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Published: 2008-03-26

750 University Avenue (Los Gatos, CA) Sublease Agreement - HI/FN Inc. and NetFlix.com Inc.



This Sublease (Sublease) is made this 4th day of January, 1999 by and between
HI/FN, Inc., a Delaware corporation ("Sublandlord") and NETFLIX.COM, Inc. a
California corporation ("Subtenant").

                                   RECITALS

A.   Sublandlord, as Tenant, is leasing from 750 University, a Limited Liability
     Corporation (Landlord) those certain premises located at 750 University
     Avenue, Los Gatos, California (Premises) pursuant to that certain lease
     dated November 13, 1997 (Master Lease). Subtenant acknowledges having
     received and reviewed a copy of the Master Lease.

B.   Sublandlord desires to lease to Subtenant and Subtenant desires to lease
     from Sublandlord a portion of the Premises consisting of approximately
     eleven thousand eight hundred and fourteen (11,814) rentable square feet,
     located on the ground floor (the Sublease Premises") as shown on Exhibit E
     attached hereto, on the terms and conditions set forth in this Sublease.

NOW, THEREFORE, the parties hereto agree as follows:

1.   PREMISES.

     Sublandlord leases to Subtenant and Subtenant hires from Sublandlord the
     Sublease Premises, together with the appurtenances thereto.

2.   INCORPORATION OF MASTER LEASE.

     This Sublease is subject to all of the terms and conditions of the Master
     Lease and Subtenant hereby accepts, assumes and agrees to perform during
     the term of this Sublease all of the obligations of Sublandlord as Tenant
     under the Master Lease to the extent applicable to the Sublease Premises
     and all of the terms and conditions of this Sublease. The terms and
     conditions of the Master Lease are incorporated in this Sublease, except
     that (i) unless stated to the contrary below, each reference in the
     incorporated paragraphs to "Lease" shall be deemed a reference to this
     "Sublease", each reference to the "Landlord" shall be deemed a reference to
     the "Sublandlord", each reference to the "Tenant" shall be deemed a
     reference to the "Subtenant", each reference to the "Premises" shall be
     deemed a reference to the "Sublease Premises", each reference to the "Term"
     shall be deemed a reference to the "Sublease Term", each reference to the
     "Rent" shall be deemed a reference to the "Rent" as described in Section 6
     of this Sublease, and (ii) the following terms and conditions of the Master
     Lease shall be excluded or modified as follows: the first and second
     sentences of the first paragraph of the recitals, Paragraphs 1, 2, 3, 4, 5,
     7, 8, 9, and 11 of the Summary of Lease, and Paragraphs 2, 3, 4, 5, the
     last sentence of the third paragraph of Paragraph 8, the last sentence of
     the first

                                      -1-

 
     paragraph of Paragraph 9, the fourth sentence of the third paragraph of
     Paragraph 11, the last sentence of the first paragraph and the entire last
     paragraph of 12, 13, the last sentence of the last paragraph of Paragraph
     15, 22, the first sentence of Paragraph 27, the second and third sentences
     of the second paragraph of Paragraph 29, 37, 47, the entire second
     paragraph of Paragraph 49, 51, 52, 54, 55, 56, 57, and the Lease Guaranty,
     Exhibits A, C, C-1 and D of the Master Lease are not incorporated herein,
     and each reference to Landlord in Sections 15, 16, 21, 30, 35 and 36 shall
     be deemed to refer to Landlord only and not to Sublandlord.

     Subtenant shall not commit or permit to be committed on the Sublease
     Premises any act or omission which shall violate any term or condition of
     the Master Lease incorporated herein or modified hereby. In the event of
     the termination for any reason of Sublandlord's interest as Tenant under
     the Master Lease, then this Sublease shall terminate therewith without any
     liability of Sublandlord to Subtenant; except that if this Sublease
     terminates as a result of a default of one of the parties hereto, whether
     under this Sublease, the Master Lease, or both, the defaulting party shall
     be liable to the non-defaulting party for all damages suffered by the non-
     defaulting party resulting from such termination.

3.   SUBLANDLORD'S OBLIGATIONS.

     Sublandlord agrees that Subtenant shall be entitled to receive all services
     and repairs to be provided by Landlord to Sublandlord as tenant under the
     Master Lease with respect to the Sublease Premises. Sublandlord covenants
     and agrees with Subtenant that Sublandlord shall perform all other
     obligations of Tenant pursuant to the Master Lease to the extent that
     failure to perform the same would adversely affect Subtenant's use or
     occupancy of the Sublease Premises. Sublandlord also agrees that
     Sublandlord will act as a conduit to transmit any instructions or requests
     by Subtenant to Landlord.

4.   TERM.

     The term of this Sublease shall be for a period of twenty-four (24) months
     commencing on the date that is the later of (i) February 1, 1999 or (ii)
     the date Sublandlord delivers to Subtenant possession of the Sublease
     Premises in broom clean condition with all approvals and permits from the
     appropriate governmental authorities required for the legal occupancy of
     the Sublease Premises for Sublessee's intended use (the "Commencement
     Date") and ending on January 31, 2001 (the "Sublease Term,") In the event
     Sublandlord is unable to deliver possession of the Sublease Premises at the
     commencement of the Sublease Term, with the voice and data wiring referred
     to in. Exhibit G installed by Sublandlord, Sublandlord shall not be liable
     for any damage caused thereby, nor shall this Sublease be void or voidable
     nor shall the term hereof be extended by such delay; provided, however,
     that Subtenant shall not be liable for rent until such time as Sublandlord
     offers to deliver possession of the Sublease Premises to Subtenant.
     Notwithstanding anything to the contrary herein, if the Commencement Date
     has not occurred prior to March 1, 1999, then, in addition to Subtenant's
     other rights and remedies. Subtenant may terminate the Sublease by written
     notice to Sublandlord,

                                      -2-

 
     whereupon any monies previously paid by Subtenant to Sublandlord shall be
     reimbursed to Subtenant.

5.   USE.

     Subtenant shall use the Sublease Premises for general office and research
     and development and for no other purpose.

6.   RENTAL.

     (a)  Subtenant shall pay to Sublandlord as rent for the Sublease Premises,
          in advance, on the first day of each calendar month during the
          Sublease Term, without deduction, offset, prior written notice or
          demand; in lawful money of the United States, the sum of Thirty-six
          Thousand Six Hundred Twenty-three and 40/100ths Dollars ($36,623.40)
          (see Rent Schedule, "Exhibit F"). If the Commencement Date is not the
          first day of the month, a prorated monthly installment shall be paid
          at the then current rate for the fractional month during which the
          Sublease commences.

     (b)  Except as provided in subparagraph (a) above, on or before the
          Commencement Date, Subtenant shall pay Sublandlord the sum of Thirty-
          six Thousand Six Hundred Twenty-three and 40/100ths Dollars
          ($36,623.40) as rent for the first month of the Sublease Term.

     (c)  Concurrently with Subtenant's execution of this Sublease, Subtenant
          shall deposit with Sublandlord the sum of Seventy-three Thousand Two
          Hundred Forty-six and 80/100ths Dollars ($73,246.80) as a non-interest
          bearing security deposit for Subtenant's performance under this
          Sublease. Within thirty (30) days after Subtenant has vacated the
          Sublease Premises at the expiration or earlier termination of the
          Sublease Term, the amount paid as security deposit shall be returned
          to Subtenant after first deducting any sums that are needed by
          Sublandlord to cure defaults of Subtenant under this Sublease or
          compensate Landlord for damages for which Subtenant is liable pursuant
          to this Sublease.

7.   SURRENDER AT END OF TERM.

     Subtenant agrees to surrender the Sublease Premises on expiration or
     earlier termination of the Sublease Term, in the same condition and repair
     as received on the Commencement Date, acts of God, condemnation, casualty,
     hazardous materials not released by Subtenant, and reasonable wear and tear
     excepted. In addition, on or prior to the expiration or earlier termination
     of this Sublease, at Sublandlord's option, Subtenant shall remove, at
     Subtenant's sole cost and expense, all telephone, other communication,
     computer and any other cabling and wiring or any sort installed in the
     space above the suspended ceiling of the Sublease Premises or anywhere else
     in the Sublease Premises and shall promptly repair any damage to the
     suspended ceiling, lights, light fixtures, walls and any other part of the
     Sublease Premises resulting from such removal.

                                      -3-

 
8.   LANDLORD'S WRITTEN CONSENT.

     This Sublease is conditioned upon and effective only upon obtaining the
     written consent of Landlord. Sublandlord shall use reasonable efforts to
     obtain Landlord's consent as soon as possible. If, however, Landlord's
     consent has not been obtained by February 1, 1999, then Subtenant shall
     have the right to terminate this Sublease, in which event Sublandlord shall
     promptly refund to Subtenant all amounts theretofore paid by Subtenant
     hereunder.

9.   NOTICES.

     All notices and demands of any kind given by Sublandlord or Subtenant
     hereunder shall be in writing and sent by the United States mail, postage
     prepaid, by overnight courier or by personal delivery. All such notices and
     demands shall be addressed to Sublandlord or Subtenant, as the case may be,
     at the addresses set forth below their respective signatures or at such
     other addresses as they may designate from time to time, and shall be
     effective upon receipt.

10.  INSURANCE.

     Insurance requirements pertaining to Sublandlord as Tenant under Paragraph
     11 of the Master Lease shall also apply to Subtenant.

11.  BROKER.

     Sublandlord and Subtenant represent and warrant to each other that, with
     the exception of Mike Filice of CPS, the Commercial Property Services
     Company, and Bob Shepherd of Colliers International, no brokers were
     involved in connection with the negotiation or consummation of this
     Sublease. Each party agrees to indemnify the other, and hold it harmless,
     from and against any and all claims, damages, losses, expenses and
     liabilities (including reasonable attorney's fees) incurred by said party
     as a result of a breach of this representation and warranty by the other
     party. Sublandlord shall pay all commissions due and owing to CPS and
     Colliers International arising out of and in connection with the Sublease.

12.  SIGNAGE.

     Sublandlord shall use reasonable efforts to provide Subtenant with Project
     directory signage reasonably satisfactory to Subtenant.

13.  SUBLANDLORD'S COVENANTS.

     Sublandlord shall (i) keep the Master Lease in effect; (ii) not modify,
     amend or waive any provisions thereof or make any election, exercise any
     option, right or remedy, or grant any consent or approval thereunder
     without, in each instance, Subtenant's prior written

                                      -4-

 
     consent; (iii) pay the rent due and perform all of Sublandlord's other
     obligations under the Master Lease, except to the extent that Subtenant is
     obligated to perform such other obligations under the Sublease; (iv) not
     take any action or omit to take any action that could cause or constitute a
     breach of the Master Lease or otherwise give rise to a right of Landlord to
     terminate the Master Lease or declare any provision thereof to have become
     ineffective; (v) enforce performance of all obligations of Landlord under
     the Master Lease; and (vi) immediately send Subtenant copies of any notices
     received by Sublandlord from Landlord that could affect Subtenant's use of
     the Sublease Premises or rights under the Sublease, including, without
     limitation, any notices of default under the Master Lease. In enforcing
     performance of all such obligations of Landlord, Sublandlord shall, upon
     Subtenant's written request, immediately notify Landlord of its
     nonperformance under the Master Lease and request that Landlord perform its
     obligations under the Master Lease.

14.  SUBLANDLORD'S REPRESENTATIONS AND WARRANTIES.

     (a)  As an inducement to Subtenant to enter into this Sublease, Sublandlord
          represents and warrants that (i) the form of the Master Lease as
          Exhibit "A" is true, correct and complete and has not been modified in
          any respect; and (ii) to the best of Sublandlord's knowledge, both the
          Master Lease is in full force and effect, and there exists no default
          or event of default under the Master Lease by either Landlord or
          Sublandlord, nor has there occurred any event which, with the giving
          of notice or the passage of time or both, could constitute such a
          default or event of default.

     (b)  In addition, Sublandlord warrants and represents that, as of the
          Commencement Date, (i) the Sublease Premises will comply with all
          applicable laws, rules, regulations, codes, ordinances, underwriters'
          requirements, covenants, conditions, and restrictions, (ii) the
          Sublease Premises will be in good and clean operating condition and
          repair, and (iii) the electrical, mechanical, HVAC, plumbing, sewer,
          elevator and other systems serving the Sublease Premises will be in
          good operating condition and repair. Sublandlord shall, promptly after
          receipt of notice from Subtenant, remedy or cause to be remedied any
          non-compliance with such warranty at Sublandlord's sole cost and
          expense.

15.  ADDITIONAL RENT.

     This is a full-service gross sublease. Subtenant's only obligation with
     regard to the repair and maintenance of the Sublease Premises shall be to
     keep the Sublease Premises in a clean and sanitary condition. Sublandlord
     shall, at Sublandlord's sole cost, maintain the Sublease Premises and all
     systems serving the Sublease Premises in good working condition and repair
     throughout the Sublease Term. Subtenant's base rent constitutes the entire
     consideration payable by Subtenant. Under no circumstances shall Subtenant
     be obligated to pay any items of additional rent required to be paid under
     the Master Lease, including, without limitation, Direct Expenses, rent
     escalation charges, common area

                                      -5-

 
     maintenance charges, real estate taxes, or insurance charges (as defined in
     Paragraphs 4 and 5 of the Master Lease).

16.  ABATEMENT OF RENT.

     Subtenant shall be entitled to, and benefit from, any rental abatement
     granted Sublandlord under the Master Lease, but only to the extent that
     such abatement relates to the Sublease Premises.

17.  WAIVER OF SUBROGATION.

     Notwithstanding anything to the contrary contained in the Sublease or the
     Master Lease, the parties hereto, including Landlord by reason of its
     consent hereto, each release the others and their respective agents,
     employees, successors, assignees and subtenants from all liability for
     injury or damage to any property to the extent specified in Paragraph 11 of
     the Master Lease.

18.  INDEMNITY.

     Except to the extent caused by any default of Subtenant, its agents,
     employees, contractors or invitees, Sublandlord shall indemnify, defend
     with counsel reasonably acceptable to Subtenant, and hold Subtenant
     harmless from and against any and all losses, costs, claims, liabilities
     and damages (including, without limitation, reasonable attorneys' and
     experts' fees) caused by or arising in connection with (i) a breach of
     Sublandlord's obligations under the Sublease; (ii) a breach of
     Sublandlord's obligations under the Master Lease, unless cause by
     Subtenant's breach of its parallel obligations under the Sublease; or (iii)
     the negligence or willful misconduct of Sublandlord, its employees,
     contractors, agents or invitees.

19.  APPROVALS.
     ---------

     Whenever the Sublease requires an approval, consent, designation,
     determination, selection or judgment by either Sublandlord or Subtenant,
     such approval, consent, designation, determination, selection or judgment
     and any conditions imposed thereby shall be reasonable and shall not be
     unreasonably withheld or delayed and, in exercising any right or remedy
     hereunder, each party shall at all times act reasonably and in good faith.

20.  REASONABLE EXPENDITURES.

     Any expenditure by a party permitted or required under the Sublease, for
     which such party is entitled to demand and does demand reimbursement from
     the other party, shall be limited to the fair market value of the goods and
     services involved, shall be reasonably incurred, and shall be substantiated
     by documentary evidence available for inspection and review by the other
     party or its representative during normal business hours.

                                      -6-

 
     IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease
as of the date first set forth above.

SUBLANDLORD:                            SUBTENANT:

HI/FN, INC.,                            NETFLIX.COM. INC.,
a Delaware corporation                  a California corporation


By: /s/ R. J. Farnham                   By: /s/ Rood Hastings
    -------------------------------         --------------------------------

Name: R. J. Farnham                     Name: Rood Hastings
      -----------------------------           ------------------------------

Its: President                          Its: President
     ------------------------------          ------------------------------- 

Date: 1-6-99                            Date: 3 JAN 98
      -----------------------------           ------------------------------

By: /s/ William R. Walker               By: /s/ Marc Randolph
    -------------------------------         --------------------------------

Name: William R. Walker                 Name: Marc Randolph
      -----------------------------           ------------------------------

Its: Secretary                          Its: Secretary
     ------------------------------          -------------------------------

Date: JAN 6 1999                        Date: 5 Jan 98
      -----------------------------           ------------------------------

                                      -7-

 
                        LANDLORD'S CONSENT TO SUBLEASE

THIS CONSENT (Consent) is given by 750 University, a Limited Liability
Corporation (Landlord) to that certain Sublease dated January 4, 1999, (the
Sublease) by and between HI/FN, Inc., a Delaware corporation ("Sublandlord") and
NETFLIX.COM, Inc, a California corporation ("Subtenant"), subject to the
following terms and conditions:

1.   All capitalized terms not otherwise defined herein shall have the meaning
     ascribed to them in the Sublease.

2.   Landlord is not a party to the Sublease and has no obligations or duties to
     Subtenant or Sublandlord under the Sublease and any provisions therein
     purporting to obligate and/or bind Landlord or limit Landlord's rights
     under the Master Lease in any way are deemed null and void. Notwithstanding
     any provision to the contrary in the Sublease, Subtenant shall have no
     greater rights than Sublandlord has as Tenant under the Master Lease.

3.   This Consent shall only apply to this Sublease and shall not be deemed to
     be a consent to any other or further sublease or a waiver of any of the
     provisions of the Master Lease.

4.   By consenting to the Sublease, Landlord waives none of its rights against
     the Sublandlord as Tenant under the Master Lease. The Sublease is and shall
     remain at all times subject to and subordinate in all respects to the
     Lease.

5.   This Consent shall not modify or amend or be deemed to modify or amend the
     Master Lease in any way, or to impose on Landlord any obligation to provide
     notice to, or obtain consent from, Subtenant with respect to amendments,
     defaults, waivers or any other matters pertaining to the Master Lease or to
     the Premises covered by the Master Lease. Any waiver by Landlord of its
     rights shall be made only in writing and signed by Landlord.

6.   Upon the expiration or earlier termination of the Master Lease, the
     Sublease shall automatically and without notice or demand, terminate and
     Subtenant agrees promptly to surrender the Sublease Premises to Landlord
     upon such termination without compensation from Landlord.

7.   This Consent shall not be effective until receipt by Landlord of a
     counterpart or counterparts of this Consent duly executed by Sublandlord
     and Subtenant, each acknowledging its agreement to the terms and conditions
     specified in this Consent.

                                      -8-

 
8.   Notwithstanding anything to the contrary herein, Landlord specifically
     agrees to paragraph 17 of the Sublease entitled "Waiver of Subrogation."

LANDLORD
750 University, a Limited Liability Corporation

                                                     
By: /s/ Birk S. McCandless                   By: /s/ Barry McCarthy             
    -----------------------------------          -------------------------------
Name: Birk S. McCandless                     Name: _____________________________
      ---------------------------------
Its: President                               Its: Secretary

Date: 1/11/99                                Date: _____________________________
      ---------------------------------

EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE
TERMS AND CONDITIONS SPECIFIED IN THE FOREGOING CONSENT AND AGREES TO ALL SUCH
TERMS AND CONDITIONS.

SUBLANDLORD                                  SUBTENANT

HI/FN, INC.,                                 NETFLIX.COM. INC.,
a Delaware corporation                       a California corporation

  
By: /s/ R.J. Farnham                         By: /s/ Reed Hastings
    -----------------------------------          -------------------------------

Name: R.J. Farnham                           Name: Reed Hastings
      ---------------------------------            -----------------------------

Its: President                               Its: President
     ----------------------------------           ------------------------------
 
Date: 1-6-99                                 Date: 3 JAN 98
      ---------------------------------            -----------------------------
 
By: /s/ William R. Walker                    By: /s/ Marc Randolph
    -----------------------------------          -------------------------------

Name: William R. Walker                      Name: Marc Randolph
      ---------------------------------            -----------------------------
 
Its: Secretary                               Its: Secretary
     ----------------------------------           ------------------------------

Date: JAN 9 1999                             Date: 5 Jan 98
      ---------------------------------            -----------------------------

                                      -9-
EX-10.6
9
LEASE AGREEMENT



                                                                  EXHIBIT 10.6

 THIS LEASE IS NOT TO BE CONSTRUED AS AN OFFER AND IS NOT BINDING ON BARRISTER
 EXECUTIVE SUITES, INC. UNTIL IT IS SIGNED BY AN OFFICER OF BARRISTER EXECUTIVE
                                 SUITES, INC.

                                LEASE AGREEMENT
                                ---------------

     THIS LEASE is made on MARCH 31, 2000 between Barrister Executive Suites,
Inc. a California Corporation (hereinafter referred to as "Lessor"), and
NETFLIX.COM, INC. _________________________________________________ (hereinafter
----------------
referred to as "Lessee")

     Lessor has entered into a master lease for the floor (the "Suite")
described below:

               Floor or Suite Number:        5th Floor OR Suite 500
               Name of Building:             Computax Tower
               Address:                      21250 Hawthorne Boulevard
               City and State:               Torrance, California 90503

This Lease is subordinate to the lease with the Building ("Master Lease") dated
February 18, 1987 (as amended).

Lessee desires to lease from Lessor a certain portion of the Suite for the
purposes of conducting Lessee's business together with rights in common to the
"common areas" of the Suite.

     In consideration of the covenants and promises each to the other made
herein, the parties hereto agree as follows:

     1.   LEASED PREMISES. Lessor agrees to lease to Lessee and Lessee agrees to
lease from Lessor portions of the Suite described below (the "Premises") and on
the floor plan attached hereto as Exhibit A. In addition to the exclusive use of
the Premises. Lessee shall have the non-exclusive right in common with Lessor's
other lessees to use all common areas and facilities available in the Suite.
Except as otherwise agreed to in writing. Lessee takes the Premises in an "as
is" condition.

          (a)  Office No(s). #5
                             --

          (b)  Desk Space No(s):_________________________________

     Lessee shall be prohibited from using or occupying any premises other than
those premises designated in this Lease as the Premises. In the event that
Lessee uses or occupies any space other than the Premises without Lessor's
written consent. Lessee shall pay Lessor a sum designated by Lessor for the
unauthorized use of said space.

     2.   TERM. Except as it may be modified by the applicable provisions of
this Agreement, the term of this Lease shall be for a period of 6 months,
commencing on APRIL 17, 2000, and expiring on OCTOBER 31, 2000. If the term
              --------------                  ----------------
commences on a day other than the first of the month, the term shall expire on
the last day of the month identified herein, provided at least two (2) full
calendar months advance written notice of termination has been provided to
Lessor in the manner described in section 3 of this Lease.

* PLUS 14 (FOURTEEN DAYS)

                                       1

 
     In the event the Premises are not ready for occupancy on the commencement
date, this Lease shall remain in full force and effect provided Lessor makes the
Premises available for occupancy within forty-five (45) days of the scheduled
commencement date. In such case all rent shall be abated until Lessor makes the
Premises available for occupancy. Lessor shall not be liable to Lessee for any
loss or damage arising from any delays: Lessee's sole remedy shall be the right
to cancel this Lease in the event Lessor fails to deliver possession of the
Premises as set forth herein. Lessee is advised that any floor plans provided by
Lessor are not to scale, the measurements are not always accurate, and the
Premises are not always built exactly as shown on the floor plans.

     3.   LEASE TERMINATION, Either party may terminate this Lease at the
expiration date set forth herein by giving two (2) calendar months advance
written notice effective on the expiration date set forth on page one (1) of
this Lease. If neither party sends written notice of termination to the other
party two (2) calendar months in advance of the expiration date, this Lease
shall automatically become a month-to-month agreement REQUIRING AT LEAST TWO (2)
FULL CALENDAR MONTHS ADVANCE WRITTEN NOTICE TO TERMINATE THE LEASE, EFFECTIVE
THE END OF THE SECOND FULL CALENDAR MONTH. IF THE LEASE HAS EXPIRED AND BECOME A
MONTH-TO-MONTH AGREEMENT, OR IF THE ORIGINAL TERM OF THE LEASE WAS MONTH-TO-
MONTH, TWO (2) FULL CALENDAR MONTHS ADVANCE WRITTEN NOTICE OF TERMINATION IS
REQUIRED, AND ANY SUCH TERMINATION SHALL ONLY BE EFFECTIVE THE END OF THE SECOND
FULL CALENDAR MONTH. FOR EXAMPLE: IF WRITTEN NOTICE OF TERMINATION IS RECEIVED
BY EITHER PARTY BY APRIL 30 TH. ANY SUCH NOTICE SHALL BE EFFECTIVE JUNE 30 TH.
IF WRITTEN NOTICE OF TERMINATION IS RECEIVED BY EITHER PARTY ON MAY 1 ST OR ANY
--------------------------------------------------------------------------------
LATER DATE IN MAY, ANY SUCH NOTICE SHALL NOT BE EFFECTIVE UNTIL JULY 31 ST.
---------------------------------------------------------------------------
Lessor's rent increase notice is not to be construed as a termination notice.
All notices must be given pursuant to section 13.

     If Lessee fails to vacate the Premises for any reason after the termination
date or purports to rescind the termination notice after Lessor has already
leased Lessee's terminated space. Lessee will pay the rent the new tenant had
agreed to pay, plus any and all resulting damages and losses incurred by Lessor
because the new tenant cannot move into the space previously terminated by
Lessee.

     4.   RENT. Lessee agrees to pay Lessor as rental for the Premises the
following monthly sums:

          $1,300.00 Office(s) (#5)
           --------

          $___________________ Desk space(s)

          $___________________ Telephone Equipment and Service

          $____________________Voicemail Box(es)

          $____________________Furniture Rental (See Page 2A)

          $1,300.00 Total monthly rent
           --------

     In addition to the above rent, Lessee shall be obligated to pay rent for
any space within the Suite which Lessee occupies but which is not included in
the Premises (the "unrented space"). Lessee's obligation for said unrented space
shall be at the rate set forth in Lessor's written notice to Lessee concerning
Lessee's occupancy of the unrented space. Lessee's obligation to pay rent for
the unrented space shall be effective as of the date in which Lessor gives
Lessee written notice of the rent to be paid for said space, and occupancy of
the unrented space shall be subject to all terms and conditions of this Lease.
The terms and conditions of this Lease are confidential, and Lessee agrees not
to reveal said terms and conditions to any third parties. Lessee's disclosure of
                                       --- 
the terms and conditions of this Lease shall be cause for Lessor at

                                       2

 
Lessor's sole discretion to immediately terminate this Lease, or increase
Lessee's rental rates to Lessor's current asking price.

Rent shall be payable on or before the first day of each and every calendar
month during the term hereof. If the term commences on a day other than the
first day of the calendar month, rent shall be prorated based on the portion of
the calendar month remaining. Lessee's first payment shall include one month's
full rent, plus any partial calendar month's rent for the first month of the
Lease, plus the last month's rent, plus the security deposit and a set-up fee of
$150.00. At all times Lessee shall maintain the last month's rent with Lessor in
an amount equal to one (1) times the monthly rent paid by Lessee for the
Premises.

     In addition to payment of the rent set forth herein. Lessee agrees to the
following: from any payment made by Lessee. Lessor shall first apply such sums
as are necessary to meet any of Lessee's outstanding obligations to Lessor. Said
obligations may arise from matters such as services Lessor provides Lessee. Any
remaining balance shall then be applied to Lessee's rent obligation in the
amount set forth above. In the event such remaining balance is not sufficient to
meet Lessee's rental obligation. Lessee shall pay upon written demand by Lessor
any remaining sums due. Failure to pay said sums when so demanded shall
constitute an event of default under this Lease.

     Any and all sums Lessee is obligated to pay under the terms of this Lease
shall be construed as rent obligations in addition to the monthly rent set forth
herein. Such additional rent shall include a service charge of Fifty Dollars
($50.00) for each of Lessee's dishonored checks returned by the institution on
which said checks are drawn. If at any time during the term of this Lease Lessee
has tendered payment by check and Lessee's bank returns more than one such
payment for any reason including insufficient funds. Lessor may, at its option,
require all future payments be made by cashier's check. A Two Hundred Dollar
($200.00) handling charge for each Three Day Notice or Notice of Termination of
Services which Lessor is required to serve upon Lessee due to Lessee's failure
to make timely rent payments or breach of any other term or condition of this
Lease shall be assessed against Lessee to be paid with the monthly rent in the
event more than one of either notice is served during the term of the Lease. A
Seven Hundred Fifty Dollar ($750.00) handling charge will be further assessed
against Lessee in the event that Lessee does not render payment after service of
a Three Day Notice and Lessor then serves Lessee with an Unlawful Detainer
Action. Should Lessee not tender payment of the rent by the first (1st) business
day of each month, a late charge shall be assessed in an amount of five cents
($0.05) for each dollar ($1.00) so overdue for the purpose of defraying the
expense incident to handling such delinquent payment. In addition, Lessor may
discontinue any and all services provided Lessee, including, but not limited to,
use of all common areas, e.g., library and conference room, telephone answering
service, photocopying, word processing, fax and legal research. Should Lessor
discontinue any services above for non-payment, an administrative fee of One
Hundred Dollars ($100.00) will be assessed to reinstate said services. Lessee
hereby releases Lessor, its employees, agents, principals and contractors from
any liability for damages which Lessee may suffer as a result of Lessor's
suspension of services for the reasons stated herein.

     5.   SECURITY DEPOSIT. Upon execution of this Lease by Lessee. Lessee
will pay a security deposit in an amount of $1,550.00 which is equal to one (1)
                                            ---------
times the monthly rent plus a services deposit of Two Hundred Fifty Dollars
($250.00) as security for the performance by Lessee of its obligations under
this Lease. The security deposit will not be interest-bearing to Lessee. Lessor
will retain the security deposit during Lessee's tenancy. Lessee shall not apply
the security deposit as rent. If Lessee remains in the Premises after the
expiration date of this Lease, the security deposit will be retained by Lessor
until Lessee moves out of the Premises. Lessor may claim and retain such amount
of Lessee's security deposit as is reasonable necessary to remedy any defaults
of the Lessee in the payment of rent or services, to repair damages to the
Premises caused by the Lessee, replacement of keys and any other outstanding
obligations to Lessor, and Lessor may, at its option and at any time during the
term of this Lease, treat the security deposit as a partial payment applied
toward Lessee's obligation for the Premises during Lessee's last month of
occupancy of the same. The parties expressly agree that the security deposit is
made for all of the aforesaid specific purposes. At all times Lessee shall
maintain a security deposit with Lessor in an amount equal to one (1) times the
monthly rent paid by Lessee for the Premises rent plus

                                       3

 
a services deposit of Two Hundred Fifty Dollars ($250.00). Lessor shall bill
Lessee for any such additional security deposit as required. Lessor will refund
Lessee's security deposit, less any offsets as set forth in this paragraph,
approximately thirty (30) days after Lessee's tenancy has terminated and
Lessee's has vacated, returned keys and removed any and all items of personal
property from the Premises.

     6.   USE Lessee shall use the Premises solely for SALES/MKTG, and for
                                                       ---------- 
no other purpose. Lessee shall not do or permit anything to be done in or about
the Suite and Premises which will in any way obstruct or interfere with the
rights of other tenants or occupants of the Suite, or injure or annoy them, or
use or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Lessee cause, maintain or permit any nuisance
in, on or about the Premises. Lessee shall not commit or suffer to be committed
any waste in or upon the Premises. Lessee agrees that Lessee will not offer or
use the Premises to provide to others, services provided by Lessor to Lessor's
other lessees. (I.E. Fax Machines, Copiers, etc.). If Lessee leases one or more
desk spaces, no desk space may be occupied by more than one person. Lessee
agrees that no office shall be occupied by more than two (2) persons without the
prior written consent of Lessor. Only two (2) computers or similar electronic
devices are allowed to be located in each office and not more than one in each
desk space. Lessor will provide all photocopy and fax services for the Premises
and Lessee shall not be permitted to install any fax or photocopy, machines in
the Leased Premises.

     7.   DEFAULTS AND REMEDIES.

          Lessee's Defaults. Any of the following defaults shall constitute a
          -----------------
material default by Lessee:

          (a) If Lessee fails to make any payment of rent, additional security
deposit or any other payment required to be made by Lessee hereunder, as and
when due.

          (b) If Lessee withholds rent, deducts or offsets from rent or services
due hereunder any amount for any reason.

          (c) If Lessee occupies, uses or stores any personal property in any
unrented office in the Suite, or stores any personal property in any unrented
desk space or unrented office in the Suite, or stores any personal property in
any common area.

          (d) If Lessee fails to observe or perform any of the provisions of
this Lease, where such failure shall continue for a period of ten (10) days
after written notice thereof from Lessor to Lessee.

          If Lessee defaults under this Lease, (i) Lessor may terminate this
Lease, (ii) Lessor may recover, in addition to any rent and other charges
already due and payable, all rent for the entire unexpired balance of the stated
term of this Lease and all costs incurred by Lessor to recover such sums from
Lessee, including reasonable attorney's fees and/or Lessor may recover damages
from Lessee. All rights and remedies of Lessor under this Lease shall be
cumulative and in addition to any other rights or remedies available at law or
in equity. No failure by Lessor to exercise any right or remedy or to insist
upon strict performance following a default by Lessee shall constitute a waiver
of such default by Lessor, (iii) Lessor may terminate all services provided
Lessee, including, but not limited to, use of all common areas, e.g., library
and conference room, telephone answering service, photocopying, word processing,
fax and legal research.

     8.   HIRING LESSOR'S EMPLOYEES. Lessor spends a great deal of time to
hire and train employees for the operation of the Suite and other suites. Lessee
derives the benefit of Lessor's experience in operating the Suite and of such
hiring and training procedures. Lessee realizes the time and expense Lessor
incurs to obtain personnel, and Lessee therefore agrees not to offer or accept
for hire any of Lessor's employees at any time during the term or any extension
or renewal of this Lease. "Lessor's employees" include Lessor's employees during
the period of their employment with Lessor and for a period of one hundred
eighty (180) days thereafter.

                                       4

 
Lessor and Lessee have considered the matter and have reasonably endeavored to
estimate the actual damages to Lessor in the event Lessee breaches this
provision and offers or accepts for hire any of Lessor's employees, and both
realizing that it would be impractical or extremely difficult to fix the actual
damage to Lessor resulting from such offer or hiring of Lessor's employees.
Lessor and Lessee therefore agree that if Lessee offers or accepts for hire any
of Lessor's employees at any time during the term or any extension of renewal of
this Lease, or within one hundred eighty (180) days after Lessee moves out of
Lessor's offices. Lessee agrees to pay Lessor the sum of Five Thousand dollars
($5,000.00) for the employee so hired to compensate Lessor for Lessor's loss in
hiring and training said employee. Said sum represents the amount agreed upon by
the parties as Lessor's liquidated damages.

     9.   INSURANCE. Lessor has blanket liability insurance coverage for the
common areas in the Suite. Lessor's insurance does not cover the Lessee's
Premises or Lessee's property in the Suite and Premises. Lessor shall not be
liable to Lessee, or to any other person, for any damages or business
interruption on account of loss, damage, fire or theft of any personal or
business property, including, but not limited to, property left with the floor
receptionist or telephone operators, door lettering or other property purchased
by, or belonging to, Lessee.

     Lessee shall indemnify and hold harmless Lessor from and against any and
All claims arising from Lessee's use of the Premises, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in the Premises and shall further indemnify and hold harmless
Lessor from and against any and all claims arising from any breach or default in
the performance under the terms of this Lease, or arising from any negligence of
the Lessee or any of Lessee's agents, contractors, visitors, or employees, and
from and against all costs, attorney's fees, expenses and liabilities incurred
in the defense of any such claim or any action or proceeding brought thereon,
and in case any action or proceeding be brought against Lessor by reason of any
such claim. Lessee upon notice from Lessor shall defend the same at Lessee's
expense by counsel satisfactory to Lessor and Lessor's landlord. Lessee, as a
material part of the consideration to Lessor and Lessor's landlord, hereby
assumes all risk of damage to property or injury to persons in the Premises and
Lessee hereby waives all claims in respect thereof against Lessor.

     Lessee shall maintain a policy (issued by a company reasonably acceptable
to Lessor) of comprehensive general liability insurance with a combined single
limit of not less than $1,000,000 insuring against all liability of Lessee and
its agents arising out of Lessee's use or occupancy of the Premises and
including contractual liability coverage for the indemnification obligations of
Lessee under this lease. This policy of insurance shall name the Lessor as an
additional insured and shall include cross liability endorsements in favor of
the Lessor. Lessee's insurance shall be primary and non contributing with any
insurance carried by Lessor, and shall contain an endorsement requiring at least
sixty (60) days prior written notice of cancellation to Lessor. Lessee shall
deliver a certificate of insurance to Lessor prior to taking occupancy of the
Premises and shall provide evidence of renewed insurance coverage prior to the
expiration of any policies. No insurance required or obtained by Lessee
hereunder shall limit any liabilities or obligations of Lessee to Lessor under
this Lease.

     10.  COMMON AREA. All areas not designated for exclusive use of tenants or
available for lease to prospective tenants constitute the Suite's common areas.
Lessee shall have the non-exclusive right of access and use of the common areas
and facilities contained therein. Conference room(s) may be used on a
reservation basis only subject to Lessor's rules and regulations governing use
of the same (see section 9 of exhibit D).

     11.  MASTER LEASE. Lessee shall have no greater rights to the use and
occupancy of the Suite and Premises than Lessor has with the Building under
Lessor's Master Lease: in particular. Lessee's term under this agreement shall
not be greater than Lessor's term under the Master Lease. Lessee is bound to
Lessor in the same manner as Lessor is bound to the Building with respect to all
standard lease provisions (e.g. eminent domain, destruction of building, etc.).
as well as the rules and regulations of the Building attached hereto as Exhibit
C.

Termination of the Master Lease shall terminate this Lease and all of Lessor's
obligations hereunder. If Lessor's interest is so terminated. Lessee shall, at
the option of Lessor's landlord, attorn to Lessor's landlord and recognize
Lessor's landlord as Lessor under this Lease. Lessee shall execute and deliver
at any time when requested by

                                       5

 
Lessor's landlord an instrument to evidence such attornment. Lessee waives the
provision of any law which may give Lessee any right of election to terminate
this Lease or to surrender possession of the Premises by reason of the
termination of the Master Lease. This paragraph does not obligate Lessee in any
way to the Master Lessor of the Building or to anyone else, for anyone else's
rent, or any payment whatever, except as expressly set forth in this Lease.

At any time, Lessor may terminate this Lease upon sixty (60) days written notice
to Lessee in the event that Lessor's interest in the Master Lease is terminated.
In the event Lessor's interest in the Master Lease is terminated. Lessee shall,
at the option of Lessor's landlord, attorn to Lessor's landlord or Lessor's
landlord's designee, and recognize Lessor's landlord or Lessor's landlord's
designee as Lessor under this Sublease. Lessee shall execute and deliver at any
time when requested by Lessor's landlord an instrument to evidence such
attornment. In no event, however, shall Lessor's landlord or Lessor's landlord's
designee be liable for any previous act or omission by Lessor under this
Sublease, or for the return of any advance rental payments or deposits under
such agreements that have not been actually delivered to Lessor's landlord or
Lessor's landlord's designee, nor shall Lessor's landlord or Lessor's landlord's
designee be bound by any modification to any modification to any such agreements
executed without Landlord's consent, or for any advance rental payments in
excess of one month's rent. Lessee waives the provision of any law which may
give Lessee any right of election to terminate this Lease or to surrender
possession of the Premises by reason of the termination of the Master Lease.

     12.  SUBLETTING. Lessee shall not sublet or assign the Premises or any part
thereof for any period of time. Any subletting or assignment of this Lease which
is not in compliance with the provisions of this paragraph shall be void and
shall, at the option of Lessor, terminate this Lease. In such event, Lessee
shall be liable for any expenses Lessor may incur in regaining possession of the
Premises or so much of the Premises as Lessee may have subleased or assigned
without Lessor's consent

     13.  NOTICE TO LESSOR. Any notice regarding a breach of this lease or
termination thereof shall be in writing and sent by certified mail or personal
delivery to Barrister Executive Suites, Inc., Attention: Lease Termination
Department, 233 Wilshire Boulevard, Suite 500, Santa Monica, California 90401
(in the case of Lessor), or to Lessee c/o the address of the Premises (in the
case of Lessee). Certified mail notice shall be deemed given forty-eight (48)
hours after the date it is placed, postage prepaid, in a depository for United
States mail, PERSONAL DELIVERY TO THE FLOOR MANAGER, RECEPTIONIST OR TELEPHONE
OPERATOR DOES NOT CONSTITUTE NOTICE TO LESSOR. Either party may provide for a
different address by notifying the other party of said change as provided for
herein.

     14.  SUBSTITUTION. At any time after the execution of this Lease, Lessor
may substitute for the Leased Premises other premises elsewhere in the suite
comparable to existing spare (the "New Premises") in which event the New
Premises shall be deemed to be the Leased Premises for all purposes hereunder,
provided:

          (a) The New Premises shall be similar in area and appropriateness for
Lessee's purposes in Lessor's reasonable determination; and

          (b) If Lessee is occupying the Leased Premises at the time of any such
substitution. Lessor shall pay the reasonable out of pocket, third party expense
of moving Lessee, its property and equipment to the New Premises.

     15.  RULES AND REGULATIONS. Lessee shall observe at all times Lessor's
Rules and Regulations a copy of which is attached hereto as Exhibit D.

     16.  REPAIRS. The landlord which leases the Suite to Lessor is
responsible for construction of the building, parking garage or lot, and repairs
to elevators, air conditioning, electrical, plumbing and structural supports
under the Master Lease. Lessor is not liable to Lessee by reason of any defect,
inadequacy or insufficiency in same. Lessee may not deduct or offset any amount
from rent due herein because of any problem regarding

                                       6

 
construction, access to services, repairs or lack thereof. Lessor will
coordinate any repair or complaint of Lessee. However, any claim by Lessee with
respect thereto shall be made solely against the Building and Lessor hereby
assigns to Lessee, solely for the purpose of making and prosecuting any such
claim, all rights which Lessor has under the Master Lease. Lessor will
coordinate all repairs for dangerous conditions existing in the common areas
within the Suite. Lessee is responsible for, and shall indemnify and hold Lessor
harmless from and against, any damage to persons or property caused by Lessee,
or Lessee's employees, agents, clients, guests or invitees, as well as any
business interruption, lost business or income caused by phone system problems,
long distance and local phone service problems, photocopier problems, and/or fax
machine problems.

     17.  RIGHT OF ENTRY. If Lessee has given notice to terminate or Lessee is
in default of rental payments, or if Lessee is on a Month-to-Month Lease,
Lessor's employees may show the Premises to prospective tenants between 9:00
a.m. and 6:00 p.m., Monday through Friday. If during the last month of the term
Lessee shall have removed all or substantially all of Lessee's property, Lessor
may immediately allow anyone else to occupy the Premises without relieving
Lessee of liability for rent for that period of time unless Lessor receives
rental income from Lessee's space, in which event such payment shall be credited
against, Lessee's rent obligation for the period of time the space is occupied
by someone else.

     18.  UTILITIES, SERVICES, MAINTENANCE AND CONSTRUCTION. Under Lessor's
Master lease, the Building provides utilities, services (janitorial, heat and
air conditioning) and maintenance. Janitorial services include carpet vacuuming,
but not shampooing. Heat and air conditioning is provided during generally
recognized business days and hours. Lessee is allowed access to the Premises
twenty-four (24) hours a day, seven (7) days a week subject to the Building's
rules requiring proper identification after normal business hours. Lessor is not
liable to Lessee by reason of any failure to provide or the inadequacy of
utilities, janitorial, heat or air conditioning services, parking, elevators, or
maintenance. Lessor is not responsible for any negligence of the Building's
agents or employees. Lessee may not deduct or offset any amount from rent due
herein because of any problem regarding utilities, heat, air conditioning,
parking, elevators, janitorial services, maintenance services or defective
construction of Premises. Upon request by Lessee. Lessor will write the Building
regarding any complaint by Lessee regarding utilities, heat, air conditioning,
janitorial services, maintenance or construction; however, any claim by Lessee
with respect thereto shall be made by Lessee directly to the Building, and
Lessor hereby assigns to Lessee, solely for the purpose of making and
prosecuting any such claim, all rights which Lessor has against the Building
under the Master Lease. Lessor is responsible for maintaining the common areas
within the Suite, however, Lessor is not responsible for maintaining, repairing
or cleaning the floor covering, wall covering or drapes/window blinds within
Lessee's Premises, other than the normal janitorial service provided by the
Building. Non-recurring operating and capital improvements may be passed on to
the Lessee.

     19.  ATTORNEY'S FEES. In the event legal proceedings to regain possession
of the Premises or to collect moneys owed are instituted because of Lessee's
failure to pay rent, security deposit, cost of repair of the Premises or to cure
any breach of this Lease by Lessee, the prevailing party shall be entitled to
recover as an element of his cost of suit, and not as damages, reasonable
attorney's fees to be fixed by the court. The "prevailing party" shall be the
party who is entitled to recover his costs of suit, whether or not the suit
proceeds to final judgment. The party not entitled to recover his costs shall
not recover attorney's fees. No sum for attorney's fees shall be counted in
calculating the amount of a judgment for purposes of determining whether a party
is entitled to recover his costs of attorney's fees.

     20.  ENTIRE AGREEMENT, MERGER AND WAIVER. This Lease Agreement supersedes
and cancels any and all previous negotiations, arrangements, offers, brochures,
agreements or understandings, if any, between the parties hereto. This Lease
Agreement expresses and contains the entire agreement of the parties hereto and
there are no expressed or implied representations, warranties or agreements
between them, except as herein contained. This Lease Agreement may not be
modified, amended or supplemented except by a writing signed by both Lessor and
Lessee. No consent given or waiver made by Lessor of any breach by Lessee of any
provision of this Lease Agreement shall operate or be construed in any manner as
a waiver of any subsequent breach of the same or of any other provision.

                                       7

 
     21.  CONFLICT OF INTEREST. Lessee agrees that a conflict of interest would
be created if Lessee were to represent or act as Legal counsel for the
employees, officers, vendors, contractors, landlords and/or tenants of Lessor.
Therefore, so long as Lessee is a tenant of Lessor, Lessee shall be prohibited
from representing Lessor's employees, officers, vendors, contractors, landlords
and/or tenants in any legal action or lawsuit which involves Lessor, or Lessor's
Managing Agent (if applicable). Failure to comply with this provision shall
constitute an event of default under the Lease and shall be cause for Lessor to
terminate this Lease.

                                         BARRISTER EXECUTIVE SUITES, INC.

NETFLIX.COM
LESSEE                                   LESSOR

/s/ Signature Illegible
VP OF Contact ACQ.                       _________________________________

Date: 3/31/00                            Date: ___________________________
      -------

"YOUR SIGNATURE IS ALSO REQUIRED ON PAGE 6 OF EXHIBIT D."

                                       8

 
                                   EXHIBIT D
                                   ---------

                       BARRISTER EXECUTIVE SUITES, INC.

                             RULES AND REGULATIONS

                       ATTACHED AND MADE A PART OF LEASE

     Lessor has adopted these Rules and Regulations for the purpose of assuring
Lessee of the quiet enjoyment of the Suite. Lessee agrees to abide by the Rules
and Regulations so long as Lessee remains in occupancy of the Premises

     1.  COMMON AREAS. The sidewalks, hallways, passages, exits, entrances,
elevators, escalators, and stairways shall not be obstructed by Lessee or used
by him for any purpose other than for ingress to and egress from the Premises.
The halls, passages, exits, entrances, escalators and stairways are not for the
use of the general public and Lessor shall in all cases retain the right to
control and prevent access thereto by all persons whose presence in the judgment
of Lessor shall be prejudicial to the safety, character, reputation and
interests of the suite and its lessees, provided that nothing herein contained
shall be construed to prevent such access to persons with whom Lessee normally
deals in the ordinary course of such Lessee's business unless such persons are
engaged in illegal activities.

     2.  DISPLAY OF SIGNS. No sign, placard, picture, name, advertisement or
notice, visible from the exterior of the Premises shall be inscribed, painted,
affixed or otherwise displayed by Lessee on the Premises or any part of the
building without the prior written consent of Lessor, and Lessor shall have the
right to remove any such sign, placard, picture, name, advertisement or notice
without notice to and at the expense of Lessee. Lessor's consent, whether before
or after the execution of the Lease, shall in no way operate as waiver or
release of any of the provisions hereof or of the Lease, and shall be deemed to
relate only to the particular sign, placard, picture, name, advertisement or
notice so consented to by Lessor and shall not be construed as dispensing with
the necessity of obtaining the specific written consent of Lessor with respect
to any other such sign, placard, picture, name, advertisement or notice.

     3.  DIRECTORY. Subject to the Building's rules and regulations. Lessee may
have Lessee's business name on the Building's lobby and parking-level
directories. Lessor will order the installation of directory listings for the
name(s) designated as "Lessee" on this Lease. Lessee, shall pay the Lessor's
prevailing charge for any Directory Listings. If Lessee desires a different
listing, additional listings, or does not want a name on the directories. Lessee
will note that fact at the bottom of this page and at the discretion of Lessor
and the Building, such additional listings may be provided.

     4.  DOOR LETTERING. Lessee may, at Lessee's expense, have the occupant's
name placed on Lessee's office door in the uniform size, style, place and manner
selected by Lessor. If Lessee requires door signs, Lessee shall pay Lessor for
same at Lessor's prevailing rate. Lessee shall not install a title, company name
or anything else on the outside of Lessee's door or any other location visible
from the common area. For attorneys, a law firm name on the door is permissible,
so long as it does not exceed one line. Lessor recommends the use of a single
occupant's name, or no name at all. If Lessee's office is within a private
suite. Lessee shall not place any name on the entrance door to the private suite
unless Lessee has leased the entire mini-suite, or each office and desk space
within that private suite is occupied and Lessee obtains written consent of all
other tenants within that private suite. If at any time Lessee does not lease an
entire mini-suite or private suite and Lessee does not have the consent of all
other occupants of the mini-suite or private suite, including Lessor's in the
event a vacancy exists. Lessee shall remove, at its own expense, all lettering
from the entrance door to the mini-suite or private suite. If Lessee's door
lettering is not installed by the office of the building or the company
recommended by Lessor, or if the next Lessee does not immediately install door
lettering. Lessee is responsible for the cost of professional removal of
Lessee's door lettering as well as any damage to the door caused by the removal
of Lessee's door

                                       1

 
lettering. If any co-Lessee complains that Lessee's door lettering is not in
keeping with the provisions herein. Lessee will after at Lessee's expense the
door lettering to comply with these provisions.

     5.  KEYS. Lessor will supply one key to the door of each office or desk
area (including one key for each existing desk lock if the former tenant
returned the key) rented by Lessee. If Lessee does not receive a door key for
space rented within 5 days after the commencement date of this Lease. Lessee
shall send Lessor a certified letter with return receipt asking for the key(s)
and if such letter is not received by Lessor. Lessee will be deemed to have
received the key(s) and Lessee will be responsible for replacing the key(s) when
Lessee moves out. Lessee will pay the Lessor's prevailing charge for elevator
keys, security cards or keys to enter the Building after normal business hours,
or additional office or desk area keys. Lessor is not responsible for changing
any lock for any reason including, but not limited to, the master key kept by
Lessor's employees, or any other key which opens Lessee's space, being stolen,
lost or misplaced. Lessee understands that Lessor is not liable for thefts.
Subject to the approval of the Building manager. Lessee may install a deadbolt
lock on or change the tumbler on any door(s) leading to an area within which
Lessee has leased all the space. Deadbolts must be installed above the doorknob.
with precisely 7 1/2" between the center of the knob and the center of the dead
bolt. If Lessee chooses to change the tumbler or to install a dead bolt. Lessee
realizes that maintenance personnel will not be able to enter and clean Lessee's
office(s). Lessee shall be responsible for the return of all keys to the
Premises. In the event Lessee fails to do so. Lessee shall pay Lessor for the
cost of re-keying all doors to the Premises. If Lessee requires Lessor to admit
Lessee into the Premises, Lessee will be assessed Lessor's standard charge for
admitting Lessee for each occurance after the first.

     6.   CARPETING AND WALL COVERING. Lessee accepts the carpeting, flooring,
and walls on an "as is" basis. Lessee shall return the carpeting, flooring,
walls, and wall covering to Lessor in their installed condition less normal wear
and tear. Lessee may not make changes in floor covering or wall covering without
the prior written consent of Lessor. Upon termination of the Lease, whether upon
expiration of the term or sooner. Lessee agrees to pay Lessor One Hundred
Dollars ($100,00) per leased office and Fifty Dollars ($50,00) per leased desk
space to cover the painting and cleaning costs for each such space. The
applicable amounts for such painting and cleaning costs shall be deducted from
Lessee's security deposit should Lessee fail to pay Lessor for same upon lease
termination.

          DRAPES (OR VENETIAN BLINDS). Lessor shall provide drapes or blinds
(whichever is standard for the Building) in exterior window offices (excluding
offices with atrium exposures) at no expense to Lessee. Lessor is not obligated
to clean or repair the drapes (or blinds). Lessee shall return same to Lessor in
their present condition less normal wear and tear. As required by the Building,
Lessee must use the building standard drapes or blinds. Lessee may install
overdrapes (visible only from within the office) in the texture and color of
Lessee's choice, which must be removed at lease termination. If the Building has
special sun-resistant glass treatment and does not provide drapes or blinds for
other floors in the building. Lessor shall not be required to provide drapes or
blinds to Lessee.

     8.   IMPROVEMENTS. Lessee may make cosmetic improvements within the
office(s) and/or desk space(s) leased herein subject to Lessor's prior written
approval and provided that Lessee pays for any such improvements, and further
provided said improvements do not affect the structural integrity of the
Building or violate Lessor's Master Lease. All improvements (other than floor
covering or wall covering changes) must be done by the Building's general
contractor or a contractor of Lessee's choice with the prior written permission
of the Office of the Building and Lessor. Lessee may remove any improvements
paid for by Lessee provided that Lessee repairs any holes, gaps or other damage
to walls, ceiling, flooring or their coverings. Lessee will remove any
improvements (other than additional, normal-height electrical outlets or shelves
within a cabinet or closet occupied by Lessee) installed by Lessee and restore
the Premises to the condition prior to Lessee's occupancy if requested to do so
by Lessor. Lessee shall not remove any improvement for which Lessor contributed
payment without Lessor's prior written consent. During the restoration period,
Lessee shall pay rent to Lessor as provided herein as if said space were
otherwise occupied by Lessee.

                                       2

 
     9.   CONFERENCE ROOM. Lessee may use the conference room(s) on a
reservation basis only. Lessee may not have a standing or permanent reservation
of the conference room. Lessee will not reserve the conference room on more than
3 occasions in any 30-day period nor may Lessee reserve use of the conference
room for an entire day more than one day at a time, unless Lessor's floor
manager confirms that such excess use does not conflict or interfere with any
other co-tenant's reasonable pro rata use of the conference room. Excess usage
will be charged to Lessee at Lessor's prevailing rate. Lessee understands the
conference room is for meetings, depositions or other conferences and is not to
be used for lunches or any other purpose which causes loud noise, offensive
odors or any other environmental situation which disturbs other tenants. Use of
the conference room at any other suite operated by Lessor is permitted one time
in any 30-day period on a reservation basis. Such usage is limited to normal
business hours when the floor manager is present.

     10.  LIBRARY. Lessor will provide access to a Law Library, consisting of
one set of each major multi-volume publication (other than desk or specialized
sets) used most frequently by most lawyers as determined by Lessor's experience
(said law library may be comprised of CD-ROM disks or books). Lessee shall not
mark, mar, tear or otherwise deface any book.

     Lessee shall refrain from smoking, eating and drinking in the library and
shall be bound by the rules made by Lessor with respect to the use of the
library, including but not limited to the following:

          (a)  Lessee will return to the shelf each book that Lessee removes
               from the shelf.

          (b)  Lessee will complete an "out card" for each book removed from the
               library.

          (c)  Lessee will not keep any book out of the library overnight.

     Lessor is not responsible for repurchasing lost, stolen or missing books or
supplements.

     If the number of lost, stolen or missing books is unusually large, as
determined by Lessor's experience in running numerous law suites. Lessor may
lock the library after normal business hours or institute other security
measures Lessor deems appropriate, including inspection of all offices in the
Suite to locate missing books.

     Lessee realizes that every book or supplement needed by Lessee will not
always be in the library as some books or supplements may be missing, stolen or
have been removed by tenants. Lessee acknowledges that Lessor is not responsible
to Lessee or any other persons in the event that research by, or on behalf of,
Lessee is inadequate or incomplete because some books or supplements have not
been updated, have been removed, or are missing or stolen. Lessor may at any
time and without prior notice to Lessee, remove the on-site library: however.
Lessee shall have the right to use the library of any other law suite operated
by Lessor but may not remove any book from said library. The Law Library is
provided for the convenience of the tenants and Lessor can not be held
responsible for any inadequacy therein.

     11.  TELEPHONE. MAIL SORTING AND RECEPTION. Lessor agrees to provide
standard telephone answering, mail sorting and reception services as reasonably
required by Lessee from 9:00 a.m. to 5:30 p.m., Monday through Friday, national
and/or state holidays excepted. Lessee shall be responsible for its own
telephone expense, and the installation and monthly service charges, if any,
from the telephone company by reason of Lessee's lines being connected to the
reception desk and telephone room consoles. Any telephone expense billed to
Lessor (including any telephone company double charge) shall be paid or
reimbursed by Lessee to Lessor. Lessee agrees to use only the telephone
equipment and services of the vendor authorized by Lessor if Lessee wishes to
connect its telephones lines to Lessor's switchboard and have Lessor answer
Lessee's telephone lines. Lessee may not install more than two incoming lines on
Lessor's switchboard for each office and one incoming line for each desk space,
and all such lines are to be answered with the same greeting. Telephone
equipment shall only be moved by Lessor or its authorized vendor and Lessee
shall be responsible to pay all costs of such moves at the current rates charged
by Lessor's authorized vendor.

                                       3

 
     In the event that Lessee receives excessive incoming telephone calls
through Lessor's switchboard (Greater than 1,000 calls per month per office
rented will be considered excessive). Lessor may impose a reasonable charge for
such excessive usage or require Lessee to disconnect its telephone lines from
Lessor's switchboard and have Lessee answer its own telephone lines. Lessee is
encouraged to have a private line that bypasses Lessors switchboard for
important clients & personal callers so as to help ensure that Lessee does not
receive excessive calls through Lessor's switchboard.

     Lessee is required to maintain voice-mail access so that Lessor's telephone
operators may route Lessee's callers that need to leave a message into said
voice-mail. Should Lessor's operators be required to take a paper message for
any reason. Lessee agrees to pay Lessor's standard charge for each such message
written.

     Should Lessee choose not to be connected to Lessor's switchboard and not
have Lessor answer its telephones. Lessee may use its own telephone equipment
provided Lessee obtains said equipment from a telephone vendor approved by
Lessor. Lessee acknowledges that the telephone cabling which currently exists in
the suite is the property of Lessor and Lessor may have provided the rights to
use of the existing cabling to its authorized telephone vendor. Therefore, if
Lessee chooses to use its own telephone equipment. Lessee may be charged a
monthly fee by Lessor or its authorized telephone vendor for use of the existing
telephone cabling. In the event Lessee replaces Lessor's cabling with Lessee's
own vendor's cabling, Lessee shall reimburse Lessor for any expense Lessor's
phone vendor assesses to switch out its cabling and to restore it after Lessee
vacates the Premises.

     Lessee agrees that Lessor is not responsible for the acts or omissions of
Lessor's telephone vendor. Lessor is not responsible for telephone equipment
breakdowns, and Lessee understands that telephone service may not always be
continuous. Further, Lessee agrees to indemnify, release, and hold Lessor
harmless from any loss damage, claim or liability arising out of or in
connection with any telephone equipment failure, including lost business or
income. Services offered by Lessor are subject to human, electrical and
mechanical error, failure, or illness which may result in the delay or
discontinuation of these services. Lessee acknowledges that Lessor is not
responsible for telephone equipment breakdowns and that telephone service may
not always be continuous.

     If the telephone company does not install Lessee's phone on or before the
commencement date of this Lease, the commencement date shall not be extended,
nor shall rent be abated since Lessee is responsible for insuring that Lessee's
telephone lines are installed in Lessee's office and connected to Lessor's
central call director. If Lessee desires a floor telephone outlet or any other
telephone outlet not already provided. Lessee will pay the Building's relocation
charge and any additional conduit and electrical work charges.

     Lessee recognizes that telephone answering, mail sorting and reception
services are never perfect and that all receptionists and telephone operators
make mistakes. Lessor strives to provide excellent telephone answering, mail
sorting and reception services, however it will not be error-free. Lessee may
perform telephone answering and mail service directly or through Lessee's
employees. Lessee agrees that Lessor shall not be liable for any loss of
business or damages of any sort occurring through or in connection with or
incidental to the furnishing of, or the failure to furnish, telephone answering,
mail sorting or reception service. Further, Lessee agrees to indemnify, release,
and hold Lessor harmless from any loss, damage, claim or liability arising out
of or in connection with any telephone answering, mail sorting and/or reception
service provided or not provided by Lessor's employees to Lessee or to any
caller, visitor or associate of Lessee, or mail or deliveries of any goods or
merchandise intended for Lessee. IN THE EVENT THIS LEASE TERMINATES, OR LESSEE
IS IN DEFAULT HEREUNDER, LESSOR MAY, AT ITS ELECTION, REFUSE TO PROVIDE
TELEPHONE ANSWERING SERVICE, LIBRARY AND CONFERENCE ROOM USAGE, PHOTOCOPYING,
WORD PROCESSING, FAX AND LEGAL RESEARCH AND LESSOR SHALL NOT BE IN BREACH OF ANY
OF ITS OBLIGATIONS HEREUNDER. NOR SHALL SUCH REFUSAL BE DEEMED AN EVICTION OF
LESSEE UNDER THIS LEASE.

                                       4

 
     Lessor provides open message and mail slots to all tenants. Lessee
acknowledges that Lessor is not responsible for loss or theft of messages or
mail. Lessee may install at Lessee's expense a locking cover over the mail slot
or one or both sides of the message slot provided that Lessee will be
responsible for any damage to said mail or message slot as well as for restoring
the slot to its original condition when Lessee moves out. Lessee understands
that any covered slot will not be in alphabetical order and will be at the
beginning or end of the row of slots at the telephone operator's discretion.
Lessee further understands that a key must be given to the telephone operators
in order for them to insert mail and/or messages into the respective slots, or
the covers must be designed with a small opening for that purpose. Lessor's sole
obligation to answer telephones or sort mail shall be limited to Lessee's name
or associates of Lessee occupying individual offices. Services in addition to
the foregoing shall be subject to a charge to be determined by Lessor.

     Upon termination of this Lease. Lessor will write on all mail "Return to
Sender" and return to the post office. Lessor will not store mail nor place a
forwarding address on it unless Lessee pays the then-prevailing charge for said
service.

     12.  PHOTOCOPYING AND FAX. Lessor will provide all photocopy and fax
services for the Premises and Lessee shall not be permitted to install any fax
or photocopy machines in the Leased Premises. If Lessee desires to use these
services. Lessee shall execute separate services agreements for same, and
charges arising from these services shall appear on Lessee's monthly statements
and shall be paid for together with the monthly rent for the Premises. Lessee
recognizes that photocopy and fax machines do break down and that repair persons
do not come over promptly. Lessee acknowledges that Lessor is not responsible
for machine breakdowns.

     13.  PARKING. Lessee and Lessee's visitors may have validated and monthly
automobile parking (if available) in the Building's parking facilities, if any,
according to the Building's rules and regulations. Lessor is under no obligation
to provide parking. Lessee's failure to obtain parking shall in no way affect
Lessee's obligation to pay rent.

     14.  PROFESSIONAL CONDUCT. If Lessee conducts himself or his business in
such a manner that reflects unfavorably on them or the Suite. Lessor may
terminate this Lease on 15 days notice to Lessee and any rent paid in advance
will be returned to Lessee on a pro rata basis. Lessor further reserves the
right to exclude, expel from the Suite or terminate the Lease of (on 5 days
notice to Lessee) any person who, in the sole judgment of Lessor, is abusive to
Lessor's employees, tenants or visitors to the Premises, is intoxicated or under
the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these rules and regulations or applicable laws.

     15.  SMOKING. Smoking is expressly prohibited in all areas of the Suite.

                                       5

 
     16.  AMENDMENTS. Lessor may, without further notice, make changes or adopt
any such other and further rules and regulations which in its sole judgment may
be necessary for the proper operation of the Suite. Lessee agrees to abide by
all such rules and regulations hereinabove stated and any additional rules and
regulations which are adopted. So long as Lessee is not in violation of its
obligations under the Lease or these rules and regulations. Lessor shall observe
the rules and regulations.

                                         BARRISTER EXECUTIVE SUITES, INC.

NETFLIX.COM
LESSEE                                   LESSOR

/s/ Signature Illegible
VP of Contact Acquisition                ____________________________________

Date: 3/31/00                            Date: ______________________________
      -------                                         

"YOUR SIGNATURE IS ALSO REQUIRED ON PAGE S OF THE LEASE"

                                       6

 
                                   EXHIBIT A
                                   ---------

                                [CHART OMITTED]

 
                                   EXHIBIT B
                                   ---------

NOT APPLICABLE TO THIS LEASE

 
                                   EXHIBIT C
                                   ---------

                        BUILDING RULES AND REGULATIONS

1.   Security Landlord may from time to time adopt appropriate systems and
     procedures for the security or safety of the Building, any persons
     occupying, using or entering the same, or any equipment, furnishings or
     contents thereof, and Tenant shall comply with Landlord's reasonable
     requirements relative thereto.

2.   Locks Landlord may from time to time install and change locking mechanisms
     on entrances to the Building, common areas thereof, and the Premises, and
     (unless 24 hour security is provided by the Building) shall provide to
     Tenant a reasonable number of keys and replacement therefor to meet the
     bona fide requirements of Tenant. In these rules "keys" include any device
     serving the same purpose. Tenant shall not add to or change existing
     locking mechanisms on any door in or to the Premises without Landlord's
     prior written consent. If with Landlord's consent, Tenant install lock(s)
     incompatible with the Building master locking system:

          (a)  Landlord, without abatement of Rent, shall be relieved of any
               obligation under the Lease to provide any service to the affected
               areas which require access thereto.
          (b)  Tenant shall indemnify Landlord against any expense as a result
               of forced entry thereto which may be required in an emergency,
               and
          (c)  Tenant shall at the end of the Term and at Landlord's request
               remove such locks at Tenant's expense.

3.   Return of Keys At the end of the Term, Tenant shall promptly return to
     Landlord all keys for the Building and for the Premises which are in
     possession of Tenant.

4.   Windows Tenant shall observe Landlord's rules with respect to maintaining
     window coverings at all windows in the Premises so that the Building
     presents a uniform exterior appearance, and shall not install any window
     shades, screens, drapes, covers or other material on or at any window in
     the Premises without Landlord's prior written consent. Tenant shall take
     reasonable steps to provide that window coverings are closed on all windows
     in the Premises while they are exposed to the direct rays of the sun.

5.   Repair, Maintenance, Alterations and Improvements Tenant shall carry out
     Tenant's repair, maintenance, alterations and improvements in the Premises
     only during times agreed to in advance by Landlord and in a manner which
     will not unreasonably interfere with the rights of other tenants in the
     building.

6.   Water Fixtures Tenants shall not use water fixtures for any purpose for
     which they are not intended, nor shall water be wasted by tampering with
     such fixtures. Any cost or damage resulting from such misuse by Tenant
     shall be paid for by Tenant.

7.   Personal Use of Premises The Premises shall not be used or permitted to be
     used for residential, lodging or sleeping purposes or for the storage of
     personal effects or property not required for business purposes.

8.   Heavy Articles Tenant shall not place in or move about the Premises without
     Landlord's prior written consent any safe or other heavy article which in
     Landlord's reasonable opinion may damage the Building, and Landlord may
     designate the location of any heavy articles in the Premises.

9.   Carpet Pads In those portions of the Premises where carpet has been
     provided directly or indirectly by Landlord, Tenant shall at its own
     expense install and maintain pads to protect the carpet under all furniture
     having casters other than carpet casters.

                                       1

 
10.  Bicycles, Animals Tenant shall not bring any animals or birds into the
     Building, and shall not permit bicycles or other vehicles inside or on the
     sidewalks outside the Building except in areas designated from time to time
     by Landlord for such purposes.

11.  Deliveries Tenant shall ensure that deliveries of material and supplies to
     the Premises are made through such entrances, elevators and corridors and
     at such times as may from time be designated by Landlord, and shall
     promptly pay or cause to be paid to Landlord the cost of repairing any
     damage in the Building caused by any person making such deliveries.

12.  Furniture and Equipment Tenant shall ensure that furniture and equipment
     being moved into or out of the Premises is moved through such entrances,
     elevators and corridors and at such times as may from time to time be
     designated by Landlord, and by movers or a moving company approved by
     Landlord, and shall promptly pay or cause to be paid to Landlord the cost
     of repairing any damage in the Building caused thereby.

13.  Solicitations Landlord reserves the right to restrict or prohibit
     canvassing, soliciting or peddling in the Building.

14.  Food and Beverages Only persons approved from time to time by Landlord may
     prepare, solicit orders for, sell, serve or distribute foods or beverages
     in the Building, or use the elevators, corridors or common areas for any
     such purpose. Except with Landlord's prior written consent and in
     accordance with arrangements approved by Landlord, Tenant shall not permit
     on the Premises the use of equipment for dispensing food or beverages or
     for the preparation, solicitation of orders for, sales, serving or
     distribution of food or beverages.

15.  Refuse Tenant shall place all refuse in proper receptacles provided by
     Tenant at its expense in the Premises or on receptacles (if any) provided
     by Landlord for the Building, and shall keep sidewalks and driveways
     outside the Building, and lobbies, stairwells, ducts and shafts of the
     Building, free of all refuse.

16.  Obstructions Tenant shall not obstruct or place anything in or on the
     sidewalks or driveways outside the Building or in the lobbies, corridors,
     stairwells or other common areas of the Building, or use such locations for
     any purpose except access to and exit from the Premises without Landlord's
     prior written consent. Landlord may remove at Tenant's expense any such
     obstruction or thing (unauthorized by Landlord) without notice or
     obligation to Tenant.

17.  Dangerous or Immoral Activities Tenant shall not make any use of the
     Premises which involves the danger of injury to any person, nor shall the
     same be used for any immoral purpose.

18.  Proper Conduct Tenant shall not conduct itself in any manner which is
     inconsistent with the character of the Building as a first-quality building
     or which will impair the comfort and convenience of other tenants in the
     Building.

19.  Employees, Agents and Invitees In these Rules and Regulations, Tenant
     includes the employees, agents, invitees and licensees of Tenant and others
     permitted by Tenant to use or occupy the Premises.

20.  Housekeeping Tenant shall prevent paper, books, magazines and other
     obstructions from being placed on heat, ventilating and air conditioning
     convectors and any other interference with the heat, ventilating and/or air
     conditioning system within the Premises.

21.  Energy Conservation Tenant shall make every effort to practice energy
     conservation within the Premises and will cooperate with Landlord in
     establishing and implementing such conservation programs as Landlord may
     from time to time develop.

                                       2

 
                               Executive Suites

                              RENTAL APPLICATION

PLEASE PRINT CLEARLY OR TYPE AND FILL IN ALL REQUESTED INFORMATION, THANK YOU.

Applicant Name (As it will appear on the Lease agreement) NetFlix.com, Inc.
                                                          ----------------

Is this business a (circle one) Corporation or Partnership or Sole
                                            --
Proprietorship? Federal Tax ID # 77-0467272
                                 ----------

If Corporation: State of Incorporation Delaware Date incorporated 8/29/97 Corp.
                                       --------                   -------
ID # _____


Type of Business DVD Rental
                 ----------

Date Business Established ___________________ Current Phone #408-399-3700
                                                             ------------
 
PLEASE PROVIDE COMPLETE INFORMATION FOR THE INDIVIDUAL(S) WHOM WILL BE EXECUTING
--------------------------------------------------------------------------------
THIS LEASE AND SIGNING AS THE GUARANTOR:
---------------------------------------

________________________________________________________________________________
Name             Title        Home Address        City      State      Zip Code
 
________________________________________________________________________________
Social Security #             Home Telephone #           Work Telephone #
 
________________________________________________________________________________
                 Title        Home Address        City      State      Zip Code

________________________________________________________________________________
                              Home Telephone #           Work Telephone #

LANDLORD REFERENCES
-------------------

Current Business Address 750 UNIVERSITY AVENUE, LOS GATOS, CA. 95032
                         -------------------------------------------

Lessor HI/FN Lessor's Phone # & Contact(408)399-3500 - Dave Merrick
       -----                           ----------------------------

Monthly Rent 36,623 Initial Term of Lease 24 mo. Length of Occupancy 14 mo.
             ------                       -----                      ----- 
 
Reason for Leaving N/A
                   ---
 
BANK ACCOUNT INFORMATION
------------------------
 
________________________________________________________________________________
Bank Name       Address           Phone # and Contact            Account Number

________________________________________________________________________________
Bank Name       Address           Phone # and Contact            Account Number

Has this business, its officers, partners or owners ever been delinquent in any
payment of any financial obligation? If yes, please explain:

________________________________________________________________________________

The information on this application is true and correct to the best of my/our
knowledge. I/We hereby authorize Barrister Executive Suites, Inc. or its agents
to obtain either a consumer or investigative credit report and to verify all
information by contracting the sources listed herein, or any other sources
available. I/We understand that information 

 
that does not verify, or cannot be verified, may result in this application not
being approved.

              OFFICERS OR PARTNERS (NAMED ABOVE) MUST SIGN BELOW
              --------------------------------------------------

NAME ____________________________  TITLE VP ??      DATE 3/31/00
                                         -----           -------

NAME ____________________________  TITLE ??         DATE 4/3/00
                                         --              ------

                              Barrister Use Only

Property #______ Space #'s__________ Term _________ Rate____________ Cost or
Teaser_______

Special
Circumstances___________________________________________________________________

Broker referral (yes or No)__________ Tenant referral (Yes or No)___________ TI
work_______

 
                                                           Los Angeles, CA 90045
                                                           (310) 258-8019
                                                           Fax (310) 258-8001
                       BUSINESS OFFICE MANAGEMENT, LLC.

                    SERVICE AND EQUIPMENT RENTAL AGREEMENT

GENERAL INFORMATION:

NetFlix.com, Inc.                       Main Phone No.: (408) 399-3700
-----------------                                       --------------
Company Name
 
750 University Avenue                   Billing Contact: ______________________
---------------------
Address
 
Los Gatos, Ca.   95032-7606             Contact Phone No. (408)________________
---------------------------
City       State   Zip Code                               CIMOY FURIMO
 
PRODUCTS/SERVICES:
 
Monthly Charges Installation Fee Refundable Deposit Qty Qty Qty --- --- --- Telephone (1 DID & 1 Voice Box) 1 x $100= 100 1 x $225= 225 1 x $100= 100 - --- - --- - --- Add'l Telephone (1 Voice Box & ext(s)) ___ x $100=___ ___ x $75=___ ___ x $100=___ Facsimile/Modern/extra DID line 1 x $25= 25 1 x $75= 75 - -- -- Additional Voice Mail Box ___ x $15=___ ___ x $25=___ Telephone/Mail Service line charge ___ x $25=___ ___ x $75=___ (1 Voice Mail Box & 1 DID) COLUMN TOTAL: 125 300 100 --- --- --- TOTAL AMOUNT DUE: 525.00 ------
* All adds, moves and changes after initial installation will be billed at then prevailing rates with a one hour minimum charge. AGREEMENT: ---------- I/WE HEREBY AGREE TO PAY BUSINESS OFFICE MANAGEMENT, LLC EACH OF THE CHARGES LISTED AS WELL AS ANY CHARGES ON THE DATE OF INSTALLATION OR IN THE FUTURE. I/WE FURTHER AUTHORIZE "BOM" TO ACT AS MY/OUR AGENT IN DEALING WITH LOCAL EXCHANGE CARRIERS, OTHER COMMON CARRIERS, RESELLER, CONSULTANTS AND EQUIPMENT VENDORS. THIS AUTHORIZATION SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL FURTHER WRITTEN NOTICE /s/ Signature Illegible By: _______________________ Date: 4/3/00 ------ Name (Please Print): W. BARRY McCARTHY JR Title: CFO -------------------- --- TERMS AND CONDITIONS OF BOM WATS SERVICE AND EQUIPMENT RENTAL AGREEMENT This Agreement shall be effective, and its obligations commence, upon the date of execution by the parties. If either party desires to cancel this Agreement it shall give the other party written notice of its intent to cancel at least thirty (30) days in advance of the desired cancellation date. Upon termination of this Agreement. Client shall vacate the equipment in good repair (ordinary wear and tear resulting from the proper use thereof alone excepted) by permitting BOM to enter Client's premises for the sole purpose of de-installing and repossessing said equipment. The equipment as outlined on the reverse side of this Agreement shall be kept at the location specified, also on the reverse of this Agreement and shall not be removed therefrom without BOM's prior written consent. Client shall use the equipment in a careful manner and shall comply with all laws relating to its possession, use and maintenance. BOM will keep the equipment in good repair and furnish all parts, mechanisms and devices required therefor. Client agrees that only BOM provided equipment will be used in Client's offices, and that Client shall not make any alterations, additions or improvements to the equipment nor change any outlets or jacks without the prior written consent of BOM. Client is responsible for loss or damage to any or all equipment, excepting ordinary wear and tear resulting from the proper use thereof, and no such loss or damage of any or all equipment shall relieve Client of the obligation to pay rent or any other obligation under the Agreement. Payment for balances shall be due BOM from the Client within ten (10) days from the invoice date. Payments received after the due date shall result in interest charges of one and one half percent (1 1/2%) per month, and entitle BOM to commence collection action as defined below. BOM does not waive remedies for collection and reserves the right to enlist the assistance of Client's executive suite management and/or ownership in collection of any outstanding balances due. BOM" agreement with Barrister Executive Suites, Inc., allows Barrister Executive Suites, Inc. to deduct any outstanding balance(s) due BOM, at termination, from Client's security deposit with Barrister Executive Suites, Inc. Client is hereby notified that BOM may instruct Barrister Executive Suites, Inc. to take such action for any balance due upon lease termination. If payment has not been received by the due date, or any extension thereof permitted at its option for all charges billed to Client, then BOM may, at its sole discretion and without prior notices, terminate this Agreement in part of in whole. BOM shall have the right, without notice or service, to remove any and all equipment from Client without legal process. BOM reserves the right to collect attorney's fees and any and all litigation costs incurred by BOM in the collection of unpaid accounts and repossession of any and all equipment. BOM further reserves the right as security for the services described herein to require a cash deposit of a minimum of one (1) months' projected usage. However, if credit worthiness has been proven and maintained BOM may waive this requirement. Client shall release BOM from any and all claims, actions, proceeding, expenses, damages and liabilities, including attorney's fees, arising in connection with the provision of BOM services, including any loss or damages or cost caused by the failure or breakdown of said service or equipment. Any damages of any kind to Client for interruption in service is limited to refund of BOM charges for the period of service outage. The parties' obligations under this Agreement are subject to, and neither party shall be liable for, delays, failures to perform, or damage, or damage or destruction or malfunction of any equipment or any consequences thereof caused or occasioned by, or due to fire, flood, water, the elements, labor disputes and shortages, utility curtailments, power failures, explosions, and disturbances, governmental requisition, shortages of equipment or supplies, unavailability of transportation, acts or omissions of third parties. or any other cause beyond the parties' reasonable control. Further, BOM makes no warranty, whether expressed or implied, with respect to the services provided hereunder and expressly disclaims any warranty of merchantability, or warranty of fitness for a particular purpose, with the exception of BOM's proven negligence. Upon prior written notice of consent is obtained from a party herein, the other party will keep in the strictest confidence all information identified by the under party as confidential, or which from the circumstance and adherence to common business practices, in good faith ought to be treated as confidential, such as but not limited to, information relating to parties' products, services, methods of operations, prices lists, customer lists, or other information of the business affairs of a party, its parent company, or its affiliated or subsidiary companies, which the party may acquire or become familiar with in connection with or as a result of the performance of this Agreement. It is hereby understood that should any such confidentiality be breached, such breach may cause BOM significant damages for which Client would be liable. The failure of either party hereto to enforce or insist upon compliance with any of the provisions of the Agreement, or the waiver thereof, in any instance, shall not be constructed by the either party as a general waiver or relinquishment of any other provision of this Agreement, but the same shall, nonetheless be and remain in full force and effect. This Agreement shall be, in all respects governed by and construed and enforced in accordance with the laws of the State of California. County of Los Angeles, including all matters of construction, validity, and performance. If any provision of this Agreement or its application shall be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, the validity, legality and enforceability of all other provisions and applications hereof shall not in any way be affected or impaired. Furthermore, client acknowledges that it has elected to be served by a private utility, that it is not a member of the general public or a portion thereof seeking protection by the Public Utilities Commission, and that it waives any right to such protection. Client will not assign this Agreement nor assign any interest in or to any of the equipment therein to any person or persons without the prior written consent of BOM. BOM reserves the right to assign this Agreement or any interest in or to any of the equipment therein at its sole discretion. Further, Client understands that any telephone numbers assigned to Client are not transferable when service is discontinued and are the sole property of BOM. Client may not place a display advertisement in the "yellow pages" of any telephone directory or order a calling card or telephone directory under the assigned telephone number without the prior written consent of BOM. This Agreement superseded all prior agreements, promises, understandings, statements, representations, warranties, indemnities and covenants and all inducements to the making of this Agreement relied upon by either party hereto, whether written or oral, between the parties hereto with respected the subject matter hereof and embodies the parties' complete and entire agreement with respect to the subject matter hereof. No statement of agreements, oral or written, made before the execution of this Agreement shall vary or modify the written terms hereof in any way whatsoever. The terms and conditions of this Agreement are subject to future changes, additions or modification of service as requested by Client and approved by Business Office Management, LLC. Rates are subject to change by Business Office Management at any time, without notice ___________________________________ ___________________________________ BY: CLIENT BY: BUSINESS OFFICE MANAGEMENT ___________________________________ ___________________________________ NAME TITLE NAME TITLE ___________________________________ ___________________________________ DATE DATE EX-10.7 10 LEASE AGREEMENT DATED AUGUST 11, 1999 EXHIBIT 10.7 LEASE AGREEMENT (NNN R&D) BASIC LEASE INFORMATION Lease Date: August 11, 1999 Landlord: LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company Landlord's Address: c/o Legacy Partners Commercial, Inc. 101 Lincoln Centre Drive, Fourth Floor Foster City, California 94404-1167 Tenant: NetFlix.com, a Delaware corporation Tenant's Address: Before Commencement Date: 750 University Avenue Los Gatos, California 95032-7606 Attention: Barry McCarthy After Commencement Date: 750 University Avenue Los Gatos, California 95032-7607 Attention: Barry McCarthy Premises: Approximately 31,830 rentable square feet as shown on Exhibit A --------- Premises Address: 2219 Old Oakland Road San Jose, California 95131-1402 Building: Approximately 55,976 rentable square feet Lot (Building's tax parcel): APN 237-01-044 Park: Approximately 138,366 rentable square feet Term: November 1, 1999 ("Commencement Date"), through October 31, 2004 ("Expiration Date") Base Rent ((P)3): Thirty Six Thousand Six Hundred Five and 00/100 Dollars ($36,605.00) per month Adjustments to Base Rent: November 1, 2000 $38,196.00 November 1, 2001 $39,788.00 November 1, 2002 $41,379.00 November 1, 2003 $42,971.00 Security Deposit ((P)4): Two Hundred Nineteen Thousand Six Hundred-Thirty and 00/100 Dollars ($219,630.00), subject to the adjustments set forth in Section 4 of the Lease. *Tenant's Share of Operating Expenses ((P)6.1): 56.86% of the Building, 23% of the Park *Tenant's Share of Tax Expenses ((P)6.2): 23% of the Park *Tenant's Share of Common Area Utility Costs ((P)7): 56.86% of the Building, 23% of the Park *Tenant's Share of Utility Expenses ((P)7): 23% of the Building *The amount of Tenant's Share of the expenses as referenced above shall be subject to modification as set forth in this Lease. Permitted Uses ((P)9): Fulfillment and distribution center of DVD rental including general office and administration, marketing, R&D, storage, distribution and light manufacturing, but only to the extent permitted by the City of San Jose and all agencies and governmental authorities having jurisdiction thereof. Unreserved Parking Spaces: One hundred twenty-seven (127) non-exclusive and non-designated spaces Broker ((P)38): Cornish & Carey Commercial for Tenant Grubb & Ellis for Landlord 1 Exhibits: Exhibit A - Premises, Building, Lot and/or Park Exhibit B - Tenant Improvements Exhibit C - Rules and Regulations Exhibit D - Covenants, Conditions and Restrictions (Intentionally omitted) Exhibit E - Hazardous Materials Disclosure Certificate - Example Exhibit F - Change of Commencement Date - Example Exhibit G - Tenant's Initial Hazardous Materials Disclosure Certificate Exhibit H - Sign Criteria (Intentionally omitted) Exhibit I - Subordination, Non-Disturbance and Attornment Agreement 2 TABLE OF CONTENTS
SECTION PAGE ------- ---- 1. Premises......................................................... 4 2. Adjustment of Commencement Date; Condition of the Premises....... 4 3. Rent............................................................. 5 4. Security Deposit................................................. 5 5. Tenant Improvements.............................................. 6 6. Additional Rent.................................................. 6 7. Utilities........................................................ 8 8. Late Charges..................................................... 9 9. Use of Premises.................................................. 9 10. Alterations and Additions; and Surrender of Premises............. 10 11. Repairs and Maintenance.......................................... 11 12. Insurance........................................................ 12 13. Waiver of Subrogation............................................ 14 14. Limitation of Liability and Indemnity............................ 14 15. Assignment and Subleasing........................................ 15 16. Ad Valorem Taxes................................................. 16 17. Subordination.................................................... 16 18. Right of Entry................................................... 17 19. Estoppel Certificate............................................. 17 20. Tenant's Default................................................. 18 21. Remedies for Tenant's Default.................................... 18 22. Holding Over..................................................... 19 23. Landlord's Default............................................... 20 24. Parking.......................................................... 20 25. Sale of Premises................................................. .20 26. Waiver........................................................... 20 27. Casualty Damage.................................................. 20 28. Condemnation..................................................... 22 29. Environmental Matters/Hazardous Materials........................ 22 30. Financial Statements............................................. 24 31. General Provisions............................................... 25 32. Signs............................................................ 26 33. Mortgagee Protection............................................. .26 34. Quitclaim........................................................ 27 35. Modifications for Lender......................................... 27 36. Warranties of Tenant............................................. 27 37. Compliance with Americans with Disabilities Act.................. 27 38. Brokerage Commission............................................. 28 39. Quiet Enjoyment.................................................. 28 40. Landlord's Ability to Perform Tenant's Unperformed Obligations... 28 41. Tenant's Early Termination Option:............................... 28
3 LEASE AGREEMENT Date: This Lease is made and entered into as of the Lease Date set forth on Page 1. The Basic Lease Information set forth on Page 1 and this Lease are and shall be construed as a single instrument. 1. PREMISES Landlord hereby leases the Premises to Tenant upon the terms and conditions contained herein. Landlord hereby grants to Tenant a license for the right to use, on a non-exclusive basis, parking areas and ancillary facilities located within the Common Areas of the Park, subject to the terms of this Lease. Landlord and Tenant hereby agree that for purposes of this Lease, as of the Lease Date, the rentable square footage area of the Premises, the Building, the Lot and the Park shall be deemed to be the number of rentable square feet as set forth in the Basic Lease Information on Page 1. Tenant hereby acknowledges that the rentable square footage of the Premises may include a proportionate share of certain areas used in common by all occupants of the Building and/or the Park (for example an electrical room or telephone room). Tenant further agrees that the number of rentable square feet of the Building, the Lot and the Park may subsequently change after the Lease Date commensurate with any modifications to any of the foregoing by Landlord, and Tenant's Share shall accordingly change. 2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES 2.1 If Landlord cannot deliver possession of the Premises on the Commencement Date, Landlord shall not be subject to any liability nor shall the validity of the Lease be affected; provided, the Lease Term and the obligation to pay Rent shall commence on the date possession is tendered in the condition required under this Lease (including the substantial completion of the Tenant Improvements), with all governmental permits required for such improvements, and the Base Rent Adjustment dates and the Expiration Date shall be extended commensurately. In the event the Commencement Date and/or the Expiration Date of this Lease is other than the Commencement Date and/or Expiration Date specified in the Basic Lease Information, as the case may be, Landlord and Tenant shall execute a written amendment to this Lease, substantially in the form of Exhibit F hereto, wherein the parties shall specify the actual commencement --------- date, expiration date and the date on which Tenant is to commence paying Rent. The word "Term" whenever used herein refers to the initial term of this Lease and any extension thereof. By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises in good condition and state of repair. Tenant hereby acknowledges and agrees that neither Landlord nor Landlord's agents or representatives has made ally representations or warranties as to the suitability, safety or fitness of the Premises for the conduct of Tenant's business, Tenant's intended use of the Premises or for any other purpose. Landlord shall deliver possession of the Premises with tile roof, HVAC system, electrical, plumbing and lighting in good working condition, all carpets cleaned, walls and ceiling in good repair "like new". Landlord shall repair, at its sole cost and expense, after receipt of Tenant's written notice thereof, which notice must be delivered to Landlord within the first ninety (90) days of the term of this Lease, any (i) defects in the Premises, and (ii) any mechanical and electrical systems serving the Premises which are not in good working order to the extent Tenant has not caused such systems to not be in good working order. If Tenant fails to timely deliver to Landlord any such written notice of the aforementioned defects or deficiencies within said 90-day period, Landlord shall have no obligation to perform any such work thereafter, except as specifically provided in this Lease. Notwithstanding the foregoing to the contrary, (A) in the event that for reasons other than the occurrence of a Force Majeure Delay (as hereinafter defined) or a Tenant Delay (as hereinafter defined) the substantial completion of the Tenant Improvements ("T.I. Completion") has not occurred by the date which is one hundred twenty (120) days after the date the Lease is fully executed ("Termination Date"), Tenant may elect to terminate the Lease. Termination of the Lease by Tenant as provided for herein shall be the sole and exclusive remedy of Tenant for Landlord's failure to deliver the Premises. Tenant shall exercise the right to terminate provided for herein by giving Landlord written notice of its intent to so terminate ("Termination Notice"). The Termination Notice shall be given, if at all, on or before the date which is five (5) days after the Termination Date. Termination of the Lease shall be effective sixty (60) days after Landlord's receipt of the Termination Notice. In the event that Tenant gives the Termination Notice, and in the further event that during such sixty (60) day period, the TI Completion Date occurs, the Tenant shall not be entitled to terminate the Lease as provided for herein. For purposes of this paragraph the term "Force Majeure Delay" shall mean any actual delay beyond the reasonable control of Landlord in completion of the Tenant Improvements which is not a Tenant Delay and which is caused by, without limitation, any one or more of the following: (a) wars; (b) fire; (c) earthquake, flood or other natural disaster, (d) unusual and unforeseeable delay not within the reasonable control of Landlord; (e) casualties; (f) other acts of God; or (g) governmental action or inaction (including failure, refusal or delay in issuing permits, approvals and/or 4 authorizations), or injunction, permit appeal or court order requiring cessation of construction taking place in the Premises. The Term "Tenant Delay" shall mean any delay in completion of the Tenant Improvements resulting from any or all of the following: (i) Tenant's failure to timely perform any of its obligations under the Lease, including any failure to complete on or before the date due thereof, any actual item which is Tenant's responsibility to complete or perform; (ii) Tenant's delay in approving plans, specifications, drawings, and any other documents setting forth and/or describing the Tenant Improvements, including, without limitation, the Final Drawings, beyond those periods of time permitted by the terms of the Lease; (iii) Tenant's changes to Landlord and Tenant approved plans, specifications, drawings or any other documents describing and/or depicting the Tenant Improvements; (iv) Tenant's request for materials, finishes, or installations which are not readily available or which are incompatible with Landlord's standard materials, finishes or installations for the Premises; (v) Tenant's use or occupancy of the Premises during the construction of the Tenant Improvements or any act or failure to act by Tenant in connection with its use or occupancy of the Premises during the construction of the Tenant Improvements. Upon termination of the Lease by Tenant pursuant to the terms of this paragraph, Landlord shall promptly return all prepaid Rent to Tenant. 2.2 In the event Landlord permits Tenant to occupy the Premises prior to the Commencement Date, such occupancy shall be at Tenant's sole risk and subject to all the provisions of this Lease, including, but not limited to, the requirement to pay Rent and the Security Deposit, and to obtain the insurance required pursuant to this Lease and to deliver insurance certificates as required herein. Landlord shall permit Tenant to enter the Premises following full execution of this Lease, prior to the Commencement Date, for the purpose of installing its furniture, equipment, data, telecommunications and cabling systems and trade fixtures. Such use of the Premises shall be subject to all of the provisions the Lease, except the obligation to pay any Rent thereunder. In addition to the foregoing, Landlord shall have the right to impose such additional conditions on Tenant's early entry as Landlord shall deem appropriate. Landlord shall not allow any other tenant to occupy the portion of the Building adjacent to the Premises until the demising wall is installed. 3. RENT On the date that Tenant executes this Lease, Tenant shall deliver to Landlord the original executed Lease, the Base Rent (which shall be applied against the Rent payable for the first month Tenant is required to pay Base Rent), the Security Deposit, and all insurance certificates evidencing the insurance required to be obtained by Tenant under Section 12 of this Lease. Tenant agrees to pay Landlord, without prior notice or demand, or abatement, offset, deduction or claim, the Base Rent specified in the Basic Lease Information, payable in advance at Landlord's address specified in the Basic Lease Information on the Commencement Date and thereafter on the first (1st) day of each month throughout the balance of the Term of the Lease. In addition to the Base Rent set forth in the Basic Lease Information, Tenant shall pay Landlord in advance on the Commencement Date and thereafter on the first (1st) day of each month throughout the balance of the Term of this Lease, as Additional Rent, Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses. Tenant shall also pay to Landlord as Additional Rent hereunder, immediately on Landlord's demand therefor, any and all costs and expenses incurred by Landlord to enforce the provisions of this Lease, including, but not limited to, costs associated with the delivery of notices, delivery and recordation of notice(s) of default, attorneys' fees, expert fees, court costs and filing fees (collectively, the "Enforcement Expenses"). The term "Rent" whenever used herein refers to the aggregate of all these amounts. If Landlord permits Tenant to occupy the Premises without requiring Tenant to pay rental payments for a period of time, the waiver of the requirement to pay rental payments shall only apply to waiver of the Base Rent and Tenant shall otherwise perform all other obligations of Tenant required hereunder. The Rent for any fractional part of a calendar month at the commencement or termination of the Lease term shall be a prorated amount of the Rent for a full calendar month based upon a thirty (30) day month. The prorated Rent shall be paid on the Commencement Date and the first day of the calendar monthinwhich the date of termination occurs, as the case may be. 4. SECURITY DEPOSIT Upon Tenant's execution of this Lease, Tenant shall deliver to Landlord, as a Security Deposit for the performance by Tenant of its obligations under this Lease, the amount specified in the Basic Lease Information. If Tenant is in default, Landlord may, but without obligation to do so, use the Security Deposit, or any portion thereof, to cure the default or to compensate Landlord for all damages sustained by Landlord resulting from Tenant's default, including, but not limited to the Enforcement Expenses. Tenant shall, immediately on demand, pay to Landlord a sum equal to the portion of the Security Deposit so applied or used so as to replenish the amount of the Security Deposit held to increase such deposit to the amount initially deposited with Landlord. As soon as practicable after the termination of this Lease, Landlord shall return the Security Deposit to Tenant, less such amounts as are reasonably necessary, as determined solely by Landlord, to remedy Tenant's default(s) hereunder or to 5 otherwise restore the Premises to a clean and safe condition, reasonable wear and tear excepted. If the cost to restore the Premises exceeds the amount of the Security Deposit, Tenant shall promptly deliver to Landlord any and all of such excess sums as reasonably determined by Landlord. Landlord shall not be required to keep the Security Deposit separate from other funds, and, unless otherwise required by law, Tenant shall not be entitled to interest on the Security Deposit. In no event or circumstance shall Tenant have the right to any use of the Security Deposit and, specifically, Tenant may not use the Security Deposit as a credit or to otherwise offset any payments required hereunder, including, but not limited to, Rent or any portion thereof. Notwithstanding the foregoing, on the third anniversary of the Commencement Date of the Lease, or following Tenant's public offering of its stock and subsequent achievement of a net worth of at least Forty Million Dollars ($40,000,000.00) and such net worth is then sustained for three consecutive financial quarters and substantiated by financial reports provided by Tenant to Landlord, which ever event occurs sooner, and, so long as Tenant has not been in material default of the Lease beyond any applicable cure period, the Security Deposit shall be reduced to Forty Two Thousand Nine Hundred Seventy-One and 00/100 Dollars ($42,971.00). In the event that the Security Deposit is reduced, as set forth herein, Landlord and Tenant shall execute an Amendment to the Lease signifying such reduction in the Security Deposit and the excess amount of Security Deposit held by Landlord shall be immediately returned to Tenant. 5. TENANT IMPROVEMENTS Tenant hereby accepts the Premises as suitable for Tenant's intended use and as being in good operating order, condition and repair, "AS IS", except as specified in Exhibit B attached hereto or elsewhere expressed in this Lease. Landlord or Tenant, as the case may be, shall install and construct the Tenant Improvements (as such term is defined in Exhibit B hereto) in accordance with the terms, conditions, criteria and provisions set forth in Exhibit B. Landlord and Tenant hereby agree to and shall be bound by the terms, conditions and provisions of Exhibit B. Tenant acknowledges and agrees that neither Landlord nor any of Landlord's agents, representatives or employees has made any representations as to the suitability, fitness or condition of the Premises for the conduct of Tenant's business or for any other purpose, including without limitation, any storage incidental thereto. Any exception to the foregoing provisions must be made by express written agreement by both parties. 6. ADDITIONAL RENT It is intended by Landlord and Tenant that this Lease be a "triple net lease." The costs and expenses described in this Section 6 and all other sums, charges, costs and expenses specified in this Lease other than Base Rent are to be paid by Tenant to Landlord as additional rent (collectively, "Additional Rent"). 6.1 Operating Expenses: In addition to the Base Rent set forth in Section 3, Tenant shall pay Tenant's Share, which is specified in the Basic Lease Information, of all Operating Expenses as Additional Rent. The term "Operating Expenses" as used herein shall mean the total amounts paid or payable by Landlord in connection with the ownership, maintenance, repair and operation of the Premises, the Building and the Lot, and where applicable, of the Park referred to in the Basic Lease Information. The amount of Tenant's Share of Operating Expenses shall be reviewed from time to time by Landlord and shall be subject to modification by Landlord if there is a change in the rentable square footage of the Premises, the Building and/or the Park. These Operating Expenses may include, but are not limited to: 6.1.1 Landlord's cost of repairs to, and maintenance of, the roof, the roof membrane and the exterior walls of the Building; 6.1.2 Landlord's cost of maintaining the outside paved area, landscaping and other common areas for the Park. The term "Common Areas" shall mean all areas and facilities within the Park exclusive of the Premises and the other portions of the Park leasable exclusively to other tenants. The Common Areas include, but are not limited to, interior lobbies, mezzanines, parking areas, access and perimeter roads, sidewalks, rail spurs, landscaped areas and similar areas and facilities; 6.1.3 Landlord's annual cost of insurance insuring against fire and extended coverage (including, if Landlord elects, "all risk" or "special purpose" coverage) and all other insurance, including, but not limited to, earthquake, flood and/or surface water endorsements for the Building, the Lot and the Park (including the Common Areas), rental value insurance against loss of Rent in an amount equal to the amount of Rent for a period of at least six (6) months commencing on the date of loss, and subject to the provisions of Section 27 below, any deductible; 6.1.4 Landlord's cost of: (i) modifications and/or new improvements to the Building, the Common Areas and/or the Park occasioned by any rules, laws or regulations effective subsequent to the date on which the Building was originally constructed; (ii) reasonably necessary replacement improvements to the Building, the Common Areas and the Park after the Lease Date; and (iii) new 6 improvements to the Building, the Common Areas and/or the Park that reduce operating costs (to the extent of the reduction) or improve life/safety conditions, all as reasonably determined by Landlord, provided, however, if any of the foregoing are in the nature of capital improvements, then the cost of such capital improvements shall be amortized over the life of the improvement at an interest rate reasonably determined by Landlord, and Tenant shall pay Tenant's Share of the monthly amortized portion of such costs (including interest charges) as part of the Operating Expenses herein; 6.1.5 If Landlord elects to so procure, Landlord's cost of preventative maintenance, and repair contracts including, but not limited to, contracts for elevator systems and heating, ventilation and air conditioning systems, lifts for disabled persons, and trash or refuse collection; 6.1.6 Landlord's cost of security and fire protection services for the Building and/or the Park, as the case may be, if in Landlord's sole discretion such services are provided; 6.1.7 Landlord's cost for the maintenance and repair of any rail spur and rail crossing, and for the creation and negotiation of, and pursuant to, any rail spur or track agreements, licenses, easements or other similar undertakings; 6.1.8 Landlord's cost of supplies, equipment, rental equipment and other similar items used in the operation and/or maintenance of the Park; 6.1.9 Landlord's cost for the repairs and maintenance items set forth in Section 11.2 below; and 6.1.10 Landlord's cost for the management and administration of the Premises, the Building and/or Park or any part thereof, including, without limitation, a property management fee, accounting, auditing, billing, postage, salaries and benefits for clerical and supervisory employees, whether located on the Park or off-site, payroll taxes and legal and accounting costs and all fees, licenses and permits related to the ownership, operation and management of the Park in an amount not to exceed three percent (3%) of the gross rents of the Park for the calendar year, or the amounts charged by comparable buildings in the area, whichever is less. Notwithstanding anything to the contrary herein, Operating Expenses shall not include and Tenant shall in no event have any obligation to perform or to pay directly, or to reimburse Landlord for, any of the following repairs, maintenance, improvements, replacements, premiums, claims, charges, costs and expenses (collectively, "Costs"): (a) Costs occasioned by casualties excluding any deductibles or by the exercise of the power of eminent domain to the extent insurance proceeds subject to Section 24 of this Lease or a condemnation award is actually received by Landlord for such purposes; (b) Costs of any renovation, improvement or redecorating of any other premises in the Park; (c) Costs, including commissions, incurred in connection with negotiations or disputes with any other occupant (or prospective occupant) of the Park; (d) expense reserves; (e) interest, charges and fees incurred on debt; (f) Costs associated with the investigation, presence and/or remediation of Hazardous Materials (hereafter defined) present in, on or about the Premises, the Building or the Park, unless such costs and expenses are the responsibility of Tenant as provided in Section 29 of this Lease, in which event such costs and expenses shall be paid solely by Tenant in accordance with the provisions of Section 29 of this Lease; and (g) Costs incurred by Landlord with respect to the performance of its obligations in Section 11.3 below. 6.2 Tax Expenses: In addition to the Base Rent set forth in Section 3, Tenant shall pay its share, which is specified in the Basic Lease Information, of all real property taxes applicable to the land and improvements included within the Lot on which the Premises are situated and one hundred percent (100%) of all personal property taxes now or hereafter assessed or levied against the Premises or Tenant's personal property. The amount of Tenant's Share of Tax Expenses shall be reviewed from time to time by Landlord and shall be subject to modification by Landlord if there is a change in the rentable square footage of the Premises, the Building and/or the Park. Tenant shall also pay one hundred percent (100%) of any increase in real property taxes attributable, in Landlord's sole discretion, to any and all alterations, Tenant Improvements or other improvements of any kind, which are above standard improvements customarily installed for similar buildings located within the Building or the Park (as applicable), whatsoever placed in, on or about the Premises for the benefit of, at the request of, or by Tenant. The term "Tax Expenses" shall mean and include, without limitation, any form of tax and assessment (general, special, supplemental, ordinary or extraordinary), commercial rental tax, payments under any improvement bond or bonds, license fees, license tax, business license fee, rental tax, transaction tax, levy, or penalty imposed by authority having the direct or indirect power of tax (including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement district thereof) as against any legal or equitable interest of Landlord in the Premises, the Building, the Lot or the Park, as against Landlord's right to rent, or as against Landlord's business of leasing the Premises or the occupancy of Tenant or any other tax, fee, or excise, however described, including, but not limited to, any value added tax, or any tax imposed in substitution (partially or totally) of any tax previously included within the definition of real property taxes, or any additional tax the nature of which was previously included within the definition of real property taxes. The term "Tax 7 Expenses" shall not include any franchise, estate, inheritance, net income, or excess profits tax imposed upon Landlord, any assessments in excess of the amount which would be payable if such tax or assessment expense were paid in installments over the longest permitted term, any increases in taxes due to the improvement of the Park for the sole use of other occupants. 6.3 Payment of Expenses: Landlord shall estimate Tenant's Share of the Operating Expenses and Tax Expenses for the calendar year in which the Lease commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and thereafter on the first (1st) day of each month throughout the remaining months of such calendar year. Thereafter, Landlord may estimate such expenses as of the beginning of each calendar year during the Term of this Lease and Tenant shall pay one-twelfth (1/12th) of such estimated amount as Additional Rent hereunder on the first (1st) day of each month during such calendar year and for each ensuing calendar year throughout the Term of this Lease. Tenant's obligation to pay Tenant's Share of Operating Expenses and Tax Expenses shall survive the expiration or earlier termination of this Lease. 6.4 Annual Reconciliation: By June 30th of each calendar year, or as soon thereafter as reasonably possible, Landlord shall endeavor to furnish Tenant with an accounting of actual Operating Expenses and Tax Expenses. Within thirty (30) days of Landlord's delivery of such accounting, Tenant shall pay to Landlord the amount of any underpayment. Notwithstanding the foregoing, failure by Landlord to give such accounting by such date shall not constitute a waiver by Landlord of its right to collect any of Tenant's underpayment at any time. Landlord shall credit the amount of any overpayment by Tenant toward the next estimated monthly installment(s) falling due, or where the Term of the Lease has expired, refund the amount of overpayment to Tenant. If the Term of the Lease expires prior to the annual reconciliation of expenses Landlord shall have the right to reasonably estimate Tenant's Share of such expenses, and if Landlord determines that an underpayment is due, Tenant hereby agrees that Landlord shall be entitled to deduct such underpayment from Tenant's Security Deposit. If Landlord reasonably determines that an overpayment has been made by Tenant, Landlord shall refund said overpayment to Tenant as soon as practicable thereafter. Notwithstanding the foregoing, failure of Landlord to accurately estimate Tenant's Share of such expenses or to otherwise perform such reconciliation of expenses, including without limitation, Landlord's failure to deduct any portion of any underpayment from Tenant's Security Deposit, shall not constitute a waiver of Landlord's right to collect any of Tenant's underpayment at any time during the Term of the Lease or at any time after the expiration or earlier termination of this Lease. 6.5 Audit: After delivery to Landlord of at least thirty (30) days prior written notice, Tenant, at its sole cost and expense through any accountant designated by it, shall have the right to examine and/or audit the books and records evidencing such costs and expenses for the previous one (1) calendar year, during Landlord's reasonable business hours but not more frequently than once during any calendar year. The results of any such audit (and any negotiations between the parties related thereto) shall be maintained strictly confidential by Tenant and its accounting firm and shall not be disclosed, published or otherwise disseminated to any other party other than to Landlord and its authorized agents. Landlord and Tenant shall use their best efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such costs and expenses. 7. UTILITIES Utility Expenses, Common Area Utility Costs and all other sums or charges set forth in this Section 7 are considered part of Additional Rent. In addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay the cost of all water, sewer use, sewer discharge fees and sewer connection fees, gas, heat, electricity, refuse pickup, janitorial service, telephone and other utilities billed or metered separately to the Premises and/or Tenant. Tenant shall also pay Tenant's Share of any assessments or charges for utility or similar purposes included within any tax bill for the Lot on which the Premises are situated, including, without limitation, entitlement fees, allocation unit fees, and/or any similar fees or charges, and any penalties related thereto. For any such utility fees or use charges that are not billed or metered separately to Tenant, including without limitation, water and refuse pick up charges, Tenant shall pay to Landlord, as Additional Rent, without prior notice or demand, on the Commencement Date and thereafter on the first (1st) day of each month throughout the balance of the Term of this Lease the amount which is attributable to Tenant's use of the utilities or similar services, as reasonably estimated and determined by Landlord based upon factors such as size of the Premises and intensity of use of such utilities by Tenant such that Tenant shall pay the portion of such charges reasonably consistent with Tenant's use of such utilities and similar services ("Utility Expenses"). If Tenant disputes any such estimate or determination, then Tenant shall either pay the estimated amount or cause the Premises to be separately metered at Tenant's sole expense. In addition, Tenant shall pay to Landlord Tenant's Share of any Common Area utility costs, fees, charges or expenses ("Common Area Utility Costs"). Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated amount of Tenant's Share of the Common Area Utility Costs on the Commencement Date and thereafter on the first (1st) day of each month throughout the balance of the Term of this Lease and any reconciliation thereof shall be substantially in the same 8 manner as specified in Section 6.4 above. The amount of Tenant's Share of Common Area Utility Costs shall be reviewed from time to time by Landlord and shall be subject to modification by Landlord if there is a change in the rentable square footage of the Premises, the Building and/or the Park. Tenant acknowledges that the Premises may become subject to the rationing of utility services or restrictions on utility use as required by a public utility company, governmental agency or other similar entity having jurisdiction thereof. Notwithstanding any such rationing or restrictions on use of any such utility services, Tenant acknowledges and agrees that its tenancy and occupancy hereunder shall be subject to such rationing restrictions as may be imposed upon Landlord, Tenant, the Premises, the Building or the Park, and Tenant shall in no event be excused or relieved from any covenant or obligation to be kept or performed by Tenant by reason of any such rationing or restrictions. Tenant further agrees to timely and faithfully pay, prior to delinquency, any amount, tax, charge, surcharge, assessment or imposition levied, assessed or imposed upon the Premises, or Tenant's use and occupancy thereof. Notwithstanding anything to the contrary contained herein, if permitted by applicable Laws, Landlord shall have the right at any time and from time to time during the Term of this Lease to either contract for service from a different company or companies (each such company shall be referred to herein as an "Alternate Service Provider") other than the company or companies presently providing electricity service for the Building or the Park (the "Electric Service Provider") or continue to contract for service from the Electric Service Provider, at Landlord's sole discretion. Tenant hereby agrees to cooperate with Landlord, the Electric Service Provider, and any Alternate Service Provider at all times and, as reasonably necessary, shall allow Landlord, the Electric Service Provider, and any Alternate Service Provider reasonable access to the Building's electric lines, feeders, risers, wiring, and any other machinery within the Premises. 8. LATE CHARGES Any and all sums or charges set forth in this Section 8 are considered part of Additional Rent. Tenant acknowledges that late payment (the fifth day of each month or any time thereafter) by Tenant to Landlord of Base Rent, Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses or other sums due hereunder, will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any note secured by any encumbrance against the Premises, and late charges and penalties due to the late payment of real property taxes on the Premises. Therefore, if any installment of Rent or any other sum due from Tenant is not received by Landlord when due, Tenant shall promptly pay to Landlord all of the following, as applicable: (a) an additional sum equal to ten percent (10%) of such delinquent amount (except on the first occasion that a late fee is charged in which case the additional sum shall be equal to eight percent (8%) plus interest on such delinquent amount at the rate equal to the prime rate plus three percent (3%) for the time period such payments are delinquent as a late charge for every month or portion thereof that such sums remain unpaid, (b) the amount of seventy-five dollars ($75) for each three-day notice prepared for, or served on, Tenant, (c) the amount of fifty dollars ($50) relating to checks for which there are not sufficient funds. Notwithstanding the foregoing, no late charge shall be due if Tenant has not been delinquent beyond the grace period in its payment of rent owed under this Lease during the one (1) year period preceding the rent delinquency in question. If Tenant delivers to Landlord a check for which there are not sufficient funds, Landlord may, at its sole option, require Tenant to replace such check with a cashier's check for the amount of such check. The parties agree that this late charge and the other charges referenced above represent a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. Acceptance of any late charge or other charges shall not constitute a waiver by Landlord of Tenant's default with respect to the delinquent amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other breach of Tenant under this Lease. If a late charge or other charge becomes payable for any three (3) installments of Rent within any twelve (12) month period, then Landlord, at Landlord's sole option, can either require the Rent be paid quarterly in advance, or be paid monthly in advance by cashier's check or by electronic funds transfer. 9. USE OF PREMISES 9.1 Compliance with Laws, Recorded Matters, and Rules and Regulations: The Premises are to be used solely for the purposes and uses specified in the Basic Lease Information and for no other uses or purposes without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed so long as the proposed use (i) does not involve the use of Hazardous Materials other than as expressly permitted under the provisions of Section 29 below, (ii) does not require any additional parking in excess of the parking spaces already licensed to Tenant pursuant to the provisions of Section 24 of this Lease, and (iii) is compatible and consistent with the other uses then being made in the Park and in other similar types of buildings in the vicinity of the Park, as reasonably determined by Landlord. The use of the Premises by Tenant and its employees, representatives, agents, invitees, licensees, subtenants, customers or contractors (collectively, "Tenant's Representatives") shall be subject to, and at all times in compliance with, (a) any and all applicable laws, ordinances, statutes, orders and regulations as same exist from time to time (collectively, the "Laws"), (b) any and all documents, matters or instruments, including without limitation, any declarations of covenants, 9 conditions and restrictions, and any supplements thereto, each of which has been or hereafter is recorded in any official or public records with respect to the Premises, the Building, the Lot and/or the Park, or any portion thereof (collectively, the "Recorded Matters"), and (c) any and all rules and regulations set forth in Exhibit C, attached to and made a part of this Lease, --------- and any other reasonable rules and regulations promulgated by Landlord now or hereafter enacted relating to parking and the operation of the Premises, the Building and the Park (collectively, the "Rules and Regulations"). Tenant agrees to, and does hereby, assume full and complete responsibility to ensure that the Premises are adequate to fully meet the needs and requirements of Tenant's intended operations of its business within the Premises, and Tenant's use of the Premises and that same are in compliance with all applicable Laws throughout the Term of this Lease. Notwithstanding the foregoing, Tenant shall be solely responsible for the payment of all costs, fees and expenses associated with any modifications, improvements or alterations to the Premises, Building, the Common Areas and/or the Park occasioned by the enactment of, or changes to, any Laws arising from Tenant's particular use of the Premises or alterations, improvements or additions made to the Premises regardless of when such Laws became effective. 9.2 Prohibition on Use: Tenant shall not use the Premises or permit anything to be done in or about the Premises nor keep or bring anything therein which will in any way conflict with any of the requirements of the Board of Fire Underwriters or similar body now or hereafter constituted or in any way increase the existing rate of or affect any policy of fire or other insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy. No auctions may be held or otherwise conducted in, on or about the Premises, the Building, the Lot or the Park without Landlord's written consent thereto, which consent may be given or withheld in Landlord's sole discretion. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of Landlord, other tenants or occupants of the Building, other buildings in the Park, or other persons or businesses in the area, or injure or annoy other tenants or use or allow the Premises to be used for any unlawful or objectionable purpose, as determined by Landlord, in its reasonable discretion, for the benefit, quiet enjoyment and use by Landlord and all other tenants or occupants of the Building or other buildings in the Park; nor shall Tenant cause, maintain or permit any private or public nuisance in, on or about the Premises, Building, Park and/or the Common Areas, including, but not limited to, any offensive odors, noises, fumes or vibrations. Tenant shall not damage or deface or otherwise commit any waste in, upon or about the Premises. Tenant shall not place or store, nor permit any other person or entity to place or store, any property, equipment, materials, supplies, personal property or any other items or goods outside of the Premises for any period of time. Tenant shall not permit any animals, including, but not limited to, any household pets, to be brought or kept in or about the Premises. Tenant shall place no loads upon the floors, walls, or ceilings in excess of the maximum designed load permitted by the applicable Uniform Building Code or which may damage the Building or outside areas; nor place any harmful liquids in the drainage systems; nor dump or store waste materials, refuse or other such materials, or allow such to remain outside the Building area, except for any non-hazardous or non-harmful materials which may be stored in refuse dumpsters or in any enclosed trash areas provided. Tenant shall honor the terms of all Recorded Matters relating to the Premises, the Building, the Lot and/or the Park. Tenant shall honor the Rules and Regulations. If Tenant fails to comply with such Laws, Recorded Matters, Rules and Regulations or the provisions of this Lease, Landlord shall have the right to collect from Tenant a reasonable sum as a penalty, in addition to all rights and remedies of Landlord hereunder including, but not limited to, the payment by Tenant to Landlord of all Enforcement Expenses and Landlord's costs and expenses, if any, to cure any of such failures of Tenant, if Landlord, at its sole option, elects to undertake such cure. 10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES 10.1 Alterations and Additions: Tenant shall not install any signs, fixtures, improvements, nor make or permit any other alterations or additions to the Premises without the prior written consent of Landlord which shall not be unreasonably withheld. If any such alteration or addition is expressly permitted by Landlord, Tenant shall deliver at least fifteen (15) days prior notice to Landlord, from the date Tenant intends to commence construction, sufficient to enable Landlord to post a Notice of Non-Responsibility. In all events, Tenant shall obtain all permits or other governmental approvals prior to commencing any of such work and deliver a copy of same to Landlord. All alterations and additions shall be installed by a licensed contractor approved by Landlord, at Tenant's sole expense in compliance with all applicable Laws (including, but not limited to, the ADA as defined herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the Premises and the property on which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. As a condition to Landlord's consent to the installation of any fixtures, additions or other improvements, Landlord may require Tenant to post and obtain a completion and indemnity bond for up to one hundred percent (100%) of the cost of the work. Tenant may request, upon submission of its written request to complete such alterations or additions, that Landlord inform Tenant at that time if Tenant will be required to remove such alterations or additions, upon Tenant's vacancy of the Premises, Landlord may, but shall have no obligation to, provide Landlord's determination, along with approval of the requested alterations or additions, as to whether such alterations or additions shall be required to be removed upon Tenant's vacancy. 10 Notwithstanding anything to the contrary contained herein, Tenant may install, make and permit to be made improvements, alterations and additions to the Premises without first obtaining Landlord's written consent thereto, provided that such improvements, alterations or additions to the Premises (a) are not structural and do not affect the structural integrity of the Premises and/or the Building, and/or (b) do not require the issuance of a building permit by the City of San Jose, and/or (c) do not require penetrations to the roof of the Building, and provided further that the cumulative cost of all such improvements, alterations and additions does not exceed ten thousand and 00/100 dollars ($10,000.00) in the aggregate over each twelve month period of the Term ("Permitted Improvements"). In all events, Tenant shall be required to submit to Landlord, at least ten (10) business days prior to commencement of any improvements, written notification of Tenant's intention to complete improvements along with all plans, specifications, or construction drawings of such improvements or alterations, Tenant shall cause all Permitted Improvements to be installed by a licensed contractor and Tenant shall keep the Premises and the property on which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. Upon Landlord's request, at Tenant's sole expense, all such Permitted Improvements installed by Tenant shall be removed and the Premises shall be restored to its original condition at the expiration or earlier termination of this Lease. 10.2 Surrender of Premises: Upon the termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon the termination of Tenant's right to possession of the Premises, Tenant will at once surrender and deliver up the Premises, together with the fixtures (other than trade fixtures), additions and improvements which Landlord has notified Tenant, in writing, that Landlord will require Tenant not to remove, to Landlord in good condition and repair (including, but not limited to, replacing all light bulbs and ballasts not in good working condition) and in the condition in which the Premises existed as of the Commencement Date, except for reasonable wear and tear, and casualty and condemnation, subject to the provisions of Section 27 and Section 28. Reasonable wear and tear shall not include any damage or deterioration to the floors of the Premises arising from the use of forklifts in, on or about the Premises (including, without limitation, any marks or stains of any portion of the floors), and any damage or deterioration that would have been prevented by proper maintenance by Tenant or Tenant otherwise performing all of its obligations under this Lease. Upon such termination of this Lease, Tenant shall remove all tenant signage, trade fixtures, furniture, furnishings, personal property, and any additions, and improvements unless Landlord requests, in writing, that Tenant not remove some or all of such fixtures (other than trade fixtures), additions or improvements installed by, or on behalf of Tenant or situated in or about the Premises. By the date which is twenty (20) days prior to such termination of this Lease, Landlord shall notify Tenant in writing of those fixtures (other than trade fixtures), alterations, additions and other improvements which Landlord shall require Tenant not to remove from the Premises. Tenant shall repair any damage caused by the installation or removal of such signs, trade fixtures, furniture, furnishings, fixtures, additions and improvements which are to be removed from the Premises by Tenant hereunder. If Landlord fails to so notify Tenant at least twenty (20) days prior to such termination of this Lease, then Tenant shall remove all tenant signage, alterations, furniture, furnishings, trade fixtures, additions and other improvements (other than the Tenant Improvements) installed in or about the Premises by, or on behalf of Tenant. Tenant shall ensure that the removal of such items and the repair of the Premises will be completed prior to such termination of this Lease. 11. REPAIRS AND MAINTENANCE 11.1 Tenant's Repairs and Maintenance Obligations: Except for those portions of the Building to be maintained by Landlord, as provided in Sections 11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and maintain the Premises and the adjacent dock and staging areas in good, clean and safe condition and repair to the reasonable satisfaction of Landlord including, but not limited to, repairing any damage caused by Tenant or Tenant's Representatives and replacing any property so damaged by Tenant or Tenant's Representatives. Without limiting the generality of the foregoing, Tenant shall be solely responsible for maintaining, repairing and replacing (a) components of all mechanical systems, heating, ventilation and air conditioning systems exclusively serving the Premises, except in the event that the entire replacement of such systems is necessary, then such cost shall be subject to Section 6.1.4 of the Lease, (b) all plumbing, electrical wiring and equipment serving the Premises, (c) all interior lighting (including, without limitation, light bulbs and/or ballasts) and exterior lighting serving the Premises or adjacent to the Premises, (d) all glass, windows, window frames, window casements, skylights, interior and exterior doors, door frames and door closers, (e) all roll-up doors, ramps and dock equipment, including without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights, (f) all tenant signage, (g) lifts for disabled persons serving the Premises, (h) sprinkler systems, fire protection systems and security systems, (i) all partitions, fixtures, equipment, interior painting, and interior walls and floors of the Premises and every part thereof (including, without limitation, any demising walls contiguous to any portion of the Premises). 11.2 Reimbursable Repairs and Maintenance Obligations: Subject to the provisions of Sections 6 and 9 of this Lease and except for (i) the obligations of Tenant set forth in Section 11.1 above, (ii) the obligations of Landlord set forth in Section 11.3 below, and (iii) the repairs rendered necessary by 11 the intentional or negligent acts or omissions of Tenant or any of Tenant's Representatives, Landlord agrees, at Landlord's expense, subject to reimbursement pursuant to Section 6 above, to keep in good repair the plumbing and mechanical systems exterior to the Premises, any rail spur and rail crossing, the roof, roof membranes, exterior walls of the Building, signage (exclusive of tenant signage), and exterior electrical wiring and equipment, exterior lighting, exterior glass, exterior doors/entrances and door closers, exterior window casements, exterior painting of the Building (exclusive of the Premises), and underground utility and sewer pipes outside the exterior walls of the Building. For purposes of this Section 11.2, the term "exterior" shall mean outside of and not exclusively serving the Premises. Unless otherwise notified by Landlord, in writing, that Landlord has elected to procure and maintain the following described contract(s), Tenant shall procure and maintain (a) the heating, ventilation and air conditioning systems preventative maintenance and repair contract(s); such contract(s) to be on a bimonthly or quarterly basis, as reasonably determined by Landlord, and (b) the fire and sprinkler protection services and preventative maintenance and repair contract(s) (including, without limitation, monitoring services); such contract(s) to be on a bi-monthly or quarterly basis, as reasonably determined by Landlord. Landlord reserves the right, but without the obligation to do so, to procure and maintain (i) the heating, ventilation and air conditioning systems preventative maintenance and repair contract(s), and/or (ii) the fire and sprinkler protection services and preventative maintenance and repair contract(s) (including, without limitation, monitoring services). If Landlord so elects to procure and maintain any such contract(s), Tenant will reimburse Landlord for the cost thereof in accordance with the provisions of Section 6 above. If Tenant procures and maintains any of such contract(s), Tenant will promptly deliver to Landlord a true and complete copy of each such contract and any and all renewals or extensions thereof, and each service report or other summary received by Tenant pursuant to or in connection with such contract(s). 11.3 Landlord's Repairs and Maintenance Obligations: Except for repairs rendered necessary by the intentional or negligent acts or omissions of Tenant or any of Tenant's Representatives, Landlord agrees, at Landlord's sole cost and expense, to (a) keep in good repair the structural portions of the floors, foundations and exterior perimeter walls of the Building (exclusive of glass and exterior doors), and (b) replace the structural portions of the roof of the Building (excluding the roof membrane) as, and when, Landlord determines such replacement to be necessary in Landlord's reasonable discretion. 11.4 Tenant's Failure to Perform Repairs and Maintenance Obligations: Except for normal maintenance and repair of the items described above, Tenant shall have no right of access to or right to install any device on the roof of the Building nor make any penetrations of the roof of the Building without the express prior written consent of Landlord. If Tenant refuses or neglects to repair and maintain the Premises and the adjacent areas properly as required herein and to the reasonable satisfaction of Landlord within applicable cure periods, Landlord may, but without obligation to do so, at any time make such repairs and/or maintenance without Landlord having any liability to Tenant for any loss or damage that may accrue to Tenant's merchandise, fixtures or other property, or to Tenant's business by reason thereof, except to the extent any damage is caused by the willful misconduct or gross negligence of Landlord or its authorized agents and representatives. In the event Landlord makes such repairs and/or maintenance, upon completion thereof Tenant shall pay to Landlord, as additional rent, the Landlord's costs for making such repairs and/or maintenance, plus twenty percent (20%) for overhead, upon presentation of a bill therefor, plus any Enforcement Expenses. The obligations of Tenant hereunder shall survive the expiration of the Term of this Lease or the earlier termination thereof. Tenant hereby waives any right to repair at the expense of Landlord under any applicable Laws now or hereafter in effect respecting the Premises. 12. INSURANCE 12.1 Types of Insurance: Tenant shall maintain in full force and effect at all times during the Term of this Lease, at Tenant's sole cost and expense, for the protection of Tenant and Landlord, as their interests may appear, policies of insurance issued by a carrier or carriers reasonably acceptable to Landlord and its lender(s) which afford the following coverages: (i) worker's compensation: statutory limits; (ii) employer's liability, as required by law, with a minimum limit of $100,000 per employee and $500,000 per occurrence; (iii) commercial general liability insurance (occurrence form) providing coverage against any and all claims for bodily injury and property damage occurring in, on or about the Premises arising out of Tenant's and Tenant's Representatives' use and/or occupancy of the Premises. Such insurance shall include coverage for blanket contractual liability, fire damage, premises, personal injury, completed operations, products liability, personal and advertising, and a plate-glass rider to provide coverage for all glass in, on or about the Premises including, without limitation, skylights. Such insurance shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar ($2,000,000) aggregate limit and excess/umbrella insurance in the amount of Two Million Dollars ($2,000,000). If Tenant has other locations which it owns or leases, the policy shall include an aggregate limit per location endorsement. If necessary, as reasonably determined by Landlord, Tenant shall provide for restoration of the aggregate limit; (iv) comprehensive automobile liability insurance: a combined single limit of not less than $2,000,000 per occurrence and insuring Tenant against liability for claims arising out of the ownership, maintenance, or use of any owned, hired 12 or non-owned automobiles; (v) "all risk" or "special purpose" property insurance, including without limitation, sprinkler leakage, boiler and machinery comprehensive form, if applicable, covering damage to or loss of any personal property, trade fixtures, inventory, fixtures and equipment located in, on or about the Premises, and in addition, coverage for flood, earthquake, if flood and earthquake was available at commercially reasonable rates, and business interruption of Tenant, together with, if the property of Tenant's invitees is to be kept in the Premises, warehouser's legal liability or bailee customers insurance for the full replacement cost of the property belonging to invitees and located in the Premises. Such insurance shall be written on a replacement cost basis (without deduction for depreciation) in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the items referred to in this subparagraph (v); and (vi) such other insurance as may otherwise be reasonably required by any of Landlord's lenders or joint venture partners. 12.2 Insurance Policies: Insurance required to be maintained by Tenant shall be written by companies (i) licensed to do business in the State of California, (ii) domiciled in the United States of America, and (iii) having a "General Policyholders Rating" of at least A:X (or such higher rating as may be required by a lender having a lien on the Premises) as set forth in the most current issue of "A.M. Best's Rating Guides." Any deductible amounts under any of the insurance policies required hereunder shall not exceed Ten Thousand Dollars ($10,000) unless specifically agreed to by Landlord on a case by case basis. Tenant shall deliver to Landlord certificates of insurance and true and complete copies of any and all endorsements required herein for all insurance required to be maintained by Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to expiration of each policy, furnish Landlord with certificates of renewal or "binders" thereof. Each certificate shall expressly provide that such policies shall not be cancelable or otherwise subject to reduction except after thirty (30) days prior written notice to the parties named as additional insureds as required in this Lease (except for cancellation for nonpayment of premium, in which event cancellation shall not take effect until at least ten (10) days' notice has been given to Landlord). Tenant shall have the right to provide insurance coverage which it is obligated to carry pursuant to the terms of this Lease under a blanket insurance policy, provided such blanket policy expressly affords coverage for the Premises and for Landlord as required by this Lease. 12.3 Additional Insureds and Coverage: Landlord, any property management company and/or agent of Landlord for the Premises, the Building, the Lot or the Park, and any lender(s) of Landlord having a lien against the Premises, the Building, the Lot or the Park shall be named as additional insureds under all of the policies required in Section 12.1(iii) above. Additionally, such policies shall provide for severability of interest. All insurance to be maintained by Tenant shall, except for workers' compensation and employer's liability insurance, be primary subject to any waiver of subrogation, without right of contribution from insurance maintained by Landlord. Any umbrella/excess liability policy (which shall be in "following form") shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall not limit Tenant's liability under this Lease. It is the parties' intention that the insurance to be procured and maintained by Tenant as required herein shall provide coverage for any and all damage or injury arising from or related to Tenant's operations of its business and/or Tenant's or Tenant's Representatives' use of the Premises and/or any of the areas within the Park, whether such events occur within the Premises (as described in Exhibit a hereto) or in any other ---------- areas of the Park. It is not contemplated or anticipated by the parties that the aforementioned risks of loss be borne by Landlord's insurance carriers, rather it is contemplated and anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant to the insurance policies procured and maintained by Tenant as required herein. 12.4 Failure of Tenant to Purchase and Maintain Insurance: In the event Tenant does not purchase the insurance required in this Lease or keep the same in full force and effect throughout the Term of this Lease (including any renewals or extensions), Landlord may, but without obligation to do so, purchase the necessary insurance and pay the premiums therefor. If Landlord so elects to purchase such insurance, Tenant shall promptly pay to Landlord as Additional Rent, the amount so paid by Landlord, upon Landlord's demand therefor. In addition, Landlord may recover from Tenant and Tenant agrees to pay, as Additional Rent, any and all Enforcement Expenses and damages which Landlord may sustain by reason of Tenant's failure to obtain and maintain such insurance. If Tenant fails to maintain any insurance required in this Lease, Tenant shall be liable for all losses, damages and costs resulting from such failure. 12.5 Landlord's Insurance: Landlord shall maintain in full force and effect during the Term of this Lease, subject to reimbursement as provided in Section 6, policies of insurance which afford such coverages as are commercially reasonable and as is consistent with other properties in Landlord's portfolio. Landlord shall also procure such additional insurance coverage as Tenant shall reasonably request Landlord to obtain; provided, however, notwithstanding anything to the contrary contained herein, Tenant shall pay, and shall be solely responsible for, any and all costs, premiums and expenses of any such additional insurance, as Additional Rent, and Tenant shall pay same to Landlord within ten (10) days of Landlord's demand therefor. Landlord shall obtain and keep in force during the Term of this 13 Lease, as an item of Operating Expenses, a policy or policies in the name of Landlord, with loss payable to Landlord and to the holders of any mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"), insuring loss or damage to the Building, including all improvements, fixtures (other than trade fixtures) and permanent additions. However, all alterations, additions and improvements made to the Premises by Tenant (other than the Tenant Improvements) shall be insured by Tenant rather than by Landlord. The amount of such insurance procured by Landlord shall be equal to one hundred percent (100%) of the full replacement cost of the Building (excluding the cost of excavation and installation of footings), including all improvements and permanent additions as the same shall exist from time to time, or the amount required by Lenders. At Landlord's option, such policy or policies shall insure against all risks of direct physical loss or damage (including, without limitation, the perils of earthquake), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Building required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered cause of loss. If any such insurance coverage procured by Landlord has a deductible clause, the deductible shall not exceed commercially reasonable amounts, and in the event of any casualty, the amount of such deductible shall be an item of Operating Expenses as so limited. Notwithstanding anything to the contrary contained herein, to the extent the cost of maintaining insurance with respect to the Building and/or any other buildings within the Park is increased as a result of Tenant's acts, omissions, alterations, improvements (including without limitation, the Tenant Improvements), use or occupancy of the Premises, Tenant shall pay one hundred percent (100%) of, and for, such increase(s) as Additional Rent. 13. WAIVER OF SUBROGATION Notwithstanding anything to the contrary in this Lease, Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties' property to the extent that such loss or damage is insured by an insurance policy required to be in effect at the time of such loss or damage or would have been insured had the waiving party carried the type of insurance required to be carried by such party under this Lease. Each party shall obtain any special endorsements, if required by its insurer whereby the insurer waives its rights of subrogation against the other party. This provision is intended to waive fully, and for the benefit of the parties hereto, any rights and/or claims which might give rise to a right of subrogation in favor of any insurance carrier. The coverage obtained by Tenant pursuant to Section 12 of this Lease shall include, without limitation, a waiver of subrogation endorsement attached to the certificate of insurance. The provisions of this Section 13 shall not apply in those instances in which such waiver of subrogation would invalidate such insurance coverage or would cause either party's insurance coverage to be voided or otherwise uncollectible. Notwithstanding anything to the contrary in this Lease, all of Landlord's and Tenant's repair and indemnity obligations under this Lease shall be subject to the waiver contained in this paragraph. 14. LIMITATION OF LIABILITY AND INDEMNITY Except to the extent of damage resulting from the gross negligence or willful misconduct of Landlord or its authorized representatives or Landlord's material default of this Lease beyond any applicable cure periods, Tenant agrees to protect, defend (with counsel acceptable to Landlord) and hold Landlord and Landlord's lenders, partners, members, property management company (if other than Landlord), agents, directors, officers, employees, representatives, contractors, shareholders, successors and assigns and each of their respective partners, members, directors, employees, representatives, agents, contractors, shareholders, successors and assigns (collectively, the "Indemnitees") harmless and indemnify the Indemnitees from and against all liabilities, damages, claims, losses, judgments, charges and expenses (including reasonable attorneys' fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly, (i) Tenant's or Tenant's Representatives' use of the Premises, Building and/or the Park, (ii) the conduct of Tenant's business, (iii) from any activity, work or thing done, permitted or suffered by Tenant in or about the Premises, (iv) in any way connected with the Premises or with the improvements or personal property therein, including, but not limited to, any liability for injury to person or property of Tenant, Tenant's Representatives, or third party persons, and/or (v) Tenant's failure to perform any covenant or obligation of Tenant under this Lease. Tenant agrees that the obligations of Tenant herein shall survive the expiration or earlier termination of this Lease. Except to the extent of damage resulting from the gross negligence or willful misconduct of Landlord or its authorized representatives or Landlord's default of this Lease and failure to cure such default beyond any applicable cure period, to the fullest extent permitted by law, Tenant agrees that neither Landlord nor any of Landlord's lender(s), partners, members, employees, representatives, legal representatives, successors or assigns shall at any time or to any extent whatsoever be liable, responsible or in any way accountable for any loss, liability, injury, death or damage to persons or property which at any time may be suffered or sustained by Tenant or by any person(s) whomsoever who may at any time be using, occupying or visiting the Premises, the Building or the Park, including, but not limited to, any 14 acts, errors or omissions by or on behalf of any other tenants or occupants of the Building and/or the Park. Tenant shall not, in any event or circumstance, be permitted to offset or otherwise credit against any payments of Rent required herein for matters for which Landlord may be liable hereunder. Landlord and its authorized representatives shall not be liable for any interference with light or air, or for any latent defect in the Premises or the Building, subject to the repair requirements in Section 2.1. 15. ASSIGNMENT AND SUBLEASING 15.1 Prohibition: Except as expressly set forth herein with respect to a Related Entity, Tenant shall not assign, mortgage, hypothecate, encumber, grant any license or concession, pledge or otherwise transfer this Lease (collectively, "assignment"), in whole or in part, whether voluntarily or involuntarily or by operation of law, nor sublet or permit occupancy by any person other than Tenant of all or any portion of the Premises without first obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld. Tenant hereby agrees that Landlord may withhold its consent to any proposed sublease or assignment if the proposed sublessee or assignee or its business is subject to compliance with additional requirements of the ADA (defined below) and/or Environmental Laws (defined below) beyond those requirements which are applicable to Tenant, unless the proposed sublessee or assignee shall (a) first deliver plans and specifications for complying with such additional requirements and obtain Landlord's written consent thereto, and (b) comply with all Landlord's conditions for or contained in such consent, including without limitation, requirements for security to assure the lien-free completion of such improvements. If Tenant seeks to sublet or assign all or any portion of the Premises, Tenant shall deliver to Landlord at least fifteen (15) days prior to the proposed commencement of the sublease or assignment (the "Proposed Effective Date") the following: (i) the name of the proposed assignee or sublessee; (ii) such information as to such assignee's or sublessee's financial responsibility and standing as Landlord may reasonably require; and (iii) the aforementioned plans and specifications, if any. Within ten (10) days after Landlord's receipt of a written request from Tenant that Tenant seeks to sublet or assign all or any portion of the Premises, Landlord shall deliver to Tenant a copy of Landlord's standard form of sublease or assignment agreement (as applicable), which instrument shall be utilized for each proposed sublease or assignment (as applicable), and such instrument shall include a provision whereby the assignee or sublessee assumes all of Tenant's obligations hereunder and agrees to be bound by the terms hereof. As Additional Rent hereunder, Tenant shall pay to Landlord a fee in the amount of five hundred dollars ($500) plus Tenant shall reimburse Landlord for actual reasonable legal and other expenses incurred by Landlord in connection with any actual or proposed assignment or subletting. In the event the sublease or assignment (1) by itself or taken together with prior sublease(s) or partial assignment(s) covers or totals, as the case may be, more than twenty-five percent (25%) of the rentable square feet of the Premises or (2) is for a term which by itself or taken together with prior or other subleases or partial assignments is greater than seventy-five percent (75%) of the period remaining in the Term of this Lease as of the time of the Proposed Effective Date, then Landlord shall have the right, to be exercised by giving written notice to Tenant, to recapture the space described in the sublease or assignment. If such recapture notice is given, it shall serve to terminate this Lease with respect to the proposed sublease or assignment space, or, if the proposed sublease or assignment space covers all the Premises, it shall serve to terminate the entire term of this Lease in either case, as of the Proposed Effective Date. Notwithstanding the foregoing Landlord's recapture rights shall not apply to a Related Entity. However, no termination of this Lease with respect to part or all of the Premises shall become effective without the prior written consent, where necessary, of the holder of each deed of trust encumbering the Premises or any part thereof. Within fifteen (15) days of Landlord's receipt of Tenant's written request to sublease or assign the Lease or upon Landlord's notice to recapture to Tenant, Landlord will contact the holder of each deed of trust encumbering the Premises and attempt to obtain the required approval of such transaction. If this Lease is terminated pursuant to the foregoing with respect to less than the entire Premises, the Rent shall be adjusted on the basis of the proportion of square feet retained by Tenant to the square feet originally demised and this Lease as so amended shall continue thereafter in full force and effect. Each permitted assignee or sublessee, including without limitation, a Related Entity, shall assume and be deemed to assume this Lease and shall be and remain liable jointly and severally with Tenant for payment of Rent and for the due performance of, and compliance with all the terms, covenants, conditions and agreements herein contained on Tenant's part to be performed or complied with, for the term of this Lease. No assignment or subletting shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee), and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease. Tenant hereby acknowledges and agrees that it understands that Landlord's accounting department may process and accept Rent payments without verifying that such payments are being made by Tenant, a permitted sublessee or a permitted assignee in accordance with the provisions of this Lease. Although such payments may be processed and accepted by such accounting department personnel, any and all actions or omissions by the personnel of Landlord's accounting department shall not be considered as acceptance by Landlord of any proposed assignee or sublessee nor shall such actions or omissions be deemed to be a substitute for the requirement that Tenant obtain Landlord's prior written consent to any such subletting or assignment, and 15 any such actions or omissions by the personnel of Landlord's accounting department shall not be considered as a voluntary relinquishment by Landlord of any of its rights hereunder nor shall any voluntary relinquishment of such rights be inferred therefrom. For purposes hereof, and except with respect to a Related Entity, in the event Tenant is a corporation, partnership, joint venture, trust or other entity other than a natural person, ally change in the direct or indirect ownership of Tenant which results in a transfer of the controlling interest of Tenant (51% or more of stock) by one party prior to a public offering shall be deemed to be an assignment within the meaning of this Section 15 and shall be subject to all the provisions hereof provided however that the sale or other transfer of stock by Tenant shall not constitute a "change in ownership" requiring the prior written consent of Landlord if the sale or other transfer is traded through an exchange or over the counter. Except for a permissible assignment to a Related entity, any and all options, first rights of refusal, tenant improvement allowances and other similar rights granted to Tenant in this Lease, if any, shall not be assignable by Tenant unless expressly authorized in writing by Landlord. Notwithstanding anything to the contrary contained herein, so long as Tenant delivers to Landlord (1) at least fifteen (15) business days after written notice of its intention to assign or sublease the Premises to any Related Entity, which notice shall set forth the name of the Related Entity, (2) a copy of the proposed agreement pursuant to which such assignment or sublease shall be effectuated, and (3) such other information concerning the Related Entity as Landlord may reasonably require, including without limitation, information regarding any change in the proposed use of any portion of the Premises and any financial information with respect to such Related Entity, and so long as Landlord approves, in writing of any change in the proposed use of the subject portion of the Premises, then Tenant may assign this Lease or sublease any portion of the Premises to any Related Entity without having to obtain the prior written consent of Landlord thereto. For purposes of this Lease the term "Related Entity" shall mean and refer to (a) any corporation or entity which controls, is controlled by or is tinder common control with Tenant, as all of such terms are customarily used in the industry, (b) an entity related to Tenant by merger, consolidation non bankruptcy, reorganization, or government action, or (c) a purchaser of substantially all of Tenant's assets, all with an equal or greater net worth as Tenant has as of the proposed transfer date. 15.2 Excess Sublease Rental or Assignment Consideration: In the event of any sublease or assignment of all or any portion of the Premises, except for Related Entity transfers or stock transfers, where the rent or other consideration provided for in the sublease or assignment either initially or over the term of the sublease or assignment exceeds the Rent or pro rata portion of the Rent, as the case may be, for such space reserved in the Lease, Tenant shall pay the Landlord monthly, as Additional Rent, at the same time as the monthly installments of Rent are payable hereunder, seventy-five percent (75%) of the excess of each such payment of rent or other consideration in excess of the Rent called for hereunder net of Tenant's reasonable costs to effectuate such assignment or sublease, limited to actual commissions paid, reasonable attorney's fees and standard tenant improvements installed by Tenant specifically for such transfer. 15.3 Waiver: Notwithstanding any assignment or sublease, or any indulgences, waivers or extensions of time granted by Landlord to any assignee or sublessee, or failure by Landlord to take action against any assignee or sublessee, Tenant agrees that Landlord may, at its option, proceed against Tenant without having taken action against or joined such assignee or sublessee, except that Tenant shall have the benefit of any indulgences, waivers and extensions of time granted to any such assignee or sublessee. 16. AD VALOREM TAXES Prior to delinquency, Tenant shall pay all taxes and assessments levied upon trade fixtures, alterations, additions, improvements, inventories and personal property located and/or installed on or in the Premises by, or on behalf of, Tenant (other than the Tenant Improvements which Tenant shall pay Tenant's Share of pursuant to Section 6.2 above) and if requested by Landlord, Tenant shall promptly deliver to Landlord copies of receipts for payment of all such taxes and assessments. To the extent any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord. 17. SUBORDINATION Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any bona fide mortgagee or deed of trust beneficiary with a lien on all or any portion of the Premises or any ground lessor with respect to the land of which the Premises are a part, the rights of Tenant under this Lease and this Lease shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building or the land upon which the Building is situated or both, and (ii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Building, the Lot, ground leases or underlying leases, or Landlord's interest or estate in any of said items is specified as security. Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or any beneficiary shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying 16 lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination and upon the request of such successor to Landlord, attorn to and become the Tenant of the successor in interest to Landlord, provided such successor in interest will not disturb Tenant's use, occupancy or quiet enjoyment of the Premises so long as Tenant is not in default of the terms and provisions of this Lease. The successor in interest to Landlord following foreclosure, sale or deed in lieu thereof shall not be (a) liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) subject to ally offsets which Tenant might have against any prior lessor; (c) bound by prepayment of more than one (1) month's Rent, except in those instances when Tenant pays Rent quarterly in advance pursuant to Section 8 hereof, then not more than three months Rent; or (d) liable to Tenant for any Security Deposit not actually received by such successor in interest to the extent any portion or all of such Security Deposit has not already been forfeited by, or refunded to, Tenant. Landlord shall be liable to Tenant for all or any portion of the Security Deposit not forfeited by, or refunded to Tenant, until and unless Landlord transfers such Security Deposit to the successor in interest. Tenant covenants and agrees to execute (and acknowledge if required by Landlord, any lender or ground lessor) and deliver, within ten (10) days of a demand or request by Landlord and in the form reasonably requested by Landlord, ground lessor, mortgagee or beneficiary, any additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such mortgage or deed of trust. Tenant's failure to timely execute and deliver such additional documents shall, at Landlord's option, constitute a material default hereunder. It is further agreed that Tenant shall be liable to Landlord, and shall indemnify Landlord from and against any loss, cost, damage or expense, incidental, consequential, or otherwise, arising or accruing directly or indirectly, from any failure of Tenant to execute or deliver to Landlord any such additional documents, together with any and all Enforcement Expenses. Notwithstanding any of the foregoing, prior to the Commencement Date, Landlord shall use reasonable efforts to cause the lender under any existing mortgages or deeds of trust encumbering the Building promptly to execute a nondisturbance and attornment agreement in a form mutually and reasonably acceptable to the beneficiary, Landlord and Tenant similar to the form attached in Exhibit I to this Lease. The subordination of this Lease to future loans is conditioned upon the execution by any such future lender to a nondisturbance agreement reasonably satisfactory to the beneficiary, Landlord and Tenant. 18. RIGHT OF ENTRY Tenant grants Landlord or its agents the right to enter the Premises at all reasonable times upon 24 hours notice (except in cases of emergency) for purposes of inspection, exhibition, posting of notices, repair or alteration. Any such entry by Landlord and Landlord's agents shall comply with all reasonable security measures of Tenant and shall not impair Tenant's operations more than reasonably necessary. At Landlord's option, Landlord shall at all times have and retain a key with which to unlock all the doors in, upon and about the Premises, excluding Tenant's vaults and safes. It is further agreed that Landlord shall have the right to use any and all means Landlord deems necessary to enter the Premises in an emergency. Landlord shall have the right to place "for rent" or "for lease" signs on the outside of the Premises, the Building and in the Common Areas. Landlord shall also have the right to place "for sale" signs on the outside of the Building and in the Common Areas. Tenant hereby waives any claim from damages or for any injury or inconvenience to or interference with Tenant's business, or any other loss occasioned thereby except for any claim for any of the foregoing to the extent arising out of the gross negligence or willful misconduct of Landlord or its authorized representatives. 19. ESTOPPEL CERTIFICATE Tenant shall execute (and acknowledge if required by any lender or ground lessor) and deliver to Landlord, within ten (10) days after Landlord provides such to Tenant, a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification), the date to which the Rent and other charges are paid in advance, if any, acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or specifying such defaults as are claimed, and such other matters as Landlord may reasonably require. Any such statement may be conclusively relied upon by Landlord and any prospective purchaser or encumbrancer of the Premises. Tenant's failure to deliver such statement within such time shall be conclusive upon the Tenant that (a) this Lease is in full force and effect, without modification except as may be represented by Landlord; (b) there are no uncured defaults in Landlord's performance; and (c) not more than one month's Rent has been paid in advance, except in those instances when Tenant pays Rent quarterly in advance pursuant to Section 8 hereof, then not more than three month's Rent has been paid in advance. Failure by Tenant to so deliver such certified estoppel certificate shall be a material default of the provisions of this Lease. Tenant shall be liable to Landlord, and shall indemnify Landlord from and against any loss, cost, damage or expense, incidental, consequential, or otherwise, arising or accruing directly or indirectly, from any failure of Tenant to execute or deliver to Landlord any such certified estoppel certificate, together with any and all Enforcement Expenses. 17 20. TENANT'S DEFAULT The occurrence of any one or more of the following events shall, at Landlord's option, constitute a material default by Tenant of the provisions of this Lease: 20.1 The abandonment of the Premises by Tenant or the vacation of the Premises by Tenant which would cause any insurance policy to be invalidated or otherwise lapse. Tenant agrees to notice and service of notice as provided for in this Lease and waives any right to any other or further notice or service of notice which Tenant may have under any statute or law now or hereafter in effect; 20.2 The failure by Tenant to make any payment of Rent, Additional Rent or any other payment required hereunder within five (5) days of written notice of a delinquency. Tenant agrees that such written notice by Landlord shall serve as the statutorily required notice under the Law (including without limitation, any unlawful detainer statutes), and Tenant further agrees to notice and service of notice as provided for in this Lease and waives any right to any other or further notice or service of notice which Tenant may have under any statute or law now or hereafter in effect on the date said payment is due.; 20.3 The failure by Tenant to observe, perform or comply with any of the conditions, covenants or provisions of this Lease (except failure to make any payment of Rent and/or Additional Rent) and such failure is not cured within (i) thirty (30) days of the date on which Landlord delivers written notice of such failure to Tenant for all failures other than with respect to Hazardous Materials (defined in Section 29 hereof), and (ii) ten (10) days of the date on which Landlord delivers written notice of such failure to Tenant for all failures in any way related to Hazardous Materials. However, Tenant shall not be in default of its obligations hereunder if such failure cannot reasonably be cured within such thirty (30) or ten (10) day period, as applicable, and Tenant promptly commences, and thereafter diligently proceeds with same to completion, all actions necessary to cure such failure as soon as is reasonably possible, but in no event shall the completion of such cure be later than sixty (60) days after the date on which Landlord delivers to Tenant written notice of such failure, unless Landlord, acting reasonably and in good faith, otherwise expressly agrees in writing to a longer period of time based upon the circumstances relating to such failure as well as the nature of the failure and the nature of the actions necessary to cure such failure thirty (30) days after written notice of such failure, or such longer time as may reasonably be required to cure the default; 20.4 The making of a general assignment by Tenant for the benefit of creditors, the filing of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant's creditors seeking the rehabilitation, liquidation, or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief of debtors and, in the case of an involuntary action, the failure to remove or discharge the same within sixty (60) days of such filing, the appointment of a receiver or other custodian to take possession of substantially all of Tenant's assets or this leasehold, Tenant's insolvency or inability to pay Tenant's debts or failure generally to pay Tenant's debts when due, any court entering a decree or order directing the winding up or liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking any action toward the dissolution or winding up of Tenant's affairs, the cessation or suspension of Tenant's use of the Premises, or the attachment, execution or other judicial seizure of substantially all of Tenant's assets or this leasehold; 20.5 Tenant's use or storage of Hazardous Materials in, on or about the Premises, the Building, the Lot and/or the Park other than as expressly permitted by the provisions of Section 29 below; or 20.6 The making of any intentional material misrepresentation or omission by Tenant in any materials delivered by or on behalf of Tenant to Landlord pursuant to this Lease. 21. REMEDIES FOR TENANT's DEFAULT 21.1 Landlord's Rights: In the event of Tenant's material default under this Lease, Landlord may terminate Tenant's right to possession of the Premises by any lawful means in which case upon delivery of written notice by Landlord this Lease shall terminate on the date specified by Landlord in such notice and Tenant shall immediately surrender possession of the Premises to Landlord. In addition, the Landlord shall have the immediate right of re-entry whether or not this Lease is terminated, and if this right of re-entry is exercised following abandonment of the Premises by Tenant, Landlord may consider any personal property belonging to Tenant and left on the Premises to also have been abandoned. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 21 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant. If Landlord relets the Premises or any portion thereof, (i) Tenant shall be liable immediately to Landlord for all costs Landlord incurs in reletting the Premises or any part thereof, including, without limitation, broker's commissions, expenses of cleaning, redecorating, and further improving the Premises and other similar costs (collectively, the "Reletting Costs"), and (ii) the rent received by Landlord from 18 such reletting shall be applied to the payment of, first, any indebtedness from Tenant to Landlord other than Base Rent, Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses; second, all costs including maintenance, incurred by Landlord in reletting; and, third, Base Rent, Operating Expenses, Tax Expenses, Common Area Utility Costs, Utility Expenses, and all other sums due under this Lease. Any and all of the Reletting Costs shall be fully chargeable to Tenant and shall not be prorated or otherwise amortized in relation to any new lease for the Premises or any portion thereof. After deducting the payments referred to above, any sum remaining from the rental Landlord receives from reletting shall be held by Landlord and applied in payment of future Rent as Rent becomes due under this Lease. In no event shall Tenant be entitled to any excess rent received by Landlord. Reletting may be for a period shorter or longer than the remaining term of this Lease. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. So long as this Lease is not terminated, Landlord shall have the right to remedy any default of Tenant, to maintain or improve the Premises, to cause a receiver to be appointed to administer the Premises and new or existing subleases and to add to the Rent payable hereunder all of Landlord's reasonable costs in so doing, with interest at the maximum rate permitted by law from the date of such expenditure. 21.2 Damages Recoverable: If Tenant's right to possession is terminated by Landlord because of a breach or default under this Lease, then Landlord may recover from Tenant all damages suffered by Landlord as a result of Tenant's failure to perform its obligations hereunder, including, but not limited to, the cost of any Tenant Improvements constructed by or on behalf of Tenant pursuant to Exhibit B hereto to the extent allocated to the remainder of the Lease term, --------- the portion of any broker's or leasing agent's commission incurred with respect to the leasing of the Premises to Tenant for the balance of the Term of the Lease remaining after the date on which Tenant is in default of its obligations hereunder, and all Reletting Costs, and the worth at the time of the award (computed in accordance with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil Code) of the amount by which the Rent then unpaid hereunder for the balance of the Lease Term exceeds the amount of such loss of Rent for the same period which Tenant proves could be reasonably avoided by Landlord and in such case, Landlord prior to the award, may relet the Premises for the purpose of mitigating damages suffered by Landlord because of Tenant's failure to perform its obligations hereunder; provided, however, that even though Tenant has abandoned the Premises following such breach, this Lease shall nevertheless continue in full force and effect for as long as Landlord does not terminate Tenant's right of possession, and until such termination, Landlord shall have the remedy described in Section 1951.4 of the California Civil Code (Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations) and may enforce all its rights and remedies under this Lease, including the right to recover the Rent from Tenant as it becomes due hereunder. The "worth at the time of the award" within the meaning of Subparagraphs (a)(l) and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by allowing interest at the rate of ten percent (10%) per annum. Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other present or future law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any default of Tenant hereunder. 21.3 Rights and Remedies Cumulative: The foregoing rights and remedies of Landlord are not exclusive; they are cumulative in addition to any rights and remedies now or hereafter existing at law, in equity by statute or otherwise, or to any equitable remedies Landlord may have, and to any remedies Landlord may have under bankruptcy laws or laws affecting creditor's rights generally. In addition to all remedies set forth above, if Tenant materially defaults under this Lease, any and all Base Rent waived by Landlord under Section 3 above shall be immediately due and payable to Landlord and all options granted to Tenant hereunder shall automatically terminate, unless otherwise expressly agreed to in writing by Landlord. 21.4 Waiver of a Default: The waiver by Landlord of any default of any provision of this Lease shall not be deemed or construed a waiver of any other default by Tenant hereunder or of any subsequent default of this Lease, except for the default specified in the waiver. 22. HOLDING OVER If Tenant holds possession of the Premises after the expiration of the Term of this Lease with Landlord's consent, Tenant shall become a tenant from month- to-month upon the terms and provisions of this Lease, provided the monthly Base Rent during such hold over period shall be 150% of the Base Rent due on the last month of the Lease Term, payable in advance on or before the first day of each month. Acceptance by Landlord of the monthly Base Rent without the additional fifty percent (50%) increase of Base Rent shall not be deemed or construed as a waiver by Landlord of any of its rights to collect the increased amount of the Base Rent as provided herein at any time. Such month-to-month tenancy shall not constitute a renewal or extension for any further term. All options, if any, granted under the terms of this Lease shall be deemed automatically terminated and be of no force or effect during said month-to- 19 month tenancy. Tenant shall continue in possession until such tenancy shall be terminated by either Landlord or Tenant giving written notice of termination to the other party at least thirty (30) days prior to the effective date of termination. This paragraph shall not be construed as Landlord's permission for Tenant to hold over. Acceptance of Base Rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease. 23. LANDLORD'S DEFAULT Landlord shall not be deemed in breach or default of this Lease unless Landlord fails within a reasonable time to perform an obligation required to be performed by Landlord hereunder. For purposes of this provision, a reasonable time shall not be less than thirty (30) days after receipt by Landlord of written notice specifying the nature of the obligation Landlord has not performed; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days, after receipt of written notice, is reasonably necessary for its performance, then Landlord shall not be in breach or default of this Lease if performance of such obligation is commenced within such thirty (30) day period and thereafter diligently pursued to completion. 24. PARKING Tenant shall have a license to use the number of non-designated and non- exclusive parking spaces specified in the Basic Lease Information. Landlord shall exercise reasonable efforts to insure that such spaces are available to Tenant for its use. 25. SALE OF PREMISES In the event of any sale of the Premises by Landlord or the cessation otherwise of Landlord's interest therein, Landlord shall be and is hereby entirely released from any and all of its obligations to perform or further perform under this Lease and from all liability hereunder accruing from or after the date of such sale; and the purchaser, at such sale or any subsequent sale of the Premises shall be deemed, without any further agreement between the parties or their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease. For purposes of this Section 25, the term "Landlord" means only the owner and/or agent of the owner as such parties exist as of the date on which Tenant executes this Lease. A ground lease or similar long term lease by Landlord of the entire Building, of which the Premises are a part, shall be deemed a sale within the meaning of this Section 25. Tenant agrees to attorn to such new owner provided such new owner does not disturb Tenant's use, occupancy or quiet enjoyment of the Premises so long as Tenant is not in default of any of the provisions of this Lease. 26. WAIVER No delay or omission in the exercise of any right or remedy of Landlord on any default by Tenant shall impair such a right or remedy or be construed as a waiver. The subsequent acceptance of Rent by Landlord after default by Tenant of any covenant or term of this Lease shall not be deemed a waiver of such default, other than a waiver of timely payment for the particular Rent payment involved, and shall not prevent Landlord from maintaining an unlawful detainer or other action based on such breach. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Rent and other sums due hereunder shall be deemed to be other than on account of the earliest Rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or other sum or pursue any other remedy provided in this Lease. No failure, partial exercise or delay on the part of the Landlord in exercising any right, power or privilege hereunder shall operate as a waiver thereof. 27. CASUALTY DAMAGE 27.1 Casualty. If the Premises or any part thereof (excluding any alterations or improvements installed by or for the benefit of Tenant) shall be damaged or destroyed by fire or other casualty, Tenant shall give immediate written notice thereof to Landlord. Within thirty (30) days after receipt by Landlord of such notice, Landlord shall notify Tenant, in writing, whether the necessary repairs can reasonably be made: (a) within ninety (90) days; (b) in more than ninety (90) days but in less than one hundred eighty (180) days; or (c) in more than one hundred eighty (180) days, from the date of such notice. 27.1.1 Minor Insured Damage. If the Premises are damaged only to such extent that repairs, rebuilding and/or restoration can be reasonably completed within ninety (90) days, this Lease shall not terminate and, provided that insurance proceeds are available to fully repair the damage, or if Landlord has failed to procure and maintain the insurance required in Section 12.5, then Landlord shall provide the insurance proceeds that would have otherwise been provided therefore. Landlord shall repair 20 the Premises to substantially the same condition that existed prior to the occurrence of such casualty, except Landlord shall not be required to rebuild, repair, or replace any alterations or improvements installed by or for the benefit of Tenant or any part of Tenant's furniture, furnishings or fixtures and equipment removable by Tenant. The Rent payable hereunder shall be abated proportionately from the date Tenant vacates the Premises only to the extent rental abatement insurance proceeds are received by Landlord and the Premises are unfit for occupancy. 27.1.2 Insured Damage Requiring More Than 90 Days To Repair. If the Premises are damaged only to such extent that repairs, rebuilding and/or restoration can be reasonably completed in more than ninety (90) days but in less than one hundred eighty (180) days, then Landlord shall have the option of: (a) terminating the Lease effective upon the occurrence of such damage, in which event the Rent shall be abated from the date Tenant vacates the Premises; or (b) electing to repair the Premises to substantially the same condition that existed prior to the occurrence of such casualty, provided insurance proceeds are available to fully repair the damage, or if Landlord has failed to procure and maintain the insurance required in Section 12.5, then Landlord shall provide the insurance proceeds that would have otherwise been provided therefore (except that the Landlord shall not be required to rebuild, repair, or replace any alterations or improvements installed by or for the benefit of Tenant or any part of Tenant's furniture, furnishings or fixtures and equipment removable by Tenant). The Rent payable hereunder shall be abated proportionately from the date Tenant vacates the Premises only to the extent rental abatement insurance proceeds are received by Landlord and the Premises are unfit for occupancy. If Landlord should fail to substantially complete such repairs within one hundred eighty (180) days after the date on which Landlord is notified by Tenant of the occurrence of such casualty (such 180-day period to be extended for delays caused by Tenant or any force majeure events), Tenant may within twenty (20) days after expiration of such one hundred eighty (180) day period (as same may be extended), terminate this Lease by delivering written notice to Landlord as Tenant's exclusive remedy, whereupon all rights of Tenant hereunder shall cease and terminate twenty (20) days after Landlord's receipt of such notice. 27.1.3 Major Insured Damage. If the premises are damaged to such extent that repairs, rebuilding and/or restoration cannot be reasonably completed within one hundred eighty (180) days, than either Landlord or Tenant may terminate this Lease by giving written notice within twenty (20) days after notice from Landlord regarding the time period of repair. If either party notifies the other of its intention to so terminate the Lease, then this Lease shall terminate and the Rent shall be abated from the date Tenant vacates the Premises. If neither party elects to terminate this Lease, Landlord shall promptly commence and diligently prosecute to completion the repairs to the Premises, provided insurance proceeds are available to fully repair the damage, or if Landlord has failed to procure and maintain the insurance required in Section 12.5, then Landlord shall provide the insurance proceeds that would have otherwise been provided therefore (except that Landlord shall not be required to rebuild, repair, or replace any alterations or improvements installed by or for the benefit of Tenant or any part of Tenant's furniture, furnishings or fixtures and equipment removable by Tenant). During the time when Landlord is prosecuting such repairs to completion, the Rent payable hereunder shall be abated proportionately from the date Tenant vacates the Premises only to the extent rental abatement insurance proceeds are received by Landlord and only during the time period that the Premises are unfit for occupancy. 27.1.4 Damage Near End of Term. Notwithstanding anything to the contrary contained in this Lease except for the provisions of Section 27.2 below, if the Premises are substantially damaged or destroyed during the last year of then applicable term of this Lease, Landlord may, at its option, cancel and terminate this Lease by giving written notice to Tenant of its election to do so within thirty (30) days after receipt by Landlord of notice from Tenant of the occurrence of such casualty. If Landlord so elects to terminate this Lease, all rights of Tenant hereunder shall cease and terminate thirty (30) days after Tenant's receipt of such notice. 27.2 Uninsured Casualty. Tenant shall be responsible for and shall pay to Landlord, as Additional Rent, any deductibles amount under the property insurance for the Premises and/or the Building. If any portion of the Premises is damaged and is not fully covered by insurance by insurance proceeds received by Landlord (and Tenant elects not to pay any such difference) or if the holder of any indebtedness secured by the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to the other party within thirty (30) days after the date of notice to Tenant of any such event, whereupon all rights and obligations shall cease and terminate hereunder, except for those obligations expressly provided for in this Lease to survive such termination of the Lease. 27.3 Tenant's Waiver. Landlord shall not be liable for any inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of use of any part of the Premises by Tenant or loss of Tenant's personal property, resulting in any way from such damage, destruction or the repair thereof, except that, Landlord shall allow Tenant a fair diminution of Rent during the time and to the extent the Premises are unfit for occupancy as specifically provided above in this Section 27. With respect to any damage or destruction which Landlord is obligated to repair or may elect to repair, Tenant hereby waives 21 all rights to terminate this Lease or offset any amounts against Rent pursuant to rights accorded Tenant by any law currently existing or hereafter enacted, including but not limited to, all rights pursuant to the provisions of Sections 1932(2.), 1933(4.), 1941 and 1942 of the California Civil Code, as the same may be amended or supplemented from time to time. Whenever Base Rent is to be abated under this Lease, all Base Rent and Additional Rent shall be equitably abated based upon the extent to which Tenant's use of the Premises is diminished. 28. CONDEMNATION If twenty-five percent (25%) or more of the Premises is condemned by eminent domain, inversely condemned or sold in lieu of condemnation for any public or quasi-public use or purpose ("Condemned"), then Tenant or Landlord may terminate this Lease as of the date when physical possession of the Premises is taken and title vests in such condemning authority, and Rent shall be adjusted to the date of termination. Tenant shall not because of such condemnation assert any claim against Landlord or the condemning authority for any compensation because of such condemnation, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate of interest or other interest of Tenant; provided, however, that Tenant shall be entitled to receive, or to prosecute a separate claim for, a condemnation award for a temporary taking of the Premises or a portion thereof by a condemnor where this Lease is not terminated (to the extent such award related to the unexpired Term), or an award or portion thereof separately designated for relocation and moving expenses or the interruption of or damage to Tenant's business or as compensation for Tenant's personal property, trade fixtures or alterations or for loss of goodwill provided such award is separate from Landlord's award and provided further such separate award does not diminish or impair the award otherwise payable to Landlord. If neither party elects to terminate this Lease, Landlord shall, if necessary, promptly proceed to restore the Premises or the Building to substantially its same condition prior to such partial condemnation, allowing for the reasonable effects of such partial condemnation, and a proportionate allowance shall be made to Tenant, as solely determined by Landlord, for the Rent corresponding to the time during which, and to the part of the Premises of which, Tenant is deprived on account of such partial condemnation and restoration. Landlord shall not be required to spend funds for restoration in excess of the amount received by Landlord as compensation awarded. 29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS 29.1 Hazardous Materials Disclosure Certificate: Prior to executing this Lease, Tenant has completed, executed and delivered to Landlord Tenant's initial Hazardous Materials Disclosure Certificate (the "Initial HazMat Certificate"), a copy of which is attached hereto as Exhibit G and incorporated herein by this --------- reference. Tenant covenants, represents and warrants to Landlord that the information on the Initial HazMat Certificate is true and correct and accurately describes the use(s) of Hazardous Materials which will be made and/or used on the Premises by Tenant. Tenant shall commencing with the date which is one year from the Commencement Date and continuing every year thereafter, complete, execute, and deliver to Landlord, a Hazardous Materials Disclosure Certificate ("the "HazMat Certificate") describing Tenant's present use of Hazardous Materials on the Premises, and any other reasonably necessary documents as requested by Landlord. The HazMat Certificate required hereunder shall be in substantially the form as that which is attached hereto as Exhibit E. ---------- 29.2 Definition of Hazardous Materials: As used in this Lease, the term Hazardous Materials shall mean and include (a) any hazardous or toxic wastes, materials or substances, and other pollutants or contaminants, which are or become regulated by any Environmental Laws; (b) petroleum, petroleum by products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos and asbestos containing material, in any form, whether friable or non-friable; (d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and lead- containing materials; (g) any other material, waste or substance displaying toxic, reactive, ignitable or corrosive characteristics, as all such terms are used in their broadest sense, and are defined or become defined by any Environmental Law (defined below); or (h) any materials which cause or threatens to cause a nuisance upon or waste to any portion of the Premises, the Building, the Lot, the Park or any surrounding property; or poses or threatens to pose a hazard to the health and safety of persons on the Premises or any surrounding property. 29.3 Prohibition; Environmental Laws: Tenant shall not be entitled to use nor store any Hazardous Materials on, in, or about the Premises, the Building, the Lot and the Park, or any portion of the foregoing, without, in each instance, obtaining Landlord's prior written consent thereto. If Landlord consents to any such usage or storage, then Tenant shall be permitted to use and/or store only those Hazardous Materials that are necessary for Tenant's business and to the extent disclosed in the HazMat Certificate and as expressly approved by Landlord in writing, provided that such usage and storage is only to the extent of the quantities of Hazardous Materials as specified in the then applicable HazMat Certificate as expressly approved by Landlord and provided further that such usage and storage is in full compliance with any and all local, state and federal environmental, health and/or safety-related laws, 22 statutes, orders, standards, courts' decisions, ordinances, rules and regulations (as interpreted by judicial and administrative decisions), decrees, directives, guidelines, permits or permit conditions, currently existing and as amended, enacted, issued or adopted in the future which are or become applicable to Tenant or all or any portion of the Premises (collectively, the "Environmental Laws"). Tenant agrees that any changes to the type and/or quantities of Hazardous Materials specified in the most recent HazMat Certificate may be implemented only with the prior written consent of Landlord, which consent may be given or withheld in Landlord's sole discretion. Tenant shall not be entitled nor permitted to install any tanks under, on or about the Premises for the storage of Hazardous Materials without the express written consent of Landlord, which may be given or withheld in Landlord's sole discretion. Landlord shall have the right at all times during the Term of this Lease to (i) inspect the Premises, (ii) conduct tests and investigations to determine whether Tenant is in compliance with the provisions of this Section 29, and (iii) request lists of all Hazardous Materials used, stored or otherwise located on, under or about any portion of the Premises and/or the Common Areas. The cost of all such inspections, tests and investigations shall be borne solely by Tenant, if Landlord reasonably determines that Tenant or any of Tenant's Representatives are directly or indirectly responsible in any manner for any contamination revealed by such inspections, tests and investigations. The aforementioned rights granted herein to Landlord and its representatives shall not create (a) a duty on Landlord's part to inspect, test, investigate, monitor or otherwise observe the Premises or the activities of Tenant and Tenant's Representatives with respect to Hazardous Materials, including without limitation, Tenant's operation, use and any remediation related thereto, or (b) liability on the part of Landlord and its representatives for Tenant's use, storage, disposal or remediation of Hazardous Materials, it being understood that Tenant shall be solely responsible for all liability in connection therewith. 29.4 Tenant's Environmental Obligations: Tenant shall give to Landlord immediate verbal and follow-up written notice of any spills, releases, discharges, disposals, emissions, migrations, removals or transportation of Hazardous Materials on, under or about any portion of the Premises or in any Common Areas. Tenant, at its sole cost and expense, covenants and warrants to promptly investigate, clean up, remove, restore and otherwise remediate (including, without limitation, preparation of any feasibility studies or reports and the performance of any and all closures) any spill, release, discharge, disposal, emission, migration or transportation of Hazardous Materials arising from or related to the intentional or negligent acts or omissions of Tenant or Tenant's Representatives such that the affected portions of the Park and any adjacent property are returned to the condition existing prior to the appearance of such Hazardous Materials. Any such investigation, clean up, removal, restoration and other remediation shall only be performed after Tenant has obtained Landlord's prior written consent, which consent shall not be unreasonably withheld so long as such actions would not potentially have a material adverse long-term or short-term effect on any portion of the Premises, the Building, the Lot or the Park. Notwithstanding the foregoing, Tenant shall be entitled to respond immediately to an emergency without first obtaining Landlord's prior written consent. Tenant, at its sole cost and expense, shall conduct and perform, or cause to be conducted and performed, all closures as required by any Environmental Laws or any agencies or other governmental authorities having jurisdiction thereof. If Tenant fails to so promptly investigate, clean up, remove, restore, provide closure or otherwise so remediate, Landlord may, but without obligation to do so, take any and all steps necessary to rectify the same and Tenant shall promptly reimburse Landlord, upon demand, for all costs and expenses to Landlord of performing investigation, clean up, removal, restoration, closure and remediation work. All such work undertaken by Tenant, as required herein, shall be performed in such a manner so as to enable Landlord to make full economic use of the Premises, the Building, the Lot and the Park after the satisfactory completion of such work. 29.5 Environmental Indemnity: In addition to Tenant's obligations as set forth hereinabove, Tenant and Tenant's officers and directors agree to, and shall, protect, indemnify, defend (with counsel acceptable to Landlord) and hold Landlord and the other Indemnitees harmless from and against any and all claims, judgments, damages, penalties, fines, liabilities, losses (including, without limitation, diminution in value of any portion of the Premises, the Building, the Lot or the Park, damages for the loss of or restriction on the use of rentable or usable space, and from any adverse impact of Landlord's marketing of any space within the Building and/or Park), suits, administrative proceedings and costs (including, but not limited to, attorneys' and consultant fees and court costs) arising at any time during or after the Term of this Lease in connection with or related to, directly or indirectly, the use, presence, transportation, storage, disposal, migration, removal, spill, release or discharge of Hazardous Materials on, in or about any portion of the Premises, the Common Areas, the Building, the Lot or the Park as a result (directly or indirectly) of the presence of storage, use, release or emission of Hazardous Materials by Tenant or any of Tenant's Representatives. The written consent of Landlord to the presence, use or storage of Hazardous Materials in, on, under or about any portion of the Premises, the Building, the Lot and/or the Park, or the strict compliance by Tenant with all Environmental Laws shall not excuse Tenant and Tenant's officers and directors from its obligations of indemnification pursuant hereto. Tenant shall not be relieved of its indemnification obligations under the provisions of this Section 29.5 due to Landlord's status as either an "owner" or "operator" under any Environmental Laws. 23 29.6 Survival: Tenant's obligations and liabilities pursuant to the provisions of this Section 29 shall survive the expiration or earlier termination of this Lease. If it is determined by Landlord that the condition of all or any portion of the Premises, the Building, the Lot and/or the Park is not in compliance with the provisions of this Lease with respect to Hazardous Materials, including without limitation all Environmental Laws at the expiration or earlier termination of this Lease, then in Landlord's sole discretion, Landlord may require Tenant to hold over possession of the Premises until Tenant can surrender the Premises to Landlord in the condition in which the Premises existed as of the Commencement Date and prior to the appearance of such Hazardous Materials except for reasonable wear and tear, including without limitation, the conduct or performance of any closures as required by any Environmental Laws. The burden of proof hereunder shall be upon Tenant. For purposes hereof, the term "reasonable wear and tear" shall not include any deterioration in the condition or diminution of the value of any portion of the Premises, the Building, the Lot and/or the Park in any manner whatsoever related to directly, or indirectly, Hazardous Materials. Any such holdover by Tenant will be with Landlord's consent, will not be terminable by Tenant in any event or circumstance and will otherwise be subject to the provisions of Section 22 of this Lease. This Section 29 constitutes the entire agreement of Landlord and Tenant regarding Hazardous Materials. No other provision of this Lease shall be deemed to apply thereto. 29.7 Disclosure: Pursuant to the provisions of California Health & Safety Code (S)25359.7 (as amended, supplemented and replaced from time to time), Landlord hereby discloses to Tenant that as of the Lease Date the Lot contains certain Hazardous Materials as such Hazardous Materials are more particularly described and set forth in that certain Phase I Environmental Site Assessment, dated December 1997, prepared by Brown and Caldwell (the "Environmental Report"). Landlord acknowledges and agrees that none of the environmental conditions or presence of Hazardous Materials on, in or under the Lot as described in the Environmental Report has been in any way caused by Tenant or any of Tenant's Representatives. Tenant hereby acknowledges and agrees as follows: (a) prior to executing this Lease a copy has been made available at Landlord's offices located at 2026 West Winton Avenue in Hayward, California for Tenant's review; (b) except for permissibly disclosing such information to its employees and invitees, to maintain the information contained therein strictly confidential and not to make or disseminate copies of such documents or the information contained therein to any party or person without first obtaining Landlord's written consent thereto, (c) not to disseminate or otherwise permit any employee, agent or other person over which Tenant has lawful authority to copy, publish or otherwise disseminate the Environmental Report or the information contained therein (except as may be lawfully compelled or otherwise required by valid rule, regulation or law); and (d) Landlord has made available to Tenant the Environmental Report for informational purposes only and Tenant may not rely upon the information contained in the Environmental Report unless and until Tenant obtains the environmental firms' written consent to such reliance thereon by Tenant. 29.8 Tenant's Exculpation. Tenant shall not be liable for nor otherwise --------------------- obligated to Landlord under any provision of the lease with respect to (i) any claim, remediation obligation, investigation obligation, liability, cause of action, attorney's fees, consultants' cost, expense or damage resulting from any Hazardous Material present in, on or about the Premises or any of the Buildings in the Park to the extent not caused nor otherwise permitted, directly or indirectly, by Tenant or Tenant's Representatives; or (ii) the removal, investigation, monitoring or remediation of any Hazardous Material present in, on or about the Premises, the Building or the Park caused by any source, including third parties other than Tenant and Tenant's Representatives, as a result of or in connection with the acts or omissions of persons other than Tenant or Tenant's Representatives; provided, however, Tenant shall be fully liable for and otherwise obligated to Landlord under the provisions of this Lease for all liabilities, costs, damages, penalties, claims judgments, expenses (including without limitation, attorneys' and experts' fees and costs) and losses to the extent (a) Tenant or any of Tenant's Representatives contributes to the presence of such Hazardous Materials or Tenant and/or any of Tenant's Representatives exacerbates the conditions caused by such Hazardous Materials, or (b) Tenant and/or Tenant's Representatives allows or permits persons over which Tenant or any of Tenant's Representatives has control and/or for which Tenant or any of Tenant's Representatives are legally responsible for, to cause such Hazardous Materials to be present in, on, under, through or about any portion of the Premises, the Building or the Park, or does not take a reasonably appropriate actions to prevent such persons over which Tenant or any of Tenant's Representatives has control and/or for which Tenant or any of Tenant's Representatives are legally responsible from causing the presence of Hazardous Materials in, on, under, through or about any portion of the Premises, the Building or the Park. 30. FINANCIAL STATEMENTS Tenant, for the reliance of Landlord, any lender holding or anticipated to acquire a lien upon the Premises, the Building or the Park or any portion thereof, or any prospective purchaser of the Building or the Park or any portion thereof, within ten (10) days after Landlord's request therefor, but not more often than once annually so long as Tenant is not in material default of this Lease, shall deliver to Landlord the 24 then current publicly available audited financial statements of Tenant (including interim periods following the end of the last fiscal year for which annual statements are available) which statements shall be prepared or compiled in accordance with generally accepted accounting principles and shall present fairly the financial condition of Tenant at such dates and the result of its operations and changes in its financial positions for the periods ended on such dates. If an audited financial statement has not been prepared, Tenant shall provide Landlord with an unaudited financial statement and/or such other information, the type and form of which are acceptable to Landlord in Landlord's reasonable discretion, which reflects the financial condition of Tenant. 31. GENERAL PROVISIONS 31.1 Time. Time is of the essence in this Lease and with respect to each and all of its provisions in which performance is a factor. 31.2 Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto. 31.3 Recordation. Tenant shall not record this Lease or a short form memorandum hereof without the prior written consent of the Landlord. 31.4 Landlord's Personal Liability. The liability of Landlord (which, for purposes of this Lease, shall include Landlord and the owner of the Building if other than Landlord) to Tenant for any default by Landlord under the terms of this Lease shall be limited to the actual interest of Landlord and its present or future partners or members in the Building, and Tenant agrees to look solely to the Building for satisfaction of any liability and shall not look to other assets of Landlord nor seek any recourse against the assets of the individual partners, members, directors, officers, shareholders, agents or employees of Landlord (including without limitation, any property management company of Landlord); it being intended that Landlord and the individual partners, members, directors, officers, shareholders, agents and employees of Landlord (including without limitation, any property management company of Landlord) shall not be personally liable in any manner whatsoever for any judgment or deficiency. The liability of Landlord under this Lease is limited to its actual period of ownership of title to the Building, and Landlord shall be automatically released from further performance under this Lease upon transfer of Landlord's interest in the Premises or the Building. 31.5 Separability. Any provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provisions hereof and such other provision shall remain in full force and effect. 31.6 Choice of Law. This Lease shall be governed by, and construed in accordance with, the laws of the State of California. 31.7 Attorneys' Fees. In the event any dispute between the parties results in litigation or other proceeding, the prevailing party shall be reimbursed by the party not prevailing for all reasonable costs and expenses, including, without limitation, reasonable attorneys' and experts' fees and costs incurred by the prevailing party in connection with such litigation or other proceeding, and any appeal thereof. Such costs, expenses and fees shall be included in and made a part of the judgment recovered by the prevailing party, if any. 31.8 Entire Agreement. This Lease supersedes any prior agreements, representations, negotiations or correspondence between the parties, and contains the entire agreement of the parties on matters covered. No other agreement, statement or promise made by any party, that is not in writing and signed by all parties to this Lease, shall be binding. 31.9 Warranty of Authority. Landlord and Tenant each represent and warrant that (1) the person executing this Lease on such party's behalf is duly and validly authorized to do so on behalf of the entity it purports to so bind, and (2) if such party is a partnership, corporation or trustee, that such partnership, corporation or trustee has full right and authority to enter into this Lease and perform all of its obligations hereunder. Tenant hereby warrants that this Lease is valid and binding upon Tenant and enforceable against Tenant. 31.10 Notices. Any and all notices and demands required or permitted to be given hereunder to Landlord shall be in writing and shall be sent: (a) by United States mail, certified and postage prepaid; or (b) by personal delivery; or (c) by overnight courier, addressed to Landlord at 101 Lincoln Centre Drive, Fourth Floor, Foster City, California 94404-1167. Any and all notices and demands required or permitted to be given hereunder to Tenant shall be in writing and shall be sent: (i) by United States mail, certified and postage prepaid; or (ii) by personal delivery to any employee or agent of Tenant over the age of eighteen (18) years of age; or (iii) by overnight courier, all of which shall be addressed to Tenant 25 at the address on the front page hereof. Notice and/or demand shall be deemed given upon the earlier of actual receipt or the third business day following deposit in the United States mail. Any notice or requirement of service required by any statute or law now or hereafter in effect, including, but not limited to, California Code of Civil Procedure Sections 1161, 1161.1, and 1162 (including any amendments, supplements or substitutions thereof), is hereby waived by Tenant. 31.11 Joint and Several. If Tenant consists of more than one person or entity, the obligations of all such persons or entities shall be joint and several. 31.12 Covenants and Conditions. Each provision to be performed by Tenant hereunder shall be deemed to be both a covenant and a condition. 31.13 Waiver of Jury Trial. The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way related to this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises, the Building or the Park, and/or any claim of injury, loss or damage. 31.14 Underlining. The use of underlining within the Lease is for Landlord's reference purposes only and no other meaning or emphasis is intended by this use, nor should any be inferred. 31.15 Merger. The voluntary or other surrender of this Lease by Tenant, the mutual termination or cancellation hereof by Landlord and Tenant, or a termination of this Lease by Landlord for a material default by Tenant hereunder, shall not work a merger, and, at the sole option of Landlord, (i) shall terminate all or any existing subleases or subtenancies, or (ii) may operate as an assignment to Landlord of any or all of such subleases or subtenancies. Landlord's election of either or both of the foregoing options shall be exercised by delivery by Landlord of written notice thereof to Tenant and all known subtenants under any sublease. 32. SIGNS Tenant shall have the right to share the signage with the occupant of the balance of the Building all signs and graphics of every kind visible in or from public view or corridors or the exterior of the Premises shall be subject to Landlord's prior written approval and shall be subject to any applicable governmental laws, ordinances, and regulations and in compliance with Landlord's sign criteria as same may exist from time to time or as set forth in Exhibit H hereto and made a part hereof. Tenant shall remove all such signs and graphics prior to the termination of this Lease. Such installations and removals shall be made in a manner as to avoid damage or defacement of the Premises; and Tenant shall repair any damage or defacement, including without limitation, discoloration caused by such installation or removal. Landlord shall have the right, at its option, to deduct from the Security Deposit such sums as are reasonably necessary to remove such signs, including, but not limited to, the costs and expenses associated with any repairs necessitated by such removal. Notwithstanding the foregoing, in no event shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall interfere with the visibility of any sign, awning, canopy, advertising matter, or decoration of any kind of any other business or occupant of the Building or the Park be permitted hereunder. Tenant further agrees to maintain any such sign, awning, canopy, advertising matter, lettering, decoration or other thing as may be approved in good condition and repair at all times. 33. MORTGAGEE PROTECTION Upon any default on the part of Landlord, Tenant will give written notice by registered or certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises who has provided Tenant with notice of their interest together with an address for receiving notice, and shall offer such beneficiary or mortgagee a reasonable opportunity to cure the default (which, in no event shall be less than ninety (90) days), including time to obtain possession of the Premises by power of sale or a judicial foreclosure, if such should prove necessary to effect a cure. If such default cannot be cured within such time period, then such additional time as may be necessary will be given to such beneficiary or mortgagee to effect such cure so long as such beneficiary or mortgagee has commenced the cure within the original time period and thereafter diligently pursues such cure to completion, in which event this Lease shall not be terminated while such cure is being diligently pursued. Tenant agrees that each lender to whom this Lease has been assigned by Landlord is an express third party beneficiary hereof. Tenant shall not make any prepayment of Rent more than one (1) month in advance without the prior written consent of each such lender, except if Tenant is required to make quarterly payments of Rent in advance pursuant to the provisions of Section 8 above. Tenant waives the collection of any deposit from such lender(s) or any purchaser at a foreclosure sale of such lender(s)' deed of trust unless the lender(s) or such purchaser shall have actually received and not refunded the deposit. Tenant agrees to make all payments under this Lease to the lender with the most senior encumbrance upon receiving a direction, in 26 writing, to pay said amounts to such lender. Tenant shall comply with such written direction to pay without determining whether an event of default exists under such lender's loan to Landlord. 34. QUITCLAIM Upon any termination of this Lease, Tenant shall, at Landlord's request, execute, have acknowledged and deliver to Landlord a quitclaim deed of Tenant's interest in and to the Premises. 35. MODIFICATIONS FOR LENDER If, in connection with obtaining financing for the Premises or any portion thereof, Landlord's lender shall request reasonable modification(s) to this Lease as a condition to such financing, Tenant shall not unreasonably withhold, delay or defer its consent thereto, provided such modifications do not materially adversely affect Tenant's rights hereunder or the use, occupancy or quiet enjoyment of Tenant hereunder or increase Tenant's obligations or decrease Tenant's rights hereunder. 36. WARRANTIES OF TENANT Tenant hereby warrants and represents to Landlord, for the express benefit of Landlord, that Tenant has undertaken an independent evaluation of the risks inherent in the execution of this Lease and the operation of the Premises for the use permitted hereby, and that, based upon said independent evaluation, Tenant has elected to enter into this Lease and except as expressly set forth herein hereby assumes all risks with respect thereto. Tenant hereby further warrants and represents to Landlord, for the express benefit of Landlord, that in entering into this Lease, Tenant has not relied upon any statement, fact, promise or representation (whether express or implied, written or oral) not specifically set forth herein in writing and that any statement, fact, promise or representation (whether express or implied, written or oral) made at any time to Tenant, which is not expressly incorporated herein in writing, is hereby waived by Tenant. 37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT Landlord and Tenant hereby agree and acknowledge that the Premises, the Building and/or the Park may be subject to the requirements of the Americans with Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III thereof, all regulations and guidelines related thereto, together with any and all laws, rules, regulations, ordinances, codes and statutes now or hereafter enacted by local or state agencies having jurisdiction thereof, including all requirements of Title 24 of the State of California, as the same may be in effect on the date of this Lease and may be hereafter modified, amended or supplemented (collectively, the "ADA"). Any Tenant Improvements to be constructed hereunder shall be in compliance with the requirements of the ADA, and all costs incurred for purposes of compliance therewith shall be a part of and included in the costs of the Tenant Improvements. Tenant shall be solely responsible for conducting its own independent investigation of this matter with respect to the condition of the Building, Tenant's use of the Premises and for all improvements to be made to the Premises after the actual Commencement Date other than the Tenant Improvements; provided, however, with respect to the Tenant Improvements Landlord shall be solely responsible for ensuring that the design of all Tenant Improvements strictly comply with all requirements of the ADA. Subject to reimbursement pursuant to Section 6 of the Lease, if any barrier removal work or other work is required to the Building, the Common Areas or the Park under the ADA, then such work shall be the responsibility of Landlord; provided, if such work is required under the ADA as a result of Tenant's particular use of the Premises or any work or alteration made to the Premises by or on behalf of Tenant (other than any initial improvements), then such work shall be performed by Landlord at the sole cost and expense of Tenant. Except as otherwise expressly provided in this provision, Tenant shall be responsible at its sole cost and expense for fully and faithfully complying with all applicable requirements of the ADA, including without limitation, not discriminating against any disabled persons in the operation of Tenant's business in or about the Premises, and offering or otherwise providing auxiliary aids and services as, and when, required by the ADA. Within ten (10) days after receipt, Landlord and Tenant shall advise the other party in writing, and provide the other with copies of (as applicable), any notices alleging violation of the ADA relating to any portion of the Premises or the Building; any claims made or threatened in writing regarding noncompliance with the ADA and relating to any portion of the Premises or the Building; or any governmental or regulatory actions or investigations instituted or threatened regarding noncompliance with the ADA and relating to any portion of the Premises or the Building. Tenant shall and hereby agrees to protect, defend (with counsel acceptable, to Landlord) and hold Landlord and the other Indemnitees harmless and indemnify the Indemnitees from and against all liabilities, damages, claims, losses, penalties, judgments, charges and expenses (including reasonable attorneys' fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly, Tenant's or Tenant's Representatives violation or alleged violation of the 27 ADA. Tenant agrees that the obligations of Tenant herein shall survive the expiration or earlier termination of this Lease. 38. BROKERAGE COMMISSION Landlord and Tenant each represents and warrants for the benefit of the other that it has had no dealings with any real estate broker, agent or finder in connection with the Premises and/or the negotiation of this Lease, except for the Broker(s) (as set forth on Page 1), and that it knows of no other real estate broker, agent or finder who is or might be entitled to a real estate brokerage commission or finder's fee in connection with this Lease or otherwise based upon contacts between the claimant and Tenant. Each party shall indemnify and hold harmless the other from and against any and all liabilities or expenses arising out of claims made for a fee or commission by any real estate broker, agent or finder in connection with the Premises and this Lease other than Broker(s), if any, resulting from the actions of the indemnifying party. Any real estate brokerage commission or finder's fee payable to the Broker(s) in connection with this Lease shall only be payable and applicable to the extent of the initial Term of the Lease and to the extent of the Premises as same exist as of the date on which Tenant executes this Lease. Unless expressly agreed to in writing by Landlord and Broker(s), no real estate brokerage commission or finder's fee shall be owed to, or otherwise payable to, the Broker(s) for any renewals or other extensions of the initial Term of this Lease or for any additional space leased by Tenant other than the Premises as same exists as of the date on which Tenant executes this Lease. Tenant further represents and warrants to Landlord that Tenant will not receive (i) any portion of any brokerage commission or finder's fee payable to the Broker(s) in connection with this Lease or (ii) any other form of compensation or incentive from the Broker(s) with respect to this Lease. 39. QUIET ENJOYMENT Landlord covenants with Tenant, upon the paying of Rent and observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, and during the periods that Tenant is not otherwise in default of any of the terms or provisions of this Lease, and subject to the rights of any of Landlord's lenders, (i) that Tenant shall and may peaceably and quietly hold, occupy and enjoy the Premises and the Common Areas during the Term of this Lease, and (ii) neither Landlord, nor any successor or assign of Landlord, shall disturb Tenant's occupancy or enjoyment of the Premises and the Common Areas. 40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS Notwithstanding anything to the contrary contained in this Lease, if Tenant shall fail to perform any of the terms, provisions, covenants or conditions to be performed or complied with by Tenant pursuant to this Lease within the applicable cure periods, and/or if the failure of Tenant relates to a matter which in Landlord's judgment reasonably exercised is of an emergency nature and such failure shall remain uncured for a period of time commensurate with such emergency, then Landlord may, at Landlord's option without any obligation to do so, and in its sole discretion as to the necessity therefor, perform any such term, provision, covenant, or condition, or make any such payment and Landlord by reason of so doing shall not be liable or responsible for any loss or damage thereby sustained by Tenant or anyone holding under or through Tenant. If Landlord so performs any of Tenant's obligations hereunder, the full amount of the cost and expense entailed or the payment so made or the amount of the loss so sustained shall immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon demand, as Additional Rent, the full amount thereof with interest thereon from the date of payment at the greater of (i) ten percent (10%) per annum, or (ii) the highest rate permitted by applicable law and Enforcement Expenses. 41. TENANT'S EARLY TERMINATION OPTION: 41.1 Termination Date: Tenant shall have a one-time option (the "Termination Option") to terminate this Lease, effective as of the 37/th/ month of the Lease Term (the "Termination Date"). The Termination Option is granted subject to the following terms and conditions: 41.1.1 Notice: Tenant delivers to Landlord written notice of Tenant's election to exercise the Termination Option, which notice is given no later than nine (9) full calendar months prior to the Termination Date; and 41.1.2 No Default: Tenant is not then in default under this Lease beyond any applicable cure periods either on the date that Tenant exercises the Termination Option, or unless waived in writing by Landlord, on the Termination Date; and 41.1.3 Termination Fee: Tenant pays to Landlord on the 30th month of the Lease Term, a cash lease termination fee (the "Fee") equal to two hundred six thousand eight hundred ninety-five and 00/100 dollars ($206,895.00). 28 41.2 Terms: If Tenant timely and properly exercises the Termination Option, (i) all rent payable under this Lease shall be paid through and apportioned as of the Termination Date (in addition to payment by Tenant of the Fee); (ii) neither party shall have any rights, estates, liabilities, or obligations under this Lease for the period accruing after the Termination Date, except those which by the provisions of this Lease, expressly survive the expiration or termination of the Term of this Lease; (iii) Tenant shall surrender and vacate the Premises and deliver possession thereof to Landlord on or before the Termination Date in the condition required under this Lease for surrender of the Premises; and (iv) Landlord and Tenant shall enter into a written agreement reflecting the termination of this Lease upon the terms provided for herein, which agreement shall be executed within thirty (30) days after Tenant exercises the Termination Option and delivers to Landlord the written notice required above. It is the parties' intention that nothing contained herein shall impair, diminish or otherwise prevent Landlord from recovering from Tenant such additional sums as may be necessary for payment of Tenant's Share of the Operating Expenses, Tax Expenses, Common Area Utility Costs, Utility Expenses, Administrative Charges and any other sums due and payable under this Lease allocated to any period prior to the Termination Date, including, any sums required to repair any damage to the Premises and/or restore the Premises to the condition required under the provisions of this Lease. 41.3 Termination: The Termination Option shall automatically terminate and become null and void upon the earlier to occur of (i) the breach or default by Tenant of any of the terms of this Lease beyond any applicable cure periods either on the date that tenant exercises the Termination Option, or unless waived in writing by Landlord, on the Termination Date; (ii) Landlord or Tenant's the termination of Tenant's right to possession of the Premises under the provisions of this Lease; or (iii) the failure of Tenant to timely or properly exercise the Termination option as contemplated herein. This Termination Option is personal to Tenant and may not be assigned voluntarily, separate from or as part of the Lease, except to a Related Entity. IN WITNESS WHEREOF, this Lease is executed by duly authorized signatories of the parties as of the Lease Date referenced on Page 1 of this Lease. TENANT: NetFlix.Com, a Delaware corporation By: ----------------------- Its: CFO & Secretary ----------------------- Date: 10/8/99 ----------------------- By: ----------------------- Its: Secretary ----------------------- Date: ----------------------- LANDLORD: LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company By: LEGACY PARTNERS COMMERCIAL, INC. as manager and agent for Lincoln-RECP Old Oakland OPCO, LLC By: --------------------- Senior Vice President Date: ------------------- If Tenant is a CORPORATION, the authorized officers must sign on behalf of the ----------- corporation and indicate the capacity in which they are signing. The Lease must be executed by the president or vice-president and the secretary or assistant ---- secretary, unless the bylaws or a resolution of the board of directors shall ------- otherwise provide, in which event, the bylaws or a certified copy of the resolution, as the case may be, must be attached to this Lease. 29 EXHIBIT A PREMISES This exhibit, entitled "Premises", is and shall constitute EXHIBIT A to that certain Lease Agreement dated August 11, 1999 (the "Lease"), by and between LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company ("Landlord") and NetFlix.com, a Delaware corporation ("Tenant") for the leasing of certain premises located at 2219 Old Oakland Road, San Jose, California (the "Premises"). The Premises consist of the rentable square footage of space specified in the Basic Lease Information and has the address specified in the Basic Lease Information. The Premises are a part of and are contained in the Building specified in the Basic Lease Information. The non cross-hatched area depicts the Premises within the [Building, Project]: 30 EXHIBIT B TO LEASE AGREEMENT TENANT IMPROVEMENTS This exhibit, entitled "Tenant Improvements", is and shall constitute EXHIBIT B --------- to that certain Lease Agreement dated August 11, 1999 (the "Lease"), by and between LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company ("Landlord") and NetFlix.com, a Delaware corporation ("Tenant") for the leasing of certain premises located at 2219 Old Oakland Road, San Jose, California (the "Premises"). The terms, conditions and provisions of this EXHIBIT B are hereby --------- incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease: 1. Tenant Improvements. Subject to the conditions set forth below, Landlord -------------------- agrees to construct and install at its sole cost and expense certain improvements ("Tenant Improvements") in the Building of which the Premises are a part in accordance with Section 2 below and pursuant to the terms of this EXHIBIT B. --------- 2. Definition. "Tenant Improvements" as used in this Lease shall include only ---------- those portions of the Building which are described below. "Tenant Improvements" shall specifically not include any alterations, additions or improvements installed or constructed by Tenant, and any of Tenant's trade fixtures, equipment, furniture, furnishings, telephone equipment or other personal property (collectively, "Personal Property"). The Tenant Improvements shall include only those improvements as specified in this Section 2 below and made a part hereof. Such work, as set forth below and as shown in the Initial Plans shall be hereinafter referred to as the "Work". Landlord shall not be obligated to pay for any improvements which are not expressly set forth herein below. The Tenant Improvements shall consist of the following Work as described more fully on Exhibit B-2 hereto: (a) Install full floor to roof joist demising wall and separately metered PG&E. (b) Remove wall partitions in former restroom area and install 12' of upper and 12' of lower cabinets, kitchenette sink and outlets for microwave and refrigerator. (c) Install exterior lighting in shipping and receiving area which will be operational on a 24-hour, 7 days per week basis. 3. Tenant Improvement Costs. The "Tenant Improvements" cost (Tenant ------------------------- Improvement Costs") shall mean and include any and all costs and expenses of the Work, including, without limitation, all of the following: (a) All costs of preliminary space planning and final architectural and engineering plans and specifications (including, without limitation, the scope of work, all plans and specifications, the Initial Plans and the Final Drawings) for the Tenant Improvements, and architectural fees, engineering costs and fees, and other costs associated with completion of said plans; (b) All costs of obtaining building permits and other necessary authorizations and approvals from the City of San Jose and other applicable jurisdictions; (c) All costs of interior design and finish schedule plans and specifications including as-built drawings; (d) All direct and indirect costs or procuring, constructing and installing the Tenant Improvements in the Premises, including, but not limited to, the construction fee for overhead and profit, the cost of all on-site supervisory and administrative staff, office, equipment and temporary services rendered by Landlord's consultants and the General Contractor in connection with construction of the Tenant Improvements, and all labor (including overtime) and materials constituting the Work; (e) All fees payable to the General Contractor, architect and Landlord's engineering firm if they are required by Tenant to redesign any portion of the Tenant Improvements following Tenant's approval of the Final Drawings; and (f) A construction management fee payable to Landlord in the amount of five percent (5%) of all direct and indirect costs of procuring, constructing and installing the Tenant Improvements in the Premises and the Building. 4. Building Standard Work. Landlord shall provide that the Tenant Improvements ----------------------- be at least equal, in quality, to Landlord's building standard materials, quantities and procedures then in use by Landlord ("Building Standards") attached hereto as Exhibit B-I, and shall consist of improvements which are generic in nature. Landlord shall obtain all government approvals of the Work to the full extent necessary for the issuance of a building permit for the Tenant Improvements. Such Tenant Improvements shall be constructed in a good and workmanlike manner, free of defects and using new 1 materials and equipment of good quality. Tenant shall have the right to submit a written "punch list" to Landlord, setting forth any defective item of construction, and Landlord shall promptly cause such items to be corrected. Tenant's acceptance of the Premises or submission of a "punch list" shall not be deemed a waiver of Tenant's right to have defects in the Tenant Improvements or the Premises repaired at no cost to Tenant. Tenant shall give notice to Landlord, within the first year of the Lease Term, whenever any such defect becomes reasonably apparent, and Landlord shall repair such defect as soon as practicable. 5. Landlord shall not be obligated to pay for any Tenant Improvements which are not specifically set forth in Section 2 above or in Exhibit B-1. 6. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar -------------------------- as they are applicable, in whole or in part, to this EXHIBIT B, are hereby --------- incorporated herein by reference, and specifically including all of the provisions of Section 31 of the Lease. In the event of any conflict between the terms of the Lease and this EXHIBIT B, the terms of this EXHIBIT B shall --------- ---------- prevail. 2 EXHIBIT B-1 BUILDING STANDARDS OUTLINE SPECIFICATION FOR NEW OFFICE BUILD-OUT IN R&D BUILDINGS OFFICE AREA ----------- DEMISING PARTITION AND CORRIDOR WALLS: Note: One hr. rated walls where required based on occupancy group. A. 6" 20-gage metal studs at 24" O.C. (or as required by code based on roof height) framed full height from finish floor to surface above. B. One (1) layer 5/8" drywall Type "X" both sides of wall, fire taped only. INTERIOR PARTITIONS: A. 3-5/8" 25-gage metal studs at 24" O.C. to bottom of T-Bar ceiling grid approximately 9' 0" high. B. One (1) layer 5/8" drywall both sides of wall, smooth ready for paint. C. 3-5/8" metal studs including all lateral bracing as required by code. PERIMETER DRYWALL (AT OFFICE AREAS): A. 3-5/8" metal studs @ 24" O.C. to 12' 0" above finished floor. (or as required by Title-24 for full height envelope then use demising wall spec.) B. One (1) layer 5/8" Type "X" drywall taped smooth and ready for paint. COLUMN FURRING: A. Furring channel all sides of 2-1/2" metal studs per details. B. One (1) layer 5/8" drywall taped smooth and ready for paint. C. Columns within walls shall be furred-out. ACOUSTICAL CEILINGS: Note Gyp. Bd. ceiling at all restrooms Typ. A. 2' x 4' standard white T-Bar grid system as manufactured by Chicago Metallic of equal. B. 2' x 4' x 5/8" white, no-directional acoustical tile to be regular second look as manufactured by Armstrong or equal. PAINTING: A. Sheetrock walls within office to receive two (2) coats of interior latex paint as manufactured by Kelly Moore or equal. Some portions of second coat to be single accent color. B. Semi-gloss paint all restrooms and lunch rooms. WINDOW COVERING: A. 1" aluminum mini-blinds as manufactured by Levelor, Bali or equal, color to be selected by Legacy Partners Commercial, Inc. (brushed aluminum or white). B. Blinds to be sized to fit window module. 1 VCT: ---- A. VCT to be l/8" x 12" x 12" as manufactured by Armstrong - Excelon Series or equal. B. Slabs shall be water proofed per manufacturer recommendations, at sheet vinyl or VCT areas. LIGHT FIXTURES: A. 2" x 4" T-bar lay in 3-tube energy efficient fixture with cool white fluorescent tubes with parabolic lens as manufactured by Lithonia or equal. (Approximately 50 F.C,) LIGHT SWITCHES: A. Switching as required by Title 24. B. Switch assembly to be Levinton or equal, color - White ELECTRICAL OUTLET: A. 110V duplex outlet in demising or interior partitions only, as manufactured by Leviton or equal, color to be White. B. Maximum eight (8) outlets per circuit, spacing to meet code or minimum 2 per office, conference room, reception and 2 dedicated over cabinet at lunch room junction boxes above ceiling for large open area with furniture partitions. C. Transformers to be a minimum of 20% or over required capacity. D. Contractors to inspect electric room and to include all necessary metering cost. E. No aluminum wiring is acceptable. TELEPHONE/DATA OUTLET: A. One (1) single outlet box in wall with pullwire from outlet box to area above T-bar ceiling per office. B. Cover plate for phone outlets by telephone/data vendors. FIRE SPRINKLERS: As required by fire codes. TOPSET BASE: A. 4" rubber base as manufactured by Burke or equal, standard colors only. B. 4" rubber base at VCT areas. TOILET AREAS: Wet walls to receive Durabond or Wonder Board and ceramic tile up to 48". Floors to receive ceramic tile with self coved base as required by code. CARPET: Note any of the following carpets are acceptable Designweave: Alumni 28 oz., Windswept Classic 30 oz. or Stratton Design Series III 30 oz, Structure II 28 oz. WOOD DOORS: Shall be 3' 0" x 9' 0" x 1-3/4" (unless otherwise specified) solid core, prefinished harmony (rotary N. birch). 2 DOOR FRAMES: Shall be ACI or equal, 3-3/4" or 4-7/8" throat, brushed, standard aluminum, snap-on trim. HARDWARE: 1-1/2 pr. butts F179 Stanley, Latchset D10S Rhodes Schlage, Lockset D53PD Rhodes Schlage, Dome Type floor stop Gylnn Johnson FB 13, Closer 4110LCN (where required) brushed chrome. INSULATION: By Title 24 insulation. PLUMBING: A. Shall comply with all local codes and handicapped code requirements. Fixtures shall be either "American Standard", "Kohler" or "Norris". All toilet accessories and grab bars shall be "Bobrick" or equal and approved by owner. B. Plumbing bid shall include 5 gallon minimum hot water heater, or insta hot with mixer valve including all connections. TOILET PARTITIONS: Shall be as manufactured by Fiat, global or equal if approved by owner. Color to be white or gray. HVAC: HVAC units per specifications. Five (5) year warranty provided on all HVAC compressor units. All penetrations including curbs and sleepers to be hot moped to Legacy Partners Commercial, Inc. standard. WAREHOUSE AREAS: Floor - seal concrete with water base clear acrylic sealer. Fire extinguishers - 2A 10 BC surface mount by code x by S.F. 400 W metal halide lighting at warehouse minimum 5-7 foot candles. Note. All high pile storage requirements are excluded for standard building. T.I. 3 EXHIBIT B-2 TENANT IMPROVEMENTS The floor plan below shows the Work to be provided by Landlord pursuant to Section 2 of this Exhibit B of the Lease. EXHIBIT C TO LEASE AGREEMENT RULES & REGULATIONS This exhibit, entitled "Rules & Regulations", is and shall constitute EXHIBIT C --------- to that certain Lease Agreement dated August 11, 1999 (the "Lease"), by and between LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company ("Landlord") and NetFlix.com, a Delaware corporation ("Tenant") for the leasing of certain premises located at 2219 Old Oakland Road, San Jose, California (the "Premises"). The terms, conditions and provisions of this EXHIBIT C are hereby --------- incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease: 1. No advertisement, picture or sign of any sort shall be displayed on or outside the Premises or the Building without the prior written consent of Landlord. Landlord shall have the right to remove any such unapproved item without notice and at Tenant's expense. 2. Tenant shall not regularly park motor vehicles in designated parking areas after the conclusion of normal daily business activity. 3. Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord without the prior written consent of Landlord. 4. All window coverings installed by Tenant and visible from the outside of the Building require the prior written approval of Landlord. 5. Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance or any flammable or combustible materials on or around the Premises, the Building or the Park. 6. Tenant shall not alter any lock or install any new locks or bolts on any door at the Premises without the prior consent of Landlord. 7. Tenant agrees not to make any duplicate keys without the prior consent of Landlord. 8. Tenant shall park motor vehicles in those general parking areas as designated by Landlord except for loading and unloading. During those periods of loading and unloading, Tenant shall not unreasonably interfere with traffic flow within the Park and loading and unloading areas of other Tenants. 9. Tenant shall not disturb, solicit or canvas any occupant of the Building or Park and shall cooperate to prevent same. 10. No person shall go on the roof without Landlord's permission. 11. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building, to such a degree as to be objectionable to Landlord or other Tenants, shall be placed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. 12. All goods, including material used to store goods, delivered to the Premises of Tenant shall be immediately moved into the Premises and shall not be left in parking or receiving areas overnight. 13. Tractor trailers which must be unhooked or parked with dolly wheels beyond the concrete loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the asphalt paving surfaces. No parking or storing of such trailers will be permitted in the auto parking areas of the Park or on streets adjacent thereto. 14. Forklifts which operate on asphalt paving areas shall not have solid rubber tires and shall only use tires that do not damage the asphalt. 15. Tenant is responsible for the storage and removal of all trash and refuse. All such trash and refuse shall be contained in suitable receptacles stored behind screened enclosures at locations approved by Landlord. 1 16. Tenant shall not store or permit the storage or placement of goods, or merchandise or pallets or equipment of any sort in or around the Premises, the Building, the Park or any of the Common Areas of the foregoing. No displays or sales of merchandise shall be allowed in the parking lots or other Common Areas. 17. Tenant shall not permit any animals, including, but not limited to, any household pets, to be brought or kept in or about the Premises, the building, the Park or any of the Common Areas of the foregoing. 18. Tenant shall not permit any motor vehicles to be washed on any portion of the Premises or in the Common Areas of the Park, nor shall Tenant permit mechanical work or maintenance of motor vehicles to be performed on any portion of the Premises or in the Common Areas of the Park. 2 EXHIBIT E HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for the Landlord (identified below) to evaluate and finalize a lease agreement with you as Tenant. After a lease agreement is signed by you and the Landlord (the "Lease Agreement"), on an annual basis in accordance with the provisions of Section 29 of the signed Lease Agreement, you are to provide an update to the information initially provided by you in this certificate. The information contained in the initial Hazardous Materials Disclosure Certificate and each annual certificate provided by you thereafter will be maintained in confidentiality by Landlord subject to release and disclosure as required by (i) any lenders and owners and their respective environmental consultants, (ii) any prospective purchaser(s) of all or any portion of the property on which the Premises are located, (iii) Landlord to defend itself or its lenders, partners or representatives against any claim or demand, and (iv) any laws, rules, regulations, orders, decrees, or ordinances, including, without limitation, court orders or subpoenas. Any and all capitalized terms used herein, which are not otherwise defined herein, shall have the same meaning ascribed to such term in the signed Lease Agreement. Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to: Landlord: ------------------------------------------------------------------- ------------------------------------------------------------------- c/o Legacy Partners Commercial, Inc. 101 Lincoln Centre Drive, Fourth Floor Foster City, California 94404 Attn: ------------------------------------------------------------- Phone: (650) 571-2200 Name of (Prospective) Tenant: ----------------------------------------------- Mailing Address: ------------------------------------------------------------ Contact Person, Title and Telephone Number(s): ------------------------------ Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s): -------------------------------------------------------- ---------------------------------------------------------------------------- Address of (Prospective) Premises: ------------------------------------------ Length of (Prospective) Initial Term: --------------------------------------- ---------------------------------------------------------------------------- 1. General Information: Describe the initial proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled services and activities to be provided or otherwise conducted. Existing Tenants should describe any proposed changes to on-going operations. ------------------------------------------------------------------------ ------------------------------------------------------------------------ 2. Use, Storage and Disposal of Hazardous Materials 2.1 Will any Hazardous Materials be used, generated, stored or disposed of in, on or about the Premises? Existing Tenants should describe any Hazardous Materials which continue to be used, generated, stored or disposed of in, on or about the Premises. Wastes Yes [ ] No [ ] Chemical Products Yes [ ] No [ ] Other Yes [ ] No [ ] If Yes is marked, please explain: -------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- 2.2 If Yes is markedinSection 2.1, attach a list of any Hazardous Materials to be used, generated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities o[ such Hazardous Materials at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial Supplies which are not regulated by any Environmental Laws); and the proposed location(s) and method of disposal for each Hazardous Material, including, the estimated frequency, and the proposed contractors or subcontractors. Existing Tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such in information from the prior year's certificate. 3. Storage Tanks and Sumps 3.1 Is any above or below ground storage of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing Tenants should describe any such actual or proposed activities. Yes [ ] No [ ] If Yes, please explain: ------------------------------------------------ ----------------------------------------------------------------------- ----------------------------------------------------------------------- 4. Waste Management 4.1 Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing Tenants should describe any additional identification numbers issued since the previous certificate. Yes [ ] No [ ] 4.2 Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing Tenants should describe any new reports filed. Yes [ ] No [ ] If yes, attach a copy of the most recent report filed. 5. Wastewater Treatment and Discharge 5.1 Will your company discharge wastewater or other wastes to: storm drain? sewer? ----- ----- surface water? no wastewater or other wastes discharged. ----- -----
Existing Tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s). ------------------------------------------------------------------ ------------------------------------------------------------------ 5.2 Will any such wastewater or waste be treated before discharge? Yes[ ] No[ ] If yes, describe the type of treatment proposed to be conducted. Existing Tenants should describe the actual treatment conducted. ------------------------------------------------------------------ ------------------------------------------------------------------ 6. Air Discharges 6.1 Do you plan for any air filtration systems or stacks to be used in your company's operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored? Existing Tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored. 2 Yes [ ] No [ ] If yes, please describe: --------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- 6.2 Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing Tenants should specify any such equipment being operated in, on or about the Premises. Spray booth(s) Incinerator(s) ----- ----- Dip tank(s) Other (Please describe) ----- ----- Drying oven(s) No Equipment Requiring Air Permits ----- -----
If yes, please describe: ------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ 7. Hazardous Materials Disclosures 7.1 Has your company prepared or will it be required to prepare a Hazardous Materials management plan ("Management Plan") pursuant to Fire Department or other governmental or regulatory agencies' requirements? Existing Tenants should indicate whether or not a Management Plan is required and has been prepared. Yes [ ] No [ ] If yes, attach a copy of the Management Plan. Existing Tenants should attach a copy of any required updates to the Management Plan. 7.2 Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Premises regulated under Proposition 65? Existing Tenants should indicate whether or not there are any new Hazardous Materials being so used which are regulated under Proposition 65. Yes [ ] No [ ] If yes, please explain: ------------------------------------------- ------------------------------------------------------------------ ------------------------------------------------------------------ 8. Enforcement Actions and Complaints 8.1 With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations? Existing Tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received. Yes [ ] No [ ] If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing Tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Section 29 of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 8.2 Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns? Yes [ ] No [ ] 3 If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and all other documents related thereto as requested by Landlord. Existing Tenants should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Section 29 of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 8.3 Have there been any problems or complaints from adjacent Tenants, owners or other neighbors at your company's current facility with regard to environmental or health and safety concerns? Existing Tenants should indicate whether or not there have been any such problems or complaints from adjacent Tenants, owners or other neighbors at, about or near the Premises. Yes [ ] No [ ] If yes, please describe. Existing Tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 9. Permits and Licenses 9.1 Attach copies of all Hazardous Materials permits and licenses including a Transporter Permit number issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any wastewater discharge permits, air emissions permits, and use permits or approvals. Existing Tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued. The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials Disclosure Certificate is being delivered in connection with, and as required by, Landlord in connection with the evaluation and finalization of a Lease Agreement and will be attached thereto as an exhibit; (B) that this Hazardous Materials Disclosure Certificate is being delivered in accordance with, and as required by, the provisions of Section 29 of the Lease Agreement; and (C) that Tenant shall have and retain full and complete responsibility and liability with respect to any of the Hazardous Materials disclosed in the HazMat Certificate notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate. Tenant further agrees that none of the following described acts or events shall be construed or otherwise interpreted as either (a) excusing, diminishing or otherwise limiting Tenant from the requirement to fully and faithfully perform its obligations under the Lease with respect to Hazardous Materials, including, without limitation, Tenant's indemnification of the Indemnitees and compliance with all Environmental Laws, or (b) imposing upon Landlord, directly or indirectly, any duty or liability with respect to any such Hazardous Materials, including, without limitation, any duty on Landlord to investigate or otherwise verify the accuracy of the representations and statements made therein or to ensure that Tenant is in compliance with all Environmental Laws; (i) the delivery of such certificate to Landlord and/or Landlord's acceptance of such certificate, (ii) Landlord's review and approval of such certificate, (iii) Landlord's failure to obtain such certificate from Tenant at any time, or (iv) Landlord's actual or constructive knowledge of the types and quantities of Hazardous Materials being used, stored, generated, disposed of or transported on or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the foregoing or anything to the contrary contained herein, the undersigned acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease Agreement and the continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement. I (print name) , acting with full authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and warrant that the information contained in this certificate is true and correct. (Prospective) Tenant: By: ---------------------------------------- Title: ------------------------------------- Date: -------------------------------------- 4 EXHIBIT F FIRST AMENDMENT TO LEASE AGREEMENT CHANGE OF COMMENCEMENT DATE This First Amendment to Lease Agreement (the "Amendment") is made and entered into to be effective as of __________, by and between _______________________ ("Landlord"), and ____________________________ ("Tenant"), with reference to the following facts: RECITALS A. Landlord and Tenant have entered into that certain Lease Agreement dated _____________ (the "Lease"), for the leasing of certain premises containing approximately _________________ rentable square feet of space located at _________, California (the "Premises") as such Premises are more fully described in the Lease. B. Landlord and Tenant wish to amend the Commencement Date of the Lease. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 1. Recitals: Landlord and Tenant agree that the above recitals are true -------- and correct. 2. The Commencement Date of the Lease shall be ______________. 3. The last day of the Term of the Lease (the "Expiration Date") shall be _______________. 4. The dates on which the Base Rent will be adjusted are: for the period ________ to __________ the monthly Base Rent shall be $ ______________; for the period ________ to __________ the monthly Base Rent shall be $ ______________; and for the period ________ to __________ the monthly Base Rent shall be $ ______________.
5. Effect of Amendment: Except as modified herein, the terms and ------------------- conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail. 6. Definitions: Unless otherwise defined in this Amendment, all terms not ----------- defined in this. Amendment shall have the meaning set forth in the Lease. 7. Authority: Subject to the provisions of the Lease, this Amendment shall --------- be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party's behalf is authorized to do so and to bind such party to the terms of this Amendment. 8. The terms and provisions of the Lease are hereby incorporated in this Amendment. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written. [PROPERTY MANAGER: Please provide Tenant information and Word Processing will complete the signature block] EXHIBIT G TENANT's INITIAL HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for the Landlord (identified below) to evaluate and finalize a lease agreement with you as Tenant. After a lease agreement is signed by you and the Landlord (the "Lease Agreement"), on an annual basis in accordance with the provisions of Section 29 of the signed Lease Agreement, you are to provide an update to the information initially provided by you in this certificate. The information contained in the initial Hazardous Materials Disclosure Certificate and each annual certificate provided by you thereafter will be maintained in confidentiality by Landlord subject to release and disclosure as required by (i) any lenders and owners and their respective environmental consultants, (ii) any prospective purchaser(s) of all or any portion of the property on which the Premises are located, (iii) Landlord to defend itself or its lenders, partners or representatives against any claim or demand, and (iv) any laws, rules, regulations, orders, decrees, or ordinances, including, without limitation, court orders or subpoenas. Any and all capitalized terms used herein, which are not otherwise defined herein, shall have the same meaning ascribed to such term in the signed Lease Agreement. Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to: Landlord: ------------------------------------------------------------------ ------------------------------------------------------------------ c/o Legacy Partners Commercial, Inc. 101 Lincoln Centre Drive, Fourth Floor Foster City, California 94404 Attn: ------------------------------------------------------------- Phone: (650) 571-2200 Name of (Prospective) Tenant: ----------------------------------------------- Mailing Address: ------------------------------------------------------------ ---------------------------------------------------------------------------- Contact Person, Title and Telephone Number(s): ------------------------------ Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s): ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Address of (Prospective) Premises: ------------------------------------------ Length of (Prospective) Initial Term: --------------------------------------- ---------------------------------------------------------------------------- 1. General Information: Describe the initial proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled services and activities to be provided or otherwise conducted. Existing Tenants should describe any proposed changes to on-going operations. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 2. Use, Storage and Disposal of Hazardous Materials 2.1 Will any Hazardous Materials bc used, generated, stored or disposed of in, on or about the Premises? Existing Tenants should describe any Hazardous Materials which continue to be used, generated, stored or disposed of in, on or about the Premises. Wastes Yes [ ] No [ ] Chemical Products Yes [ ] No [ ] Other Yes [ ] No [ ] If Yes is marked, please explain: -------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- 1 2.2 If Yes is marked in Section 2.1. attach a list of any Hazardous Materials to be used, generated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities of such Hazardous Materials at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not regulated by any Environmental Laws); and the proposed location(s) and method of disposal for each Hazardous Material, including, the estimated frequency, and the proposed contractors or subcontractors. Existing Tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year's certificate. 3. Storage Tanks and Sumps 3.1 Is any above or below ground storage of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing Tenants should describe any such actual or proposed activities. Yes [ ] No [ ] If yes, please explain: ------------------------------------------- ------------------------------------------------------------------ ------------------------------------------------------------------ 4. Waste Management 4.1 Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing Tenants should describe any additional identification numbers issued since the previous certificate. Yes [ ] No [ ] 4.2 Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing Tenants should describe any new reports filed. Yes [ ] No [ ] If yes, attach a copy of the most recent report filed. 5. Wastewater Treatment and Discharge 5.1 Will your company discharge wastewater or other wastes to: storm drain? sewer? ---- ---- surface water? no wastewater or other wastes discharged. ---- ----
Existing Tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s). ------------------------------------------------------------------ ------------------------------------------------------------------ 5.2 Will any such wastewater or waste be treated before discharge? Yes [ ] No [ ] If yes, describe the type of treatment proposed to be conducted. Existing Tenants should describe the actual treatment conducted. ------------------------------------------------------------------ ------------------------------------------------------------------ 6. Air Discharges 6.1 Do you plan for any air filtration systems or stacks to be used in your company's operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored? Existing Tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored. 2 Yes[ ] No[ ] If yes, please describe: ------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ 6.2 Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing Tenants should specify any such equipment being operated in, on or about the Premises. Spray booth(s) Incinerator(s) ---- ---- Dip tank(s) Other (Please describe) ---- ---- Drying oven(s) No Equipment Requiring Air Permits ---- ---- If yes, please describe: ------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ 7. Hazardous Materials Disclosures 7.1 Has your company prepared or will it be required to prepare a Hazardous Materials management plan ("Management Plan") pursuant to Fire Department or other governmental or regulatory agencies' requirements? Existing Tenants should indicate whether or not a Management Plan is required and has been prepared. Yes [ ] No [ ] If yes, attach a copy of the Management Plan. Existing Tenants should attach a copy of any required updates to the Management Plan. 7.2 Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Premises regulated under Proposition 65? Existing Tenants should indicate whether or not there are any new Hazardous Materials being so used which are regulated under Proposition 65. Yes [ ] No [ ] If yes, please explain: ------------------------------------------- ------------------------------------------------------------------ ------------------------------------------------------------------ 8. Enforcement Actions and Complaints 8.1 With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations? Existing Tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received. Yes [ ] No [ ] If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing Tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Section 29 of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 8.2 Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns? Yes [ ] No [ ] 3 If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and all other documents related thereto as requested by Landlord. Existing Tenants should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Section 29 of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 8.3 Have there been any problems or complaints from adjacent Tenants, owners or other neighbors at your company's current facility with regard to environmental or health and safety concerns? Existing Tenants should indicate whether or not there have been any such problems or complaints from adjacent Tenants, owners or other neighbors at, about or near the Premises. Yes [ ] No [ ] If yes, please describe. Existing Tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement. ------------------------------------------------------------------ ------------------------------------------------------------------ 9. Permits and Licenses 9.1 Attach copies of all Hazardous Materials permits and licenses including a Transporter Permit number issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any wastewater discharge permits, air emissions permits, and use permits or approvals. Existing Tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued. The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials Disclosure Certificate is being delivered in connection with, and as required by, Landlord in connection with the evaluation and finalization of a Lease Agreement and will be attached thereto as an exhibit; (B) that this Hazardous Materials Disclosure Certificate is being delivered in accordance with, and as required by, the provisions of Section 29 of the Lease Agreement; and (C) that Tenant shall have and retain full and complete responsibility and liability with respect to any of the Hazardous Materials disclosed in the HazMat Certificate notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate. Tenant further agrees that none of the following described acts or events shall be construed or otherwise interpreted as either (a) excusing, diminishing or otherwise limiting Tenant from the requirement to fully and faithfully perform its obligations under the Lease with respect to Hazardous Materials, including, without limitation, Tenant's indemnification of the Indemnitees and compliance with all Environmental Laws, or (b) imposing upon Landlord, directly or indirectly, any duty or liability with respect to any such Hazardous Materials, including, without limitation, any duty on Landlord to investigate or otherwise verify the accuracy of the representations and statements made therein or to ensure that Tenant is in compliance with all Environmental Laws; (i) the delivery of such certificate to Landlord and/or Landlord's acceptance of such certificate, (ii) Landlord's review and approval of such certificate, (iii) Landlord's failure to obtain such certificate from Tenant at any time, or (iv) Landlord's actual or constructive knowledge of the types and quantities of Hazardous Materials being used, stored, generated, disposed of or transported on or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the foregoing or anything to the contrary contained herein, the undersigned acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease Agreement and the continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement. I (print name)_________, acting with full authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and warrant that the information contained in this certificate is true and correct. (Prospective) Tenant: By: ---------------------------------------------- Title: ------------------------------------------- Date: -------------------------------------------- 4 EXHIBIT I SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT ------------------------ This Subordination, Non-Disturbance and Attornment Agreement (this "Agreement") is as of the ___ day of ______, 19___, between Credit Suisse First Boston Mortgage Capital LLC ("Lender") and _______("Tenant"). RECITALS -------- A. Tenant is the tenant under a certain lease (the "Lease"), dated as of _______________________________, 19__, with__________________________________ ("Landlord"), of premises described in the Lease (the "Premises") as more particularly described in Exhibit A hereto. --------- B. This Agreement is being entered into in connection with a certain loan (the "Loan") which Lender has made to Landlord, and secured in part by a Deed of Trust, assignment of leases and rents and security agreement on the Premises (the "Deed of Trust ") dated as of ___________________________________ _________________________________,199__ and an assignment of leases and rents dated as of___________________________________________________,199__ (the "Assignment"; the Deed of Trust, the Assignment and the other documents executed and delivered in connection with the Loan are hereinafter collectively referred to as the "Loan Documents"). AGREEMENT --------- For mutual consideration, including The mutual covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Tenant agrees that the Lease and all terms and conditions contained therein and all rights, options, liens and charges created thereby is and shall be subject and subordinate in all respects to the Loan Documents and to all present or future advances under the obligations secured thereby and all renewals, amendments, modifications, consolidations, replacements and extensions of secured obligations and the Loan Documents, to the full extent of all amounts secured by the Loan Documents from time to time. 2. Lender agrees that, if Lender exercises any of its rights under the Loan Documents such that it becomes the owner of the Premises, including but not limited to an entry by Lender pursuant to the Deed of Trust, a foreclosure of the Deed of Trust, a power of sale under the Deed of Trust or otherwise: (a) the Lease shall continue in full force and effect as a direct lease between Lender and Tenant, and subject to all the terms, covenants and conditions of the Lease, and (b) Lender shall not disturb Tenant's right of quiet possession of the Premises under the terms of the Lease so long as Tenant is not in default beyond any applicable grace period of any term, covenant or condition of the Lease. 3. Tenant agrees that, in the event of a exercise of the power of sale or foreclosure of The Deed of Trust by Lender or the acceptance of a deed in lieu of foreclosure by Lender or any other succession of Lender to ownership of the Premises, Tenant will attorn to and recognize Lender as its landlord under the Lease for the remainder of the term off the Lease (including all extension periods which have been or are hereafter exercised) upon the same terms and conditions as are set forth in the Lease, and Tenant hereby agrees to pay and perform all off the obligations of Tenant pursuant to the Lease. 4. Tenant agrees that, in the event Lender succeeds to the interest of Landlord under the Lease, Lender shall not be: (a) liable in any way for any act, omission, neglect or default of any prior Landlord (including, without limitation, the then defaulting Landlord), or (b) subject to any claim, defense, counterclaim or offsets which Tenant may have against any prior Landlord (including, without limitation, the then defaulting Landlord), or (c) bound by any payment of rent or additional rent which Tenant might have paid for more than one month in advance of the due date under the Lease to any prior Landlord (including, without limitation, the then defaulting Landlord), or (d) bound by any obligation to make any payment to Tenant which was required to be made prior to the time Lender succeeded to any prior Landlord's interest, or (e) accountable for any monies deposited with any prior Landlord (including security deposits), except to the extent such monies are actually received by Lender, or (f) bound by any amendment or modification of the Lease made without the written consent of Lender. 1 Nothing contained herein shall prevent Lender from naming Tenant in any foreclosure or other action or proceeding initiated in order for Lender to avail itself of and complete any such foreclosure or other remedy. 5. Tenant hereby agrees to give to Lender copies of all notices of Landlord default(s) under the Lease in the same manner as, and whenever, Tenant shall give any such notice of default to Landlord and no such notice of default shall be deemed given to Landlord unless and until a copy of such notice shall have been so delivered to Lender. Lender shall have the right but no obligation to remedy any landlord default under the Lease, or to cause any default of Landlord under the Lease to be remedied, and for such purpose Tenant hereby grants Lender, in addition the period given to Landlord for remedying defaults, an additional 30 days to remedy, or cause to be remedied, any such default. Tenant shall accept performance by Lender of any term, covenant, condition or agreement to be performed by Landlord under the Lease with the same force and effect as though performed by Landlord. No Landlord default under the Lease shall exist or shall be deemed to exist (i) as long as Lender, in good faith, shall have commenced to cure such default within the above reference time period and shall be prosecuting the same to completion with reasonable diligence, subject to force majeure, or (ii) if possession of the Premises is required in order to cure such default, or if such default is not susceptible of being cured by Lender, as long as Lender, in good faith, shall have notified Tenant that Lender intends to institute proceedings under the Loan Documents, and, thereafter, as long as such proceedings shall have been instituted and shall be prosecuted with reasonable diligence. In the event of the termination of the Lease by reason of any default thereunder by Landlord, upon Lender's written request, given within thirty (30) days after any such termination, Tenant, within fifteen (15) days after receipt of such request, shall execute and deliver to lender or its designee or nominee a new lease of the Premises for the remainder of the term of the Lease upon all of the terms, covenants and conditions of the Lease. Neither Lender nor its designee or nominee shall become liable under the Lease unless and until Lender or its designee or nominee becomes, and then only with respect to periods in which Lender or its designee or nominee remains, the owner of the Premises. In no event shall Lender have any personal liability as successor to Landlord and Tenant shall look only to the estate and property of Lender in the Premises for the satisfaction of Tenant's remedies for the collection of a judgment (or other judicial process) requiring the payment of money in the event of any default by Lender as Landlord under the Lease, and no other property or assets of Lender shall be subject to law, execution or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to the Lease. Lender shall have the right, without Tenant's consent, to foreclose the Deed of Trust or to accept a deed in lieu of foreclosure of the Deed of Trust or to exercise any other remedies under the Loan Documents. 6. Tenant has no knowledge of any prior assignment or pledge of the rents accruing under the Lease by Landlord. Tenant hereby acknowledges the making of the Assignment from Landlord to Lender in connection with the Loan. Tenant acknowledges that the interest of the Landlord under the Lease is to be assigned to Lender solely as security for the purposes specified in said assignments, and Lender shall have no duty, liability or obligation whatsoever under the Lease or any extension or renewal thereof, either by virtue of said assignments or by any subsequent receipt or collection of rents thereunder, unless Lender shall specifically undertake such liability in writing. 7. If Tenant is a corporation, each individual executing this Agreement on behalf of said corporation represents and warrants that s/he is duly authorized to execute and deliver this Agreement on behalf of said corporation, in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the by-laws of said corporation, and that this Agreement is binding upon said corporation in accordance with its terms. If Landlord is a partnership, each individual executing this Agreement on behalf of said partnership represents and warrants the s/he is duly authorized to execute and deliver this Agreement on behalf of said partnership in accordance with the partnership agreement for said partnership. 8. Any notice, election, communication, request or other document or demand required or permitted under this Agreement shall be in writing and shall be deemed delivered on the earlier to occur of (a) receipt or (b) the date of delivery, refusal or nondelivery indicated on the return receipt, if deposited in a United States Postal Service Depository, postage prepaid, sent certified or registered mail, return receipt requested, or if sent via recognized commercial courier service providing for a receipt, addressed to Tenant or Lender, as the case may be at the following addresses: If to Tenant: NetFlix.com ------------------------------------------- 750 University Ave. ------------------------------------------- Los Gatos, CA 95032 Attn: CFO ------------------------------------------- with a copy to: ------------------------------------------- ------------------------------------------- ------------------------------------------- 2 If to Lender: Credit Suisse First Boston Mortgage Capital LLC 11 Madison Avenue, New York, New York 10010 Attention: --------------------- with a copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York 10038 Attention: William P. McInerney, Esq. 9. The term "Lender" as used herein includes any successor or assign of the named Lender herein, including without limitation, any co-lender at the time of making the Loan, any purchaser at a foreclosure sale and any transferee pursuant to a deed in lieu of foreclosure, and their successors and assigns, and the term "Tenant" as used herein includes any successor and assign of the named Tenant herein. 10. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to be enforceable, or if such modification is not practicable such provision shall be deemed deleted from this Agreement, and the other provisions of this Agreement shall remain in full force and effect. 11. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing executed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought. 12. This Agreement shall be construed in accordance with the laws of the State of _____________. Witness the execution hereof as of the date first above written. [LENDER] By: ----------------------------------------- Name: ------------------------------------- Title: ------------------------------------ [TENANT] By: NetFlix.com ----------------------------------------- Name: /s/ [Illegible]^^ ------------------------------------ Title: CFO ------------------------------------ The undersigned Landlord hereby consents to the foregoing Agreement and confirms the facts stated in the foregoing Agreement. [LANDLORD] By: ---------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 3 Second Amendment to Lease Agreement This Second Amendment to Lease Agreement (the "Amendment") is made and entered into as of January 4, 2000, by and between LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company ("Landlord"), and NETFLIX.COM, a Delaware corporation ("Tenant"), with reference to the following facts. Recitals A. Landlord and Tenant have entered into that certain Lease Agreement dated as of August 11, 1999 (the "Lease"), for the leasing of certain premises consisting of approximately 31,830 rentable square feet located at 2219 Old Oakland Road, San Jose, California (the "Original Premises") as such Original Premises are more fully described in the Lease. B. Landlord and Tenant now wish to amend the Lease to provide for, among other things, the addition of certain contiguous space to the Original Premises, all upon and subject to each of the terms, conditions, and provisions set forth herein. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant agree as follows: 1. Recitals: Landlord and Tenant agree that the above recitals are true -------- and correct and are hereby incorporated herein as though set forth in full. 2. Premises: -------- 2.1 Commencing on February 1, 2000 (the "AP Commencement Date") there shall be added to the Original Premises those certain premises consisting of approximately 26,020 rentable square feet located at 2217 Old Oakland Road, San Jose, California (the "Additional Premises"), which Additional Premises are depicted on the building plan attached hereto and made a part hereof as Exhibit A. 2.2 For purposes of the Lease, from and after the AP Commencement Date, the "Premises" as defined in Section 1 of the Lease shall mean and refer to the aggregate of the Original Premises and the Additional Premises consisting of a combined total of approximately 57,850 rentable square feet located at 2219 Old Oakland Road. Accordingly, from and after the AP Commencement Date, all references in this Amendment and in the Lease to the term "Premises" shall mean and refer to the Original Premises and the Additional Premises. Landlord and Tenant hereby agree that for purposes of the Lease, from and after the AP Commencement Date, the rentable square footage area of the Premises shall be conclusively deemed to be 57,850 rentable square feet. In addition to the foregoing, it is the parties express intention that the balance of the Term of the Lease for the Original Premises and the Additional Premises be coterminous with the Expiration Date of the Initial Term as specified in the Lease and that any option or renewal term described in the Lease shall be applicable to both the Premises and the Additional Premises. 2.3 Notwithstanding anything to the contrary contained herein or in the Lease, Landlord shall neither be subject to any liability, nor shall the validity of the Lease be affected if Landlord is not able to deliver to Tenant possession of the Additional Premises by the AP Commencement Date. Provided, however, Tenant's obligation to pay Rent on the Additional Premises shall commence on the date possession is tendered. 3. Base Rent: The Basic Lease Information and Section 3 of the Lease --------- are hereby modified to provide that during the Term of the Lease the monthly Base Rent payable by Tenant to Landlord, in accordance with the provisions of Section 3 of the Lease shall be as follows:
Period Original Premises Additional Premises Aggregate Amount of Monthly Base Rent Monthly Base Rent Monthly Base Rent -------------------------------------------------------------------------------------------------- 02/01/00 - 12/06/00 $36,605.00 $29,923.00 $66,528.00 -------------------------------------------------------------------------------------------------- 12/07/00 - 12/06/01 $38,196.00 $31,224.00 $69,420.00 -------------------------------------------------------------------------------------------------- 12/07/01 - 12/06/02 $39,788.00 $32,525.00 $72,313.00 -------------------------------------------------------------------------------------------------- 12/07/02 - 12/06/03 $41,379.00 $33,826.00 $75,205.00 -------------------------------------------------------------------------------------------------- 12/07/03 - 12/06/04 $42,971.00 $35,127.00 $78,098.00 --------------------------------------------------------------------------------------------------
4. Condition of the Additional Premises: Subject to the provisions of ------------------------------------ Section 2 above, on the AP Commencement Date Landlord shall deliver to Tenant possession of the Additional Premises in its then existing condition and state of repair, "AS IS", without any obligation of Landlord to remodel, improve or alter the Additional Premises, to perform any other construction or work of improvement upon the Additional Premises, or to provide Tenant with any construction or refurbishing allowance. Tenant acknowledges that no representations or warranties of any kind, express or implied, respecting the condition of the Additional Premises, Building, or Park or have been made by Landlord or any agent of Landlord to Tenant, except as expressly set forth herein. Tenant further acknowledges that neither Landlord nor any of Landlord's agents, representatives or employees have made any representations as to the suitability or fitness of the Additional Premises for the conduct of Tenant's business, including without limitation, any storage incidental thereto, or for any other purpose. Any exception to the foregoing provisions must be made by express written agreement signed by both parties. 5. Security Deposit: Tenant's existing Security Deposit of Two Hundred ---------------- Nineteen Thousand Six Hundred Thirty and 00/100 Dollars ($219,630.00) shall be reduced to Zero Dollars ($0.00) and such Security Deposit amount shall be returned to Tenant upon Landlord's receipt of the Letter of Credit (which must be in form and content acceptable to Landlord as set froth in Section 14) pursuant to Section 14 of this Amendment. In addition, the final two (2) sentences of Section 4 of the Lease are hereby deleted and of no further force or effect. 6. Tenant's Share of Operating Expenses: As of the AP Commencement Date, ------------------------------------ the Lease shall be modified to provide that Tenant's Share of Operating Expenses (as defined in the Basic Lease Information and Section 6 1 of the Lease) shall be increased to 100% of the Building, 41% of the Park. 7. Tenant's Share of Tax Expenses: As of the AP Commencement Date, the ------------------------------ Lease shall be modified to provide that Tenant's Share of Tax Expenses (as defined in the Basic Lease Information and Section 6.2 of the Lease) shall be increased to 41%. 8. Tenant's Share of Utility Expenses: As of the AP Commencement Date, the ---------------------------------- Lease shall be modified to provide that Tenant's Share of Utility Expenses (as defined in the Basic Lease Information and Section 7 of the Lease) shall be increased to 100% of the Building, 41% of the Park. 9. Tenant's Share of Common Area Utility Costs: As of the AP Commencement ------------------------------------------- Date, the Lease shall be modified to provide that Tenant's Share of common Area Utility Costs (as defined in the Basic Lease Information and Section 7 of the Lease) shall be increased to 100% of the Building, 41% of the Park. 10. Unreserved Parking Spaces: As of the AP Commencement Date, the Lease ------------------------- shall be modified to provide that Tenant's Unreserved Parking Spaces (as defined in the Basic Lease Information) shall be increased to two hundred thirty-three (233). 11. Insurance: Tenant shall deliver to Landlord, upon execution of this --------- Amendment, a certificate of insurance evidencing that the Additional Premises are included within and covered by Tenant's insurance policies required to be carried by Tenant pursuant to the Lease. 12. Brokers: Tenant warrants that it has had no dealings with any real ------- estate broker or agent in connection with the negotiation of this Amendment other than Cornish & Carey. If Tenant has dealt with any other person, real estate broker or agent with respect to this Amendment other than Cornish & Carey, Tenant shall be solely responsible for the payment of any fee due to said person or firm, and Tenant shall indemnify, defend and hold Landlord free and harmless against any claims, judgments, damages, costs, expenses, and liabilities with respect thereto, including attorneys' fees and costs. 13. Park and Building: The Park, as defined in the Basic Lease ----------------- Information, shall herein be modified to reflect the current aggregate building area of 140,254 rentable square feet, and the Building, as defined in the Basic Lease information shall herein be modified to 57,850 rentable square feet. 14. Collateral for Performance of Lease Obligations: Simultaneously with ----------------------------------------------- Tenant's execution and delivery of this Amendment to Landlord and as a condition precedent to the effectiveness of this Amendment, Tenant shall deliver to Landlord, as collateral for the full and faithful performance by Tenant of all of its obligations under this Lease and for all losses and damages Landlord may suffer as a result of any default by Tenant under this Lease, an irrevocable and unconditional negotiable letter of credit, in the form and containing the terms required herein, payable in the City of Foster City, California running in favor of Landlord issued by a solvent bank under the supervision of the Superintendent of Banks of the State of California, or a National Banking Association, in the amount of Four Hundred Two Thousand and 00/100 Dollars ($402,000.00) (the "Letter of Credit"). The Letter of Credit shall be (a) at sight and irrevocable, (b) maintained in effect, whether through replacement, renewal or extension, for the entire Lease Term (the "Letter of Credit Expiration Date") and Tenant shall deliver a new Letter of Credit or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the Letter of Credit, without any action whatsoever on the part of Landlord, (c) subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev) International Chamber of Commerce Publication #500, (d) acceptable to Landlord in its sole discretion, and (e) fully assignable by Landlord by amendment thereto in accordance with customary letter of credit practice and permit partial draws. In addition to the foregoing, the form and terms of the Letter of Credit (and the bank issuing the same) shall be acceptable to Landlord, in Landlord's sole discretion, and shall provide, among other things, in effect that: (1) Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit upon the presentation to the issuing bank of Landlord's (or Landlord's then managing agent's) statement that such (A) amount is due to Landlord under the terms and conditions of this Lease, it being understood that if Landlord or its managing agent be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity), and (B) an event of default has occurred under this Lease and all applicable notice and cure periods have elapsed; (2) the Letter of Credit will be honored by the issuing bank without inquiry as to the accuracy thereof and regardless of whether the Tenant disputes the content of such statement; and (3) in the event of a transfer of Landlord's interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part (or cause a substitute letter of credit to be delivered, as applicable), to the transferee and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new Landlord. If, as a result of any such application of all or any part of the Letter of Credit, the amount of the Letter of Credit shall be less than Four Hundred Two Thousand and 00/100 Dollars ($402,000.00), Tenant shall within five (5) days thereafter provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total amount of Four Hundred Two Thousand and 00/100 Dollars ($402,000.00) and each such additional (or replacement) letter of credit shall comply with all of the provisions of this Section 14, and if Tenant fails to do so, the same shall constitute an incurable default by Tenant. Tenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the Letter of Credit Expiration Date, Landlord will accept a renewal thereof or substitute letter of credit (such renewal or substitute letter of credit to be in effect not later than thirty (30) days prior to the expiration thereof), which shall be irrevocable and automatically renewable as above provided through the Letter of Credit Expiration Date upon the same terms as the expiring letter of credit or such other terms as may be acceptable to Landlord in its reasonable discretion. However, if the Letter of Credit is not timely renewed or a substitute letter of credit is not timely received, or if Tenant fails to maintain the Letter of Credit in the amount and terms set forth in this Section 14, Landlord shall have the right to present such Letter of Credit to the bank in accordance with the terms of this Section 14, and the entire sum evidenced thereby shall be paid to and held by Landlord as collateral for performance of all of Tenant's obligations under this Lease and for all losses and damages Landlord may suffer as a result of any default by Tenant under this Lease. If there shall occur a default under this Lease as set forth in Section 20 of this Lease, Landlord may, but without obligation to do so, draw upon the Letter of Credit, in part or in whole, to cure any default of Tenant and/or to compensate Landlord for any and all damages of any kind or nature sustained or which may be sustained by Landlord resulting from Tenant's default. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a "draw" by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord's right to draw from the Letter of Credit. No condition or term of this Lease shall be 2 deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Landlord and Tenant acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof or substitute therefor be (i) deemed to be or treated as a "security deposit" within the meaning of California Civil Code Section 1950.7 (as supplemented, amended, replaced and substituted from time to time), (ii) subject to the terms of such Section 1950.7 (as supplemented, amended, replaced and substituted from time to time), or (iii) intended to serve as a "security deposit" within the meaning of such Section 1950.7 (as supplemented, amended, replaced and substituted from time to time). The parties hereto (x) recite that the Letter of Credit is not intended to serve as a security deposit and such Section 1950.7 (as supplemented, amended, replaced and substituted from time to time) and any and all other laws, rules and regulations applicable to security deposits in the commercial context ("Security Deposit Laws") shall have no applicability or relevancy to the Letter of Credit and (y) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws. Notwithstanding the foregoing, on the third anniversary of the Commencement Date of the Lease, or following Tenant's public offering of its stock and subsequent achievement of a net worth of at least Forty Million Dollars ($40,000,000.00) and such net worth is then sustained for three consecutive financial quarters and substantiated by financial reports provided by Tenant to Landlord, which ever event occurs sooner, and, so long as Tenant has not been in material default of the Lease beyond any applicable cure period, then Tenant shall have the right to provide a cash Security Deposit to Landlord in the amount of Seventy Eight Thousand Seven Hundred Thirty-Three and 00/100 Dollars ($78,733.00) (the "New Deposit"). In the event that Tenant has met the financial and other requirements set forth above and Tenant is no longer required to maintain the Letter of Credit, so long as Tenant delivers the New Deposit to Landlord, as set forth herein, Landlord and Tenant shall execute an Amendment to the Lease signifying such removal of the Letter of Credit requirement and Tenant shall deposit the New Deposit with Landlord and Landlord shall return the Letter of Credit to Tenant. Thereafter, for the purposes of this Lease, the New Deposit shall be (i) deemed to be the "Security Deposit" under the terms of the Lease and (ii) subject to all of the provisions of the Lease relating to the "Security Deposit". 15. Tenant's Early Termination Option: The parties hereby acknowledge and --------------------------------- agree that effective as of the date of this Amendment the Termination Option pursuant to Section 41 of the Lease shall be deleted in its entirety and shall be of no further force and effect and Tenant shall have no further right to terminate the Lease. 16. Effect of Amendment: Except as modified herein, the terms and ------------------- conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail. 17. Definitions: Unless otherwise defined in this Amendment, all terms not ----------- defined in this Amendment shall have the meanings assigned to such terms in the Lease. 18. Authority: Subject to the assignment and subletting provisions of the --------- Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party's behalf is authorized to do so and to bind such party to the terms of this Amendment. 19. Incorporation: The terms and provisions of the Lease are hereby ------------- incorporated in this Amendment. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written. Tenant: NETFLIX.COM, a Delaware corporation By: /s/ ----------------------------- Its: CFO --- Date: 1/5/00 ------ By: /s/ ----------------------------- Its: CFO --- Date: 1/5/00 ------ Landlord: LINCOLN-RECP OLD OAKLAND OPCO, LLC, a Delaware limited liability company By: LEGACY PARTNERS COMMERCIAL, INC. as manager and agent for Lincoln-RECP Old Oakland OPCO, LLC By: /s/ ----------------------------- Senior Vice President Date: ----------------------------- If Tenant is a CORPORATION, the authorized officers must sign on behalf of the ----------- corporation and indicate the capacity in which they are signing. The Lease must be executed by the president or vice-president and the secretary or assistant --- secretary, unless the bylaws or a resolution of the board of directors shall ------ otherwise provide, in which event, the bylaws or a certified copy of the resolution, as the case may be, must be attached to this Lease. 3 Exhibit A Original Premises and Additional Premises The non cross-hatched area below represents the "Additional Premises". [Site Plan] 4