliver to any potential lender or purchaser deSignated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or aSSignment and delivery of the Security DepOSit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. 18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its partners, members, directors, officers or shareholders, and Lessee shall look to the Project, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction. The obl igations of Lessee under this Lease shall not const itute personal obligations of Lessee or its partners, members, directors, officers or shareholders, and Lessor shall look to SutveyMonkey.com, LLC for the satisfact ion of any liability of Lessee with respect to this Lease and shall not seek recourse against Lessee's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction. 21 . Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. PAGE 14 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed suffiCiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrentiy transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing. 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested , shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is suffiCient). provided a copy is also delivered via delivery or mail. If notice is received on a Saturday. Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers. (a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee. shall be deemed a waiver of any other term, covenant or condition hereof. or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor's consent to. or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to. or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith. which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MAnERS RELATED THERETO AND WHERE PERMISSIBLE BY LAW. HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE. 25. giselosu~os RegardlRg The Nature of a Real !Estate ,.gaRey RelatloRship. ------,(aCij)---'lWheR-eRteAAg-iRI.o-a-Qi&GlJssloo-wil~_a_t_eal__estale_ag9Al-fegami~al--estat~nsaGUan. a Lessor Qf-I..~&see-shGI:I14 ffGm-thEH>UI68HlAl'leffiland-WAat-t~H3genr;J ~aIfQl'l~H"-ep~seAlaijoR It R3&-WiIM~e~g9AI&-I~A&3sl1o~SGf-3nd-be6see asknowledge eeing ad'Jised ey tAe Brekers in this transastion, as fellows: ----------G~·)>----4L,fI&-6&S6~t 1', lesser's agent-\inGer-a-li&l ~1'8eFR6flt-Witl:HRe lessor acts--a&-tfle agenl for Il=Ie le660f only. A le&so.~gent-lla&-tA&-felle\Yifl§ a#ifR'lilllve-obllgal,ions: To 111& L&660r; ,,\ fiauGlal)' (j~st-G<\f&;-ifItagfny, Aon~M 10yalty-lA-4ea!ifl!;Js-wltA.4he LeEsor: To #/& Le6see anG-th& /"e6se,<: a. Olligeflt-eKersise 'af reaSGRabIEHklIl~~Fmaflse of Ihe agen~ Eluties. B. A (jl.lty ef Aenest ana faiHiealing-and geed fait~aWy-4&-Gissle6e all Ja616-kf1e~~e-ageR\-fRaterially-atfestintllhe valtJe-ef.(jesiffi9ll~ of Ihe propeRy-tAat are. Aol knoWA-t~n-tRe-EllligOAt allonllen an61 oBservation of. the Par:tles. An agent is not oellgat~ Awea] 10 either !JaHy aAY-68Ar~!lallnfGrFRetion r;l9talnod frorn Il=Ie other Flaw!' ' .... l=Ilsh dees not Involve the affiFmatlve-G~1ies-68~9oY&' (I~ /"&669&'6 Ag9R/. An agent GaR agree to am as agent for 1M lessee enly~se 6il~atieAs, lJ:le a.gBAI i6 net ~or's aseAt,even It by 3greerneAl ,l=Ie a!l8At rnay FeGeiIJa sornpeAsaltGfH94'-&6f>JIG8S rendered, elthe, ~ full or in part frorn lI'1e lessor. An ageR\ acliA,g oAly for a bassee 1:l'a&4Ae rolleWi~mFl'RatiIJe oell§atlen~ Ih9 Lessee: A Iid~slary (My-o~IHme&kaf&;-IAle!iri~, I=IBReSly. aRG leyally-lf\ GealiRgS wllh Ihe lessee. 7="a tha Le&s~he LesS61'.'--&--9iligeAt-elleFeise of r93sGAa~1I6 ana GafB In pof'fefma~uties. e. A EIu~f-Mnest-.arnl fair l'IealiRg aR~&OEi-faitR. G. " dl:lly Ie disGIese-a1i fasts knBWA Ie Il=Ie agent FRati3rially-a#eGlins tJ:te value or EleSiral}llity ef tl:la ~f.l6R¥-tl=taHiFe Ret k(1e ..... R Ie, or 'IIithi(1 ttle ditt!loAHlt~n ami otlservalioR of, IAe Partles. .!\(1 aseAI is ReteI:JUgated-ta-r'6vea~H2af\y-any G9Afll'lel'ltla\-.lAfGfrnal~talAe94Forn'Ae otfleF-P.arty-W~~~fliFrnalTve (Mies se~l:Jey&' (ill) AgeRt ~~S9RI!Rf1 ~h ~ .. afld Lessee. 1'. real estate agent. either aeliAg Eli~I:I9A ene or rnore as&eeiate IIseRses. GaMegally.be the agenl af tll;)th-U!&-lo&6GHJ~ssee-in-a-transae!l~I-9AIy-vJitMRe-kAowIeage aRd SBR6&At ef l:JolAlhe l:esse~AEI4J:Ie-l-essee. 1(1 a M~6'f-GIWall~e-ageAll1as-tAe-fGllGWIRg-afflfmilllY6-69ligaliaR6 10 eath Il=Ie lessor.af1G...U1e..t--eS68e: a. It. fiduciary EluIy-oHAA=lost-GarB, integrity. l:Ienesty-aRd-I&yalt)4R IRa gaallngs 'III,,,, eill:ler lesser sF H18 lessee. 9. O~r4l,jUes 10 the lessor and Ihe L-essee-a& slated-ageve In sI.l9~s-{i}-efilI.). IA Fep~senl~~F-aM-be~~el-wllhOl:lt Ihe BlIpFess perrnlssiBR ef IhB ~speelWe PaRy,-QiSGlose-to../he-eU=ler FlaRY Il=laHl=\&-bess9F-Wlll-aooept reAt 11'1 31'1 aFROOAt-fess-lhan-t~i&aIeEJ-ifHJ:\e..IistlAgor that IA8 bassee Is w"llfl!4~ AigAer Fent-tAan that offerea. The aBove (jl:llles of !\:Io agent In a FeaH;state-tfaRsa6tioA de nel ~Ijeve a lesser or l06600 fFern Ihe responsibllll>j 10 proteGt4Aeit-eWA-iI'Itefesls. Lesser and-lesseB sho",~..u~~rn8fl\&-lG-a~Fe that they aaeql.lalt!f~ss-Iheif-.l:lMe~~~Ae 1~9n. ,a. rea~geAI4&-ai*1rson ~",aliflad to aEl\'lse a9Q1:I! real estate, If legal or ia)' al'llJiG&.-ls4esl~g. eans",l! a Ilornf,letonl prefesslORal-: (9) Brokers have oRe FesponsiBllity with resflOct kHmy.-<ilefalJlHr 9Fea6h he~or B)4)itAef-Party. TAB FlaFUes agree that no Ia~ther legal pFeGeedlAg IRvollllA!J-3FIy I:Jreash of EI"'~, 8rrer or ernlS&lon FelaliRg 10 Ihis lease FRay 99 9fGl.lght-agaiflst-Bmke( me~ IA<m-oFl6 yoar after tile Sta&&a~at-thEHlabiUty-{lRGIlJElln9 eel:lrl !;lasts an£J atIOFRBYS' foes), af any 9rekeF with respoel t9-3Fly &l:Ieh laWSYII-aREIffiF..legaI pF0689EllRft-&l:IaU.{lol Oilseed 1he ree-reGeI\leEl-!}y.-&I;IGA Brekef'fMSl.laRl-te this Lease: preViGed, l=Ie ..... &Ver, thaI the fer.egoiAg-limitatien on Bash 91'OkeR> liaeilil>j shall net ee applisal:Jle to aRY gross Aegligense or willfI,Jl rnisGoRdl:lsl of SI:IGh Broker. (c) l esser aRd Leseee agreB Ie iElenlify to 8rek-ef6 as "Confiaenlial" aRY oornrnunlsalioR or IRfGrma1ien giveR 8rekers thai Is sonsidered ey sl:lsh Party 10 ee GenfideAlial. 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over. then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease. all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context. the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. PAGE 15 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E 29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 30. Subordination; Attornment; Non Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor. 30.3 Non Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement. 30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein. 31 . Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation). 32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee's use of the Premises. All such activities shall be without abatement of rent or liability to Lessee. In addition, Lessor shall have the right to retain keys to the Premises and to unlock all doors in or upon the Premises other than to files, vaults and safes, and in the case of emergency to enter the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forcible or unlawful entry or detainer of the Premises or an eviction. Lessee 'IIal'.<es any GRar;ges fer Ela~a!le6 sr inj\,lries or Inlerferense ''''IIR Lessee's properly or 9\,1siness iA-GGRA9GIiGA IRere ..... iIR. 33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction. 34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any time and ordinary "For Lease" signs during the last 6 months of the term hereof. Lessor may not place any sign on the exterior of the Building that covers any of the windows of the Premises. Except for ordinary "For Sublease" signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor's prior written consent. All signs must comply with all Applicable Requirements. 35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue anyone or all existing subtenancies. Lessor's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest. 36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to arChitects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease eXists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request. K PAGE 16 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03110E 37. Guarantor. 37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by the AIR Commercial Real Estate Association. 37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. 39. Options. If Lessee is granted an Option, as defined below, then the following provisions shall apply. 39.1 Definition. "Option" shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the Original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting. 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised. 39.4 Effect of Default on Options. (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is past due and unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option. (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease. 40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. In the event, however, that Lessor should elect to provide security services, then the cost thereof shall be an Operating Expense. 41. Reservations. (a) Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, (iii) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways and their creation and installation do not unreasonably interfere with the use of the Premises by Lessee. Lessor may also: change the name, address or title of the Building or Project upon at least 90 days prior written notice; provide and install, at Lessee's expense, Building standard graphics on the door of the Premises and such portions of the Common Areas as Lessor shall reasonably deem appropriate; grant to any lessee the exclusive right to conduct any business as long as such exclusive right does not conflict with any rights expressly given herein; and to place such signs, notices or displays as Lessor reasonably deems necessary or advisable upon the roof, exterior of the Building or the Project or on pole signs in the Common Areas. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such rights. The obstruction of Lessee's view, air, or light by any structure erected in the vicinity of the Building, whether by Lessor or third parties; shall in no way affect this Lease or impose any liability upon Lessor. (b) bes&GHllse reserves Il=!e fi§l=!t la FRa'Je bessee le-et/:Ie~~lee 11'\ Il=!e QullslR§ eF PrGjesb besser FRust !}F9vige-a~fieF-WfilteR Rellse at sl:Isl=I FRGVe, amJ tl=!e Rew sllase FRiiS! GBRtaifl-ifRf)fBYBFRBRls ef SaFRllarat3le quality Ie these SSRI\:1iRee wil!:lIR Il=!e PFeFRlses, besser sl=!all pay ll=!e reasenailla elJt af Ilaskal sssts Il=!at bessee IRSYFS '/Jill=! regafs Ie sl:lsh reiGGaIieR, iRSllJslRg Iha axpeRses sf R'!eIllAg BAa AeseS&afy-&laIiGA~8fH>GSts. 11'1 nB even!. RS'lleVer, shall Lessar lola rai:lu~y"clA aFRalJRt 11'1 el{GeS6 af-lWe...fl'leRt:A&-8ase ReRI. bessee FRay Rat Be relssates FRsre l!:laR aRse aliriR§ tRe lerFR af IRis bease. (c) Lessee shall not: (I) lJsa a rel3reSenlaUeR (PRetegtapl'liG-er-etMFWiSa) ef IRa 8ulk1~f PrGj961 BF their RaFRe(6) IR GBRnestlan wil!:l bessee's BlJsiRess; SF (ii) suffer or permit anyone, except in emergency, to go upon the roof of the Building. 42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid "under protest" with 6 months shall be deemed to have waived its right to protest such payment 43. Authority; Multiple Parties; Execution. (a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party s.hall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority. (b) If this Lease is executed by more than one person or entity as "Lessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed that anyone of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document. (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument, 44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 45. Offer. Preparation of this Lease by either party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. «I' PAGE 17 OF 19 INITIALS INITIALS ©2002 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTON-7-03/10E Paragraph 52 -RIGHTS OF FIRST OFFER AND FIRST REFUSAL TO LEASE ADDITIONAL SPACE IN THE BUILDING (a) If any space in the Building becomes available for leasing for general office use ("Expansion Space") during the Term of this Lease: (i) Right of First Offer. Lessor shall notify Lessee in writing of the availability of the Expansion Space, after which Lessee will have 7 days (the "Exclusivity Period") to notify Lessor in writing of Lessee's intention to lease the Expansion Space from Lessor. If Lessee elects to lease the Expansion Space during the Exclusivity Period, Lessor and Lessee shall negotiate in good faith an amendment to this Lease (or other appropriate legal document) (the "Expansion Agreement") to add the Expansion Space to the Premises and modify any relevant terms and conditions including, without limitation: (i) the definition of Premises; (ii) the Base Rent due per month; (iii) the Lessee's Share. Lessor shall not agree to lease the Expansion Space to any other party during the Exclusivity Period or, if Lessee indicates during the Exclusivity Period its intention to lease the Expansion Space, for a period of 30 days after either party has sent a first draft of the Expansion Agreement to the other (or for such longer period as may be agreed between Lessor and Lessee). If Lessee elects not to lease the Expansion Space, or fails to notify Lessor by the end of the Exclusivity Period, Lessee shall be free to lease the space to others. (ii) Right of First Refusal. If any offer acceptable to Lessor from a potential tenant to lease the Expansion Space is made, Lessor shall, prior to the acceptance of that offer, give Lessee written notice of that offer (including a copy of such offer). Unless the Equivalent Monthly Rent (defined below) under such offer is greater than the Equivalent Monthly Rent under the offer made by Lessee under paragraph (a)(i) above, Lessee shall then have the option and right of first refusal for 7 days after receipt of such notice within which to elect to lease the Expansion Space on all of the terms of such offer. "Equivalent Monthly Rent" is, with respect to the Expansion Space, (1) the monthly base rent, (2) plus estimated monthly operating expenses, (3) minus any tenant improvement allowance divided by the number of months of the lease term, (4) minus the total of any free rent divided by the number of months of the lease term, and (5) minus any other amounts that effectively discount the overall base rent or operating expenses payable under the relevant lease. (b) The rights in paragraphs (a)(i) and (a)(ii) above (together, the "Lease Option") are subject to the following provisions: (i) Despite the foregoing, the Lease Option will not apply with respect to an offer to lease the Expansion Space that is made by a tenant then occupying the Expansion Space who offers to extend its existing lease with Lessor, or while the Lessee is in default of this Lease beyond any applicable cure period. (ii) The Lease Option is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee, and: (A) only while the original INITIALS ~ INITIALS T fA. Lessee is in full possession of the Premises, (B) only for the occupancy and use by the original Lessee, and (C) without the then current intention of the Lessee thereafter assigning or subletting. (iii) Failure by Lessee to exercise any of its rights under the Lease Option will not terminate the Lease Option, nor affect the Lease and the continuance of Lessee's rights and Options under the Lease (includirtg the Option in this paragraph 52). The Lease Option shall continue throughout the Term of this Lease and may be exercised at any other time during the Lease as any Expansion Space becomes available. Paragraph 53 -PRIOR SUB-SUBLEASE The Parties acknowledge that prior to the Commencement Date, Lessee is sub-subleasing the Premises from Ning, Inc., a Delaware corporation ("Sub-Sublandlord") pursuant to a 285 Hamilton Sub-Sublease Agreement dated May 5, 2010 (the "Sub-Sublease") and that Ning Inc., is subleasing certain premises (which includes the Premises) from Facebook, Inc. a Delaware corporation (Sublandlord) pursuant to a 285 Hamilton Sublease Agreement dated August 7, 2009 (the "Sublease"). If the event of the early termination of the Sublease, Paragraph 2 of Exhibit B to the Sub- Sublease (the "Sub-Sublease Consent") contains the non-disturbance provisions by which Sublandlord agrees to recognize Sub-Subtenant as Sublandlord's direct subtenant on the same terms and conditions of the Sub-Sublease, as if the Sublease remained in effect as to the Premises. In the event of the early termination of the Lease of285 Hamilton Avenue, Suites 400 and 500, Palo Alto, California by and between Facebook, Inc. and Thoits Brothers, Inc. dated as of May 15,2007 (the "Master Lease"), Paragraph 7 of the Sublease specifies that the Sublease shall thereupon be terminated. The parties hereto agree that in the event that the Master Lease is terminated early, the Commencement Date of this Lease shall be modified to be the date immediately following the termination date of the Master Lease and the concurrent termination of the Sublease; in which event, during the period between the early termination date of the Master Lease and the originally scheduled Commencement Date of this Lease, Lessee shall pay rent and operating expenses at the rates set forth in the Master Lease, and the Term of this Lease shall be extended accordingly (such that the Commencement Date will begin earlier, but the Expiration Date remains the same). Paragraph 54 -PARKING The five (5) reserved parking spaces provided by Paragraph 1.2(b) of the Lease are those designated as Parking Spaces No.3 and No.6 through No.9 INITIALS INITIALS il'\ ~ Exhibit A ASBESTOS NOTIFICATION 285 HAMILTON STJmET BUILDING rn 1988. CaliforniA enacted Legislation (specifically, Chapter 10.4 of the fIea~th and Safety Code, Section 25915 et seq.) requiring landlords and tenants ,)f commercial buildings conStl'\lcted prior to 1979 to notify certain people. including each other and their respective employees working within such building, of any knowledge they may have regarding allY asbestos-<:ontaining construction materials ("ACMU ) in the Building. On July 13, 1995. Title 29, 90de of Federal Regulations, Section 1910.1001 and 1926.1101 defmed Presumed Asbestos Containing Mater.ial ("PACM") as Thermal System Insulation and Surfaciog Material found in buildings constructed no laler than 1980. The Federal Standard requires the bUilding andlor facility owner to notify contractors and tenaD ts cd' the preseDce of ACMIP ACM. On May 3, 1996. CalJOSHA adopted the same notification requirements for PACM in Title R CCR 5208 & 1529. This notification is being given to provide the information required under this Legislation iD order to help you avoid any unintentional contact with the ACMlPACM, to assure thaI app~opriate precautionary measures are taken before disturbing any ACMJPACM, and to aSI;ist you in making appropriate disclosures to your eIllployees and others. We have engaged qualified asbestos consultantl. to survey the property for asbeslos and 10 assist in implementing an asbestos managemenl plan thaI inc1\tdes. among other things. P~O(lic reinspection and smveillance, air monitoring, information and trainiI,g programs for building en'gineering and other measures to minimize potential fiber releases. A desori)ltion of Ihe 'currenl Operations and Management Plans prepared for the Building (the "O&M Plans") is S(.t forth on Schedule A attached hereto. Our asbestos consultant has certified to us that the O&M Plans fully compty with the disclosure requirements of Health and Safety Code Section 25915.1. We have no reaSOD to believe, based upon the O&M Plans, that the ACMlPACM iD the Building is currently in a condition to release asbestos fibers which would pose a significant bealth hazard to the Building's occupants. This should remain so if such ACWPACM is properly handled and remains undisturbed. You should take into consideration that our knowledge as to the absence of health risks is based solely upon general information and the informatl4m contained in the O&M Plans. and that we have no special knowledge concerning potential health risks I'llsulting from exposure to asbestos in the Building. We are therefore required by the above-mentioned legislation to encollrage you 10 contact local or state public agencies if you wish to obtain a better unc.erstanding of the potential impacts resulting from exposure to asbestos. Because any tenant alterations or other work at the property could disturb ACMJPAOA: and possibly release asbestos fibers into the air, we must reqdre that you obtain our written approval prior to beginning such projects. This includes major alterations, b\lt might also include such activities as drilling or boring holes. installing electrical. telecommunications or computer lines. sanding floors, removing ceiling tiles or other work which disturbs ACMlPACM. rn many cases, such activities will not affect ACMlPACM. but you must check with the property man~lger in advance, just in case. You should check with the property manager a( the address set forth On Sch~ule A. The property manager will make available such instruction as may be required. Any such Norlc shOuld not be attempted by an indjvid\lal or contractor wbo is not qualified to handle ACMIP ACM. In the aTeas specified i.n Schedule A, you $hould avoid tOUching or disturbing the ACMlPACM In any way. lfyou observe any activity which Lessor's Initials ~ 1 Lessee's Initials T f\ has the potential to disturb the ACMlPACM, please report the same to the property manager immediately. Further information concerning asbestos handlhg procedures in general can be found in the building's Asbestos Operation and Maintenance Plan, Iccated in the building office. At this time, we are unaware of specific handling restrictions or procedures which might be necessary in any particular situation to avoid exposure. We are therefore required hy the above-mentioned legislation to encourage you to contact local, state or federal public health agencies if you which to obtain further information regarding handling procedures and restrictions. In connection with the foregoing, we have adopl:ed the following policies (which shall be considered rules under tenant leases): (I) the owner, ani representatives of the owner, including. without limitation, the owner's ACMIP ACM consultant, are enti:led to enter into the premises of any tenant to inspect for ACMlPACM. perform air tests and abatemeut; (2) any tenant, contractor, or other party must obtain our prior written approval before performing any alterations on any tenant space, or performing any other work at the property that might disturb ACM/PACM or involve exposure to asbestos fibers as described above. Lessor's Initials ~ 2 Lessee's Initials Tt\ NOTICE TO EMPLOYEES, LESSEES, AND CONTRACTORS Asbestos in Building Materials at 285 Hamilton Avenue Palo Alto, CA 94301 This notice is provided to all employees, tenants, and contractors working at 285 Hamilton Avenue, Palo Alto, CA as required by Health and Safety Code Section 29515. 1. A preliminary survey of the building identified above has been conducted by a professional consultant in order to identify accessible areas that contain Asbestos Containing material (ACM) The conclusions and results are summarized as follows: Material Description 1) Fire Proofing **Inventory Material Location Structural Supports **Note: The Above -listed finding is based on limited asbestos surveys. Prior to any disturbance ofthe building materials, the Asbestos Program manager should be contacted to perform a more detailed asbestos survey. The copies of all surveys, and if air sampling has been done, are available at the Great Western Bank Property management office, located a t 7600 Dublin Boulevard, Suite 302, Dublin, CA 94568, during normal business hours. 2. Any attempt to move, drill, bore, scrape, sand or otherwise disturb the ACM can present a risk of fibers becoming airborne and should not be attempted by anyone who has not been trained in specific procedures for safely handling this ACM. A. As a result, should construction activities be necessary that will disturb ACM, Please contact Thoits Bros., Inc. at 629 Emerson Street, Palo Alto, CA 94301; 650 323-4868 B. Should you observe any deterioration of the ACM, please contact: Thoits Bros., Inc. at 629 Emerson Street, Palo Alto, CA 94301; 650 323-4868 3. Asbestos exposure can cause asbestosis and other respiratory diseases, and is listed under Proposition 65, California Health and Safety Code Sections 25249.5-25249.13, as a chemical known to the State of California to cause cancer. Although there are uncertainties surrounding the levels which can cause disease, the major reason for implementing the comprehensive Asbestos Management Plan is to prevent airborne asbestos exposure to building occupants. If you would like to Obtain further information regarding potential health risks or impacts of airborne asbestos, please Contact the California Occupational Safety and Health Administration. 4. As defined in Health and Safety Code Section 29515, a tenant or sub-tenant is also an 1/ owner" who is required to give this notice. Accordingly, copies of this notice should be distributed. A. Your employees, sub-tenants, and assignees within 15 days after receipt of this notice. B. New employees, sub-tenants, or assignees within 15 days of their commencing work or occupancy of the building. C. Any contractor performing tenant improvements, repair renovation, or remodeling in the building, with instructions to contact building management for more detailed information. Both you and your contractors are responsible to post a conspicuous warning sigh, with bold print and bright letters which states: CAUTION: ASBESTSO: CANCER AND LUNG DISEASE HAZARD DO NOT DISTURB WITHOUT PRPOER TRAINING AND EQUIPMENT. Any work that you or the contractor intends to perform should be coordinated with the Great Western Property Management Group in order to obtain more detailed information regarding the asbestos hazard and procedures that should be followed to avoid disturbance of the ACM. 5. A copy of this notice must be provided to all of your employees, or sub-contractors, and their employees working in the building. 6. PLEASE NOTE: This notice does not identify any governmentally-promulgated health action levels or exposure standards. Contact your health care provider in order to obtain the most current information and to assist you in interpreting the health implications of information contained in this letter. ASBESTOS OPERA nONS AND MAINTENANCE PROGRAM FOR 285 HAMILTON AVENUE PALO ALTO, CALIFORNIA NOVEMBER 2009 1.0 INTRODUCTION This Operations and Maintenance (O&M) Program addresses activities which may involve or disturb asbestos containing materials (ACM) in the building at 285 Hamilton Avenue, Palo Alto, California. See Section 4.0 for ACM types. The building is managed by the owner, Thoits Bros., Inc. (TBI). An O&M Program minimizes the potential for facility employees, tenants, maintenance personnel, contractors/vendors, and the general public to be exposed to ACM or airborne asbestos fibers. Asbestos is a naturally occurring mineral silicate whose fiber like particles are know to cause mesothelioma, asbestosis, and lung cancer. Through the development and implementation of a procedural manual for company associates outlining the necessary procedures for emergency situations, associate training, periodic inspections, testing and recordkeeping, an O&M program can meet the needs of the facility in the management of ACM. The O&M program, when implemented, provides a level of assurance that the most prudent steps are being taken to minimize, and in some instances eliminate, the potential for asbestos exposure for facility employees, tenants, maintenance personnel, contractors/vendors, and the general public. Through this directive the O&M program becomes a document that provides evidence of the corporation's awareness of the liabilities and outlines the necessary steps to minimize exposure potential, 2.0 POLICY STATEMENT It is the policy of TBI to notify appropriate persons as required by law and to take necessary steps to minimize the potential for asbestos exposure. It is the policy of TBI that only trained, qualified individuals shall disturb or remove any ACM. It is the policy of TBI that maintenance/custodial staff shall receive appropriate O&M training, as deemed necessary. 3.0 PROGRAM PARTICIPANTS TBI will designate an overall asbestos Program Manager. To effectively meet these responsibilities, this asbestos Program Manager shall have implementation and enforcement authority for this program. Engineering/maintenance personnel share responsibilities for implementing the O&M work procedures to reduce the potential for exposure to airborne asbestos fibers. For this building, the Program manager is: Jim Thoits Vice President Thoits Bros., Inc. 650 323-4868 All activities relative to the handling of ACM are to be coordinated through this individual. 3.1 RESPONSIBILITIES Program manager The Program Manager shall be responsible for the following tasks: Implement and monitor the asbestos control program Coordinate all activities with asbestos consultants and contractors Review specifications for services or work, retain consultants and evaluate bids and proposals, and monitor contractor's performance of asbestos related work. Provide access to training and technical assistance to construction and office managers to ensure asbestos control. Keep adequate records of asbestos exposure assessments, medical exam records (if required), abatement plans and actions, and ensure regional compliance with Occupational Safety and Health Administration (OSHA) regulations 29 CFR 1910.100.1(m)(3), 29 CFR 1910.20 and 1926.110.1(n)(3), and the California OSHA asbestos standard Title 8 CCR 1529. Ensure that all personnel tasked to handle asbestos are qualified and certified in accordance with applicable federal, state, and local standards. Incorporate, schedule, monitor, and maintain records of the periodic ACM inspection program. Review all planned construction and maintenance activities in areas known to have ACM, to prevent unnecessary damage to the ACM, occupant exposure, and contamination of the building. Monitor the above work while it is in progress to ensure that it complies with contract specifications. Monitor the above work while it is in progress to ensure that it complies with contract specifications. Ensure that a record is kept of all applicable incidents, situations/accidents involving ACM. 4.0 TYPES OF ACM The building was constructed using spray on ACM as fireproofing for the structural members. In the course of tenant improvements, ACM has been removed as possible, and has been encapsulated where removal is not possible. FIRST AMENDMENT TO LEASE AGREEMENT This FIRST AMENDMENT TO LEASE AGREEMENT (the "First Amendment") is dated May 1, 2011, for reference, and made by and between THOITS BROS., INC., ("Lessor"), and SURVEYMONKEY.COM, LLC, ("Lessee"), with reference to the following facts: A. Lessor and Lessee entered into that certain Lease dated November 1,2010, for the entire fifth floor of the building known as Suite 500 ("Fifth Floor Space") located at 285 Hamilton Avenue, Palo Alto, California, consisting of approximately 9,781 rentable square feet (the "Lease"). The Commencement Date of the Lease prior to this First Amendment is October 1,2011. B. Lessor and Lessee now desire to amend the Lease to among other things (i) revise the Premises to include approximately 3,133 rentable square feet on the second floor of the Building known as Suite 280 (the "Second Floor Space"), (ii) to provide for the Premises to consist solely of the Second Floor Space during the period from the Commencement Date to September 30, 2011 (the "Second Floor Period"), (iii) to expand the Premises to include the Fifth Floor Space beginning on October 1, 2011, and (iv) modify various other terms and provisions of the Lease as more particularly provided herein. AGREEMENT NOW THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows: 1. Capitalized Terms. All capitalized terms when used herein shall have the same meaning as is given to such terms in the Lease unless expressly superseded by the terms of this First Amendment. 2. Commencement Date. The Commencement Date of the Lease shall be amended to be August 1, 2011 ("Revised Commencement Date"). The Expiration Date of the Lease shall continue to be September 30, 2016. The Original Term shall be amended to be 5 years and 2 months. 3. Early Possession. The last sentence of Paragraph 1.4 of the Lease is replaced with the following: "Lessor and Lessee acknowledge Lessee is the Sub-Subtenant of the Fifth Floor Space prior to the Expansion Date." 4. Premises. During the Second Floor Period as defined above, the Premises shall consist solely of the Second Floor Space, and Lessee shall have no right to occupy or otherwise use the Fifth Floor Space, except pursuant to the prior Sub-Sublease referenced in Paragraph 53 of the Lease. Effective October 1, 2011 ("Expansion Date") the Premises shall be expanded to include the Fifth Floor Space in addition to the Second Floor Space. Section 3.3 of the Lease shall apply to any delays in 280317 10. Prior Sub-Sublease. Instances of the word "Premises" in the first and second paragraphs of Paragraph 53 of the Lease are replaced with "Fifth Floor Space". The last sentence of Paragraph 53 of the Lease is replaced with: The parties hereto agree that in the event that the Master Lease is terminated early, the Commencement Date of this Lease shall be modified to be the date immediately following the termination date of the Master Lease and the concurrent termination of the Sublease (the "Early Termination Date"); in which event: (a) during the period between the Early Termination Date and the Expansion Date, (i) the definition of "Premises" shall be expanded to include the Fifth Floor Space (but, for the avoidance of doubt, "Premises" shall not include the Second Floor Space during the period between the Early Termination Date and the Commencement Date (as originally defined before its modification under this paragraph)); (ii) Lessee shall pay rent and operating expenses in relation to the Fifth Floor Space at the rates set forth in the Master Lease; and (iii) Lessee shall remain entitled to the parking spaces set forth in the Master Lease; and (b) the Term of this Lease shall be extended accordingly (such that the Commencement Date will begin earlier, but the Expiration Date remains the same). 11. No Other Amendment; Conflict. Lessor and Lessee acknowledge that as of the effective date of this First Amendment neither party is in default of its obligations under the Lease. Except as set forth in this First Amendment, the Lease shall remain in full force. If the provisions of this First Amendment conflict with the provisions of the Lease, then the provisions of this First Amendment shall prevail. 12. Counterparts. This First Amendment may be executed in multiple counterparts which, when signed by both parties, shall constitute a binding agreement. IN WITNESS WHEREOF, the undersigned gave duly executed this First Amendment as of the dated first above written. LESSOR: THOITS BROS., INC. By: Name: Title: 280317 :~~~ R~ \~a:~ =tiLE~ iDE--~ LESSEE: SURVEYMONKEY.COM, LLC By: ~~JL;zr 7 Name: Title: 'If, (jUJ({vf&S) of> f frNAlVcrt- SECOND AMENDMENT TO LEASE AGREEMENT This SECOND AMENDMENT TO LEASE AGREEMENT (the "Second Amendment") is dated as of October 25, 2011, for reference, and made by and between THOITS BROS., INC., ("Lessor"), and SURVEYMONKEY.COM, LLC, ("Lessee"), with reference to the following facts: A. Lessor and Lessee entered into that certain Lease dated November 1,2010, for the entire fifth floor of the Building ("Fifth Floor Space") located at 285 Hamilton Avenue, Palo Alto, California, consisting of approximately 9,781 rentable square feet (the "Original Lease"). B. Lessor and Lessee entered into that certain First Amendment to Lease Agreement dated May 1, 2011 ("First Amendment") to revise the Premises to include approximately 3,133 rentable square feet on the second floor of the Building known as Suite 280, and to provide for an earlier lease start date for Suite 280, than the lease start date for the Fifth Floor Space. The Original Lease and the First Amendment together are the "Lease". C. The entire fourth floor of the Building known as Suite 400 consisting of approximately 9,781 rentable square feet (the "Fourth Floor Space") is, as of the date of this Second Amendment, leased to NING, Inc. ("Ning") under the terms of a written lease with Lessor ("Ning Lease"). Ning has agreed to be acquired by Glam Media, Inc., pursuant to an Agreement of Merger and Plan of Reorganization dated September 20, 2011. In connection with the acquisition, Ning is willing to have the Ning Lease terminate on December 31, 2011. Landlord is willing to allow this early termination of the Ning Lease so long as Lessee agrees to lease the Fourth Floor Space starting on January 1, 2012 ("Second Expansion Date"). D. Lessor and Lessee now desire to further amend the Lease to, among other things, include as part of the Premises the Fourth Floor Space, and modify various other terms and provisions of the Lease as more particularly provided herein. AGREEMENT NOW THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows: 1. Capitalized Terms. All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Second Amendment. 2. Contingency. The closing of the acquisition of Ning by Glam Media, Inc. pursuant to an Agreement of Merger and Plan of Reorganization dated September 20, 2011 (the "Ning Closing") on or before December 2, 2011 is a condition precedent to the effectiveness of the obligations set forth in this Second 280317