Complaint Unlimited Fee AppliesCal. Super. - 6th Dist.March 24, 2021\DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO E-FILED 3/24/2021 8:44 AM Clerk of Court DANIEL J. MASH, STATE BAR #123678 Superior Court 0f CA, McPHARLIN SPRINKLES & THOMAS LLP County Of Santa Clara 160 W. Santa Clara St., Ste. 625 21 CV381 058 San Jose, California 951 13 Telephone: (408) 293-1900 Facsimile: (408) 709-5409 dmash@mstpartners.com Reviewed By: V. Taylor Attorneys for Plaintiff Institute for the Future SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA INSTITUTE FOR THE FUTURE, a California) Case NO.:21 CV381 058 Nonprofit Corporation, ) Plaintiff, ) VERIFIED COMPLAINT FOR ) DECLARATORY RELIEF AND FOR V, ) INJUNCTION AND DAMAGES ) DON B. MULLEN AND CAROL MULLEN ) AS TO AN UNDIVIDED 50% INTEREST; ) SCHER HOLDINGS LLC, a California ) Limited Liability Company, AS TO AN ) UNDIVIDED 50% INTEREST; and DOES 1 ) through 25, inclusive, ) Defendants. g Plaintiff allege as follows: I. GENERAL ALLEGATIONS 1. Plaintiff Institute for the Future (“IFTF”) is and at all times mentioned herein was a registered 501(c)(3) nonprofit organization based in Palo Alto, California conducting business in Santa Clara County. IFTF provides businesses, governments, and social impact organizations With global forecasts, custom research, and foresight training t0 navigate complex change and develop world-ready strategies. Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 1 \DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO 2. Plaintiff is informed and believes, and therefor alleges that Defendants Don B. Mullen and Carol Mullen as t0 an undivided 50% interest, and Scher Holdings LLC A California limited liability company as t0 an undivided 50% interest (collectively “Defendants”) are the owners of that certain real property in the City of Palo Alto, County 0f Santa Clara, State of California commonly known as 201-225 Hamilton Ave., Palo Alto, CA 94301 (the “Property”). 3. The true names and capacities, whether individual, corporate, associate 0r otherwise, of Defendants sued herein as DOES 1 through 25, inclusive, are unknown to Plaintiff Who therefore sues said Defendants by such fictitious names. Plaintiff will amend this complaint t0 include their true names together With appropriate charging allegations When the same are ascertained. Plaintiff is informed and believes and, 0n that basis, alleges that each of the fictitiously named Defendants is responsible in some manner for occurrences herein alleged and the Plaintiff s damages as herein alleged were proximately caused by their conduct. 4. Plaintiff is informed and believes and, on that ground, alleges that at all times mentioned herein, each 0f the Defendants referred to herein was at all times acting within the purpose and scope for such agency and/or employment. 5. On February 28, 2014, Defendants, as owners, leased the Property to IFTF pursuant to a written lease agreement (“Lease”), a copy of which is attached hereto as Exhibit A and is incorporated herein by reference. Pursuant to the lease terms, the Lease term began on March 1, 2018. 6. Plaintiff is informed and believes, and 0n that basis alleges that pursuant to Lease provision 24, IFTF obtained a letter of Credit from Bridge Bank (“LC”), in the amount of $286,790.16 to secure a portion of the Lease payment obligation. Although the LC is subject to a restricted Bridge Bank Account, Bridge Bank has confirmed that they Will release funds t0 the Defendants as beneficiaries 0n the fourth (4th) banking day after a demand is made. It is not a requirement 0f the LC that Bridge Bank notify IFTF 0f a demand. 7. On March 24, 2020, the Santa Clara County Board 0f Supervisors enacted a moratorium on “no-fault” evictions and evictions for non-payment 0f rent for tenants who have incurred substantial income loss and/or substantial out-of-pocket medical expenses as a result of Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 2 \DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO the COVID-19 pandemic. The state 0f California has also enacted a similar moratorium. Under the moratorium, substantial loss 0f income due t0 COVID-19 may include if the business qualifies as a small business, closure 0f a place 0f business 0r substantial decrease in business income. This moratorium applies throughout Santa Clara County, including Cities, and protects both residential as well as small business tenants and was extended until June 30, 2021 (“Moratorium”). 8. Under the Moratorium, although Defendants as a landlord have a right to collect rent, if IFTF qualifies for protection under the Moratorium, IFTF has 6 months after the Moratorium ends t0 repay at least 50% of the past-due rent and 12 months after the Moratorium ends to repay in filll the past-due rent. Defendants cannot charge a late fee and before initiating any repayment plan with a IFTF must first inform IFTF of the foregoing repayment protections. 9. As a result of the C0Vid-19 pandemic IFTF incurred traumatic disruption to its business model and operation, was not able to use or otherwise occupy the Property and incurred significant and substantial income loss. 10. Despite the Moratorium, 0n or about August 18, 2020, defendants through their agent Ventana Property Services issued IFTF a notice of default (“Notice”) alleging IFTF is in default of the Lease by its failure t0 pay rent for July and August 0f 2020. A true and correct copy ofNotice is attached hereto as Exhibit B and is incorporated herein by reference. Defendants Notice violates the Moratorium in numerous ways including, failing t0 inform IFTF 0f the foregoing repayment protections, by making a demand under the LC Without regard t0 the repayment protections under the Moratorium, without allowing or obtaining information on IFTF’s income and circumstance as a result of Covid-19 and by attempting to charge/impose late fees. 11. On August 20, 2020 Marina Gorbis 0f IFTF responded to the Notice of Default, in writing reminding Defendants that in prior conversations and e-mails t0 and With Joe Martignetti and Julie L. DeShazo, they had discussed the Santa Clara County Moratorium and specifically the rent deferral protection. Defendants were made aware that IFTF as a tenant of the Property for over six (6) years, relied 0n the use 0f the Property for both its operations and its revenue, Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 3 \DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO and that the COVID-19 pandemic and the Shelter In Place order IFTF is precluded from use of the Property for any purpose. IFTF requested Defendants discuss this matter and continue the discussions previously initiated t0 explore a compromise regarding IFTF’s rent payment in a manner consistent with the Moratorium. 12. Defendants responded 0n September 8, 2020, When Defendants’ legal counsel maintained that all past due rent in full was due and payable as of October 1, 2020. IFTF’s attorney responded 0n September 18, 2020. True and correct copies of Plaintiff and Defendants’ attorneys’ correspondence are attached hereto collectively as Exhibit C. If defendants act on their threat to make a demand 0n the LC, the immediate loss ofmoney will cause IFTF irreparable damage and injury. IFTF Will be unable t0 fimd its daily operation, Will be damaged in its creditworthiness and therefore unable t0 obtain financing, will default on vendor obligations and as a result be unlikely to continue its business. FIRST CAUSE OF ACTION (Declaratory Relief) 13. Plaintiff incorporates herein by reference paragraphs 1-12 of this Complaint as through set for the herein. 14. Plaintiff is informed and believes and thereon alleges that an actual controversy has arisen and now exists between Plaintiff IFTF and Defendants concerning their rights and obligations under the Lease and Defendants right t0 make a demand 0n the LC given the Moratorium. 15. A judicial declaration is necessary and appropriate at this time and under these circumstances in order that the parties ascertain their respective rights regarding the Lease and Defendants right t0 make a demand on the LC given the Moratorium. 16. Plaintiff is informed and believes and 0n that ground alleges that at all times herein mentioned, Plaintiff qualifies for protection under the Moratorium as a commercial tenant meeting the size standards for a small business under the U.S. Small Business Administration’s table 0f size standards by industry, codified in the Code of Federal Regulations at 13 C.F.R. section 121.201, is in possession of the Property in Santa Clara County, and is informed and Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 4 \DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO believes it is protected by Santa Clara County Moratorium from Defendants demands and threats for immediate payment of rent, late charges and demand 0n the LC. 17. Plaintiff is informed and believes and 0n that ground alleges that at all at times herein mentioned, Defendants have been and now are, the owners of Property, and claim a right t0 immediate rental payments, the imposition of late charges and the right to make a payment demand on the LC. 18. Plaintiff s desire a judicial determination 0f the rights and duties 0f the parties to this action and a declaration as t0 their respective rights respective rights regarding the Lease and Defendants right to make a demand 0n the LC given the Moratorium under the law t0 access the Property and the Lease. 19. A judicial declaration is necessary and appropriate at this time and under these circumstances in order that Plaintiffs may ascertain their rights. SECOND CAUSE OF ACTION (Iniunctive Relief) 20. Plaintiff hereby incorporate by reference Paragraphs 1 through 19, inclusive, of the first cause 0f action as if fully set forth herein. 21. By reason of the March 24, 2020, the Santa Clara County Board of Supervisors, Shelter in Place order, Plaintiff is being prevented from using the Property. 22. Despite the fact that IFTF cannot use the Property and the enactment of the Moratorium, Defendants’ continue t0 demand immediate and complete rental payment from Plaintiff and they are deliberately claiming a default in order to access the Letter of Credit. 23. Plaintiff will sustain great and irreparable injury if Defendants’ make a demand on the LC, in that IFTF Will not have notice of the demand and a draw down 0n the LC, Will make it extremely difficult and impossible t0 ascertain the exact amount of damage Plaintiff Will sustain, but IFTF will likely be unable t0 fund its daily operation, Will be damaged in its creditworthiness and unable to obtain financing, will default 0n vendor obligations and as a result be unlikely t0 continue its business. Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 5 \DOONQUI-bUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQQUI-PUJNHOKDOOQQUI-bUJNHO 24. Unless Defendants are enjoined from a demand and a draw down on the LC by this Court, IFTF Will suffer the foregoing irreparable harm and likely result in a multiplicity 0f actions. For all 0f these reasons, pecuniary compensation would not afford Plaintiff adequate relief, and Plaintiff, therefore, are Without an adequate remedy 0f law. 25. Plaintiff has n0 adequate remedy at law for the injuries in that it Will be impossible for Plaintiff t0 determine the precise amount 0f the damage it will suffer if Defendants’ conduct is not restrained. PRAYER WHEREFORE, Plaintiff prays judgment against Defendants as set forth hereafter. FOR THE FIRST CAUSE OF ACTION 1. For general damages according t0 proof at the time of trial; 2. For interest at the maximum rate allowed by law; 3. For reasonable attorneys’ fees; 4. For costs of suit incurred herein; 5. For a declaration that Defendants must comply With the Moratorium tenant protection requirements and that Plaintiff is protected by Santa Clara County Moratorium from Defendants demands and threats for immediate payment 0f rent, late charges and demand 0n the LC; and 6. For such other and fithher relief as the court deems just and proper. FOR THE SECOND CAUSE OF ACTION 1. For an order requiring Defendants to show cause, if any, why they should not be enjoined as hereinafter set forth, during the pendency 0f this action; 2. For a temporary restraining order, a preliminary injunction, and a permanent injunction, all enjoining Defendants, their agents, servants, employees, and all persons acting under, in concert With, 0r for them, from demands and threats for immediate payment of rent, late charges and making a demand 0n the LC, from in any way furthering the obstruction, interference, or hindrance of Plaintiff” s rights under the Santa Clara County Moratorium and Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 6 \OOOQQUIAUJNH NNNNNNNNNr-tr-tr-tr-tr-tr-tr-tr-tr-tr-t OOQONUIAUJNHOKOOOQQUIAUJNHO directing Defendants, their agents, servants, employees, and all persons acting under, in concert with, or for them, t0 cease any further Violation 0f IFTF’s rights to repayment protections . 3. For damages in the sum according to proof; and 4. For punitive and exemplary damages in the sum Within the Court’s discretion. FOR ALL CAUSES OF ACTION 1. For costs of suit herein incurred; and 2. For such other and further relief as the Court may deem just and proper. DATED: March 22, 2021 McPHARLIN SPRINKLES & THOMAS LLP By: Darriéfi. Mash, Attorney for Plaintiff Institute for the Future Verified Complaint for Declaratory Relief and for Temporary Restraining Order, Injunction and Damages 7 \DOONJON'J‘I-PWN-‘ NNNNNNNNN-_;-d-A~HHH-t-s DOxJONLh-b-UJNr-OOOOflaUl-RDJN-‘O VERIFICATION TO COMPLAINT I Marina Gorbis, am the Executive Director 0f plaintiff in this action, and] am authorized t0 make this verification. Ihave read the foregoing VERIFIED COMPLAINT FOR DECLARATORY RELIEF AND FOR TEMPORARY RESTRAINING ORDER, INJUNCTION AND DAMAGES and know its contents. The matters stated in the VERIFIED COMPLAINT FOR DECLARATORY RELIEF AND FOR TEMPORARY RESTRAINING ORDER, INJUNCTION AND DAMAGES are true based on my own knowledge, and as t0 those matters I believe them t0 be true. l declare under penalty 0f perjury under the laws 0f the State 0f California that the foregoing is true and correct. Executed 0n September 35:, 2020, at Palo Alto, Califomia. Mariam fig? Marifia Gorbis Verified Complaint for DeclaratOIy Relief and for Temporary Restraining Order, Injunction and Damages 8 FINAL VERSION m DON B. MULLEN AND CAROL MULLEN AS TO AN UNDIVIDED 50% INTEREST, AND SCHER HOLDINGS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS TOAN UNDIVIDED 50% INTEREST, AS TENANTS IN COMMON as Landlord, and INSTITUTE FOR THE FUTURE, _, a California corporation, as Tenant mmwm Exhibit A ._.. -_._-....__ §QMY OF BASIC LEA§E INFORMATION This Summary of Basic Lease Information (“Summary”) is hereby incorporated into and made a part of the attached Lease. Each reference in the Lease to any term of this Summary shall have the meaning as set forth in this Summaxy for such term. In the event of a conflict between the terms of this Summary and the Lease, the terms of the Lease shall prevail. Any capitalized terms used herein and not otherwise defined herein shall have the meaning as set forth in the Lease. TERMS OF LEASE I 1. Date: February 28, 2014 2. Landlord: DON B. MULLEN AND CAROL MULLEN AS TO AN UNDIVIDED 50% INTEREST, AND SCI-IER HOLDINGS, LLC, AS TO AN UNDIVIDED 50% INTEREST, AS TENANTS 1N COMMON 3. Address of Landlord (gectim 26. l9): c/o Ventana Property Services. 975 High Street Palo Alto, California 94301 Attention: Joseph Martignetti, Jr. 4. Tenant: INSTITUTE FOR THE FUTURE, a Californié‘chfio-rifiofi 5. Address of Tenant (Section 26. 12): _ INSTITUTE FOR THE FUTURE, The Premises Attention: $2.11N WWI (£0. 6. Premises (flick 1): M59379593 TERMS OF LEASE 6.1 Premises: 6.2 Building: 7. Term (Articlg 2): 7.1 Lease Term: 7.2 Commencement Date: 7.3 Expiration Date: 7.4 Amendment to Lease: M5937959.8 Approximately 18,624 rentable square feet as determined by Landlord’s method of measurement (which has been explained to Tenant) and, for pmposes of this Lease, agreed to contain such number of square feet. The Premises consists of (i) the entire rentable area of the first (1“) floor of the Building (as defined below), containing approximately 8,767 rentable square feet of space (the “First Floor Premises”) , and (ii) the entire rentable area of the basement of the Building, containing approximately 9,857 rentable square feet (the “Basement Premises”). The Premises is described more particularly in Exhibit A-l attached hereto. The Building and the Premises are not subject to re-measurement unless, pursuant to a written amendment to this Lease signed by both Landlord and Tenant, space is subtracted therefi'om or additional space is added thereto. Recogizing that both Landlord and Tenant have agreed to the foregoing rentable square footage number and have agreed that there will be no re-measurement except as expressly provided above, Landlord has given Tenant the opportlmity to measure the Building and the Premises and has encouraged Tenant to do so, and Tenant hereby confirms that it has elected, in its sole discretion and without reliance on any representation by Landlord or its agents or any brokers, not to mgasure the Building or the Premises. The Premises are located in that certain building (sometimes referred to herein as the “Building”) whose address is 201-225 Hamilton Avenue, Palo Alto, CA 94301. Ten (10) years. March 1, 2014. The last day of the month in which thc tenth (10th) anniversary of the Commencement Date occurs, unless earlier terminated or extended in accordance with the provisions of this Lease. Landlord and Tenant may confirm the Commencement Date and Expiration Date in an Amendment to Lease (Mibit B) to be executed pursuant to Article 2 of the Lease. TERMS 0F LEASE 8. Base Rent. Base Rent for the First Floor Premises and the Basement Premises is set forth in the following Base Rent Schedule: mm Commencement Date until the end of the third month afier the Commencement Date Month 4 to First Anniversary of the Commencement Date Month 13 to Month 24 Month 25 to Month 36 Month 37 to Month 48 Month 49 to Month 60 Month 61 to Month 72 Monm 73 to Month 84 Monm 85 to Month 96 Month 97 to Month 108 Month 109 to Month 120 N759379593 Monthly Installment ofiflgge 3th for Eirgt £100; Prom9: $0 $41,643.25 $42,892.55 $44,179.32 $45,504.70 $46,869.84 $48,275.94 $49,72422 $51,214.94 $52,752.42 $54,334.99 Monthly Installment ofEase Lent for Basement Premg' g; $13,306.95 $13,306.95 $13,706.16 $14,] 17.34 $14,540.86 $14,977.09 $15,426.40 $15,889.19 $16,365.87 $16,856.84 $17,362.55 9. Additional Rent (M'cle 4): 9.1 Tenant’s Share ofOperating Expenses, Tax Expenses and Utilities Costs: 10. Parking: ll. Security Deposit (Article 20): l2. Letter of Credit Amount (Article 24) M5937959.8 67.59% based on 27,555 rentable square feet within the Building). There is no on-site or off-site private parking lot available for the Building or the Premises. In no event shall Tenant use or permit the use of the alley adjacent to the Building for parldng. $143,395.08 $286,790.16 iv LEA E This Lease, which includes the preceding Summary and the exhibits attached hereto and incorporated herein by this reference (the Lease, the Summary and the exhibits to be known sometimes collectively hereafter as the “Lease”), dated for reference as ofthe date set forth in §ection 1 ofthe Summary, is made by and betweenDON B. MULLEN AND CAROL MULLEN AS T0 AN UNDIVIDED 50% INTEREST, AND SCI-ER HOLDINGS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS T0 AN UNDIVIDED 50% INTEREST, AS TENANTS IN COMMON (“Landlord”), and INSTITUTE FOR TEE FUTURE, a California corporation (“Tenant”).w REAL PROPERTY, BUILDmG AND PREMISES 1.1 Real Property, Building and Premises. 1.1.1 Premises and Real Progeny. qun and subject to the terms, covenants and conditions hereinafier set forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases fi'om Landlord the premises set forth in Section 6.1 of the Summary (the "Premises"), which Premises are located in the Building defined in Section 6.2 ofthe Summary (the "Building"). The outline ofthe floor plan ofthe Premises is set forth in Exhibit A-l attached hereto. The Building, any outside plaza areas, land and other improvements surrounding the Building which are designated fiom time to time by Landlord as common areas appurtenant to or servicing the Building, and the land upon which any ofthe foregoing are situated, are herein sometimes collectively referred to as the “Real Property”. 1.1.2 Tenant's and Landlord's Rights. Tenant is hereby gamed the right to the nonexclusive use of the common corridors and hallways, stairwells, elevators, restrooms and other public or common areas located within the Building and those areas located on the Real Property that are designated by Landlord fiom time to time as common areas for the Building (collectively, the "Common Areas") for the purposes for which they were designed and intended and for no other purposes whatsoever; provided, however, that (i) Tenant's use thereof shall be subject to (A) the provisions of any covenants, conditions and restrictions regarding the use thereof now or hereafier recorded against the Real Property, and (B) such reasonablé, non-discriminatory rules, regulations and restrictions as Landlord may make fiom time to time (which shall be provided in writing to Tenant), and (ii) Tenant may not go on the roof of Building without Landlord's prior consent (which may be withheld in Landlord's sole and absolute discretion) and without otherwise being accompanied by a representative of Landlord. Landlord reserves the right fi'om time to time to use any of the common areas of the Building, and the roof, risers and conduits of the Building for telecommunications and/or any other purposes, and to do any of the following: (1) make any changes, additions, improvements, repairs and/or replacements in or to the Real Property or any portion or elements thereof, including, without limitation, (x) changes in the location, size, shape and number of driveways, entrances, loading and unloading areas, ingress, egress, direction ofMo, landscaped areas, walkways, public and private streets, plazas, courtyards, transportation facilitation areas and common areas, and (y) expanding or decreasing the size of the Real Property and the Building and any common areas and other elements thereof, thereon and therefi'om; (2) close temporarily any of the common areas while engaged in making repairs, improvements or alterations to the Building; and (3) perform such other acts and make such other changes with respect to the Building as Landlord may, in the exercise of good faith business judgment, deem to be appropriate. Landlord reserves the right fi'om time to time to gant, without the consent or joinder of Tenant, such easements, rights of way and dedications that Landlord deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights ofway and dedications do not unreasonably interfere with the use of the Premises by Tenant or Tenant's access to the Premises, and do not increase Tenant's obligations hereunder. Tenant agrees to execute any documents reasonably requested by Landlord to effectuate any such easement rights, dedications, maps or restrictions. 1.2 Condition ofPremim. Landlord shall deliver the Premises to Tenant in good worldng order and condition, including the HVAC, electrical and plumbing systems servicing the Premises. Landlord shall deliver the Premises to Tenant on the Commencement Date broom-clean. Landlord shall not be obligated to provide or pay for any improvement, remodeling or refurbishment work or services related to the improvement, remodeling or N75937959.8 refurbishment ofthe Premises, and except as set forth in the immediately preceding sentence Tenant shall accept the Premises in its “AS IS” condition on the Commencement Date. It is agreed that by accepting possession of the Premises, Tenant formally accepts same and aclmowledges that the Premises are in the condition called for by this Lease. 1.3 Rentable Square Feet. The parties hereby stipulate that the Premises contain the rcntable square feet set forth in Section 6. 1 of the Summary, and such square footage amount is not subject to adjustment or remeasurement by Landlord or Tenant. Accordingly, there shall be no adjustment 1n the Base Rent, Tenant’s Share, or other amounts set forth'1n this Lease. QTICLE 2 LEA E TERM The terms and provisions of this Lease shall be efiective as of the date of this Lease. The term of this Lease (the “Lease Term”) shall be as set forth in §ection 7.1 of the Summary and shall commence on the date (the “Commencement Date”) set forth in Section 7.2 ofthe Summary, and shall terminate on the date (the “Expiration Date”) set forth in Section 7.3 of the Summary, unless this Lease is sooner terminated as hereinafler provided. Landlord shall not be subject to any liability nor shall the validity of this Lease nor the obligations of Tenant hereunder be affected due to delays in delivery of the Premises by Landlord. In the event Landlord delivers to Tenant an amendment to lease in the form attached hereto as Exhibit B setting forth the Commencement Date and the Expiration Date, upon Tenant’s reasonable approval, Tenant shall execute and return such amendment to Landlord within five (5) business days afier Tenant’s receipt thereof, or shall notify Landlord in writing within such period ifTenant disapproves ofthe amendment. IfTenant fails to either (i) notify Landlord of its disapproval of the' amendment or (ii) execute and return the amendment withinIsuch 5-day period, Tenant shall be deemed to have approved and confirmed the dates set forth therein. TICLE 3 BA§E RENT Tenant shall pay, without notice or demand, to Landlord or Landlord’s agent at the management office for the Building, or at such other place as Landlord may fi'om time to time designate in writing, in cash or other immediately available good funds, base rent (“Base Rent”) as set forth in Sectjgn 8 of the Summary, payable in equal monthly installments as set forth in Section 8 ofthe Summary in advance on or before the first day of each and every month during the Lease Term, without any setoff or deduction whatsoever. The Base Rent for the first full month of the Lease Term in which Base Rent is payable hereunder shall be paid at the time of Tenant’s execution of this Lease. If any rental payment date (including the Commencement Date) falls on a day of the month other than the first day of such month or if any rental payment is for a period which is shorter than one month, then the rental for any such fiactional month shall be a proportionate amount of a full calendar month’s rental based on the proportion that the number of days in such fiactional month bears to the number of days in the calendar month during which such fi'actional month occurs. All other payments or adjustments required to be made under the terms ofthis Lease that require proration on a time basis shall be prorated on the same basis. ARTICLE 4 ADDITLOEAL BEE: 4.1 Additional Rent. In addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay as additional rent the sum ofthe following: (i) Tenant’s Share (as such term is defined below) ofthe annual Operating Expenses; plus (ii) Tenant’s Share of the annual Tax Expenses; plus (iii) Tenant’s Share of the annual Utilities Costs. Such additional rent, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease (including, without limitation, pursuant to Article 6), shall be hereinafier collectively referred to as the “Additional Rent.” The Base Rent-and Additional Rent are herein collectively referred to as the “Rent.” A11 amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner, time and place as the Base Rent. Without limitation on other obligations of Tenant M5937959.8 which shall survive the expiration ofthe Lease Term, the obligations ofTenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration ofthe Lease Term. 4.2 Definitions. As used in this Article 4 the following terms shall have the meanings hereinafter set forth: 4.2.1 “Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord shall pay because of or in connection with the ownership, management, maintenance, repair, ' replacement, restoration or operation of the Building, including, without limitation, any amounts paid for: (i) the cost of operating, maintaining, repairing, renovating and managing the utility systems, mechanical systems, sanitary and storm drainage systems, any elevator systems and all other “Systems and Equipment” (as defined in Section 4.2.2 of this Lease), and the cost of supplies and equipment and maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections, and the cost of contesting the validity or applicability of any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with implementation and of a uansportation system management prog'am or similar program; (iii) the cost of insurance (premiums and deductibles) carried by Landlord, in such amounts as Landlord may reasonably determine or as may be required by any mortgagees or the lessor of any underlying or ground lease afl'ecting the Building; (iv) the cost of landscaping, relamping, supplies, tools, equipment and materials, and all fees, charges and other costs (including consulting fees, legal fees and accounting fees) incurred in connection with the management, operation, repair and maintenance of the Building; (v) any equipment 'rental ageements or management ageements (including the cost of any management fee and the fair rental value of any ofice space provided thereunder); (vi) wages, salaries and other compensation and benefits of all persons engaged in the operation, management, maintenance or security of the Building, and employer’s Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied On such wages, salaries, compensation and benefits; (vii) payments under any easement, license, operating ageement, declaration, restrictive covenant, underlying or ground lease (excluding Ijent), or instrument pertaining to the sharing of costs by the Building; (viii) the cost ofjanitorial service, alarm and security service, if any, window cleaning, uash removal, replacement of wall and floor coverings, ceiling files and fixtures in lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (ix) amortization (including interest on the unamortized cost) of the cost of acquiring or the rental expense of personal prOperty used in the maintenance, operation and repair ofthe Building; and (x) the cost of any capital improvements or other costs (I) which are intended as a labor-saving device or to effect other economies in the operation or maintenance of the Building, (II) made to the Building or any portion thereof afier the Commencement Date that are required under any governmental law or regulation, or (Ill) which are reasonably determined by Landlord to be in the best interests of the Building; provided, however, that if any such cost described in (I), (II) or (HI) 'above, is a capital expenditure, such cost shall be amortized (including interest on the unamortized cost) as Landlord shall reasonably determine. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the addiu'onal Operating Expens_es which would reasonably have been incurred during such period by Landlord if it had at its own expense fumished such work' or service to such tenant. If the Building is less than ninety-five percent (95%) occupied, Landlord shall m'ake an appropriate adjustment to the variable components of Operating Expenses for such year or applicable portion thereof, employing sound accounting and management principles, to determine the amount of Operating Expenses that would have been paid had the Building been ninety-five percent (95%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year, or applicable portion thereof. The cost of replacements of equipment or improvements reasonably determined by Landlord to be necessary to maintain the Building and the Real Property in good order and condition shall be included in Operating Expenses, provided that the cost of replacements shall, to the extent the same constitute capital items, be amortized (with interest thereon at the rate of ten percent per 'annum) over the useful life of the replacement (as reasonably determined by Landlord), and Operating Expenses in any calendar year will only include the annual amortized amount. Operating Expenses shall not include any of the following: (i) leasing commissions; (ii) the cost of improvements installed for the exclusive use of other tenants or occupants of the Building; (iii) wages, salaries, fees M5937959.8 and fi'inge benefits paid to employees or oficers of Landlord above the level of property manager; (iv) costs for which Landlord has received actual reimbursement fiom others (other than through Operating Expenses); (v) costs to correct any construction or design defects in the Building or to construct capital improvements to comply with any private restrictions, underwriter’s requirement or Law (as defined below) that were applicable to the Building on the Commencement Date; (vi) costs of attomeys’ fees and other costs and expenses incurred in connection with negotiations or disputes with present or prospective tenants or other occupants ofthe Building; (vii) costs of interest on debt or amortization on any mortgages, and rent payable under any ground lease of the Building; (viii) costs of special services provided solely to an individual tenant of the Building other than Tenant; (ix) costs which are generally treated as a capital expenditure, exc_ept to the extent expressly authorized in subsection 4.2.l(x) above; (x) Utilities Costs; and (xi) Tax Expenses. 4.2.2 “Systems and Equipment” shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and humidity or any other services or'utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment which serve the Building in whole or in part. 4.2.3 “Tax Expenses” shall mean all federal, state, county, or local governmental or municipal taxes, fees, assessments, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary, (including, without limitation, real estate taxes, general and special assessments, transit assessments, fees and taxes, child care subsidies, fees and/or assessments, job mining subsidies, fees and/or assessments, open space fees and/or assessments, housing subsidies and/or housing fund fees or assessments, public an fees and/or assessments, leasehold taxes or taxes based upon the receipt of rent, including gross receipts 6r sales taxes applicable to the receipt of rent, personal property taxes imposed upon the fixtures, machinery, equipment, appaIatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Building), which Landlord shall pay because of or in connection with the ownership, leasing and operation of the Building or Landlord’s interest therein. For purposes of this Lease, Tax Expenses shall be calculated as if (i) the tenant improvements in the Building were fi111y consuucted, and (ii) the Building and all tenant improvements therein were fully assessed for real estate tax purposes. 4.2.3.1 Tax Expenses shall include, without limitation: (i) Any tax on Landlord’s rent, right to rent or other income fi'om the Building or as against Landlord’s business of leasing any ofthe Building; (ii) Any assessment, m, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously includcd within the definition ofreal property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants. It is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees, levies, and charges and all similar assessments, taxes, fees, levies and charges be included within the definition ofTax Expenses for purposes of this Lease; (iii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area ofthe Premises or the rent payable hereunder; _ (iv) Any assessment, tax, fee, levy or charge, upon this tansaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises; and (v) Any reasonable expenses incurred by Landlord in attempting to protest, reduce or minimize Tax Expenses. M59379593 4.2.3.2 Notwithstanding anything to the conu'ary contained in this Section4 2.3 there shall be excluded fiom Tax Expenses (i) all excess profits taxes, gross receipts taxes, fianchise taxes, gifi taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state net income taxes, and other taxes to the extent applicable to Landlord’s net income (as opposed to rents, receipts or income attributable to operations at the Buflding), (ii) any items included as Operating Expenses or Utilities Costs, and (iii) any items paid by Tenant under Section 4.4 of this Lease. . 4.2.4 “Tenant’s Share” shall mean the percentage set forth inmm; of the Summary. Tenant’s Share Was calculated by dividing the number of rentable square feet of the Premises by the total rentable square feet in the Building (as set forth in Section 9.1 ofthe Summary), and stating such amount as a percentage. 4.2.5 “Utilities Costs” shall mean all actual charges for utilities for the Building which Landlord shall pay, including, but not limited to, the costs of water, sewer and electricity, and the costs ofHVAC (including, the cost of electricity to operate the HVAC units) and other utilities as well as related fees, assessments and surcharges (but'excluding those charges for which tenants directly reimburse Landlord or otherwise pay directly to the utility company). Utilities Costs shall be calculated assuming the Building is at least ninety-five percent (95%) occupied. If Landlord shall not provide any utilities (the cost of which, if provided by Landlord, would be included in Utilities Costs) to a tenant (including Tenant) who has undertaken to provide the same instead of Landlord, Utilities Costs shall be deemed to be increased by an amount equal to the additional Utilities Costs which would reasonably have been incurred during such period by Landlord if Landlord had at its own expense provided such utilities to such tenant. Utilities Costs shall include any costs of utilities which are allocated to the Building under any declaration, restrictive covenant, or other insu'ument pertaining to the sharing of costs by the Building or any portion thereof, including any covenants, conditions or restrictions now or hereafier recorded against or affecting the Building. 4.3 Calculation and Payment ofAdditional Rent. bx Tenant. Landlord shall endeavor to give to Tenant an oer before the thu-tmth (30') day :1me following the end of each calendar year during the Lease Term, a statement (the “Statement”) which shall state the Operating Expenses, Tax Expenses and Utilities Costs incurred or accrued for such preceding calendar year. Upon receipt of the Statement for each calendar year ending during the Lease Term, Tenant shall pay, with its next installment of Base Rent due (or within fifieen (1 5) days following delivery ofthe Statement ifthe Lease Term has expired or been terminated), the full amount of the Tenant's Share of Operating Expenses, Tax Expenses and Utilities Expenses for such calendar year, less the amounts, if any, paid during such calendar year as “Estimated Expense Payments, ” as that term is defined inW of this Lease. If the Estimated Expense Payments made by Tenant for any calendar year exceed the actual amount of the Tenant's Share of Operating Expenses, Tax Expenses and Utilities Expenses for such calendar year, Landlord shall credit such excess to Tenant for sums then due or coming due hereunder or, at Landlord's option, pay such excess to Tenant provided Tenant is not otherwise in default hereunder; provided that, notwithstanding the foregoing, any such excess remaining at the end of the Term shall be paid to Tenant. The failure of Landlord to timely furnish the Statement shall not prejudice Landlord fiom enforcing its rights under this Article 4. The provisions of this §ectiog 4.3.1 shall survive the expiration or earlier termination of the Lease Term. addition, Landlord shall endeavor to give Tenant, on or about April 1 of each calendar year during the Lease Term, a yearly expense estimate statement (the "Estimate Statement") which shall set forth Landlord’s reasonable estimate (the "Estimate") ofwhat the total amount of Operating Expenses, Tax Expenses and Utilities Costs allocated to the Building pursuant to Article 4 shall be and the estimated amount of Tenant's Share of Operating Expenses, Tax Expenses and Utilities Costs (the "Estimated Expense Payments") for such calendar year. The failure of Landlord to timely fiJrnish the Estimate Statement for any calendar year shall not preclude Landlord fi-om enforcing its rights to collect any Operating Expenses, Tax Expenses or Utilities Costs under this Article 4. Upon delivery of the Estimate Statement, Tenant shall pay, with its next installment of Base Rent due, a fi'action of the Estimated Expense Payments for the then-current calendar year (reduced by any amounts paid pursuant to the last sentence of this Section 4,3,2). Such fi'action shall have as its numerator the number of months which have elapsed in such current calendar year to the month of such payment, both months inclusive, and shall have twelve (12) as its M5937959.8 denominator. Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelflh (1/12) of the total Estimated Expense Payments set forth in the previous Estimate Statement delivered by Landlord to Tenant. 4.4 Taxgg and Other Charges for Which Tenant Is Directly Responsible. Tenant shall reimburse Landlord upon demand for any and all taxes or assessments required to be paid by Landlord (except to the extent included in Tax Expenses), excluding (i) all excess profits taxes, gross receipts taxes, fianchise taxes, gifi taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state net income taxes, and other taxes to the extent applicable to Landlord’s net income (as opposed to rents, receipts or income attributable to operations at the Building), (ii) any items included as Operating Expenses or Utilities Costs, whether or not now customary or within the contemplation ofthe parties hereto, when: 4.4.1 said taxes are measured by or reasonably ath'ibutable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, to the extent the cost or value of such leasehold improvements exceeds the cost or value of a building standard build-out as determined by Landlord regardless ofwhether title to such improvements shall be vested'1n Tenant or Landlord; 4.4.2 said taxes are assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or 'any portion of the Building; or 4.4.3 said taxes are assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. 4.5 Late Charges. If any installment ofRent or any other sum due fiom Tenant shall not be received by Landlord or Landlord’s designee by the due date therefor (or, ifthe due date therefor is not a business day, on the ' next succeeding business day), then Tenant shall pay to Landlord a late charge equal to five percent (5%) of the amount due plus any attomeys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due hereunder. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder, at law.and/or in equity and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid by the date that they are due shall thereafier bear interest 1mti1 paid at a rate (the “Interest Rate”) equal to the lesser of (i) the “Prime Rate” or “Reference Rate” announced fiom time to time by the Bank ofAmerica (or such reasonable comparable national banking institution as selected by Landlord in the ev'ent Bank of America ceases to exist or publish a Prime Rate or Reference Rate), plus four percent (4%), or (ii) the highest rate permitted by applicable law. 4.6 Tenant’s Augi; fight; Each Statement shall be conclusive and binding upon Tenant unless, within three (3) months afier receipt thereof, Tenant shall give Landlord notice that Tenant disputes the correctness of the Statement, specifying the particular respects in which the Statement is claimed to be incorrect. Tenant shall not have the right to withhold payment 6f Operating Expenses, Tax Expenses or Utilifies Costs in the event of a dispute. Landlord shall maintain books and records appropriate for the computation and verification of Operating Expenses, Tax Expenses and Utilities Costs and shall permit Tenant’s accountants, consultants and/or employees to examine Landlord’s books and records, during Landlord’s regular business hours at Landlord’s place of business and with at least ten (10) days prior written notice, in order to verify the accuracy of the relevant Statement. The records and any related informafion obtained fi'om Landlord shall be Heated as confidential, and as applicable only to the Premises, by Tenant, its accountants, consultants, and any other parties reviewing the same on behalf of Tenant. Before making any records available for review, Landlord may require Tenant and Tenant’s accountants, consultants and employees to execute a reasonable confidentiality ageement, in which event Tenant shall cause the same to be executed and delivered to Landlord within thirty (30) days afier receiving it fi'om Landlord, and if Tenant fails to do so, the three (3) month objection period referred to in the first sentence ofthis paragraph shall be reduced by one day for each day by which such execution and delivery follows the expiration of such 30-day period. If it shall be finally determined by an independent accountant engaged by Tenant and reasonably approved by Landlord that Statement was incorrect or commercially unreasonable, then either (a) Landlord shall at its election reimburse Tenant for any overpayment or credit the amount of such overpayment against the next monthly installment of M5937959.8 Operating Expenses, Tax Expenses or Utilities Costs, as applicable, payable under this Lease, or (b) Tenant shall within twenty (20) days afier such determination pay any amounts due to Landlord. Tenant agees to pay the cost of such audit, provided that, ifthe audit reveals that Landlord’s determinafion of Operating Expenses, Tax Expenses or Utilities Costs was overstated by more than seven percent (7%), Landlord shall pay the cost of such audit. Notwithstanding any contrary provision hereof, Tenant may not examine Landlord’s records or dispute any Statement if any Rent remains unpaid past its due date. ARTICLE 5 USE OF PREMISES The Premises shall be used for a trade school, for general ofice purposes and for other trade school and business ofice 'strategic uses consistent therewith, including spdce-sharing arrangements with start-up or “incubator” entities or programs and their members, fimdraising events and workshop events (the "Acceptable Um"). Notwithstanding the foregoing, Tenant understands and acknowledges that use ofthe Premises is ultimately limited by, among other things, applicable Laws (as defined below), specifically including, without limitation, zoning ordinances of the City of Palo Alto, and Landlord makes no representation or warranty whatsoever with regard to whether any prospective use of the Premises (including, without limitation, the Acceptable Uses) is permitted under applicable Laws. Tenant shall be responsible, at its sole cost'and expense, for obtaining all permits and/or other approvals that may be required by the City of Palo Alto or other governmental agencies with respect to Tenant’s use of, and/or Tenant’s business operations to be conducted in the Premises. Landlord nonetheless consents to use of the Premises solely for the Acceptable Uses (and for no other uses whatsoever), subject to compliance by Tenant with all applicable Laws and with the other provisions of this Lease. Upon Landlord's request fi'om time to time, Tenant shall immediately provide Landlord with evidence reasonably acceptable to Landlord that Tenant's use of the Premises complies with applicable Laws. Notwithstanding the foregoing or any other provision of this Lease to the contrary, Tenant fi1rther covenants and agees that it shall not use, or sufier or permit any person or persons to use, the Premises or any part thereof for a nightclub, bar, restaurant, retail, for any use or purpose contraxy to the provisions of Exhibit C (or any reasonable modifications thereto of which Tenant has notice), attached hereto, or in violation of the laws of the United States of America, the state of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Building, including, without limitation, the City of Palo Alto (collectively, "Laws"). Tenant shall comply with all recorded covenants, conditions, and resu'ictions, and the provisions of all gound or underlying leases, now or hereafler affecting the Building. All noise generated by Tenant in its use ofthe Premises shall be confined or mumed so that it does not unreasonably interfere with the businesses of or unreasonably annoy the occupants and/or users of other properties or premises. Tenant shall continuously during the entire Lease Term hereof conduct and carry on Tenant’s business in the Premises and shall keep the Premises open for business and cause Tenant’s business to be conducted therein during such reasonable hours and days as like businesses are conducted within downtown Palo Alto, provided, however, that these provisions shall not apply if the Premises should be closed and the business of Tenant temporarily discontinued thereon on account of strikes, lockouts or similar causes beyond the reasonable control of Tenant or by reason of remodeling provided that the remodeling is expeditiously completed within a reasonable time. Tenant shall at all times maintain the Premises in a clean, neat, sanitary and orderly condition. Tenant shall at all times refiajn fiom keeping, displaying or selling any merchandise or any object outside the Premises, or on any portion of any sidewalks, walkways or other portion of the common area without Landlord’s approval. Tenant shall not commit or allow to be committed any waste in or upon the Premises and shall refi'ain from using or permitting the use ofthe Premises or any portion thereof as living quarters, sleeping quarters or for lodging purposes. W §ERVICEs AND UTILITIES 6.1 W. Tenant shall contract directly with the applicable utility provider for all utilities separately metered to the Premises. M5937959.8 6.2 Interruption of Use. Tenant agess that Landlord shall not be liable for damages; by abatement of Rent or otherwise, for failure to filmish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building afier reasonable efi‘ort to do so, by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant fiom paying Rent or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any ofthe services or utilities as set forth in this Mick 6, if any. 6.3 Adg'tional Serviceg. Landlord shall also have the exclusive right, but not the obligation, to provide any additional services which may be required by Tenant, including, without limitation, locksmithing, lamp replacement, additional janitorial service, and additional repairs and maintenance, provided that Tenant shall pay to Landlord upon billing, the sum of all costs to Landlord of such additional services plus an administration fee. Charges for any utilities or services for which Tenant is required to pay fiom time to time hereunder, shall be deemed Additional Rent hereunder and shall be billed 011 a monthly basis. TICLE 7 REPAIRS 7.1 Tenant’s Repairs. Subject to Landlord’s repair obligations in Sections 7.2 andm below, Tenant shall, at Tenant’s own expense, keep the Premises, including all improvements, fixtures and furnishings therein and all plumbing, electrical heating, ventilating, air conditionings units and systems exclusively servicing the Premises (whether or not located within the Premises), in good order, repair and condition at all times during the Lease Term, which repair obligations shall include, without limitation, the obligation to promptly and adequately repair all damage to the Premises and replace or repair all damaged or broken fixtures and appurtenances; provided however, mat, at Landlord’s option, or if Tenant fails to make such repairs, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including a percentage of the cost thereof (to be uniformly established for the Building) suficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising fiom Landlord’s involvement with such repairs and replacements forthwim upon‘ being billed for same. 7.2 Lanflord’s Repairs. Anything contained in gection 1.1 above to the contrary notwithstanding, and subject to M'cles 11 andQ ofthis Lease, Landlord shall repair and maintain the structural portions ofthe Building and the basic plumbing, life safety and elecu'ical systems serving the Building generally and not located in the Premises; provided, however, if such maintenance and repairs are caused in part or in whole by the act, excess or nonstandard usage, neglect, fault of or omission of any duty by Tenant, its agents, servants, contractors, employees or invitees, Tenant shall pay to Landlord as additional rent, the reasonable cost of such maintenance and repairs. Landlord shall not be liable for any failure to make any such repairs, or to perform any maintenance. There shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising fiom the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or in or to fixtures, appurtenances and equipment therein. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under Sectio'ns 1941 and 1.942 ofthe California Civil Code; or under any similar law, statute, or ordinance now or hereafier in efi'ect. ' ARTICLE 8 ADDITIONSfly QTEBATION§ 8.1 Landlord’s Congent to Alterations. Tenant may not make any improvements, alterations, additions or changes to the Premises (collectively, the “Alterations”) without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than thirty (30) days prior to the M5937959.8 commencement thereofi and which consent shall not be unreasonably withheld by Landlord; provided, however, Landlord may withhold its consent in its sole and absolute discretion with respect to any Alterations which may afi'ect the structural components of the Building or the Systems and Equipment or which can be seen fi'om outside the Premises. Tenant shall pay for all overhead, general conditions, fees and other costs and expenses of the Alterations. Tenant shall pay to Landlord a Landlord supervision fee (the “Supervision Fee”) in the amount of (i) 3.75% of the cost ofthe Alter'ations comprising the Tenant Improvements (as defined in Section 8.4 below), and (ii) 5% of the cost of the Alterations fdr any future Alterations made to the Premises afier the completion ofthe Ten'ant Improvements. The Supervision Fee shall be paid to Landlord in monthly installments during the construction of any Alteration, including the Tenant Improvements. Upon the completion of the Tenant Improvements and any other Alteration during the Lease Term, Tenant shall provide Landlord with a final cost break-down of the cost of the Tenant Improvements and Alteration for the purposes of performing a final calculation of the Supervision Fee for such construction pm]'.ect 8.2 mm. Landlord may impose, as a condition of its consent to all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its reasonable discretion may deem desirable, including, but not limited to, the requirement that Tenant utilize for such purposes only contractors, materials, mechanics and materialmen approved by Landlord; provided, however, Landlord may impose such requirements as Landlord may determine, in its sole and absolute discretion, with respect to any work afi'ecting the structural components of the Building or Systems and Equipment (including designating specific contractors to perform such work). Tenant shall construct such Alterations and perform such repairs in conformance with any and all applicable rules and regulations of any federal, state, county or municipal code or ordinance and pursuant to a valid building permit, issued by the City Palo Alto, and in conformance with Landlord’s construction rules and regulations. Landlord’s approval of the plans, specifications and working drawings for Tenant’s Alterations shall create no responsibility or liability on the part ofLandlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. All work with respect to any Alterations must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work. In performing the work of any such Alterations, Tenant shall have the work performed in such manner as not to obsu'uct access to the Building or the Common Areas for any other tenant of the Building, and as not to obstruct the business of Landlord or other tenants of the Building, or interfere with the labor force working at the Building. If Tenant makes any Alterations, Tenant agees to carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the consu'uction of such Alterations, and such other insurance as Landlord may require, it being understood and ageed that all of such Alterations shall be insured by Tenant pursuant to Am'cle 10 of this Lease immediately upon completion thereof. In addition, Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-fi'ee completion of such Alterations and naming Landlord as a qo-obligee. Upon completion of any Alterations, Tenant shall (i) cause a Notice of Completion to be recorded m the ofice of the Recorder of the county in which the Building'1s located'm accordance with Section 3093 of the Civil Code ofthe State of California or any successor statute, (ii) deliver to the management ofice ofthe Building a reproducible copy ofthe “as buil ” drawings ofthe Alterations, and (iii) deliver 'to Landlord evidence of payment, contractors’ affidavits and full and final waivers of all liens for labor, services or materials. 8.3 Landlord’s Propegy. All Alterations, improvements, fixtures and/or equipment which may be installed or placed in or about the Premises, including any cabling and wiring associated with any telephone system or network, and all signs installed in, on or about the Premises, fi'om time to time, shall be at the sole cost of Tenant and shall be and become the property of Landlord. However, Landlord may require that Tenant remove any improvement or Alteration (including any cabling and wiring associated with any telephone system or network) upon the expiration or early termination of the Lease Term, and repair any damage to the Premises and Building caused by such removal. If Tenant fails to complete such removal and/or- to repair any damage caused by the removal of any Alterations (including any cabling and wiring associated with any telephone system or network), Landlord may do so and may charge the cost thereof to Tenant (together with a five percent (5%) supervision/adminisn'ation fee), and Tenant shall pay such cost to Landlord within thirty (30) days of being billed for the same. 10 Ans9379s9.s 8.4 Required Alterations. Tenant acknowledges and agrees that Landlord shall not be required to construct or to pay for the consu'uction of any Alterations or improvements to the Premises that Tenant may desire to make and that Tenant shall be solely responsible for making and paying for such Alterations in accordance with this Article 8. Notwithstanding anything in this Lease to the contrary, subject to the terms and conditions in this Article 8, Article 9 and as otherwise set forth in this Lease, Tenant agrees that prior to the eighteen (18) month anniversary of the Commencement Date, Tenant shall complete the installation and consu'uction of certain tenant improvements (the “Tenant Improvements”). The Tenant Improvements shall include the design, permitting and construction ofimprovements having a total cost of at least $250,000. As part ofthe Tenant Improvements, Tenant shall install fifll-service men’s and women’s restrooms in the Basement Premises in compliance with all applicable Laws and the terms and conditions of this Article 8. As used in this Section 8.4, the term “completion” means the substantial completion in accordance with the plans and specifications for the Tenant Improvements that have been approved by Landlord as required by this Article 8 and the issuance by the City of Palo Alto of a certificate of occupancy (if applicable) Or final permit sigl-ofl‘for such improvements. ARTICLE 9 COVENANT AGAINST LIENS Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Building or the Real Property, and any and all liens and encumbrances created by Tenant shall attach to Tenant’s interest only. Landlord shall have the right at all times to post and keep posted on the Premises any notice which it deems necessary for protection fi'om such liens. Tenant covenants and agrees not to suffer or permit any lien ofmechanics or materialmen or others to be placed against the Building or the Real Property with respect to work or services claimed to have been performed for or materials claimed to have been fumished to Tenant or the Premises, and, in case of any such lien attaching or notice of any lien, Tenant covenants and agees to‘cause it to be immediately released and removed ofrecord. Notwithstanding anything to the contary set forth in this Lease, if any such lien is not released and removed on or before the date notice of such lien is delivered by Landlord to Tenant, Landlord, at its sole option, may immediately take all action necessary to release and remove such lien, without any duty to investigate the validity thereof, and all sums, costs and expenses, including reasonable attomeys’ fees and costs, incurred by Landlord in connection with such lien shall be deemed Additional Rent under this Lease and shall immediately be due and payable by Tenant. W EEMLFICATION AND INSURANCE 10.1 hdgm‘fication and Waiver. To the maximum extent permitted by law, Tenant hereby assumes all risk of damage to property and injury to persons, in, on, or about the Premises fi-o'm any cause whatsoever and agees that neither Landlord (including any party constituting Landlord) nor its partners and subpartners, and their respective officers, agents, property managers, servants, employees, and independent contractors (collectively, “Landlord Parties”) shall be liable for, and are hereby released fiom any responsibility for, any damage to property or injury to persons or resulting fiom the loss of use thereof, which damage or injury is sustained by Tenant or by other persons claiming through Tenant. To the maximum extent permitted by law, Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties fiom any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attomeys’ fees) incurred in connection with or arising fi'om (i) any breach or default by Tenant under this Lease, (ii) any cause in, on or about the Premises (including, without limitation, Tenant’s installation, placement, operation and removal of Alterations, improvements, fixtures, furniture, devices, apparatus and/or equipment in, on or about the Premises), or (iii) any acts, omissions or negligence of (A) Tenant or any person claiming by, through or under Tenant or the contractors, agents, servants, employees, licensees or invitees ofTenant or any such person, in, on or about the Premises, the Building or the Real Property or (B) any person (including children) in, on or about the Premises with the actual or constructive permission of Tenant or its contractors, agents, servants, employees, licensees or invitees; provided, however, that the terms of the foregoing indemnity shall not apply to the gross acfive negligence or willful misconduct of Landlord. The provisions of this Section 10.1 shall survive the expiration or sooner termination of this Lease. 1 1 N75937959.s 10.2 Tenant’s Compliance with Landlord’s Fire and Qasualgy Insurance. Tenant shall, at Tenant’s expense, comply as to the Premises with all insurance company requirements pertaining to the use of the Premises; Tenant shall not conduct nor permit any other person to conduct any activities nor keep, store or use (or allow any other person to keep, store or use) any item or thing within the Premises, the Building, the Common Areas or the Property which (i) is prohibited under'the terms of any such policies, (ii) could result in the termination of the coverage afforded under any of such policies, or (iii) could give to the insurance carrier the right to cancel any of such policies. If Tenant’s conduct or use of the Premises causes any increase in the premium for such insurance policies, then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s expense, shall comply with all rules, orders, regulafions or requirements ofthe American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body. 10.3 Tenant’s Insurance. Tenant shall maintain the following coverages in the following amounts. 10.3.1 Commercial General Liability Insurance covering the insured against claims of bodily _ injury, personal injury and property damage arising out of Tenant’s operations, assumed liabilities or use of the Premises, including a Broad Form Commercial General Liability endorsement covering the insuring provisions of this Lease and the performance by Tenant of the indemnity ageements set forth in Section 10.1 of this Lease, (and with owned and non-owned automobile liability coverage, and liquor liability coverage in the event alcoholic beverages are served on the Premises) for limits of liability not less than: Bodily Injury and $5,000,000 each occurrence Property DamageLiability $5,000,000 annual aggregate Personal Injury Liability $5,000,000 each occurrence $5,000,000 annual aggregate 0% Insured’s participation 10.3.2 Physical Damage Insurance covering (i) all office furniture, trade fixtures, office equipment, merchandise and all other items of Tenant’s property on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant Improvements, including any Tenant Improvements which Landlord permits to be installed above the ceiling of the Premises or below the floor of the Premises, and (iii) all other improvements, alterations and additions to the Premises, including any improvements, alterations or additions installed at Tenant’s request above the ceiling of the Premises or below the floor of the Premises. Such insurance shall be written on a “physical loss or damage” basis under a “special form” policy, for the full replacement cost value new without deduction for depreciation ofthe covered items and in amounts that meet any co-insurance clauses of the policies of insurance and shall include a vandalism and malicious mischief endorsement, sprinkler leakage coverage and earthquake sprinkler leakage coverage. 10.3.3 Workers’ compensation insurance as required by law. 10.3.4 Loss-of-income, business interruption and extra-expense insurance in such amounts as will reimburse Tenant for direct and indirect loss of earnings attributable to all perils commonly insured against by prudent tenants or attributable to prevention of loss of access to the Premises or to the Building as a result of such perils. 10.3.5 Tenant shall carry comprehensive automobile liability insurance having a combined single limit of not less than Two Million Dollars ($2,000,000.00) per occurrence and insuring Tenant against liability for claims arising out of ownership, maintenance or use ofany owned, hired or non-owned automobiles. 10.3.6 The minimum limits of policies of insurance required of Tenant under this Lease shall in no event limit the liability of Tenant under this Lease. Such insurance shall: (i) name Landlord, and any other party it so specifies, as an additional insured; (ii) specifically cover the liability assumed by Tenant under this Lease, including, but not limited to, Tenant’s obligations under Section 10.1 of thjs Lease; (iii) be issued by an insurance 12 ms9379s9.a company having a rating of not less than A-X in Best’s Insurance Guide or which is otherwise acceptable to Landlord and licensed to do business in California; (iv) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-conu'ibuting with any insurance requirement of Tenant; (v) provide that said insurance shall not be canceled or coverage changed unless thirty (30) days’ prior written notice shall have been given to Landlord and any mortgagee or ground or underlying lessor of Landlord; (vi) contain a cross-liability endorsement or severabihty of interest clause acceptable to Landlord; and (vii) with respect to the insurance required in Sections 10.3. 1 and 10.3.2 above, have deductible amounts not exceeding Five Thousand Dollars ($5,000.00). Tenant shall deliver said policy or policies or certificates thereof to Landlord on or before the Commencement Date and at least thirty (30) days before the expiration dates thereof. If Tefiant shall fail to procure such insurance, or to deliver such policies or certificate, within such time periods, Landlord may, at its option, in addition to all of its other rights and remedies under this Lease, and without regard to any notice and cure periods set forth in sectig 12.1, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within ten (10) days afier delivery of bills therefor. 10.4 Subrogation. Landlord and Tenant ayee‘ to have their reSpective insurance companies issuing property damage insurance waive any rights of subrogation that such companies may have against Landlord or Tenant, as the case may be, so long as the insurance carried by Landlord and Tenant, respectively, is not invalidated thereby. As long as such waivers of subrogation are contained in their respective insurance policies, Landlord and Tenant hereby waive any right that either may have against the other on account of any loss or damage to their respecfive property to the extent such loss or damage"1s insurable under policies of msurance for fire and all risk coverage, thefi, public liability, or other similar'msurance. 10.5 Additimal Insurance Obligatiogs, Tenant shall carry and maintain during the entire Lease Tenn, at Tenant’s sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 10, and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant’s operations therein, as may be reasonably requested by Landlord. ARTICLE l 1 DAMAGE AND DE§TRQCTIQN 11.1 ' Rgpair of Damage to Premises by Landlord. Tenant shall promptly notify Landlord of any damage to the Premises resulting fi'om fire or any other casualty. If the Premises or any Common Areas serving or providing access to the Premises shall be damaged by fire or other casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control, and subject to all other terms of this Am'cle 11, restore the base, shell, and core of the Premises and such Common Areas. Such restoration shall be to substantially the same condition of the base, shell, and core of the Premises and Common Areas. prior to the casualty, except for modifications required by zoning and building codes and other Laws or by the holder of a mortgage on the Building or the Real Property, or the lessor of a gound or underlying lease with respect to the Building and/or the Real Property, or any other modifications to the Common Areas deemed desirable by Landlord, provided access to the Premises and any common restrooms serving the Premises shall not be materially impaired. Notwithstanding any other provision of this Lease, upon the occurrence of any damage to the Premises, Tenant shall assigl to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance required under Section 10.3 of this Lease, and Landlord shall repair any injury or damage to the tenant improvements and alterations installed in the Premises and shall return such tenant improvements and alterations to their original condition; provided that if the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord fiom Tenant’s insurance carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s repair of the damage. Notwithstanding anything to the contrary herein, in no event shall Landlord be obligated to repair or restore any specialized or dedicated equipment serving Tenant, such as any cabling, wiring, supplemental utility system, telephone system or wireless/Wi-Fi Network. In connection with such repairs and replacements, Tenant shall, prior to the commencement of construction, submit to Landlord, for Landlord’s review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the contractors to perform such improvement work. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s business resulting in any way fiom such damage or the repair thereof; provided however, that if such fire or other casualty shall have damaged the Premises or Common Areas necessary to Tenant’s occupancy, 13 ms937959.s and if such damage is not the result of the negligence or willful misconduct of Tenant or Tenant’s employees, contractors, licensees, or invitees, Landlord shall allow Tenant a proportionate abatement ofBase Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs to the extent Landlord is reimbursed fiom the proceeds of rental interruption insurance purchased by Landlord as part of Operating Expenses, during the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof. 11.2 Landlord’s thion to Repair. Notwithstanding the terms of Sectigg 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the Premises, the Building and/or any other portion of the Real Property and instead terminate this Lease by notifying Tenant in writing of such termination within sixty (60) days after the date of damage, such notice to include a termination date giving Tenant ninety (90) days to vacate the Premises, but Landlord may so elect only if the Building shall be damaged by fire or other casualty or cause, whether or not the Premises are afi‘ected, and one or more of the following conditions is present: (i) repairs cannot reasonably be completed within one hundred twenty (120) 'days of the date of damage (when such repairs are made without the payment of ovem'me or other premiums); (ii) the holder of any mortgage on the Building or ground or underlying lessor with respect to the Building and/or the Real Property shall require that the insurance proceeds or any portion thereofbe used to retire the mortgage debt, or shall terminate the gound or underlying lease, as the case may be; or (iii) the damage is not fully covered, except for deductible amounts, by Landlord’s insurance policies. In addition, if the Premises or the Building is desu'oyed or damaged to any substantial extent during the last twelve (12) months of the Lease Term, then notwithstanding anything contained in this Article ll Landlord shall have the option to terminate this Lease by giving written notice to Tenant of the exercise of such option within thirty (30) days afier such damage or destruction, in which event this Lease shall cease and terminate as of the date of such notice. Upon any such termination of this Lease pursuant to this Section 11.2 Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to such date of termination, and both parties hereto shall thereafier be fi'eqd and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination ofthe Lease Term. ' 11.3 Waiver of Statutog Provisions. The provisions of this Lease, including this Articlg 11, constitute an express ageement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any pan of the Premises, the Building or any other portion ofthe Real Property, and any statute or regulation ofthe state of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express ayeement between the parties, and any other statute or regulation, now or hereafier in efi‘ect, shall have no application to this Lease or any damage or destruction to all or any part ofthe Premises, the Building or any other portion ofthe Real Property. w QNDEMNATIOJ 12.1 Permanent Tm' g. If the whole or any part of the Premises, Building or the Real Property shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the use, reconstruction or remodeling of any part of the Premises, Building or the Real Property, or if Landlord shall yam a deed or other instument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days afiel- the date of such taking, condemnation, reconfiguration, vacation, deed or other instrument. Ifmore than twenty-five percent (25%) of the rentable square feet of the Premises is taken, or if access to the Premises is substantially impaired, Tenant shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days afier the date of such taking. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claim does not diminish the award available to Landlord, its gound lessor with respect to the Building or its mortgagee, and such claim is payable separately to Tenant. A11 Rent shall be apportioned as ofthe date of such termination, or the date of l4 M59379s9.s such taking, whichever shall first occur. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be proportionately abated. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 ofthe California Code of Civil Procedure. 12.2 Temporm Taking. Notwithstanding anything to the contrary contained in this Article 12 in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking. ARTICLE 13 COVENANT 0F T ENJOYLIENT Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved and on keeping, observing and performing a1] the other terms, covenants, conditions, provisions and agreements herein contained on the part ofTenant to be kept, observed and performed, shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and ayeements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other covenant express or implied. ARTICLE l4 A§§IQNMENT AND SUBLETTING 14.1 {1:rggsfers. Tenant shall not, without the prior written consent of Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment or other such foregoing transfer of this Lease or any interest hereunder by operation of law, sublet the First Floor Premises or any part thereof, sublet the Basement Premises or any part thereof to any person or entity (other than the sublease to NEU pursuant to the terms of Section 14.7 below), or permit the use of the Premises by any persons other than Tenant and its employees' (all of the foregoing are hereinafier sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”). If Tenant shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”) shall include (i) the proposed efl‘ective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180) days afier the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the “Subject Space”), (iii) all of the terms of the proposed Transfer, the name and address of the proposed Transferee, and a copy of all existing and/or proposed documentation pertaining to the proposed Transfer, including all exisfing operative documents to be executed to evidence such Transfer or the ayeements incidental or related to such Transfer, (iv) current financial statements of the proposed Transferee certifiedby an oficer, partner or owner thereof, and (v) such other information as Landlord may reasonably require. Any Transfer m'ade without Landlord’s prior written consent shall, at Landlord’s option, be null, void and of no efi'ect, and shall, at Landlord’s option, constitute a default by Tenant under this Lease subject to the cure period set forth in Section 19.1.4. Each time Tenant requests Landlord’s consent to a proposed Transfer, whether or not Landlord shall grant consent, within thirty (30) days afier written request by Landlord, as Additional Rent hereunder, Tenant shall reimburse Landlord for any reasonable legal fees incurred by Landlord in connection with Tenant’s proposed Transfer. , 14.2 Landlorg’g ngt. Landlord shall not unreasonably withhold its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. The parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent: 15 Ans937959.s 14.2.1 The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality ofthe Building; 14.2.2 The Transferee intends to use the Subject Space for purposes which are not permitted under this Lease; 14.2.3 The Transferee is either a governmental agency or instrumentality thereof; 14.2.4 The Transfer will result in more than a reasonable and safe number of occupants per floor within the Subj act Space; 14.2.5 The Transferee is not a party of reasonable financial worth and/or financial stability that has and will continue to have sufficient financial strength to perform all of the remaining obligations of Tenant under the Lease fi-om and afier the date of transfer, as reasonably determined by Landlord taking into account all relevant facts and circumstances; 14.2.6 The proposed Transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant ofthe Building a right to cancel its lease; 14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant to any such right); or 14.2.8 Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is contolled by, or is under common control with, the proposed Transferee, (i) occupies space in th'e Building at the time ofthe request for consent, (ii) is negotiating with Landlord to lease space in the Building at such time, or (iii) has negotiated with Landlord during the twelve (12) month period immediately preceding the Transfer Notice. . 14.2.9 The Transfer occurs at a time that less than ninety-five percent (95%) of the rentable square feet of the Building is leased and the rent charged by Tenant to such Transferee during the term of such Transfer, calculated by usixig a present value analysis, is less than ninety-five percent (95%) ofthe rent being quoted by Landlord at flue time of such Transfer, for comparable space in the Building for a comparable term, calculated using a present value system. Notwithstanding the foregoing, this Section 14.2.9 shall not be applicable to any sublease ofthe Basement Premises. 14.2.10 The Transfer is a sublease of some or part of the First Floor Space to a person or entity other-than a permitted sublessee of the Basement Premises, unless other available space in the Building cannot reasonably accommodate the proposed subtenant. If Landlord consents to any Transfer pursuant to the terms of this §ection 14.2 (and does not exercise any recapture rights Landlord may have under §ection 14.4 of this Lease), Tenant may within six (6) months afier Landlord’s consent, but not later than the expiration of said six-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any changes in the terms and conditions fi'om those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refine its consent to such 'I‘ransfbr under this Section 14.2 or (ii) which would cause the proposed Tran'sfer to be more favorable to the Transferee than the terms set forth in Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to.Landlord for its approval and other action under this Article l4 (including Landlord’s right ofrecapture, if any, under Sgcfign 14.4 ofthis Lease). 14.3 Transfe; Pregium. If Landlord consents to a Transfer, as a condition thereto which the parties hereby ages is reasonable, Tenant shall pay to Landlord sixty percent (60%) of any “Transfer Premium,” as that term is defined in this Section 14.3, received by Tenant fiom such Transferee. “Transfer Premium” shall mean all rent, additional rent or other consideration payable by such Transferee in excess of the Rent and Additional Rent l6 M5937959.s payable by Tenant under thjs Lease (on a per rentable square foot basis if less than all ofthe Premises is transferred), afier deducting (i) the costs incurred by Tenant for the Tenant Improvements and (ii) any reasonable market-rate brokerage .commissions in connection with the Transfer. “Transfer Premium” shall also include, but not be limited to, key money and bonus money paid by Transferee to Tenant'm connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee 1n connection with such Transfer 14.4 Landlord’s thiong tg Subject §pace. Notwithstanding anything to the contrary contained in this Amcle l4, Landlord shall have the option, by giving written notice (“Recapture Notice”) to Tenant within thirty (30) days afier receipt of any Transfer Notice, to recapture the Subject Space. If Tenant does not rescind the Transfer Notice within the time period provided below, such Recapture Notice shall cancel and terminate this Lease with respect to the Subject Space as of the date stated in the Transfer Notice. If this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number ofrentable square feet contained 1n the Premises, and this Lease as so amended shall continue thereafler'm fi111 force and efl‘ect, and upon request of either party, the parties shall execute written confirmation of the same. If Landlord declines, or fails to elect 1n a timely manner to recapture the Subject Space under this Section 14.4 then, provided Landlord has consented to the proposed Transfer, Tenant shall be entitled to proceed to transfer the Subject Space to the proposed Transferee, subject to provisions of the last paragaph of Section 14.2 of this Lease. If Landlord elects to recapture the Subject Space, Tenant shall have the right to rescind the Transfer Notice by giving written notice to Landlord within five (5) days afier its receipt ofthe Recapture Notice. 14.5 Efi‘ect of Transfer. If Landlord cements to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified; (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly afier execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, and (iv) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of‘the Lease fi'om liability under this Lease. Landlord or its auflmrized representatives shall have the right at a1] reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and shall have the right to make copies thereof. Ifthe Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days afier demand, pay the deficiency and Landlord’s costs of such audit. 14.6 Additional Transfer; For purposes of this Lease, the term “Transfer” shall also include (i) if Tenant is a parmflship, the withdrawal or change, voluntary, involuntary or by operation of law, of fifly percent (50%) or more of the partners, or u'ansfer of twenty-five percent or more of partnership interests, within a twelve (12) month period, or the dissolution of the parmflship without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant, (B) the sale or other transfer of more than an aggregate of fifiy percent (50%) of the voting shares of Tenant (other than to immediate family members by reason of gifi or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge ofmore than an aggegate of fifly percent (50%) ofthe value ofthe unencumbered assets of Tenant within a twelve (12) month period. 14.7 NEQ Sublease. Notwithstanding the preceding provisions of this Article 14, Landlord and Ten'ant acknowledge that Tenant intends to sublease the Basement Premises to New England University, Inc. (“NEU”) for use by NEU solely for ofice purposes for a term of three (3) years commencing on the Commencement Date at a base rental amount equal to or greater than the Base Rent payable under this Lease for the first year of the Lease Term (the “NEU Sublease”). Pursuant to the NEU Sublease, NEU or Tenant shall be required to construct during the initial first year ofthe Lease Term men’s and women’s restrooms in the Basement Premises in compliance with applicable Laws and the terms and conditions of this Lease (including, without limitation, Section 7 of this Lease), which shall be considered Tenant Improvements for all purposes hereunder. Landlord hereby (i) acknowledges that no Transfer Notice is required in connection with the NEU Sublease, (ii) aclmowledges that NEU satisfies the criteria set forth for a Transferee in Sections 14.2.1, 14.2.2, 14.2.4, and 14.2.7, and (iii) subject to Landlord’s approval of the form ofNEU Sublease (not to be unreasonably withheld, conditioned or delayed) and the execution by Tenant and NEU of Landlord’s standard consent to subleasing (the “Sublease Consent”), consents to the NEU 17 M59319»: Sublease as a permitted Transfer. 'Ihe consent ofLandlord shall be required for any extension and/or renewal ofthe NEU Sublease. The NEU Sublease shall be subject to the payment of a Transfer Premium as set forth in Section 14.3 above. In no event shall Tenant grant possession of any portion of the Premises to NEU until such time as the Sublease Consent has been executed and delivered by Landlord, Tenant and NEU and NEU has delivered to Landlord evidence of all insurance (including certificates of insurance and additional insured endorsements) satisfying the requirements of Section 10.3 of this Lease and the Sublease Consent. As between Landlord and Tenant, Tenant at its sole cost and expense shall be solely responsible for making all Alterations, if any, required to deliver the Basement Premises to NEU in the condition required by the NEU Sublease, including, if applicable, making any Alterations required to configure the Basement Premises and the First Floor Premises in a manner that provides NEU with separate and/or secured access to the Basement Premises. 14.8 Shared. Space Amgements. Notwithstanding anything to the contrary in this Article 14, Tenant may fiom time to time permit its clients, afiliates, vendors or other third parties to temporarily occupy portions of the Premises and any such occupancy shall not be deemed to be a Transfer under this Article l4 so long as (i) not more than a cumulative total of 3,500 rentable square feet ofme Premises is so used ax any one fime, (ii) me Tenant originally named herein remains the Tenant hereunder and continues to conduct business in not less than one-half of the Premises, (iii) the space occupied by such parties is not separately demised fi'om the balance ofthe Premises (i.e. separated fiom the balance of the space by a wall or other consu'ucted device and having separate entrances to the Common Areas), (iv) the cumulative license fees payable for such arrangements do not exceed Ten Thousand Dollars ($10,000) per month, and (v) the use of the space is in compliance with Article 5 above. Tenant shall be fully responsible for the conduct of such parties within the Premises and the Real Property, and Tenant’s indemnification obligations set forth in Section 10 of this Lease shall apply with respect to the conduct of such parties. Tenaht shall supply Landlord with the terms of any such space sharing arrangement within fifieen (15) days afier entering into any such arrangement. If such arrangement indicates that the sums payable thereunder for the value ofthe use of the space exceed the Rent payable under Section 3 and 4 hereof for such space, and such excess is not reasonably atu'ibutable to the bundle of services provided by Tenant to such occupant (as reasonably evidenced by Tenant to Landlord), then that particular space sharing arrangement shall be deemed to be a Transfer and shall be subject to Section 14.3 above. Notwithstanding the foregoing, Tenant shall not permit any party to occupy space in the Premises (or conduct business in the Prcmises) pursuant to the this Section 14.8 until Tenant delivers to Landlord a fully executed counterpart of Landlord’s waiver and acknowledgement form for space sharing arrangements (the “Acknowledgement”_) in the form of attached Exhibit E. W15. SURRENDER; OWNERSHIP AND REMOVAL 0F TRADE FIXTms 15.1 Surrender of Premises. No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in a writing signed by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee ofLandlord shall not constitute a surrender of the Premises or efi‘ect a termination of this Lease, whether or not the keys are thereafler retained by Landlord, and nomithstanding such delivery Tenant shall be entitled to the reun'n of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option ofLandlord shall operate as an assigment to Landlord of all subleases or subtenancies affecting the Premises. 15.2 Removal of Tenant Prgpem b1 Tmt. Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15 quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafier improved by Landlord and/or Tenant, reasonable wear and tear and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed fiom the Premises all debris and rubbish, and such items of furniture, equipment, fi-ee-standing cabinet work, and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, and cabling, wiring or conduit (including any such cabling or wiring associated with any telephone system or network, if any) which may have been placed at the l 8 Ans937959.s Building or within the Building by or on behalf of Tenant, and such similar articles of any other persons claiming under Tenant, as Landlord may, in its sole discretion, require to be removed, and Tenant shall repair at its own expense all damage to the Premises and Building resulting fiom such removal. ARTICLE 1w IfTenant holds over afier the expiration of the Lease Term hereof, with or without the express or implied consent of Landlord, such tenancy shall be fiom month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate equal to one hundred fifiy percent (150%) ofthe geater of (i) the Base Rent applicable during the last rental period ofthe Lease Term under this Lease, and (ii) the fair market rental rate of the Premises as ofthe commencement ofsuch holdover period. Such month-to-month tenancy shall be subject to every other term, covenant and ageement contained herein. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or .at law. If Tenant fails to surrender the Premises upon the termination .or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefi-om, Tenant shall protect, defend, indemnify and hold Landlord harmless fi'om all loss, costs (including reasonable attorneys’ fees) and liability resulting fiom such failure, including, without limiting file generality ofthe foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefi'om.m1 ET PPL E CATE Within ten (10) days following a request in writing by Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate, which, as submitted by Landlord, shall be in the form as may be required by any prospective mortgagee or purchaser of the Real Property (or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by Landlord or Landlord’s mortgagee or prospective mortgagee. Tenant shall execute and deliver whatever other instruments may be reasonably required for such purposes. Failure of Tenant to fimely execute and deliver such estoppel certificate or other instruments shall constitute an acceptance of the Premises and an aclcnowledgnent by Tenant that statements included in the estoppel certificate are rue and correct, without exception. Failure by Tenant to so deliver such estoppel certificate shall be a default ofthe provisions of this Lease, subject to the cure periods set forth in Section 19.1.4. In addition, Tenant shall be liable to Landlord, and shall indemnify Landlord fiom and against any loss, cost, damage or expense, incidental, consequential, or otherwise, including attorneys’ fees, arising or accruing directly or indirectly, fi'om any failure of Tenant to execute or deliver to Landlord any such estoppel certificate. mg INATIo This Lease is subject and subordinate to all present and future gound or Imderlying leases of the Building and to the lien of any mortgages or trust deeds, now or hereafier in force against the Real Pr0perty, if any, and to all renewals, extensions, modifications, consolidations arid replacements thereof, and to all advances made or hereafier to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages or trust deeds, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto. Tenant covenants and agees in the event any proceedings are brought for the foreclosure of any such mortgage, or if any ground or underlying lease is terminated, to attom, without any deductions or set-offs whatsoever, to the purchaser upon any such foreclosure sale, or to the lessor of such gound or Imderlying lease, as the case may he, if so requested to do so by such purchaser or lessor and to recognize such purchaser or lessor as the lessor under this Lease. Tenant shall, within five (5) days of request by Landlord, execute such further instruments or assm'ances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to 19 ms937959.s any such mortgages, trust deeds, ground leases or underlying leases. Tenant hereby irrevocably authorizes Landlord to execute and deliver in the name of Tenant any such instrument or instruments if Tenant fails to do so, provided that such authorization shall in no way relieve Tenant fi'om the obligation of executing such insu'uments of subordination or superiority. Tenant waives the provisions of any current or filture statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations ofthe Tenant hereunder in the event of any foreclosure proceeding or sale.m2 TENANT’S DEFAULTS' LANDLORD’S REMEDIES 19.1 Events 9f Defamt by Tenant. All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any reduction ofRent. The occurrence of any ofthe following shall constitute an “Event of Default” under fllis Lease by Tenant: 19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due; or 19.1.2 Any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for fifieen (l5) days afier written notice thereof fi'om Landlord to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; and provided further that if the nature of such default is such that the same cannot reasonably be cured within a fifleen (15) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafier diligently proceeds to rectify and cure said default as soon as possible; or 19.1.3 Abandonment or vacation of the Premises by Tenant. Abandonment is herein defined to include, but is not limited to, the failure of Tenant to operate in the Premises during customary business hours for thirty (30) days or longer while an Event of Default described elsewhere in this Section 19.1 has occurred and is continuing. 19.1.4 Any failure by Tenant to observe or perform the provisions of Sections 14, l7, 18 or 26.4 where such failure continues for more than five (5) business days afier notice fiom Landlord. 19.1.5 Tenant (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary petition in banla'uptcy, or sufl’ers the filing of an involuntary petition by creditors, (iii) suffers the appointment of a receiver to t'ake possession of all or substantially all of its assets, (iv) sufi‘ers the attachment or other judicial seizure of all or substantially all of its assets, (v) admits in wrifing its inability to pay its debts as they come due, or (vi) makes an offer of settlement, extension or composition to its creditors generally. Tenant acknowledges that Landlord’s delivery of any notice described in the foregoing provisions of this Section 19.1 shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law 19.2 Landlord’s Remedies Upgn Event of Default. Upon the occurrence of an Event of default by Tenant, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever. 19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so,led10rd may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession ofthe Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover fi'om Tenant the following: 20 ms9319s9.s (i) The worth at the time of award of any unpaid rent which has been earned at the time ofsuch termination; plus (ii) The worth at the time of award ofthe amount by which the unpaid rent which would have been earned afiel- termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (iii) The worth at the time of award of the amount by which the unpaid rent for the balance ofthe Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus ' (iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefi'om, specifically including but not limited to, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a difl‘erent use, and any special concessions made to obtain a new tenant, including, without limitation, any rent abatement; and (v) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted fiom time to time by applicable law. The term “rent” as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in fiecfiom 19.2.1111 and (m above, the “worth at the time of award” shall be computed by allowing interest at the Interest Rate set forth in Section 4.5 of this Lease. As used in Section 19.2.11iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time ofaward plus one percent (1%). 19.2.2 Landlord shall have the remedy described in California Civil Code Section 195 l .4 (lessor may continue lease in effect afier lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account ofany default by Tenant, Landlord may, fi'om time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due. 19.2.3 Landlord may, but shall not be obligated to, make any such payment or perform or otherwise cure any such obligation, provision, covenant or condition on Tenant’s part to be observed or performed (and may enter the Premises for such purposes) In the event of Tenant’s failure to perform any of its obligations or covénants under this Lease, and such failure to perform poses a material risk of injury or harm to persons or damage to or loss ofproperty, then Landlord shall have the right to Cure or otherwise perform such covenant or obligation at any time afier such failure to perform by Tenant, whether or nbt any such notice or cure period set forth in Secfion 19.1 above has expired. Any such actions undertaken by Landlord pursuant to the foregoing provisions of this Section 19.2.3 shall not be deemed a waiver of Landlord’s rights and remedies as a result of Tenant’s failure to perform and shall not release Tenant fi'om any of its obligations under this Lease. 19.3 Pament bx Tenant. Tenant shall pay to Landlord, within fifieen (15) days afier delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incuned by Landlord in connection wifla Landlord’s performance or cure of any of Tenant’s obligations pursuant to the provisions of Section 19.2.3 above; and (ii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all- legal fees and other amounts so expended. Tenant’s obligations under this Sggg'gn 12.3 shall survive the expiration or sooner termination of the Lease Term. 21 M5937959.8 19.4 Sublesgees of Tenant. Whether or not Landlord elects to terminate this Lease on account of any Event of Default, as set forth in this Article 12, upon the occun'ence of an Event of Default by Tenant, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual anangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder. 19.5 Waiver of Default. No waiver by Landlord of any violation or breach by Tenant of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach by Tenant of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Landlord in enforcement of one or more ofthe remedies herein provided upon a default or Event of Default by Tenant shall not be deemed or construed to consfitute a waiver of such default or Event of Default. The acceptance ofany Rent hereunder by Landlord following the occurrence of any default, whether or hot lmown to Landlord, shall not be deemed a waiver of any such default, except only a default'1n the payment of the Rent so accepted. 19.6 Efi‘orts to Relet. For the purposes of this Article 19 Tenant’s right to possession shall not be deemed to have been terminated by efforts of Landlord to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by appointment of a receiver to protect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative of acts which may be performed by Landlord without terminating Tenant’s right to possession. 19.7 Concessions. If Landlord provides Tenant with any concessions under this Lease, including, without limitation, rent abatement or tenant improvement allowance, Tenant acknowledges and agees that Landlord provided such concessions to Tenant in reliance upon Tenant's representation and warranty that Tenant shall faithfully and timely perform all terms and conditions of this Lease. Accordingly, if an Event of Default by Tenant shall occur, Landlord shall, in addition to all other damages due Landlord, recover fiom Tenant all such concessions as Additional Rent. ARTICLE 20 SECURITY DEPOSIT Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with Landlord a security deposit (the “Security Deposit”) in the amount set forth in Sectiog 10ef-flaa-SWWfiI-WMHH by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Lease Term. If Tenant defaults with respect to any provisions of this Lease, including, but not limited to, the provisions relating to the payment of Rent, Landlord may, but shall not be required to, use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any amount that Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage that Landlord may sufi‘er by reason of Tenant’s default. If any portion ofthe Security Deposit is so used or applied, Tenant shall, within five (5) days afier written demand therefor, deposit cash with Landlord in an amount suficient to restore the Security Deposit to its orig'nal amount, and Tenant’s failure to do so shall be a default under this Lease. IfTenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord’s opfion, to the last assignee of Tenant’s interest hereunder, within sixty (60) days following the expiration ofthe Lease Term. Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force, which provide that Landlord may claim fiom a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being ageed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or mforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee ofTenant. 22 ”759379593 W COMPLIANCE WITH LAWS 21 .l Notwithstanding any other provision ofthis Lease to the contrary, 21.1.1. Tenant shall not do anything or suffer anything to be done in or about the Premises which will in any way conflict with any Laws now 'in force or which may hereafter be enacted or promulgated; 21.1.2 Tenant, at its expense, shall comply with all Laws relating to (i) the operation of its business at the Premises, (ii) the use, condition, configuration or occupancy of the Premises, or (iii) the Building systems located in or exclusively serving the Premises; and 21.1.3. If a change to the Premises, any Common Area, the Building structure, or any Building System becomes required under Law as a result of any Alterations or any furniture, fixtures, equipment or apparatus which Tenant installs or places in the Premises, or any use of the Premises other than a trade school, Tenant shall, upon demand and at Landlord’s option, either (y) make such change at Tenant’s cost and subject to Article. 8 above or (y) immediately cease the use or remove the Alterations or fin'niture, fixtures, equipment or apparatus triggering such compliance requirements, all at Tenant's cost. 21.2 In addition, Tenant shall fully comply with all present or future progams intended to manage parking, transportation or trafic in and around the Building, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. The judgnent of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive ofthat fact as between Landlord and Tenant. ARTICLE 22 ENTRY BY LANDLORD Landlord reserves the right at all reasonable times and upon reasonable notice to Tenant to enter the Premises to: (i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees or tenants, or to the ground or underlying lessors; (iii) to post notices ofnonresponsibility; or (iv) alter, improve or re'pair the Premises or the Building ifnecessary to comply with current building codes or other applicable laws, or for structural alterations, repairs or improvements to the Building, or as Landlord may otherwise reasonably desire or deem necessary. Notwithstanding anything to the conuary contained in this Article 22 Landlord may enter the Premises at any time, without notice to Tenant, in emergency situations and/or to perform janitorial or other services required of Landlord pursuant to this Lease. Any such entries shall be without the abatement of Rent and shall include the right to take such reasonable steps as required to accomplish the stated purposes. Tenant hereby waives any claims for damages or for any injuries or inconvenience to or intetference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by_ Tenant. In an emergency, Landlord shall have the right to enter without notice and use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant fi‘om any portion ofthe Premises. ARTICLE 23 ENVIRONMEE EAL PROTECTION 23 N759379s9.8 23 .1 Environmental Protectign. Tenant’s obligations under this Article 23 shall survive the expiration or termination of this Lease. 23.1.1 As used herein, the term “Hazardous Materials” shall mean any toxic or hazardous substance, material or waste or any pollutant or infectious or radioactive material, including but not limited to those substances, materials or wastes regulated now or in the future under any ofthe following statutes or regulations and any and all of those substances included within the definitions of “hazardous substances,” “hazardous materials,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixtm'e,” “toxic substances,” “hawdous air pollutant,” “toxic pollutant,” or “solid waste” in the (a) Comprehensive Environmental Response, Compensation and Liability Act of 1990 (“CERCLA” or “Superfimd”), as amended by the Superfimd Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq., (b) Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6901 et seq., (c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et seq., (d) Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., (e) Toxic Substances Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et seq., (g) Carpenter-Presley-Tanner Hazardous Substance Account Act (“California Superfund”), Cal. Health & Safety Code § 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health & Safety code § 25100 ct seq., (i) Porter-Cologne Water Quality Contol Act (“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety codes § 25220 et seq., (k) Safe Drinking Water and Toxic Enforcement_Agt_gt:Jfigflroposiflon 65”), Cal. Health & Safety code § 25249.5 et seq., (l) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety code § 25280 et seq., (m) Air Resources Law, Cal. Health & Safety Code § 39000 et seq., and (n) regulations promulgated pursuant to said Laws or any replacement thereof, or as similar terms are defined in the federal, state and local Laws, statutes, regulations, orders or rules. Hazardous Materials shall also mean any and all other biohazardous materials, wastes and substances which are, or in the future become, regulated under applicable Laws for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, Without limitation, (i) trichloroethylene, teh'achloroethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products or fiactions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials and wastes that are harmful to or may threaten human health, ecology or the environment. 23.1.2 Notwithstanding anything to the contrary in this Lease, Tenant, at its sole cost, shall comply with all Laws relating to the storage, use and disposal of Hazardous Materials; provided, however, that Tenant shall not be responsible for contamination ofthe Premises by Hazardous Materials existing as ofthe date the Premises are delivered to Tenant. Tenant shall not store, use or dispose of any Hazardous Materials except for those Hazardous Materials that are commonly used and are typically found in similar premises used for the purposes permitted by Article 5 hereof(“Permitted Materials”) which may be used, stored and disposed ofprovided (i) such Permitted Materials are used, stored, transported, and disposed of in strict compliance with applicable Laws (ii) Tenant shall provide Landlord with copies of all material safety data sheets and other documentation required under applicable Laws in connection with Tenant’s use of Permitted Materials as and when such documentation is provided to any regulatory authority having jurisdiction. In no event shall Tenant cause or permit to be discharged into the plumbing or sewage system ofthe Building or onto the land underlying or adjacent to the Real Property any Hazardous Materials. Tenant shall be solely responsible for and shall defend, indemnify, and hold Landlord and its agents haxmless fi-om and against all claims, costs and liabilities, including attorneys’ fees and costs, arising out of or in connection with Tenant’s storage, use and/or disposal of Hazardous Materials. If the presence of Hazardous Materials in or on the Premises, the Building, the Common Areas, or the Real Property caused or knowingly permitted by Tenant results in contamination or deterioration of water or soil. then Tenant shall promptly take any and all acfion necessary to clean up such contamination, but the foregoing shall in no event be deemed to constitute permission by Landlord to allow the presence of such Hazardous Materials. At any time prior to the expiration of the Lease Term if Tenant has a reasonable basis to suspect that there has been any release or the presence of Hazardous Materials in the gound or ground water on the Premises which did not exist upon commencement of the Lease Term, Tenant shall have the right to conduct appr0priate tests of water and soil and Tenant shall deliver to Landlord the results of such tests to demonstate that no contamination in excess of permitted levels has occurred as a result of Tenant’s use of the Premises. Tenant shall fimher be solely responsible for, and shall defend, indemnify, and hold Landlord and its agents harmless fiom and against all claims, costs and liabilities, including attorneys’ fees and costs, arising out of or in connection with any removal, cleanup and restoration work and materials required 24 ”759379593 under this Section 23 . 1 .2 to return the Premises the Building, the Common Areas, or the Real Preperty and any other property ofwhatever nature to their condition existing prior to the appearance ofthe Hazardous Materials. 23. 1 .3 Upon termination or expiration of the Lease Term, Tenant at its sole expense shall cause all Hazardous Materials placed'm or about the Premises, the Building and/or the Real Property by Tenatit, its agents, contractors, or invitees, and all installations (whether interior or exterior) made by or on behalf of Tenant relating to the storage, use, disposal or transportation of Hazardous Materials to be removed fi'om the property and transported for use, storage or disposal in accordance and compliance with all Laws and other requirements respecting Hazardous Materials used or permitted to be used by Tenant. Tenant shall apply for and shall obtain fiom all appropriate regulatory authorities (including any applicable fire department or regional water quality control board) all permits, approvals and clearances necessary for the closure ofthe Real Property and shall take all other actions as may be required to complete the closure of the Building and the Real Property. In addition, if Landlord has a reasonable basis to suspect the existence of Hazardous Materials contamination caused or lmowingly permitted by Tenant, then prior to vacating the Premises, Tenant shall, upon Landlord's request, undertake and submit to Landlord an environmental site assessment fiom an environmental consulting company reasonably acceptable to Landlord which site assessment shall evidence Tenant’s compliance with this Paragaph 23. 1 .3. 23. 1.4 At any time prior to expiration of the Lease Term, subject to reasonable prior'notice (not less than forty-eight (48) hours) and Tenant’s reasonable security requirements and provided such activities do not unreasonably interfere with the conduct of Tenant’s business at the Premises, Landlord shall have the right to enter in and upon the Real Property, Building and Premises in order to conduct appropriate tests of water and soil to determine whether levels of any Hazardous Materials in excess of legally permissible levels has occurred as a result of Tenant’s use thereof. Landlord shall furnish copies of all such test results and reports to Tenant and, at Tenant’s option and cost, shall permit split sampling for testing and analysis by Tenant. Such testing shall be at Tenant‘s expense (and shall be reimbursable to Landlord‘immediately upon demand) if Landlord has a reasonable basis for suspecting and confirms the presence ofHazardous Materials in the soil or surface or yound water in, on, under, or about the Real Property, the Building or the Premises, which has been caused by or resulted fi'om the activities of Tenant, its agents, contractors, or invitees. 23.1.5 Landlord may voluntarily cooperate in a reasonable manner with the efforts of all governmental agencies in reducing actual or potential environmental damage. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement ofrent by reason of such voluntary cooperation, nor for any required compliance. Tenant agrees at all times to cooperate fully with the requirements and recommendations of governmental agencies regulating, or otherwise involved in, the protection ofthe environment. wlfl 24.1 Letter of Credit. Concurrently with its execution of this Lease, Tenant shall deposit with Landlord an irrevocable standby letter of credit (the “Letter of Credit”) in the amount set forth'in Section 12 ofthe Summary (the “Letter of Credit Amount”), as further specified in this Article 24. For purposes of this Lease, “Letter of Credit” shall mean an unconditional, irrevocable sight drafi letter of credit, drawable in the San Francisco Bay Area, in the Letter of Credit Amount issued by a bank reasonably satisfactory to Landlord and which will accept presentation of the Letter of Credit in the City of Palo Alto (or by fax), naming Landlord as beneficiary, and otherwise in substantially the form ofthe letter of credit attached hereto as Exhibit D 24.2 Draws Under Letter of Credit. Upon any default or breach of this Lease by Tenant, Landlord shall be entitled to draw upon the Letter of Credit by the issuance of Landlord’s sole written demand to the issuing financial institution. Any such draw shall be without waiver of any rights Landlord may have under this Lease or at law or in equity as a result ofthe default, as a setoff for fixll or partial compensation for the default. Partial drawings upon the Letter ofCredit shall be permitted, and the Letter of Credit shall be transferable to a new building owner or lender. Tenant shall reimburse Landlord for any fees imposed by the issuing bank to transfer the Letter of Credit. 24.3 Ierm; Renewal of Letter of Credit. The Letter of Credit will be automatically renewed upon the expiration of its term for additional one (1) year periods, the renewal period not to extend beyond ninety (90) days 25 ms937959.s afier the Expiration Date of this Lease. The Letter of Credit shall provide for automatic annual renewals. Notwithstanding the foregoing, if the issuing bank for any reason notifies Landlord in writing that it will not renew the Letter of Credit for any subsequent year, Tenant shall cause the Letter of Credit (or a replacement letter of credit acceptable to Landlord and satisfying the requirements of this Article 24) to be renewed through the date that is ninety (90) days afier the expiration of the Term (including any extensions of the Lease Term upon Tenant’s exercise of an extension option as provided in the Lease). In the event the Letter of Credit is not renewed by the issuing financial institution on or before thirty (30) days prior to the then-scheduled expiration date of the Letter of Credit, then Landlord shall have the right to draw the filll amount of the Letter of Credit and to hold such amount as cash security for Tenant’s fi111 and faithful performance of its obligations under this Lease. 24.4 Return of Letter of Credit. If Tenant performs all of Tenant’s obligations hereunder, the Letter of Credit or so much thereof as has not heretofore been drawn and/or applied by Landlord, shall be returned, to Tenant (or, at Landlord’s option, to the last assignee, if any, of Tenant’s interest hefeunder) not later than ninety (90) days following the date this Lease expires or its earlier termination and Tenant has vacated the Premises. 24.5 Tenant Default' Waivers. The Letter of Credit is not an advance payment or prepayment ofRent or a measure or limit of Landlord’s damages upon a default or breach by Tenant. Without waiver of any rights Landlord may have under this Lease or at law or in equity, Landlord may fi'om time to time draw upon and apply all or a portion ofthe Letter of Credit as is necessary for the following purposes: (i) to remedy any default by Tenant in the payment of Rent, (ii) to repair damage to the Premises caused by Tenant, (iii) to clean the Premises upon the expiration or sooner termination of this Lease, and/or (iv) to the payment of any other amount which Landlord may spend or become obligated to spend by reason of a default and/or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of a default, to the fullest extent permitted by law (including, without limitation, on account of damages owing to Landlord under Article 19 of this Lease). Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code (to the extent applicable to the Letter of Credit) and all other provisions of law, now or hereafier in efi‘ect, which provide that Landlord may claim fi'om a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums specified in this Article 24 and/or those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the acts or omissions of Tenant or any omcer, employee, agent, contactor or invitee of Tenant. ARTICLE 25 OPTION TQ EXTEND 25.1 Extension Qmion. So long as Institute for the Future is the Tenant hereunder and Tenant, its employees and licensees (but no other party, other than NEU) occupy the entirety ofthe Premises, Tenant shall have one (1) option (the "Extension Option") to extend the term ofthis Lease with respect to the entirety ofthe Premises, for a period of five (5) years fi'om the Expiration Date (each an “Extension Period”), subject to the following conditions: 25. l .1. Notice. The Extension Option shall 'be exercised, if at all, by notice of exercise given to Landlord by Tenant not more than two hundred ten (210) days nor less than one hundred eighty (180) days prior to the expiration ofthe Lease Term; and 25.1.2. Limitations. Anything herein to the contary notwithstanding, if (i) more than two (2) defaults beyond the applicable notice and cure period have occurred during the last two (2) years of the Lease Term or (ii) Tenant is in default beyond the applicable notice and cure period under any of the terms, covenants or conditions of this Lease, either at the time Tenant exercises the Extension Option or on the commencement date of the Extension Period, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right to terminate the Extension Option upon notice to Tenant and, upon such termination, the Extension Option shall be ofno force or efi‘ect whatsoever. 26 ms9379s9.s 25.2 Pg: Market gent. In the event the option is exercised in a timely fashion, the Lease shall be extended for the term of the Extension Period upon all of the terms and conditions of this Lease, provided that the Base Rent for the Extension Period shall be one hundred percent (100%) of the “Fair Market Rent” for the Premises and Tenant shall have no further right to extend the Lease Term. For purposes hereof, “Fair Market Rent” shall mean the Base Rent determined pursuant to the process described in Section 25.3 below. In no event, however, shall any adjustment ofBase Rent pursuant to this paragaph result in a decrease ofthe Base Rent for the Premises below the amount due fi'om Tenant for the preceding portion ofthe initial Lease Term for which Base Rent had been fixed. No leasing commissions shall be due or payable to any broker retained by Tenant with regard to this Lease for any Extension Period. In the event the parties fail to ages upon the Fair Market Rent on or before the date that is one hundred eighty (1 80) days prior to the date upon which the Base Rent is scheduled to adjust to the Fair Market Rent, the Fair Market Rent shall be determined in the manner hereinafier set forth in Section 25.3. 25.3 Broker Valuation Process. In the event it becomes necessary under this Article 25 to determine the Fair Market Rent, one hundred eighty (180) days prior to the date upon which the Base Rent is scheduled to adjust to the Fair Market Rent, Landlord and Tenant each shall appoint a licensed real estate broker with at least ten (10) years of experience in the leasing and determination ofrental value for ofice properties in the downtown Palo Alto area, and such brokers shall each determine the Fair Market Rent for the Premises taking into account the use of the Premises, the rentable square footage, the value of the Premises and the amenities provided by the Building, the annual adjustments of Base Rent as provided in this Section 25.3, and prevailing comparable rentals in the downtown Palo Alto market; provided, however, that in their determination of the Fair Market Rent shall not take into account improvements to the Premises provided or installed by Tenant which Tenant would be entitled to remove upon expiration ofthe Lease Term pursuant to the terms of this Lease. Such brokers shall, within forty-five (45) business days afier their appointment, complete their valuations and submit their valuation reports to Landlord and Tenant. Ifthe Fair Market Rent ofthe Premises established in the two (2) valuations varies by five percent (5%) or less ofthe higher rental, the average oftwo shall be controlling. If said Fair Market Rent varies by more than five percent (5%) of the higher rental, the brokers, within ten (10) days after submission of the last valuation, shall appoint a third broker who shall be simflarly qualified and experienced. Such third broker shall, within forty-five (45) business days afier his appointment, determine by valuation the Fair Market Rent of the Premises, taking into account the same factors referred to above, and submit his valuation report to Landlord and Tenant. The Fair Market Rent determined by the third broker for the Premises shall be averaged with whichever of the other two values determined by the other brokers that'ls closest to that determined by the third broker, and said average shall be the Fair Market Rent used to determine Base Rent pursuant to the preceding paragaph. If either Landlord or Tenant fails to appoint an broker, the valuation submitted by the broker properly appointed and timely submitting his valuation shall be controlling. Ifthe two brokers appointed by Landlord and Tenant are unable to ages upon a third broker within the required period in accordance with the foregoing, application shall be made within twenty (20) days thereafier by either Landlord or Tenant to the presiding judge of the Santa Clara Superior Court to select the third broker. The cost of all brokers under this paragaph shall be borne equally by Landlord and Tenant. Upon each anniversary of the date of commencement of the Extension Period, the Base Rent due per month shall be increased by not less than three percent (3.0%) of the monthly Base Rent for the previous year. The parties expressly agree that the provisions of this Section shall be implemented in accordance with express terms of this Section and under such other procedures as the parties may agree to in their sole discretion, and except as expressly set forth above, shall NOT be subject to or governed by the provisions of California Code of Civil Procedure Section 1280 et seq. as an arbitration, and all such arbitration provisions are hereby intentionally waived.. ARTICLE 26 MISCELLANEOU§ PBOVISIONS 26.1 Terms; Captigns. The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, consu-ue, afi'ect or alter the meaning ofsuch Articles and Sections. 26.2 Binding Efl‘ect. Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective successors or 27 Ans9379s9.s assigns, provided this clause shall not permit any assignment by Tenant comrary to the provisions of Article 14 of this Lease. 26.3 No Waiver. No waiver of any provision of this Lease shall be implied by any failure of a party to enforce any remedy on account of fl1e violation of such provision, even if such violation shall continue or be repeated subsequently, any waiver by a party of any provision of this Lease may only be in writing, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord fiom Tenant afier the termination of this Lease shall in any way alter the length ofthe Lease Term or of Tenant’s right ofpossession hereunder or afier the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being ageed that afier the service of notice or the commencement of a suit or afier final judgnent for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive 9r afiect said notice, suit or judgnent. 26.4 Mogg'flcafign-ofLeage; Finggialg. Should any current or prospective mortgagee or gotmd lessor for the Building require a modification or modifications of this Lease, which modification or modifications will not cause an increased cost or expense to Tenant or in any other way materially and adversely change the rights and obligations of Tenant hereunder, then and in such event, Tenant agrees that this Lease may be so modified and agees to execute whatever documents are required therefor and deliver the same to Landlord within ten (10) days following the request therefor. Should Landlord or any such current or prospective mortgagee or ground lessor require execution of a short form of Lease for recording, containing, among other customary provisions, the names ofthe parties, a description of the Premises and the Lease Term, Tenant agees to execute such short form of Lease and to deliver the same to Landlord within ten (10) days following the request therefor. In addition, upon request fiom time to time, Tenant agrees to provide to Landlord, within ten (10) days of written request, current financial statements for Tenant, dated no earlier than one (1) year prior to such request, certified as accurate by Tenant or, if available, audited financial statements prepared by an independent certified public accountant with copies of the auditor’s statement. If any Guaranty is executed in connection with this'Lease, Tenant also agees to deliver to Landlord, within ten (-10) days of written request, current financial statements ofthe Guarantor in a form consistent with the above criteria. A11 such financial statements will be delivered to Landlord and any such lender or purchaser in confidence and shall only be used for purposes of evaluating the financial strength of Tenant or of Guarantor, as applicable. 26.5 Transfer ofi Lanflord’s Inmg. Tenant aclmowledges that Landlord has the right to transfer all or any portion of its interest in the Building, the Real Property and/or in this Lease, and Tenant agrees that in the event ofany such transfer, Landlord shall automatically be released fiom all liability under this Lease and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligafions hereunder afier the date of transfer. Without limiting the generality of the foregoing, it is aclmowledged‘ and agreed that the liability of Landlord under this Lease is limited to its actual period of ownership of title to the Building. The liability of any transferee of Landlord shall be limited to the interest of such tansferee in the Building or the Real Property and such tansferee shall be without personal liability under this Lease, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. Tenant further aclmowledges that Landlord may assign its interest in this Lease to a mortgage lender as additional security and agees that such an assignment shall not release Landlord fi-om its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder. 26.6 Prohibition Against Recording. Neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof in violation ofthis provision shall make this Lease null and void at Landlord’s election. 26.7 Landlor ’s Title; Air Rim. Landlord’s title is and always shall be parammmt to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which c'an, shall or may encumber the title of Landlord. No n'ghts to any view or to light or air over any property, whether belonging to Landlord or any other person, are gamed to Tenant by this Lease. 26.8 Tenant’s Sig. Tenant shall be entitled, at itg sole cost and expense, to Building suite and directory signage on the ground floor provided that the location, quality, design, style, fighting and size of such signs 28 Ms937959.s shall be consistent with the applicable laws and ordinances, Landlord’s Building standard signage progam and shall be subject to Landlord’s prior written approval, in its reasonable discretion. Such signs shall be installed by a sigage contractor designated by Landlord. Upon the expiration or earlier termination of this Lease, Tenant shall be responsible, at its sole cost and expense, for the removal ofsuch simage and fl1e repair of all damage to the Building caused by such removal. Subject to the foregoing provisions of this Secg'on 26.8, Tenant may not install any signs on or in the Building or the Common Areas and any signs, window coverings, or blinds (even ifthe same are located behind the Landlord approved window coverings for the Building), or other items visible fi'om the exterior of the Premises or Building without the prior written approval ofLandlord, in its sole and absolute discretion. 26.9 Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship ofprincipal and agent, parmership, joint venturer or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship oflandlord and tenant. 26.10 Applicatign 9fPaments. Landlord shall have the right to apply payments received fiom Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect. 26.11 ' Time ofEssence. Time is ofthe essence of this Lease and each of its provisions. 26.12 Partial Invalidifl. If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be afiected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law. 26.13 No Warrang. In executing and delivering this Lease, Tenant has not relied on any representation, including, but not limited to, any representation whatsoever as to the amount of any item comprising Additional Rent or the amount ofthe Additional Rent in the aggregate or that Landlord is fumishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement ofLandlord which is not set forth herein or in one or more ofthe Exhibits attached hereto. 26. l4 Landlord Exculpafion. It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and nomithstanding any applicable law to the contrary, the liability of Landlord and the Landlord Parties hereunder (including any successor landlord) and any recourse by Tenant against Landlord or the Landlord Parties shall be limited solely and exclusively to an amount which is equal to the ownership interest of Landlord in the Real Property (excluding any proceeds thereof), and neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalfof itself and all persons claiming by, through or under Tenant. 26.15 Enfire‘Amemmt. It is understood and aclmowledged that there are no oral ag'eements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and .all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease and any s_ide letter or separate agreement executed by Landlord and Tenant in connection with this Lease and dated of even date herewith contain all of the terms, covenants, conditions, warranties and ageements .of the parties relating in any manner to the rental, use and occupancy of the Premises, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto. All negotiations and oral ageements acceptable to both parties have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and ayeements contained in this Lease. 26.16 Right to Lease. Landlord reserves the absolute right to effect such other tenancies in the Building as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the 29 Ans9379s93 Building. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building (or that any specific tenant or type or number oftenants will not occupy the Building during the Lease Term). 26. l7 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control ofthe party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease (collectively, the “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period ofany delay in such party’s performance caused by a Force Majcure. 26.18 Waiver of Redemption by Tenant. Tenant hereby waives for Tenant and for all those claiming under Tenant all right now or hereafier existing to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right ofoccupancy ofthe Premises afier any termination of this Lease. 26.19 Notices. All notices, demands, statements or communications (collectively, “Notices”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage prepaid, return receipt requested, or delivered personally (i) to Tenant at the appropriate address set forth in §ectign 5 ofthe Summary, or to such other place as Tenant may fi'om time to time designate in a Notice to Landlord; or (ii) to Landlord at the addresses set forth in Section 3 of the Summary, or to such other firm or to such other place as Landlord may fiom time to time designate in a Notice to Tenant. Any Notice will be deemed given on the date it is mailed as provided in this Sectign 26.12 or upon the date personal delivery is made. IfTenant is notified ofthe identity and address of Landlord’s mortgagee or gound or underlying lessor, Tenant shall give to such mortgagee or ground or underlying lessor written notice of any default by Landlord under the terms of this Lease by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s exercising any remedy available to Tenant. 26.20 Joint and Several. If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several. 26.21 Authorifl. If Tenant is a corporation or partnership, each individual executing this Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in the state of California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so. Tenant confirms that it is not in violation of any executive order or similar governmental regulation or law, which prohibits terrorism or transactions with suspected or confirmed terrorists or terrorist entities or with persons or organizations that are associated with, or that provide any form of support to, terrorists. Tenant further confirms that it will comply throughout the Lease Term, with all governmental laws, rules or regulations governing transactions or business dealings with any suspected or confirmed terrorists or terrorist entities, as identified fiom time to time by the U.S. Treasury Department's Oflice of Foreign Assets Contol or any other applicable governmental entity. 26.22 1m Trial; Attorneys’ Fees. IF EITHER PARTY COMMENCES LITIGATION AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE BREACH PEREOF OR OTI-ERWISE FOR ENFORCEMENT OF ANY REMEDY I-IEREUNDER, T0 THE FULLEST EXTENT PERMITTED BY LAW, THE PARTES PERETO AGREE TO AND HEREBY DO WAIVE ANY RIGHT T0 A TRIALBY .TURY. In the event of any such commencement of litigation, the prevailing party shall be entitled to recover fi'om the other party such costs and reasonable attomeys’ fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and executing suchjudgment. 26.23 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the state of California. 30 M5931959.s 26.24 Sgbmission of Lease. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not efl'ective as a lease or otherwise until execution and delivery by both Landlord and Tenant. 26.25 Brokgs. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only Ventana Property Services, 1110., who represents Landlord (the “Transaction Broker”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Each party agrees to indemnify and defend the other pmty against and hold the other party harmless fi'om any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including without hmitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party’s dealings with any real estate broker or agent other than the Transacfion Broker. 26.26 Independent govemts. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that ifLandlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord; provided, however, that the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the - Building, the Real Property or any portion thereof, of whose address Tenant has theretofore been notified, and an opportunity is granted to Landlord and such holder to correct such violations as provided above. 26.27 Building Name and Sigage. Landlord shall have the right at any time to change the name(s) of the Building and to install, affix and maintain any and all signs on the exterior and on the interior ofthe Building as Landlord may, in Landlord's sole discretion, desire. Tenant shall not use the name ofthe Building or use pictures or illusu'ations ofthe Building'm advertising or other publicity, without the prior written consent ofLandlord. 26.28 Confidentiah'fl. Tenant acknowledges that the content of this Lease and any related documents are confidential infannation. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal, and space planning consultants. 26.29 Seem. Tenant aclmowledges that Landlord has not undertaken any duty whatsoever to provide security for the Premises, the Building, the Common Areas or the Real Property and, accordingly, Landlord is not responsible for the security of same or the protection of Tenant‘s property or Tenant’s employees, invitees, or contractors fiom any cause whatsoever, including but not limited to criminal and/or terrorist acts. To the extent Tenant determines that such security or protection services are advisable or necessary, Tenant shall arrange for and pay the costs of providing same. In the event Landlord m its sole and absolute discretion agees to provide any security services, whether it be guard service or access systems or otherwise, Landlord shall do so stictly as an accommodation to Tenant and Landlord shall have no liability whatsoeverm connection therewith, whether it be for failure to maintain the Secure access system, or for failure of the guard service to provide adequate security, or otherwise. 26.30 . Landlord may voluntarily cooperate in a reasonable manner with the efi‘orts of governmental agencies and/or utility suppliers in reducing energy or other resource consumption within the Real Property. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of such cooperation. Tenant agees at all times to cooperate fully with Landlord and to abide by all reasonable rules established by Landlord (i) in order to maximize the efficient operation of the electrical, heating, ventilating and air conditioning systems and all other energy or other resource consumption systems with the Real Property and/or (ii) in order to comply with the rgcommendations of utility suppliers and governmental agencies regulating the consumption of energy and/or other resources. 26.31 Digclggure. Tenant hereby waives any and all rights under and benefits of California Civil Code Section 1938 and acknowledges that neither the Building nor the Premises has undergone inspection by a Certified Access Specialist (CASp) (defined in California Civil Code Section'55.52). 3 1 M59379”: 26.32 Countegparts. This Lease may be executed by facsimile and/or elecuonic mail and in counterparts, each of which shall be deemed an original, but such counterparts, when taken together, shall constitute one agreement. 26.33 Waiver of Statutog Provisions. Each party waives California Civil Code §§ 1932(2), 1933(4) and I945. Tenant waives (a) any rights under (i) California Civil Code §§ 1932(1), I941, 1942, 1950.7 or any similar Law, (ii) California Code of Civil Procedure §§ 1263.260 or 1265.130; (b) any right to terminate this Lease under California Civil Code § 1995.3 10; and (c) California Civil Code § 3275 and California Code of Civil Procedure §§ 1174(0) and 1179 and any existing or future rights to redeem or reinstate, by order orjudgment of any court or by any legal process or writ, this Lease or Tenant’s right ofoccupancy ofthe Premises afier any termination hereof. 26.34 §upplemengl flyAg Quit. If the Premises are served by any supplemental HVAC unit (a “Unit”), then (a) Tenant shall pay the costs of all electricity consumed in the Unit’s operation, together with the cost of installing a meter to measure such consumption; (b) Tenant, at its expense, shall (i) operate and maintain the Unit in compliance with all applicable Laws and such reasonable rules and procedures as Landlord may impose; (ii) keep the Unit in as good worldng order and condition as existed upon installation (or, if later, when'_Tenant took possession of the Premises), subject to normal wear. and tear and damage resulting fiom Casualty; (iii) maintain in efi'ect, with a contractor reasonably approved by Landlord, a contact f0; the maintenance and repair of the Unit, which contract shall require the contactor, at least once every three (3) months, to inspect the Unit and provide to Tenant a report of any defective conditions, together with any recommendations for maintenance, repair or parts- replacement; (iv) follow all reasonable recommendations of such contractor; and (v) promptly provide to Landlord a copy of such contract and each report issued thereunder; and (d) if any portion of the Unit is located on the roof, then (i) Tenant’s access to the roof shall be subject to such reasonable rules and procedures as Landlord may impose; (ii) Tenant shall maintain the affected portion of the roof in a clean and orderly condition and shall not interfere with use of the roofby Landlord or any other tenants or licensees; and (iii) Landlord may relocate the Unit and/or temporarily interrupt its operation, without liability to Tenant, as reasonably necessary to maintain andarepair the roof or otherwise operate the Building. 26.35 Eggs. Tenant shall be permitted during the Term of the Lease to bring fully domesticated and licensed dogs, kept by Tenant’s employees as pets, into the Premises, provided and on the condition that: (a) there shall not be more than three (3) dogs in the Premises at any one time (other than licensed and certified service animals); (b) all dogs shall be strictly controlled at all times and shall not be permitted to foul, damage or otherwise mar any pan of the Building (including the Premises) or Common Areas or cause any loud noise whether through barking, yowling or otherwise; (c) all dogs shall remain in the Premises and not wander throughout the Project or otherwise be left unattended; (d) while outside the Premises (i.e., in any Common Area), all dogs shall be kept on leashes, and other than during ingress and egess- in and out of the Building, no dogs shall be permitted in the .Common Areas; (e) within thirty (30) days of Landlord's written request fiom time to time, Tenant shall provide Landlord with evidence of all current vaccinations for dogs having access to the Premises and the Building; (f) ' Tenant shall be responsible for any additional cleaning costs and all other costs which may arise fi'om the dogs' presence in the Building in excess of the costs that would have been incurred had dogs not been allowed in or around the Building; (g) Tenant’s indemnificau'on obligations under Article 10 shall extend to any and all claims arising fi'om any and all acts (including but not limited to biting and causing bodily injury to, or damage to the property of, another tenant, subtenant, occupant, licensee, invites or an employee of Lessor or any of the Landlord Parties) of, or arising fiom the presence of, any dog brought or kept by Tenant or its employees in or about the Premises or the Building; (h) no dog with (or suspected by Tenant of having) fleas or ticks or any infection is to be brought into the Building; and (i) Tenant shall immediately remove any dog waste and excrement fiom the Premises, the Building and the Real Property. If Landlord reasonably determines that Landlord has incurred or is incurring increased janitorial (interior or exterior) maintenance costs as a result of the dogs’ presence, Tenant shall reimburse Lessor for such costs as Additional Rent within thirty (3 0) days of Landlord’s written demand accompanied by a documented invoice therefor. If, at any time during the Term (x) Landlord reasonably determines that the presence of any' and all dogs is materially disruptive to the maintenance and operation of the Building or otherwise reduces the value or reputation of the Building, or (y) any other tenant of the Building has complained about the pres_ence ofthe dogs, or (z) Tenant has failed to comply with any ofthe provisions set forth in this Section 26.35, Landlord shall have the right to revoke Tenant's rights under this Section 26.35. Tenant shall adequately insure the presence of and activities of any dog in the Premises and/or the Building, and shall name Landlord as an additional insured on such insurance. Tenant shall comply in all material respects with all applicable laws 32 N7s9s79s93 associated with or governing the presence of a dog within the Premises, the Building and/or upon file Real Property and such presence shall not violate a_ny certificate ofoccupancy or other use permit afl‘ecting the Building. [SIGNATURES 0NNEXT PAGE] 33 M59379”; IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written. M59379593 "Landlord”: CAROL MULLEN SCI-IER HOLDINGS, LLC, a California limited liability company By: I Edward Scher, Manager “Tenant”: NSTITUTE FOR THE FUTURE, a California corporation By: Name: Its: By: Name: Its: INWITNESS WMREOF, LandlordandTenmhavecausodmisLeasotobeexecmdtho dayanddmfi'st abovewritten. “Landlord”: DON B. MULLEN CAROLMULLEQ SCI-mRHOLDINGS, LLC, aCalifornia company EdwudSohet,Mannger “Tenant”: mSTI'l'U'l‘EFORTI-IEFU'IURE, aCalifmniacolporation Bin Nam: By: Name: IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written. M59379”! “Landlord”: DON B. MULLEN CAROL MULLEN SCIER HOLDINGS, LLC, a California limited liability company By: Edward Sc‘her, Manager “Tenant”: INSTITUTE FOR THE FUTURE, a California corporation M EXHIBIT A-l OQILmE OFFLOORELM Q!mmES mm IV" M59379593 mt. 21! M59379593 Mt. 22E =mm ---u :u-I-L EXHIBIT B AMENDMNT TO LEASE THIS AMENDMENT TO LEASE (“Amendment”) is made and entered into effective as of , 20_, by and between DON B. MULLEN AND CAROL MULLEN AS TO AN UNDIVIDED 50% INTEREST, AND SCHER HOLDINGS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS T0 AN UNDIVIDED 50% INTEREST, AS TENANTS IN COMMON (“Landlord”), and Institute for the Future., a California corporation (“Tenant”). RECITALS:_---m"a-um A. Landlord and Tenant entered into that certain Lease dated as ofFebruary_, 20 14 (the “Lease”) pursuant to which Landlord leased to Tenant-and Tenant leased fi'om Landlord certain “Premises”, as described in flle Lease, in that certain Building located at 201-225 Hamilton Avenue, Palo Alto, CA 94301. B. Except as otherwise set forth herein, all capitalized terms used in this Amendment shall have the same meaning as such terms have in the Lease. C. Landlord and Tenant desire to amend the Lease 1:0 confirm the Commencement Date and the Expiration Date ofthe Lease Term, as hereinafter provided. NOW, TI-EREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and _sufficiency of which are hereby aclmowledged, the parties hereto agree as follows: l. Confirmation of Dates. The parties hereby confirm that the Lease Term commenced as of (the “Commencement Date”) for a term of ending on (unless sooner terminated as provided in the Lease). 2. N9 Further Mog'ficatiog. Except as set forth in this Amendment, all of the terms and provisions ofthe Lease shall remain modified and in full force and efi'ect. M5937959.8 IN WITNESS WI-EREOF, this Amendment to Lease has been executed as of the day and year first above written. J “Landlord”: DON B. MULLEN CAROL MULLEN sCHERHOLDINGS, LLc, a California limited liability pompany By: Edward Scher, Manager “Tenant”: INSTITUTE FOR TIE FUTURE, a California corporation i By: I Name: Its: By: Name: Its: M5931959.8 EIG-IIBIT C RULES AND REGULATIONS Tenant shall faithfully observe and comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of said Rules and Regulations by or otherwise with respect to the acts or omissions ofany other tenants or occupants ofthe Building. Tenant shall not alter any lock or install any new or additional locks qr bolts on any doors or windows of the Premises without obtaining Landlord’s prior written consent. Tenant shall bear the cost of any lock changes or repairs required by Tenant. Two keys will be furnished by Landlord for the Premises, and any additional keys required by Tenant must be obtained fiom Landlord at a reasonable cost to be established by Landlord. All doors opening to public corridors shall be kept closed at all times except for normal ingress and egress to the Premises, unless electrical hold backs have been installed. Landlord reserves the right to close and keep locked all enhance and exit doors ofthe Building during such hours as are customary for comparable buildings in the vicinity of the Building. Tenant, its employees and agents must be sure that the doors to the Building are securely closed and locked when leaving the Premises if it is afier the normal hours of business for the Building. Any tenant, its employees, agents or any other persons entering or leaving the Building at any time when it is so locked, or any time when it is considered to be afier normal business hours for the Building, may be required to sign the Building register when so doing. Afier-hours access by Tenant’s authorized employees may be provided by card-key access or other procedures adopted by Landlord fi'om time to time; Tenant shall pay for the costs of all access cards provided to Tenant’s employees and all replacements thereof for lost, stolen or damaged cards. Access to the Building and/or the Real Property may be refused unless the person seeking access has proper identification or has a previously arranged pass for such access. Landlord and its agents shall in no case be liable for damages for any err‘or with regard to the admission to or exclusion fi-om the Building and/or the Real Property of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building and/or the Real Property during the continuance of same by any means it deems appropriate for the safety and protection of life and property. ' Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy property brought into the Building. Safes and other heavy objects shall, if considered necessary by Landlord, stand on supports of such thickness as is necessary to properly disuibute the weight. Landlord will not be responsible for loss of or damage to any such safe or property in any case. All damage done to any part of the Building, its contents, occupants or visitors by moving or maintaining any such safe or other property shall be the sole responsibility ofTenant and any expense of said damage or injury shall be home by Tenant. No fin'niture, fi'eight, supplies (other than ordinary office supplies) or heavy equipment will be carried up or down in the elevators, unless approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed). Landlord shall have the right to control and operate the public portions of the Building and the Real Property, the public facilities, the heating and air conditioning, and any other facilities furnished for the common use oftenants, in such manner as is customary for comparable buildings in the vicinity ofthe Building. The requirements of Tenant will be attended to only upon application at the management office of the Building or at such office location designated by Landlord. Employees of Landlord shall not perform any work or do anything outside their regular duties unless under special instructions fi'om Landlord. N75937959.8 Tenant shall not disturb, solicit, or canvass any occupant of the Building 0r the Real Property and shall cooperate with Landlord or Landlord’s agents to prevent same. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreigl substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting fi'om the violation of this rule shall be borne by the tenant who, or whose employees or agents, shall have caused it. ' Tenaht shall not overload the floor of the Premises. Tenant shall not mark, drive nails or screws, or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof without Landlord’s consent first had and obtained; provided, however, Landlord’s prior consent shall not be required with respect to Tenant’s placement of pictures and other normal office wall hangings on the interior walls of the Premises (but at the end ofthe Lease Term, Tenant shall repair any holes and other damage to the Premises resulting therefi'om). Except for vending machines intended for the sole use of Tenant’s employees, licensees and invitees, no vending machine or machines of any description other than fi'actional horsepower office machines shall be installed, maintained or operated upon the Premises without the written consent ofLandlord. Tenant shall not use any method of heating or air conditioning other than that which may be supplied by Landlord, without the prior written consent of Landlord. Tenant shall not use or keep in or on the Premises, the Building or the Real Property any kerosene, gasoline or other inflammable or combustible fluid or material. Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in or on the Premises, or permit or allow the Premises to be occupied or used in a manner oflensive or objectionable to Landlord or' other occupants of the Building or the Real Property by reason of noise, odors, or vibrations, or interfere in any way with other tenants or those having business therewith. Except as otherwise expressly permitted by the Lease, Tenant shall not bring into or keep within the Building, the Real Property or the Premises any small animals, birds or other vehicles; provided, that Tenant’s employees and licensees may bring into and keep within the Building not more than one (1) bicycle per adult occupant. The Premises shall not be used for the storage of merchandise, for lodging or for any improper, objectionable or immoral purposes. Tenant may operate within the Premises a food preparation area and small eating area provided that food preparation and eating area are used only by Tenant’s employees, licensees, clients and guests and are not Open to the public generally. The food preparafion and eating area may contain underwriters’ laboratory-approved equipment and microwave ovens and warming ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages, provided that such use is in accordance with a1] applicable federal, state and city laws, codes, ordinances, rules and regulations, and does not cause odors which are objectionable to Landlord and other tenants. In no event shall Tenant be permitted to install a gas or electric range or oven other than as expressly permitted above. Landlord will approve where and how telephone and telegaph wires and other cabling are to be introduced to the Premises. No boring or cutting for wires shall be allowed without the consent of Landlord. The location of telephone, call boxes and other office equipment and/or systems affixed to the Premises shall be subject to the approval ofLandlord. Landlord reserves the right to exclude or expel fiom the Building and/or the Real Property any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation ofany ofthese Rules and Regulations: Tenant, its employees and agents shall not loiter in the entrances or corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or elevators, and shall use the same only as a means of ingess and egress for the Premises. N75937959.8 Tenant shall not waste electricity, water or air conditioning and agees to cooperate fully with Landlord to ensure the most effective operation of the Building’s heating and air conditioning system, and shall refi-ain fiom attempting to adjust any controls. ' Tenant shall store all its trash and garbage within the interior ofthe Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the city in which the Building is located without violation of any law or ordinance governing such disposal. A11 trash, garbage and refuse disposal shall be made only through enu'y-ways and elevators provided for such purposes at such times as Landlord shall designate. Tenant shall comply with all safety, fire proteetion and evacuation procedures and regulafions established by Landlord or any governmental agency. Tenant shall assume any and all responsibility for protecting the Premises fi'om thefi, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed, when the Premises are not occupied. No awnings or signage shall be attached to the outside walls of the Building without the prior written consent of Landlord. With the prior written approval of Landlord, Tenant may attach and use interior shades or screens on the windows of the Premises. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the windowsills. A11 electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent and/or of a quality, type, design and bulb color approved by Landlord. The washing and/or detailing of or, the installation of Windshields, radios, telephones in or general work on, automobiles shall not be allowed on the Building. If Tenant uses a third-party vendor or service provider to provide food or catering service to the Premises, such service provider shall comply with Landlord’s reasonable regulations for deliveries and placement and maintenance of equipment. Tenant must comply with requests by the Landlord concerning the informing of their employees of items of importance to the Landlord. Tenant shall comply with any non-smoking ordinance adopted by any applicable governmental authority. Landlord may waive any one or more ofthese Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be c'onstrued as a waiver of such Rules and Regulations in favor pf ' any other tenant or tenants, nor prevent Landlord fi'om thereafier enforcing any such Rules or Regulations against any or all tenants of the Building and/or the Real Property. Landlord reserves the right at any time to change or rescind any one or more of these Rules and Regulations, or to make such other and fimher reasonable Rules and Regulations as in Landlord’s judgment may fi'om time to time be necessary for the management, safety, care and cleanliness of the Premises, Building and the Real Property, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord shall not be responsible to Tenant or to any other person for the nonobservance of the Rules and Regulations by another tenant or other person. Tenant shall be deemed to have read these Rules and.Regulations and Lo have agreed to abide by them as a condition of its occupancy ofthe Premises. N75937959.8 EXHIBIT D LETTER OF CREDIT [TO BE ATTACHED] N75937959.8 THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY. IT WILL BECOME AN INTEGRAL PART OF AND MUST BE ATTACHED T0 BRIDGE BANK APPLICATION FOR STANDBY LETTER 0F CREDIT WHEN APPROVED FOR ISSUANCE BY APPLICANT IRREVOCABLE STANDBY LETTER OF CREDITN0 LC DATE: BENEFICIARY: DON B. MULLEN AND CAROL MULLEN AS TO AN UNDIVIDED 50% INTEREST, AND SCHER HOLDINGS, LLC, AS TO AN UNDIVIDED 50% INTEREST C/O VENTANA PROPERTY SERVICES. 975 HIGH STREET PALO ALTO, CA 94301 ATTENTION: JOSEPH MARTIGNETTI, JR. APPLICANT: INSTITUTE FOR THE FUTURE 124 UNIVERSITY AVE 2ND FLOOR PALO ALTO, CA 94301 " AMOUNT: USD $286,790.16 EXPIRATION DATE: MARCH XX, 2015 LOCATION: AT OUR COUNTER IN SAN JOSE, CALIFORNIA WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. LC IN YOUR FAVOR. THIS LETTER 0F CREDIT IS AVAILABLE BY SIGHT PAYMENT WITH OURSELVES ONLY AGAINST PRESENTATION AT THIS OFFICE OF THE FOLLOWING DRAWING DOCUMENTS: l. 2. 3. THE ORIGINAL OF THIS LETTER 0F CREDIT AND ALL AMENDMENT (S), IF ANY. YOUR SIGHT DRAFT DRAWN ON US IN THE FORM ATTACHED HERETO AS EXHIBIT “A”. A DATED CERTIFICATION PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER OR REPRESENTATIVE OF TI-E BENEFICIARY FOLLOWED BY HIS/HER PRINTED NAME AND DESIGNATED TITLE STATING THE FOLLOWING: “APPLICANT IS IN BREACH OF ONE OR MORE OBLIGATIONS, AS TENANT,UNDER THAT CERTAIN LEASE WITH BENEFICIARY, AS LANDLORD, BEYOND ANY APPLICABLE NOTICE AND CURE PERIOD, AND IS ENTITLED TO DRAW DOW'N 0N THE LETTER OF CREDIT IN CONNECTION THEREWIT .” PARTIAL AND MULTIPLE DRAWS ARE ALLOWED. THIS LETTER OF CREDIT AND AMENDMENT(S), IF ANY, MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO THE BENEFICIARY, PROVIDED; HOWEVER, THAT THE REMAINING AMOUNT AVAILABLE HEREUNDER SHALL BE REDUCED BY TI-E AMOUNT 0F THE DRAWINGS. DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE 0F THIS LETTER OF CREDIT. DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: ' Page 1 of 1 CLIENT SIGNATURE/s THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY lT WILL BECOME AN INTEGRAL PART OF AND MUST BE ATTACHED TO BRIDGE BANK APPLICATION FOR STANDBY LETTER OF CREDIT WHEN APPROVED FOR ISSUANCE BY APPLICANT PRESENTATION OF SUCH DRAWING DOCUMENTS MAY ALSO BE MADE BY FAX TRANSMISSION T0 FAX NO. (408) 275-0362 0R SUCH OTHER FAX NUMBER IDENTIFIED BY ISSUER IN A WRITTEN NOTICE TO YOU. TO THE EXTENT A PRESENTATION IS MADE BY FAX TRANSMISSION, YOU MUST (I) PROVIDE EMAIL NOTIFICATION THEREOF T0 ISSUER AT LETTEROFCREDIT@BR1DGEBANK.COM PRIOR TO OR SIMULTANEOUSLY WITH THE SENDING OF SUCH FAX TRANSMISSION AND (II) SEND THE ORIGINAL 0F THE DRAWING DOCUMENTS T0 ISSUER BY OVERNIGHT COURIER, AT THE SAME TIME T0 THE ADDRESS PROVIDED BELOW FOR PRESENTATION OF DOCUMENTS. IF THE DRAWING DOCUMENTS ARE- PRESENTED HEREUNDER' BY‘ SIGHT OR FACSIMILE TRANSMISSION AS PERMITTED HEREUNDER, AND PROVIDED THAT SUCH DRAWING DOCUMENTS CONFORM TO THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE MADE TO YOU, 0R TO YOUR DESIGNEE, OF THE AMOUNT SPECIFIED, IN IMMEDIATELY AVAILABLE FUNDS ON THE FOURTH BANKING DAY SUBJECT TO THE BANK’S RECEIPT 0F THE ORIGINAL DRAWING DOCUMENTS. IF A DEMAND FOR PAYMENT MADE BY YOU HEREUNDER DOES NOT, IN ANY INSTANCE, CONFORM TO THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, WE SHALL GIVE YOU NOTICE WITHIN TWO (2) BANKING DAYS THAT THE DEMAND FOR PAYMENT WAS NOT EFFECTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, STATING THE REASONS THEREFORE AND THAT WE WILL UPON YOUR INSTRUCTIONS HOLD ANY DOCUMENTS AT YOUR DISPOSAL OR RETURN THE SAME T0 YOU. UPON BEING NOTIFIED THAT THE DEMAND FOR PAYMENT WAS NOT EFFECTED IN CONFORMITY WITH THIS LETTER OF CREDIT, YOU MAY ATTEMPT TO CORRECT ANY SUCH NON-CONFORMING DEMAND FOR PAYMENT TO THE EXTENT THAT YOU ARE ENTITLED TO DO SO AND WITHIN THE VALIDITY OF THIS LETTER 0F CREDIT. THIS LETTER OF CREDIT IS TRANSFERABLE SUCCESSIVELY IN ITS ENTIRETY ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF ANY NOMINATED TRANSFEREE THAT BENEFICIARY CERTIFIES IN THE TRANSFER REQUEST AS THE SUCCESSOR IN INTEREST TO BENEFICIARY(“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE 1N COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATIONS, INCLUDING BUT NOT LIMITED T0 THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF COMNIERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US TOGETHER WITH OUR LETTER 0F CREDIT TRANSFER INSTRUCTIONS (IN THE FORM OF EXHIBIT “B” ATTACHED HERETO) AND PAYMENT OF OUR TRANSFER COMMISSION IN EFFECT AT THE TIME OF THE TRANSFER. THE CORRECTNESS OF THE SIGNATURE AND TITLE 0F THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY BENEFICIARY’S BANK. THIS LETTER OF CREDIT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR A ONE YEAR PERIOD STARTING FROM THE PRESENT EXPIRATION DATE HEREOF, MARCH XX, 2015 AND UPON EACH ANNIVERSARY 0F SUCH DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR T0 ANY SUCH EXPIRATION DATE WE HAVE SENT YOU A WRITTEN NOTICE BY COURIER SERVICE OR OVERNIGHT MAIL THAT WE ELECT NOT T0 PERMIT THIS LETI‘ER OF CREDIT TO BE SO EXTENDED BEYOND ITS THEN CURRENT EXPIRATION DATE. NO PRESENTATION MADE UNDER THIS LETTER OF CREDIT AFTER SUCH DATE WILL BE HONORED. THE DATE THIS LETTER OF CREDIT FULLY AND FINALLY EXPIRES, XX, XX, 2024 IS THE “TERMINAL EXPIRY DATE”, IF IT HAS NOT PREVIOUSLY EXPIRED IN ACCORDANCE WITH THE DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: Page 2 of 2 CLIENT SlGNATURE/S THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY. IT WILL BECOMEAN INTEGRAL PART OF AND MUST BE ATTACHED TO BRIDGE BANK APPLICATION FOR STANDBY LETTER OF CREDIT WHEN APPROVED FOR ISSUANCE BY APPLICANT PRECEDING PARAGRAPH. NO PRESENTATIONS MADE UNDER THIS LETTER OF CREDIT AFTER SUCH DATE WILL BE HONORED. DOCUMENTS MUST BE DELIVERED T0 US DURING REGULAR BUSINESS HOURS OF A BANKING DAY OR FORWARDED TO US BY OVERNIGHT DELIVERY SERVICE TO: BRIDGE BANK, N.A., 55 ALMADEN BLVD., SUITE 100, SAN JOSE, CA 95113, ATTENTION: INTERNATIONAL BANKING DIVISION - STANDBY LETTER OF CREDIT NEGOTIATION DEPARTMENT (THE “BANK’S” OFFICE). AS USED I-EREIN, THE TERM “BANKING DAY” MEANS A DAY ON WHICH WE ARE OPEN AT OUR ABOVE ADDRESS IN SAN JOSE, CALIFORNIA TO CONDUCT OUR LETTER OF CREDIT BUSINESS. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THE ISP98 (AS HEREINAFTER DEFINED), IF THE EXPIRATION DATE OR THE TERMINAL EXPIRY DATE IS NOT A BANKING DAY THEN SUCH DATE SHALL BE AUTOMATICALLY EXTENDED TO THE NEXT SUCCEEDING DATE WHICH IS A BANKING DAY. ALL BANKING CHARGES UNDER THIS LETTER 0F CREDIT INCLUDING WIRE REMITTANCE FEE ARE FOR THE ACCOUNT OF TI-E APPLICANT. WE HEREBY AGREE WITH YOU THAT THE DRAFTS DRAWN UNDER AND 1N ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER 0F CREDIT, AS EXTENDED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF, SHALL BE DULY HONORED BY BRIDGE BANK, N.A. EXCEPT AS FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER 0F CREDIT WILL BE (I) SUBJECT T0 THE INTERNATIONAL STANDBY PRACTICES ISP98 (INTERNATIONAL CHAMBER 0F COMMERCE, PUBLICATION NO. 590) ORANY SUBSEQUENT REVISIONS TI-EREOF; AND (II) SUBJECT TO AND IN FULL COMPLIANCE WITH THE THEN EXISTING SANCTIONS REGULATIONS OF THE OFFICE OF FOREIGN ASSETS CONTROL, UNITED STATES DEPARTMENT OF TREASURY. BRIDGE BANK, N.A. EXECUTIVE VICE PRESIDENT DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: Page 3 0f 3 CLIENT SlGNATURE/S THIS DRAFT lS FOR DISCUSSION PURPOSES ONLY. IT WILL BECOME AN INTEGRAL PART 0F AND MUST BE ATTACHED T0 BRIDGE BANK APPLICATION FOR STANDBY LE; IQflMTEm flPEQEED FQR ISSUANCE BY APPLICANT EXHIBIT “A” SIGHT DRAFT/BILL OF EXCHANGE AT SIGHT 0F THIS BILL OF EXCHANGE PAY TO THE ORDER OF USS US DOLLARS “DRAWN UNDER BRIDGE BANK, NA. SAN JOSE, CALIFORNIA, IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER: DATED: ." BRIDGE BANIQ N. A. DON B. MULLBN AND CAROL MULLEN AS TO AN INTERNATIONAL BANKING DIVISION UNDIVIDED 50% INTEREST, AND SCHER HOLDINGS, LLC. 55 ALMADEN BLVD AS TO AN UNDlVIDED 50% INTEREST SUITE 100 (“BENEFlCIARY”) SAN JOSE, CA, 951 l3 U.S.A. GUIDELINES TO PREPARE THE SIGHT DRAFT OR BILL OF EXCHANGE: l. DATE ISSUANCE DATE OF DRAFT OR BILL OF EXCHANGE. 2. REF NO YOUR REFERENCE NUMBER, IF ANY. 3. PAY TO THE ORDER OF: NAME OF BENEFICIARY 4. US$ AMOUNT OF DRAWING IN NUMERIC FIGURES 5. US DOLLARS AMOUNT 0F DRAWING - IN WORDS. 6. LETTER 0F CREDIT NUMBER: OUR STANDBY LETTER OF CREDIT NUMBER 7. DATED: ISSUANCE DATE 0F STANDBY LETTER OF CREDIT NOTE: BENEFICIARY MUST ENDORSE THE BACK OF THE SIGHT DRAFT OR BILL OF EXCHANGE AS YOU WOULD ENDORSE A CHECK. DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: Page 4 of 4 CLIENT SIGNATURES THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY. [T WILL BECOME AN INTEGRAL PART 0F AND MUST BE ATTACHED TO BRIDGE BANK APPLICATION FOR STANDBY LETTER 0F CREDIT WEEN APPROVED FOR ISSUANCE EVAPPLJCANT EXHIBIT “B” LETTER 0F CREDIT TRANSFER INSTRUCTIONS TO: BRIDGE BANK, N.A. 55 ALMADEN BLVD SUITE 100 SAN JOSE, CA 951 13 U.S.A. ATTN: INTERNATIONAL BANKING DIVISION (408) 556-8397 ' DATE: RE: BRIDGE BANK, N.A. IRREVOCABLE STANDBY LETTER 0F CREDIT N0. LETTER OF CREDIT DATED: LADIES AND GENTLEMEN: FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY (“BENEFICIARY”) HEREBY IRREVOCABLY TRANSFERS TO: (NAME 0F TRANSFEREE) (ADDRESS) (CONTACT NAME) (TELEPHONE NUMBER) (“TRANSFEREE”) ALL RIGHTS OF BENEFICIARY UNDER THE ABOVE LETTER OF CREDIT (“LETTER OF CREDIT”) AND TRANSFEREE SHALL HAVE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING WITHOUT LIMITATION SOLE RIGHTS RELATING TO ANY AMENDMENTS THERETO, WI-ETHER INCREASES 0R EXTENSIONS OR OTHER AMENDMENTS AND WHETHER NOW EXISTING OR HEREAFTER MADE. IN CONNECTION WITH THE FOREGOING, BENEFICIARY HEREBY IRREVOCABLY AGREES AND INSTRUCTS YOU (A) THAT BENEFICIARY DOES NOT RETAIN ANY RIGHT TO REFUSE TO ALLOW YOU T0 ADVISE TRANSFEREE OFANY AMENDMENT TO THE LETTER OF CREDIT, DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: Page 5 Of 5 CLIENT SIGNATURE/S THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY. IT WILL BECOME AN INTEGRAL PART OF AND MUST BE ATTACHED TO BRIDGE BANK APPLICATION FOR STANDBY LETTER 0F CREDIT WHEN APPROVED FOR ISSUANCE BY APPLICANT (B) THAT ALL FUTURE AMENDMENTS TO THE LETTER OF CREDIT ARE TO BE ADVISED DIRECTLY TO TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF 0R NOTICE TO BENEFICIARY, AND (C) THAT THERE WILL BE NO SUBSTITUTION 0F BENEFICIARY’S DRAFT(S) AND/OR OTHER DOCUMENTS FOR THOSE PRESENTED TO YOU BY TRANSFEREE. WE ENCLOSE HEREWITH THE ORIGINAL LETTER 0F CREDIT (AND ALL ORIGINAL AMENDMENTS THERETO DATED ON OR PRIOR TO THE DATE OF THESE TRANSFER INSTRUCTIONS) AND, TOGETHER WITH TRANSFEREE, REQUEST THAT YOU TRANSFER THE LETTER OF CREDIT TO TRANSFEREE BY REISSUING THE LETTER OF CREDIT DI FAVOR OF THE TRANSFEREE WITH PROVISIONS CONSISTENT WITH THE LETTER OF CREDIT. BENEFICIARY AND TRANSFEREE AGREE THAT ANY CHARGES ASSESSED BY YOU IN RELATION T0 THIS TRANSFER SHALL BE PAID BY BENEFICIARY, UNLESS OTHERWISE PROVDED 1N THE LETTER 0F CREDIT, AND THAT THIS TRANSFER SHALLNOT BE EFFECTIVE UNLESS AND UNTIL YOU RECEIVE SUCH PAYMENT. WE WARRANT THAT THE TRANSACTION INVOLVED IS NOT IN VIOLATION OF ANY U.S. FOREIGN ASSETS CONTROL REGULATIONS. THIS TRANSFER SHALL BE GOVERNED BY AND CONSTRUED ACCORDING T0 THE LAWS 0F THE STATE 0F CALIFORNIA WITHOUT REGARD TO CONFLICT 0F LAW PRINCIPLES, TO THE JURISDICTION OF WHOSE COURTS THE PARTIES HEREBY SUBMIT. VERY TRULY YOURS, (NAME OF BENEFICIARY) (AUTHORIZED SIGNATURE) SIGNATURE AUTHENTICATED The name(s), title(s), and signature(s) conform to that/those on file with us for the company and the signature(s) is/are authorized to execute this instrument. We further confirm that the company has been identified applying the appropriate due diligence and enhanced due diligence as required byBSA and all its subsequent amendments. (Name ofBeneficiaxy’s Bank) (Address of Bank) . (City, State, zIP Code) ACKNOWLEDGED AND ACCEPTED THIS (Authorized Name and Title) DAY OF , (Authorized Signature) (Telephone number) (NAME 0F TRANSFEREE) (AUTHORIZED SIGNATURE) DRAFT LANGUAGE APPROVED FOR ISSUANCE BY: Page 6 Of 6 CLIENT SIGNATURE/S EMHBIT E SPACE SHARING WAIVER, INDEMNITY AND ACKNOWLEDGEMENT Don B. Mullen and Carol Mullen, as to an undivided 50% interest, and Scher Holdings, LLC, a California limited liability company, as to an undivided 50% interest, as tenants in common (collectively, “Landlord”), as landlord, and Institute for the Future (“Tenant”), as tenant, are parties to that certain lease, dated as of , 2014, pursuant to which Tenant leases fi'om Landlord certain premises in the building located at 201-225 Hamilton Avenue, Palo Alto, California (the “Building”). The aforementioned lease, as such may be amended fi'om time to time, is referred to hereinafter as the “Master Lease” and the premises fiom time to time deinised under the Master Lease are referred to hereinafier as the “Premises.” Tenant and a (hereinafier “0ccupa_nt”), have entered into an ageement (the “Space Sharing Agreement”) which permits Occupant to occupy and use a portion ofthe Premises (the “Subject Premisw”). As a condition of Landlord’s ayeement under Section 14.8 ofthg Master Lease to permit Tenant to gant Occupant the right to occupy and use the Subject Premises, Tenant ageed to require Occupant to execute and deliver to Landlord a copy ofthis Space Sharing Waiver, Indemnity and Acknowledgnent (“Acknowledgement”). Accordingly, in consideration ofLandlord’s consent to Occupant’s occupancy ofthe Subject Premises, Occupant, Tenant and Landlord hereby agree as follows: l. Occupancy of the Subject Premises by Occupant is in all respects subject to the Master Lease, and Landlord hereby informs Tenant and Occupant that Landlord requires sufict compliance by Tenant and Occupant with all terms and conditions ofthe Master Lease. Neither the Space Sharing Agreement nor this Achowledgement shall release or discharge Tenant fi'om any obligations or liability under the Master Lease. The breach or violation of any provision of the Master Lease by Occupant shall constitute a default by Tenant in fulfilling such provision and any such breach by Occupant shall entitle Landlord to all the rights and remedies provided in the Master Lease in the event of such a breach, and any other available remedy, against Occupant and Tenant. Landlord’s consent to the Occupant’s occupancy within the Building is limited to Occupant’s occupancy of the Subject Premises (as expressly defined in the Space Sharing Agreement) and does not apply to any other space within the Premises. 2. This Acknowledgement shall not be construed as approval or consent to any provision(s) of the Space Sharing Agreement which may conflict with or be interpreted to restrict Landlord’s rights or Tenant’s obligations under the Master Lease, or to expand upon Tenant’s rights or Landlord’s obligations under the Master Lease, and Landlord shall not be bound or estopped in any way by the provisions of the Space Sharing Agreement. This ageement shall not create in Occupant, as a third party beneficiary or otherwise, any rights except as specifically set forth herein. A11 communications with Landlord will be recognized by Landlord only if made by Tenant, not by Occupant. . 3. Upon the expiration or earlier termination ofthe term of the Master Lease, or upon the surrender ofthe Master Lease by Tenant to Landlord, 'the Space Sharing Ageement shall terminate as of the effective date (“Termination Date”) of such expiration, termination, or surrender, and Occupant shall vacate the Subject Premis'es on or before the Termination Date. Notwithstanding anything to the contrary contained in the Space Sharing Agreement, neither Landlord nor Tenant shall have any liability to Occupant (and the Space Sharing Agreement shall terminate as of the Termination Date as provided herein) in the event Tenant elects to terminate the Master Lease, whether pursuant to a termination right expressly granted to Tenant in the Master Lease or pursuant to an agreement between Landlord and Tenant entered into afier the date of the Space Sharing Ageement. In no event shall the foregoing be consu'ued to gant to Tenant any right to terminate the Master Lease. 4. In consideration of Landlord’s ageement in the Master Lease to permit Tenant and Occupant to enter into the Space Sharing Agreement, Occupant agees, to the extent permitted by law, that Landlord and the holders of any mortgage on the Real Property, and the constituent shareholders, parmers or other owners thereof, and all of their respective agents, contactors, servants, oficers, directors, employees and licensees (hereinafier collectively called me “Indemnitees”) shall not be liable to Occupant and, to the extent permitted by law, Occupant hereby 9 Ans9379s9.s waives all claims against such parties for any loss, injury or other damage to person or property in or about the Subject Premises or the Real Property (as defined in the Master Lease) fi'om any cause whatsoever, including without limitation, water leakage of any character fiom the roof, walls, basement or other portion of the Subject Premises or the Real Property, or gas, fire, explosion, electricity, or any malfunction within the Subject Premises or the Real Property, or acts of otherltenants of the Building; provided, however, that the foregoing waiver shall be inapplicable as to any Indemnitee with respect to any loss, injury or damage resulting directly fi'om such Indemnitee’s gross negligence or willful misconduct. Occupant further agrees that, to the extent permitted by law, such parties shall in no event be liable for any consequential or remote damages or lost profits or loss of business. To the extent permitted by law, Occupant shall hold Landlord and the other Indemnitees harmless fiom and indemnify the Indemnitees against any claims, liability, damages, costs or expenses, including reasonable attomeys’ fees and costs incurred in defending against the same, to the extent arising fi'om the acts or omissions of Occupant, Occupant’s employees, agents, contactors, licensees, subtenants, customers, guests or invitees in or about the Real Property, or any accident, injury or damage, howsoever and by whomsoever caused, to any person or property, occurring in or about the Subject Premises; except for such claims, liability, damages, costs or expenses to the extent they are caused directly by the negligence or willfill misconduct of Landlord or any other Indemnitee. In case any action or proceeding be brought against any of the Indemnitees by reason of any such claim or liability, Occupant, upon notice fi'om Landlord, covenants to resist and defend at Occupant’s sole expense such action or proceeding by counsel reasonably satisfactory to Landlord. The provisions of this Paragaph shall survive the termination of the Master Lease and/or the Space Sharing Arrangement with respect to any injury, illness, death or damage occurring prior to such termination. Occupant shall carry, and cause the Indemnitees designated by Landlord to be named as additional insureds on, the policy of commercial general liability insurance required by Section 10.3 of the Master Lease, and shall provide Landlord with such policy or a certificate thereof upon commencement of the term of the Space Sharing Ageement and shall provide Landlord with a renewal policy or certificate at least thirty (30) days prior to the expiration dates of expiring policies. 5. No provisions of this Aclmowledgnent shall-be deemed waived by Landlord unless such waiver is in a writing signed by Landlord. In the event of any action or proceeding by Landlord to enforce any provision of this I Aclmowledgnent, the losing party shall pay to the prevailing party all costs and expenses, including, without limitation, reasonable attomeys’ fees and expenses, incurred in such action and in any appeal in connection therewith by such prevailing party. This Acknowledgment may not be modified or amended except by a writing signed by Landlord, Tenant and Occupant. Dated: Occupant: ,a By: Name: Title: Tenant: INSTITUTE FOR THE FUTURE, a California corporation 10 ms937959.s M59319593 By: Name: Title: Landlord: DON B. MULLEN CAROL MULLEN SCI-ER HOLDINGS, LLC, a California limited liability company By: Edward Scher, Manager 11 \V/ VENTANA PROPERTY SERVICES VIA FEDEX OVERNIGHT, HAND DELIVERY & EMAIL August 18, 2020 Ms. Marina Gorbis, Executive Director Ms. Katie Fuller, Director of Finance & Administration Institute for the Future 201 Hamilton Avenue, Palo Alto, CA 94301 Re: NOTICE OF EVENT OF DEFAULT OF LEASE 201-225 Hamilton Avenue, Palo Alto, CA 94301 Dear Marina and Katie: This letter serves as written notice of an Event of Default under Paragraph 19.1 of your Lease for lack of payment 0f July and August 2020 Rent pursuant to the terms and conditions ofthe Lease dated February 28, 2014 between Don B. Mullen and Carol Mullen as t0 an Undivided 50% Interest and Scher Holdings, LLC, a California limited liability company, as to an Undivided 50% Interest, as Tenants in Common and Institute for the Future, a California corporation. Capitalized terms used herein shall have the same meaning as under the Lease. Past due Rent shall be subject t0 Late Charges and bear interest at the Interest Rate set forth in the Lease. Any Concessions under the Lease including, but not limited to, the rent abatement for Months 1 through 3 of the Lease, shall be recovered by Landlord as Additional Rent. Landlord, at Landlord’s option, may use, apply or retain all or any part of the Security Deposit and Letter 0f Credit for the payment 0fany past due Rent 0r any sum in default, or for the payment ofany amount that Landlord may spend or become obligated to spend by reason ofTenant’s default. Please note that Landlord reserves all ofits rights and remedies pursuant to the Lease, at law and in equity, including but not limited to its right to reimbursement of legal costs and expenses incurred in connection With enforcement ofthe Lease. Sincerely, D011 B. Mullen and Carol Mullen as to an Undivided 50% Interest and Scher Holdings, LLC, a California limited liability company, as t0 an Undivided 50% Interest, as Tenants in Common By: Ventana Property Services, Inc. - Agent for Owner Jam DeShm Julie L. DeShazo Director of Property Management DRE License No. 00995305 DRE License N0. 01 129571 Commercial andResidential Real Estate Services 975 High Street ° Palo Alto, CA 94301 ° Tel 650.847.2000 ° Fax 650.847.2001 Exhibit B 100 Saratoga Avenue, Suite 200 TODD B. ROTHBARD Phone: (408) 244-4200 Santa Clara, California 95051 BRIAN SKARBEK Fax: (408) 244-4267 RYAN MAYBERRY STEVE NAUMCHIK CHRISTINA N. DABIS Institute for the Future Marina Gorbis Executive Director 201 Hamilton Avenue, Palo Alto, CA 94301 mgorbis@iftf.0rg RE: TENANCY AT 210-225 HAMILTON AVE Dear Ms. Gorbis, Irepresent your landlord from Whom you lease 201-225 Hamilton Ave., Palo Alto, CA, With respect t0 your tenancy. I am writing t0 you in response t0 your August 20, 2020 emailed letter addressed to Julie L. DeShazo in an attempt t0 set the record straight. Your letter suggests that my client’s deferral offer demanded a repayment scheduled that was prohibited by the Santa Clara County Urgency Ordinance N0. NS-9.287 (the Ordinance). This is not the case. My client has offered a generous repayment schedule that reduced rent by 23%, in the amount 0f $15,000.00 per month, and provided you 24 months t0 repay all past due rent, which is longer than the Ordinance provides. Because you have emphatically refused the offer, and have offered n0 other alternate schedule, other than t0 quote the Ordinance, it appears clear that n0 deferral agreement will be reached. You should be aware that in the absence of a deferral agreement, my client intends t0 assert all of its rights under the law. The Ordinance was passed in reliance 0n Governor Newsom’s Executive Order N-28-20, which provides in part: 2) Any provision 0f state law that would preempt 0r otherwise restrict local government's exercise 0f its police power to impose substantive limitations 0n residential 0r commercial evictions as described in subparagraphs (i) and (ii) below-including, but not limited t0, any such provision 0f Civil Code sections 1940 et seq. 0r 1954.25 et seq.-is hereby suspended t0 the extent that it would preempt 0r otherwise restrict such exercise. This paragraph 2 shall only apply to the imposition 0f limitations on evictions when: (i) The basis for the eviction is nonpayment 0f rent, 0r a foreclosure, arising out 0f a substantial decrease in household 0r business income (including, but not limited to, a substantial decrease in household income caused by layoffs 0r a reduction in the number of compensable hours 0f work, 0r a substantial decrease in business income caused by a reduction in opening hours 0r consumer demand), or substantial out-of- pocket medical expenses; and Exhibit C (ii) The decrease in household 0r business income 0r the out-of- pocket medical expenses described in subparagraph (i) was caused by the COVID-19 pandemic, 0r by any local, state, 0r federal government response t0 COVID-19, and is documented. The protections in the paragraph 2 shall be in effect through May 31, 2020, unless extended. (such extensions have been granted through September 30,2020). In the absence of Executive Order N-28-20, the Ordinance is in conflict with general laws contained in Civil Code sections 1940 et seq. 0r 1954.25 et seq., and Code of Civil Proc. Section 1161, and therefore unlawful and unenforceable under Article XI, Section 7 0f the California Constitution: “A county 0r city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict With general laws.” Because the Ordinance relies on the Executive Order for validity, we must also assess whether the Ordinance exceeds the scope of the Executive Order. It clearly does. The Executive Order only suspends the general laws with which the Ordinance is in conflict until September 30, 2020. The Executive Order provides no “repayment period.” Accordingly, On October 1, 2020, all past due rent comes due and must be paid in fill], unless a deferral agreement can be reached. My client remains hopeful that you will come back to the table and work in good faith (as they have from the beginning) t0 resolve this situation in a way that is fair t0 all. Please feel free t0 reach out to me with any questions. Dated September 8, 2020 flBy: I fl/ I Brian Skarbek Law Offices of Todd Rothbard Attorney for Landlord cc: Joseph F. Martignetti (jmartignetti@ventanaps.com) Julie L. DeShazo (jdeshazo@ventanaps.com) McPHARLIN SPRINKLES & PAUL S. AVILLA JEANINE D. DeBACKER THOMAS LLP LINDA HENDRIX McPHARLIN DANIEL J. MASH ATTORNEYS AT LAW THOMAS D. MURTHA ANNE . B 160 w. SANTA CLARA ST., STE. 400 C STROM ERG SAN JOSE, CALIFORNIA 951 13 N. DAVID THOMAS TELEPHONE (408) 293-1900 ........................................... FACSIMILE (408) 293' l 999 September '1 8, 2020 CATHERINE c. SPRINKLES (mums)WWW.MSTPARTNERS.COM Sent via email Brian Skarbek, Esq. 100 Saratoga Ave., Ste. 200 Santa Clara, CA 95051 Re: Lease-201-225 Hamilton Avenue, Palo Alto, CA 94301 Dear Mr. Skarbek, As we discussed by telephone on September 11, 2020 this law firm is counsel for Institute for the Future (“IFTF”) with regard to its Lease (the “Lease”) of 201-225 Hamilton Avenue, Palo Alto, CA 94301 (the “Property”). I am in receipt of your letter 0f September 8, 2020. Set forth below are my responses to the issues you raise. It is simply not true that my client have aborted any effort to reach an agreement on the issue of its rental obligations in light 0f the Covid-19 pandemic. As your client is aware the Covid-19 pandemic has imposed traumatic disruption to IFTF’s business and it has not been able t0 use or otherwise occupy the Property. Despite this unfortunate fact, IFTF is and has been committed to an effort to reach a mutual resolution of the issue. In fact, our client presumed your client had no interest in further discussion of the issue given its August 18, 2020 Notice of default (“Notice”). On August 20, 2020 Marina Gorbis of IFTF responded to the Notice of Default, but did not receive a response until the receipt of your letter. 'We do however have a disagreement on your interpretation of Governor Newsom’s Executive order N-28-20 as extended by Executive order N-66-20. The State’s executive orders contemplated that the orders may be extended or rescinded as state and local governments deemed appropriate. Santa Clara County did just that in enacting Ordinance NS-9.287, extended by NS-9.288 and amended by NS-9.289 (“Ordinance”). The Santa Clara County Ordinance allows IFTF 6 months after the moratorium ends to repay at least 50% of the past-due rent and 12 months afier the moratorium ends t0 repay in full the past-due rent. The fact that the state executive order may expire at the end of this month will not invalidate the Ordinance otherwise validly enacted. Therefore I do not agree that as of “October 1, 2020 all past due rent comes due”. Brian Skarbek, Esq. September 18, 2020 Page 2 Beyond the Ordinance protection issue, because IFTF has not been able t0 utilize the Property since March, the purpose of the Lease was not achievable. Your client’s ability t0 provide access t0 and use 0f the Propefiy was and is a precondition t0 the Lease. In the absence 0f your client’s performance, IFTF perfmmance is excused. (Dairy Food Store, Inc. v. Alpert (1931) 116 Cal.App. 670, 672-673, 3 P.2d 61.) Similarly, Califomia Civil Code § 151 1(2), provides that the performance 0f an obligation is excused “when it is prevented 01' delayed by an irresistible, superhuman cause, 0r by the act ofpublic enemies 0f this state 0r 0f the United States, unless the parties have expressly agreed t0 the contrary. ” Autry v. Republic Productions (1947) 30 Cal.2d 144. "Impossibility" is defined in section 454 ofrhe Restatement ofContractS, as not only strict impossibility but as impracticability because ofextreme and unreasonable difficulty, expense, injury, 0r 1053 involved. Temporary impossibility Ofthe character which, ifit Should become permanent, would discharge a promisbr's entire contractual duty, operates as a permanent discharge ifperformance after the impossibility ceases would impose a substantially greater burden upon the promisor; otherwise the duty is suspended while the impossibility exists. (Restatement ofContracts, § 462.) Closely related t0 impossibility is the legal concept of frustration ofpquose, where “performance remains possible, but is excused whenever a fortuitous event supewenes t0 cause a failure 0f the consideration 0r a practically total destruction 0f the expectedvvalue 0f the performance.” (see Restatement (Second) of Contract 265 and Lloyd v, Murphy, 25 Cal. 2d 48, 54, 153 P.2d 47, 50 (1944), enumerating the frustration of purpose doctn'ne when “a party’s “pfincipal purpose is substantially frustrated”) 1726 question in cases involvingfmstration is whether the equities offhe case, considered in the light ofso-zmd public policy, require placing the risk ofa disruption or complete destruction ofzhe contract equilibrium 0n defendant 0r plaintifl’under the circumstances ofa given case ( Fibrosa Spolka Akcyjina v, Fairbairn Lawson Combe Barbour, Ltd. [1942], 1 67 L.T.R. [H.L.] 10], 112-113). The doctrine 0f frustration is clear in this circumstance given that the Covid-l 9 pandemic was not reasonably foreseeable and the value 0f the Lease is lost, and has n0 real value. (La Cumbre Golf& Country Club v. Santa Barbara Hotel Ca, 205 Cal. 422, 425 [271 P. 476]; Johnson v. AtkinS, 53 Ca1.App.2d 430, 434 [127 P.2d 1027]; Grace v. Croninger, 12 Cal.App.2d 603, 606-607 [55 P.2d 940]. Therefore my client’s position is that its performance 0f the Lease is legally excused given the governmental restrictions to use 0f the Property. If need be a court can decide that issue. However, my client’s focus is 0n resolution and IFTF believes there is value in meeting t0 discuss the issue. Toward that end my client is willing t0 meet informally 01' t0 use Judge Silver, Judge Komar 0r Judge Jacobs- May as the mediator in this matter in an effort t0 resolve the matter in the most expeditious manner possible. Their respective availably is set forth below. Let me know your thoughts. Brian Skarbek, Esq. September 18, 2020 Page 3 Judge Silver October 20, 22, 27, 28 Judge Komar September 22, 25, 3O (1 1 :30 am. start); October 1, 2 Judge Jacobs- May N0 Dates available in September or October.