EX-10.14 6 dex1014.htm OFFICE LEASE BY AND BETWEEN 650 TOWNSEND ASSOCIATES LLC AND ZYNGA INC. Office Lease by and between 650 Townsend Associates LLC and Zynga Inc.

Exhibit 10.14

OFFICE LEASE

699 EIGHTH STREET

SAN FRANCISCO, CALIFORNIA

LANDLORD:

650 TOWNSEND ASSOCIATES LLC

TENANT:

ZYNGA GAME NETWORK INC.


    

TABLE OF CONTENTS

 
         Page  
1.   Definitions      1   
  1.1         Terms Defined      1   
  1.2         Basic Lease Information      21   
2.   Premises      22   
  2.1         Lease of Premises      22   
  2.2         Delivery of Premises      22   
  2.3         Delay Rent Credits      23   
  2.4         Termination for Delay in Completion      23   
  2.5         Acceptance of the Premises      24   
  2.6         Conditions of Delivery of Certain Premises      24   
  2.7         Lease of Temporary Premises      25   
  2.8         Tenant Construction      26   
3.   Term      28   
  3.1         Term of Lease      28   
  3.2         Early Access      28   
  3.3         Tenant’s Early Termination Options      28   
  3.4         Option to Extend      30   
4.   Rent      34   
  4.1         Obligation to Pay Base Rent      34   
  4.2         Manner of Rent Payment      34   
  4.3         Additional Rent      35   
  4.4         Late Payment of Rent; Interest      35   
  4.5         Abatement of Base Rent      35   
5.   Calculation and Payments of Escalation Rent      35   
  5.1         Payment of Estimated Escalation Rent      35   
  5.2         Escalation Rent Statement and Adjustment      36   
  5.3         Adjustments to Operating Expenses      37   
  5.4         Adjustments to Tenant’s Percentage Share      38   
  5.5         Payment of Real Property Taxes in Installments      38   
  5.6         Proration for Partial Year      38   
  5.7         Certain Real Property Taxes Limited      38   
  5.8         Inspection of Landlord’s Records      39   
6.   Payments by Tenant      40   
  6.1         Impositions      40   
  6.2         Net of Electricity      40   
7.   Use of Premises      41   
  7.1         Permitted Use      41   
  7.2         Ancillary Uses      41   
  7.3         Landlord Cooperation      41   
  7.4         Compliance with Requirements      42   
  7.5         Compliance With Environmental Laws; Use of Hazardous Materials      42   

 

i


  7.6         Sustainable Building Operations      43   
  7.7         Recycling and Waste Management      44   
  7.8         Landlord Covenants      44   
  7.9         No Third Party Beneficiary      44   
  7.10       Generators      44   
8.   Building Services      46   
  8.1         Building-Standard Services      46   
  8.2         No Representation      46   
  8.3         Building Security Services and Access      46   
  8.4         Interruption or Unavailability of Services      47   
  8.5         Tenant’s Use of Excess Electricity and Water; Premises Occupancy Load      48   
  8.6         Provision of Additional Services; After-Hours HVAC Services      48   
  8.7         Tenant’s Supplemental Air Conditioning      49   
  8.8         Janitorial Service      49   
  8.9         Tenant to Provide Security Services      49   
  8.10       Controls      50   
  8.11       Service Providers      50   
  8.12       Property Management      50   
9.   Maintenance and Repair      50   
  9.1         Landlord’s Maintenance Obligations      50   
  9.2         Operable Building Systems upon Lease Commencement      51   
  9.3         Tenant’s Obligations      51   
10.   Alterations to Premises      51   
  10.1        Landlord Consent; Procedure      51   
  10.2        General Requirements      52   
  10.3        Landlord’s Right to Inspect      53   
  10.4        Tenant’s Obligations Upon Completion      53   
  10.5        Ownership and Removal of Alterations      53   
  10.6        Minor Alterations      54   
  10.7        Landlord’s Fee      54   
11.   Liens      54   
12.   Damage or Destruction      55   
  12.1        Repair Obligations      55   
  12.2        Termination Rights      55   
  12.3        Completion of Repairs      56   
  12.4        Rent Abatement      56   
  12.5        Waiver of Statutory Provisions      56   
  12.6        Casualty Following Exercise of Purchase Option      57   
13.   Eminent Domain      57   
  13.1        Lease Termination      57   
  13.2        Partial Taking      57   
  13.3        Landlord’s Termination Right      57   
  13.4        Compensation      57   
  13.5        Waiver      58   

 

ii


14.   Insurance      58   
  14.1        Liability Insurance      58   
  14.2        Form of Policies      58   
  14.3        Landlord’s Insurance      59   
15.   Waiver of Subrogation Rights      59   
16.   Waiver of Liability and Indemnification      59   
  16.1        Indemnification      60   
  16.2        Duty to Defend      60   
  16.3        Survival      60   
17.   Assignment and Subletting      60   
  17.1        Restriction on Transfers      61   
  17.2        Notice of Proposed Transfer      61   
  17.3        Reasonable Conditions      62   
  17.4        Transfer Premium      62   
  17.5        Terms of Consent      63   
  17.6        Subsequent Consents      63   
  17.7        Permitted Transfers      63   
  17.8        Permitted Occupancy by Certain Business Affiliates      64   
  17.9        Arbitration      64   
18.   Rules and Regulations      64   
19.   Entry of Premises by Landlord; Modification to Common Areas      65   
  19.1        Entry of Premises      65   
  19.2        Modifications to Common Areas      65   
  19.3        Waiver of Claims      66   
20.   Default and Remedies      66   
  20.1        Events of Default      66   
  20.2        Landlord’s Remedies Upon Occurrence of Event of Default      67   
  20.3        Damages Upon Termination      67   
  20.4        Computation of Certain Rent for Purposes of Default      68   
  20.5        Landlord’s Right to Cure Defaults      68   
  20.6        Remedies Cumulative      68   
  20.7        Landlord’s Default      68   
21.   Subordination, Attornment and Nondisturbance      69   
  21.1        Subordination and Attornment      69   
  21.2        Mortgage Subordination      70   
  21.3        Notice to Encumbrancer      70   
  21.4        Rent Payment Direction      70   
  21.5        SNDA      70   
22.   Sale or Transfer by Landlord; Lease Non-Recourse      71   
  22.1        Release of Landlord on Transfer      71   
  22.2        Lease Nonrecourse to Landlord; Limitation of Liability      71   
23.   Estoppel Certificate      71   

 

iii


  23.1        Tenant Estoppel      71   
  23.2        Landlord Estoppel      71   
24.   No Light, Air, or View Easement      72   
25.   Holding Over      72   
26.   Letter Of Credit      72   
  26.1        Delivery of Letter of Credit      72   
  26.2        Transfer of Letter of Credit      73   
  26.3        In General      73   
  26.4        Application of Letter of Credit      74   
  26.5        Security Deposit      75   
  26.6        Increase in Letter of Credit Amount      75   
  26.7        Reduction in Letter of Credit      77   

27.

 

Waiver

     77   

28.

 

Notices; Tenant’s Agent for Service

     77   

29.

 

Authority

     78   

30.

 

Parking; Transportation

     78   
  30.1        Lease of Parking Spaces      78   
  30.2        Tenant’s Right to Secure Parking      79   
  30.3        Use of the Parking Spaces      79   
  30.4        Management of Parking Garage      80   
  30.5        Abatement      80   
  30.6        Shuttle Service      80   

31.

 

Communications and Computer Lines

     80   
  31.1        Tenant’s Rights      80   
  31.2        Landlord’s Rights      81   
  31.3        Removal; Line Problems      81   

32.

 

Miscellaneous

     82   
  32.1        No Joint Venture      82   
  32.2        Successors and Assigns      82   
  32.3        Construction and Interpretation      82   
  32.4        Severability      82   
  32.5        Entire Agreement      82   
  32.6        Governing Law      83   
  32.7        Costs and Expenses      83   
  32.8        Standards of Performance and Approvals      83   
  32.9        Brokers      83   
  32.10      Memorandum of Lease      84   
  32.11      Quiet Enjoyment      84   
  32.12      Force Majeure      84   
  32.13      Surrender of Premises      84   
  32.14      Exhibits      85   
  32.15      Survival of Obligations      85   

 

iv


  32.16      Time of the Essence      85   
  32.17      Waiver of Trial By Jury; Waiver of Counterclaim      85   
  32.18      Consent to Venue      86   
  32.19      Financial Statements      86   
  32.20      Subdivision; Future Ownership      86   
  32.21      Modification of Lease      87   
  32.22      No Option      87   
  32.23      Reserved      87   
  32.24      Compliance with Anti-Terrorism Law      87   
  32.25      First Source Hiring Program      87   
  32.26      Landlord Lien Waiver      88   
  32.27      Rent Not Based on Income      88   
  32.28      Counterparts      88   

33.

 

Expansion Options

     88   
  33.1        Expansion Option at Lease Terms      88   
  33.2        Expansion Option at Modified Lease Terms      90   
  33.3        Expansion Option at Market Terms      92   
  33.4        Conditions of Exercise      94   
  33.5        Expansion Premises Tenant Improvement Allowance      94   
  33.6        Letter of Credit Amendment; Commissions      94   
  33.7        Amendment to Lease      95   
  33.8        Expansion Rent Adjustment      95   
  33.9        Rights Personal to Original Tenant      95   

34.

 

Right of First Refusal

     95   
  34.1        First Refusal Space      95   
  34.2        First Refusal Notice      95   
  34.3        Lease of First Refusal Space      96   
  34.4        Conditions of Exercise      96   
  34.5        Letter of Credit Amendment; Commissions      96   
  34.6        Amendment to Lease      97   
  34.7        Suite 500 Premises Limited Rights      97   
  34.8        Rights Personal to Original Tenant      97   

35.

 

Right of First Offer

     97   
  35.1        First Offer Space      97   
  35.2        Offering Notice      97   
  35.3        Lease of First Offer Space      98   
  35.4        Conditions of Exercise      98   
  35.5        Letter of Credit Amendment      99   
  35.6        Amendment to Lease      99   
  35.7        Rights Personal to Original Tenant      99   

36.

 

Purchase Option

     99   
  36.1        Grant of Purchase Option      99   
  36.2        Offer Procedure      99   
  36.3        Purchase Agreement      100   
  36.4        Rejection of Offer      100   
  36.5        Excluded Transfers      101   
  36.6        Condition of Title      101   

 

v


  36.7        Right to Effect a Like Kind Exchange      101   
  36.8        Broker’s Commission      102   
  36.9        No Implied Obligation      102   
  36.10      Personal to Original Tenant      102   
  36.11      Time of Essence      102   

37.

 

Rooftop Parking Area; Terrace and Dog Run

     102   
  37.1        Use      102   
  37.2        Improvements to Parking Garage Roof Space      102   
  37.3        Protection of Project      102   
  37.4        Use and Maintenance      103   
  37.5        Costs      103   
  37.6        Conditions to Continued Use      103   
  37.7        Lease Provisions      104   

38.

 

Tenant’s Rooftop and Other Equipment

     104   
  38.1        Grant of License      104   
  38.2        Interference      104   
  38.3        Roof Repairs      105   
  38.4        Rules and Regulations      105   
  38.5        Transfer of Rights      105   

39.

 

Sidewalk Areas

     105   

40.

 

Cafeteria

     106   
  40.1        Construction and Use      106   
  40.2        Operation      106   
  40.3        Costs      107   

41.

 

Tenant Competitors

     107   

42.

 

Dogs

     108   
  42.1        General Conditions      108   
  42.2        Costs and Expenses      108   
  42.3        Insurance; Indemnity      108   
  42.4        Rights Personal to Original Tenant      109   

43.

 

Storage Premises

     109   

44.

 

Signs

     109   
  44.1        Building Directory      109   
  44.2        Interior Signage      109   
  44.3        Exterior Signs      110   
  44.4        Approvals      111   
  44.5        Maintenance and Removal      111   
  44.6        Restriction on Competitor Signage      112   
  44.7        Assignment and Subleasing      112   

45.

 

JAMS ARBITRATION

     112   
  45.1        General Submittals to Arbitration      112   
  45.2        JAMS      112   

 

vi


  45.3        Provisional Remedies      113   
  45.4        Waiver of Rights to Litigate in a Court or Jury Trial      113   

46.

 

Representations and Warranties. Landlord warrants and represents that:

     113   
  46.1        No Other Third-Party Rights      113   
  46.2        Encumbrances      114   

 

vii


Exhibits

    
Exhibit A-1:    Floor Plans of Premises and Storage Space
Exhibit A-2:    Floor Plans of Temporary Premises
Exhibit A-3:    Floor Plans of Expansion Premises
Exhibit A-4:    Floor Plans Depicting Relocation Tenants
Exhibit A-5:    Reserved
Exhibit A-6:    Plan Depicting Location of Sidewalk Area
Exhibit B-1:    Rules and Regulations
Exhibit B-2:    Rooftop Rules
Exhibit C:    Work Letter
Exhibit D:    Confirmation of Lease Term
Exhibit E:    Janitorial Specifications
Exhibit F:    Form of Subordination, Non-Disturbance and Attornment
Exhibit G:    Form of Letter of Credit
Exhibit H:    Example of Calculation of Weighted Average Abatement Period
Exhibit I:    Location of Existing Generators
Exhibit J:    Landlord Security Program
Exhibit K:    Location of Parking Spaces
Exhibit L:    Memorandum of Lease
Exhibit M:    Tenant Competitors
Exhibit N:    Reserved
Exhibit O:    Reserved
Exhibit P:    Existing Encumbrances
Exhibit Q:    Form of Estoppel Certificate
Exhibit R:    Form of Confidentiality Agreement
Exhibit S:    Early Termination Example Calculations

 

viii


OFFICE LEASE

699 EIGHTH STREET

San Francisco, California

BASIC LEASE INFORMATION

 

Lease Date:

September 24, 2010

 

Landlord:

650 Townsend Associates LLC,

a Delaware limited liability company

 

Tenant:

Zynga Game Network Inc.,

a Delaware corporation

 

Premises:

A total of approximately 267,866 Adjusted Rentable Square Feet (as defined in Section 1.1.1 below) at the Building comprised of the following:

 

  (i) Suites 120 and 140 located on the concourse level containing approximately 75,000 Adjusted Rentable Square Feet (the “Concourse Premises”);

 

  (ii) Suites 50, 60 and 70 and the lobby located on the first floor containing approximately 20,425 Adjusted Rentable Square Feet (the “First Floor Premises”);

 

  (iii) Suites 250, 252, 260, 270, 271, 275, 280, 285 and 290 located on the second floor containing approximately 24,066 Adjusted Rentable Square Feet and certain corridor space adjacent thereto containing approximately 8,000 Adjusted Rentable Square Feet (“Second Floor Corridor Space”), totaling approximately 32,066 Adjusted Rentable Square Feet on the second floor (the “Second Floor Premises”);

 

  (iv) Suites 350, 352, 360, 365 and 375 located on the third floor containing approximately 36,492 Adjusted Rentable Square Feet (“Third Floor Premises”);

 

  (v) Suites 550 and 575 located on the fifth floor containing approximately 52,071 Adjusted Rentable Square Feet (the “Fifth Floor Premises”); and

 

  (vi) Suites 650, 675 and 680 located on the sixth floor containing approximately 51,812 Adjusted Rentable Square Feet (the “Sixth Floor Premises”).

 

  Floor plans of the Premises are attached hereto as Exhibit A 1.

 

ix


Term:

Commencing on the Lease Date and expiring on the day preceding the seventh (7th) year anniversary of the first full month following the Commencement Date, except as may be extended pursuant to Section 3.4 below.

 

Commencement Date:

The earlier to occur of (a) the date which is thirty (30) days after the Phase 1 Substantial Completion Date (as defined in the Work Letter) and (b) the date Tenant commences business operations in at least one hundred nineteen thousand (119,000) Adjusted Rentable Square Feet of the Phase 1 Premises. The Commencement Date shall occur before (and shall be a precondition to) the occurrence of the Phase 2 Substantial Completion Date (as defined in the Work Letter).

 

Target Phase 1 Completion Date:

April 1, 2011

 

Target Phase 2 Completion Date:

June 1, 2011

 

Phase 1 Rent Commencement Date:

The Commencement Date, subject to abatement as provided in Section 4.5 below.

 

Phase 2 Rent Commencement Date:

The earlier to occur of (a) the date which is thirty (30) days after the Phase 2 Substantial Completion Date or (b) with respect to each Suite comprising the Phase 2 Premises, the date Tenant commences business operations in such Suite, subject to abatement as provided in Section 4.5 below.

 

Expiration Date:

The day preceding the seventh (7th) year anniversary of the first full month following the Commencement Date.

Base Rent (Net of Electrical):

 

Time Period

  

Annual Base

    Rent/ARSF    

   Annual Base Rent      Monthly Base
Rent
 

Phase 1 Rent Commencement

Date until the Phase 2 Rent

Commencement Date

  

$24.50 (except for the

Concourse Premises which

is $15.00)

   $ 4,717,606.50       $ 393,133.88   

Phase 2 Rent Commencement

Date to the first anniversary of the

Phase 1 Rent Commencement Date

  

$24.50 (except for the

Concourse Premises which

is $15.00)

   $ 5,850,217.00       $ 487,518.08   

First anniversary of the Phase 1

Rent Commencement Date to the

second anniversary of the Phase 1

Rent Commencement Date

  

$25.50 (except for the

Concourse Premises which

is $16.00)

   $ 6,118,083.00       $ 509,840.25   

 

x


Second anniversary of the Phase 1

Rent Commencement Date to the

third anniversary of the Phase 1

Rent Commencement Date

  

$26.50 (except for the

Concourse Premises which

is $17.00)

   $ 6,385,949.00       $ 532,162.42   

Third anniversary of the Phase 1

Rent Commencement Date to the

fourth anniversary of the Phase 1

Rent Commencement Date

  

$27.50 (except for the

Concourse Premises which

is $18.00)

   $ 6,653,815.00       $ 554,484.58   

Fourth anniversary of the Phase 1

Rent Commencement Date to the

fifth anniversary of the Phase 1

Rent Commencement Date

  

$28.50 (except for the

Concourse Premises which

is $19.00)

   $ 6,921,681.00       $ 576,806.75   

Fifth anniversary of the Phase 1

Rent Commencement Date to the

sixth anniversary of the Phase 1

Rent Commencement Date

  

$29.50 (except for the

Concourse Premises which

is $20.00)

   $ 7,189,547.00       $ 599,128.92   

Sixth anniversary of the Phase 1

Rent Commencement Date to the

Expiration Date

  

$30.50 (except for the

Concourse Premises which

is $21.00)

   $ 7,457,413.00       $ 621,451.08   

Extension Terms

   See Section 3.4 below   

 

Base Year:

Calendar year 2011

 

Tenant’s Percentage Share:

33.12% as of the Phase 1 Commencement Date (initially being the quotient of 221,637 Adjusted Rentable Square Feet of the Phase 1 Premises divided by 669,166 Adjusted Rentable Square Feet multiplied by 100); and

 

  40.03% as of the Phase 2 Commencement Date (initially being the quotient of 267,866 Adjusted Rentable Square Feet of the Premises divided by 669,166 Adjusted Rentable Square Feet multiplied by 100).

 

Letter of Credit/Security Deposit:

As described in Article 26

 

Number of Parking Spaces:

One (1) parking space for each 1,800 Adjusted Rentable Square Feet in the Premises

 

Tenant’s Address:

Prior to Commencement Date:

Zynga Game Network Inc.

365 Vermont Street

San Francisco, CA 94103

Attention: Director of Real Estate

 

xi


with a copy to:

Zynga Game Network Inc.

365 Vermont Street

San Francisco, CA 94103

Attention: General Counsel

 

and a copy to:

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Stephen I. Berkman, Esq.

On and after Commencement Date:

 

  Zynga Game Network Inc.

699 Eighth Street

San Francisco, California 94103

Attention: Director of Real Estate

 

with a copy to:

Zynga Game Network Inc.

699 Eighth Street

San Francisco, California 94103

Attention: General Counsel

 

and a copy to:

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Stephen I. Berkman, Esq.

 

Landlord’s Address for Notices:

650 Townsend Associates LLC

c/o TMG Partners

100 Bush Street, 26th Floor

San Francisco, California 94104

Attn: Lynn Tolin

 

Landlord’s Address for Payments:

650 Townsend Associates LLC

P.O. Box 49034

San Jose, California 95161-9034

Brokers:

 

      Landlord’s Broker:

The CAC Group (Bruce A. Wilson and Steve Anderson)

 

      Tenant’s Broker:

Colliers International (Jay Sternberg and Philip Arnautou)

Exhibits

Exhibit A-1:         Floor Plans of Premises and Storage Space

Exhibit A-2:         Floor Plans of Temporary Premises

Exhibit A-3:         Floor Plans of Expansion Premises

Exhibit A-4:         Floor Plans Depicting Relocation Tenants

Exhibit A-5:         Reserved

Exhibit A-6:         Plan Depicting Location of Sidewalk Area

 

xii


Exhibit B-1:

   Rules and Regulations

Exhibit B-2:

   Rooftop Rules

Exhibit C:

   Work Letter

Exhibit D:

   Confirmation of Lease Term

Exhibit E:

   Janitorial Specifications

Exhibit F:

   Form of Subordination, Non-Disturbance and Attornment

Exhibit G:

   Form of Letter of Credit

Exhibit H:

   Example of Calculation of Weighted Average Abatement Period

Exhibit I:

   Location of Existing Generators

Exhibit J:

   Landlord Security Program

Exhibit K:

   Location of Parking Spaces

Exhibit L:

   Memorandum of Lease

Exhibit M:

   Tenant Competitors

Exhibit N:

   Reserved

Exhibit O:

   Reserved

Exhibit P:

   Existing Encumbrances

Exhibit Q:

   Form of Estoppel Certificate

Exhibit R:

   Form of Confidentiality Agreement
Exhibit S:    Early Termination Example Calculations

 

xiii


OFFICE LEASE

THIS LEASE is made and entered into by and between Landlord and Tenant as of the Lease Date.

Landlord and Tenant hereby agree as follows:

1. Definitions.

1.1 Terms Defined. The following terms have the meanings set forth below. Certain other terms have the meanings set forth elsewhere in this Lease.

1.1.1 8th Street Signage. The term “8th Street Signage” shall have the meaning set forth in Section 44.3.3 below.

1.1.2 AAA. The term “AAA” shall have the meaning set forth in Section 45.2 below.

1.1.3 Abatement Event. The term “Abatement Event” shall have the meaning set forth in Section 8.4 below.

1.1.4 Acceptance Notice. The term “Acceptance Notice” shall have the meaning set forth in Section 36.2.2 below.

1.1.5 Acceptance Period. The term “Acceptance Period” shall have the meaning set forth in Section 36.2.2 below.

1.1.6 Additional Generator. The term “Additional Generator” shall have the meaning set forth in Section 7.10.2 below.

1.1.7 Adjusted Rentable Square Feet. The term “Adjusted Rentable Square Feet” means the rentable square footage of the Premises or the Building, as the case may be, determined in accordance the Building Owners and Managers Association standard method of measurement (ANSI Z65/1-1996) and adjusted based on a load factor determined by Landlord’s architect and approved by Tenant’s architect.

1.1.8 Alterations. The term “Alterations” means alterations, additions or other improvements to the Premises made by or on behalf of Tenant, other than the Tenant Improvements and Ancillary Tenant Improvements.

1.1.9 Amortization Rate. The term “Amortization Rate” means the applicable Interest Rate at the time a capital improvement or capital asset is installed, constructed or acquired (whichever is earliest), but not more than the maximum rate permitted by Applicable Laws at the time such capital improvements or capital assets are installed, constructed or acquired (whichever is earliest).

1.1.10 Ancillary Tenant Improvements. The term “Ancillary Tenant Improvements” shall have the meaning set forth in the Work Letter.

 

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1.1.11 Ancillary Uses. The term “Ancillary Uses” means fitness/health facility (including showers for users of such facility), ATM facility, travel agency, concessions and franchises related specifically to office services functions that may be outsourced by a tenant (such as food service, reproduction services, mail room services, cleaning, security, IT services, MEP services and/or engineering services), childcare facility, auditorium, board rooms, libraries, training rooms and facilities, audiovisual and closed circuit television facilities, messenger and mailroom facilities, reproduction and copying facilities, word processing centers, computer and communications facilities, pantries (including vending machines), file rooms (including condensed file rooms with reinforced flooring if required), meeting and conference centers and rooms, storage space and kitchens, serveries, cafeterias and dining rooms, in all cases as a use ancillary to Tenant’s use of the Premises for general office and administrative use.

1.1.12 Annual Statement. The term “Annual Statement” shall have the meaning set forth in Section 5.2 below.

1.1.13 Anti-Terrorism Law. The term “Anti-Terrorism Law” means any Applicable Laws relating to terrorism, anti-terrorism, money-laundering or anti-money laundering activities, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, Executive Order No. 13224, and Title 3 of the USA Patriot Act, and any regulations promulgated under any of them.

1.1.14 Anticipated Delivery Date. The term “Anticipated Delivery Date” shall have the meaning set forth in Section 33.1.1 below.

1.1.15 Applicable Laws. The term “Applicable Laws” means all applicable laws, statutes, ordinances, orders, judgments, decrees, regulations, permit conditions, and requirements of all courts and all federal, state, county, municipal or other governmental or quasi-governmental authorities, departments, commissions, agencies and boards now or hereafter in effect, including, but not limited to, the Americans With Disabilities Act (42 U.S.C. § 12101 et seq.) and Title 24 of the California Code of Regulations and all regulations and guidelines promulgated thereunder.

1.1.16 Approval. The term “approval” shall have the meaning set forth in Section 32.8 below.

1.1.17 Arbitration of Disputes. The term “Arbitration of Disputes” shall have the meaning set forth in Section 45.1 below.

1.1.18 Arbitration Notice. The term “Arbitration Notice” shall have the meaning set forth in Section 45.2 below.

1.1.19 Arbitration Panel. The term “Arbitration Panel” shall have the meaning set forth in Section 3.4.6 (d) below.

1.1.20 Arbitration Rules. The term “Arbitration Rules” shall have the meaning set forth in Section 45.2 below.

1.1.21 Arbitrator. The term “Arbitrator” shall have the meaning set forth in Section 45.2 below.

1.1.22 Available Expansion Premises. The term “Available Expansion Premises” shall mean (a) those portions of the Expansion Premises comprised of Suite 460 (as defined

 

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herein), Suite 500 (as defined herein), and Suite 600 (as defined herein), each as depicted on the floor plans attached hereto as Exhibit A-3, all of which are Available for Lease (as defined herein) as of the Lease Date and to the extent such portions remain Available for Lease during any applicable period in which an Expansion Option may be exercised and (b) the remaining portions of the Expansion Premises that first become and remain Available for Lease during any applicable period in which an Expansion Option may be exercised.

1.1.23 Available for Lease: The term “Available for Lease” shall mean an applicable space is vacant or, if occupied, when Landlord has reasonably determined that it will place the applicable space on the market for lease.

1.1.24 Bank. The term “Bank” shall have the meaning set forth in Section 26.1 below.

1.1.25 Bankruptcy Code. The term “Bankruptcy Code” means the United States Bankruptcy Code or any state bankruptcy code.

1.1.26 Base Rent. The term “Base Rent” shall have the meaning set forth in Section 4.1 below.

1.1.27 Base Year. The term “Base Year” shall have the meaning set forth in the Basic Lease Information.

1.1.28 Base Real Property Taxes. The term “Base Real Property Taxes” means the Real Property Taxes allocable to the Base Year, including any reduction in Base Real Property Taxes obtained by Landlord after the date hereof as a result of a commonly called Proposition 8 application; provided, however, that the Base Real Property Taxes shall hereafter be increased by (a) the amount of any increase in Real Property Taxes due solely to the expiration or reversal of such Proposition 8 application or (b) the positive difference between a reduction to the Real Property Taxes obtained by Landlord as a result of a Proposition 8 application applicable to the Base Year and a reduction to the Real Property Taxes obtained by Landlord as a result of a Proposition 8 application applicable to any year subsequent to the Base Year.

1.1.29 Bona Fide Offer. The term “Bona Fide Offer” shall have the meaning set forth in Section 34.2 below.

1.1.30 Building. The term “Building” means the six-story office building located within the Project, including related Common Areas and the Parking Garage.

1.1.31 Building Fuel Tank. The term “Building Fuel Tank” shall have the meaning set forth in Section 7.10.1 below.

1.1.32 Building Holidays. The term “Building Holidays” means New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving and Christmas Day.

1.1.33 Building Rules. The term “Building Rules” shall have the meaning set forth in Section 18 below.

1.1.34 Building Standard Hours. The term “Building Standard Hours” means 8:00 a.m. to 6:00 p.m. on weekdays (except Building Holidays).

 

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1.1.35 Building Systems. The term “Building Systems” means all systems serving the Building in general, including, but not limited to, the fire/life safety, electrical, plumbing, HVAC, security and telecommunications systems, including all components thereof and related equipment, but excluding any equipment that is separately installed by or on behalf of Tenant and any distribution systems or equipment existing within the Premises as of the Lease Date.

1.1.36 Business Affiliates. The term “Business Affiliates” shall have the meaning set forth in Section 17.8 below.

1.1.37 Cable Path. The term “Cable Path” shall have the meaning set forth in Section 38.1 below.

1.1.38 Cafeteria. The term “Cafeteria” shall have the meaning set forth in Section 40.1 below.

1.1.39 Casualty. The term “Casualty” means fire, earthquake, or other event of a sudden, unexpected, or unusual nature.

1.1.40 Change of Ownership Transaction. The term “Change of Ownership Transaction” shall have the meaning set forth in Section 17.1 below.

1.1.41 Claims. The term “Claims” means any and all obligations, losses, claims, actions (including remedial or enforcement actions of any kind and administrative or judicial proceedings, suits, orders or judgments), causes of action, liabilities, penalties, damages (excluding, except with respect to third-party claims, foreseeable and unforeseeable consequential damages and punitive damages), costs and expenses (including reasonable attorneys’ and consultants’ fees and expenses).

1.1.42 Common Areas. The term “Common Areas” means all areas of the Project designated by Landlord from time to time for the common use or benefit of occupants of the Building, and their employees and invitees, or the public.

1.1.43 Comparable Buildings. The term “Comparable Buildings” means the other office buildings located in the South of Market and Showplace Square sub-market areas of San Francisco, California, that are comparable in terms of age, size, location, quality of construction and quality of common area improvements to the Building.

1.1.44 Comparison Leases. The term “Comparison Leases” shall have the meaning set forth in Section 3.4.4 below.

1.1.45 Complete Termination. The term “Complete Termination” shall have the meaning set forth in Section 2.4.1 below.

1.1.46 Confirmation. The term “Confirmation” shall have the meaning set forth in Section 3.1 below.

1.1.47 Connections. The term “Connections” shall have the meaning set forth in Section 38.1 below.

1.1.48 Construction Completion Date. The term “Construction Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

 

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1.1.49 Control. The term “Control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of more than fifty percent (50%) of the voting interest in, any person or entity.

1.1.50 Current Assets. The term “Current Assets” shall have the meaning set forth in Section 26.6.3 below.

1.1.51 Current Liabilities. The term “Current Liabilities” shall have the meaning set forth in Section 26.6.4 below.

1.1.52 Deed. The term “Deed” shall have the meaning set forth in Section 36.6 below.

1.1.53 Delay Rent Credits. The term “Delay Rent Credits” shall have the meaning set forth in Section 2.3 below.

1.1.54 Delayed Delivery Premises. The term “Delayed Delivery Premises” shall have the meaning set forth in Section 2.6.1 below.

1.1.55 Deposit. The term “Deposit” shall have the meaning set forth in Section 26.5 below.

1.1.56 Determination. The term “Determination” shall have the meaning set forth in Section 3.4.6 (a) below.

1.1.57 Early Phase 2 Occupancy. The term “Early Phase 2 Occupancy” shall have the meaning set forth in Section 2.2.2 below.

1.1.58 Early Phase 2 Occupancy Space. The term “Early Phase 2 Occupancy Space” shall have the meaning set forth in Section 2.2.2 below.

1.1.59 Early Termination Date. The term “Early Termination Date” shall have the meaning set forth in Section 3.3.1 below.

1.1.60 Early Termination Option. The term “Early Termination Option” shall have the meaning set forth in Section 3.3.1 below.

1.1.61 Eligibility Period. The term “Eligibility Period” shall have the meaning set forth in Section 8.4 below.

1.1.62 Encumbrance. The term “Encumbrance” means any ground lease or underlying lease, or the lien of any mortgage, deed of trust, and other encumbrances now or hereafter placed on or against the Building or the Project, or both, and all renewals, extensions, modifications, consolidations and replacements thereof.

1.1.63 Encumbrancer. The term “Encumbrancer” means the holder of the beneficial interest under an Encumbrance.

1.1.64 Environmental Laws. The term “Environmental Laws” means all Applicable Laws in any way relating to or regulating human health or safety, industrial hygiene, or the

 

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use, generation, handling, emission, release, discharge, storage or disposal of Hazardous Materials, now or hereafter in force, as amended from time to time.

1.1.65 Equipment. The term “Equipment” shall have the meaning set forth in Section 38.1 below.

1.1.66 Escalation Rent. The term “Escalation Rent” means the Tenant’s Percentage Share of the total dollar increase, if any, in Operating Expenses allocable to each calendar year, or part thereof, after the Base Year, over the amount of Base Operating Expenses, and Tenant’s Percentage Share of the total dollar increase, if any, in Real Property Taxes allocable to the tax year or years occurring in each such calendar year over the Base Real Property Taxes for the tax year or years occurring in the Base Year.

1.1.67 Estimated Restoration Period. The term “Estimated Restoration Period” shall have the meaning set forth in Section 12.1 below.

1.1.68 Estoppel Reminder Notice. The term “Estoppel Reminder Notice” shall have the meaning set forth in Section 23.1 below.

1.1.69 Event of Default. The term “Event of Default” shall have the meaning set forth in Section 20.1 below.

1.1.70 Excess Cooling Problem. The term “Excess Cooling Problem” shall have the meaning set forth in Section 8.5 below.

1.1.71 Executive Order No. 13224. The term “Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing effective September 24, 2001, and relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism,” as may be amended from time to time.

1.1.72 Existing Generators. The term “Existing Generators” shall have the meaning set forth in Section 7.10.1 below.

1.1.73 Existing Security Holder. The term “Existing Security Holders” shall have the meaning set forth in Section 21.5 below.

1.1.74 Existing Tenants. The term “Existing Tenants” shall have the meaning set forth in Section 2.6.1 below.

1.1.75 Expansion at Lease Terms Period. The term “Expansion at Lease Terms Period” shall have the meaning set forth in Section 33.1.1 below.

1.1.76 Expansion at Market Terms Period. The term “Expansion at Market Terms Period” shall have the meaning set forth in Section 33.3.1 below.

1.1.77 Expansion at Modified Lease Terms Period. The term “Expansion at Modified Lease Terms Period” shall have the meaning set forth in Section 33.2.1 below.

1.1.78 Expansion Delays. The term “Expansion Delays” shall have the meaning set forth in Section 33.1.3 below.

 

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1.1.79 Expansion Notice. The term “Expansion Notice” shall have the meaning set forth in Section 33.4 below.

1.1.80 Expansion Option. The term “Expansion Option” shall have the meaning set forth in Section 33.3.1 below.

1.1.81 Expansion Premises. The term “Expansion Premises” means (a) Suite 265 located on the second floor containing approximately 2,557 Adjusted Rentable Square Feet (“Suite 265”), (b) Suite 380 located on the third floor containing approximately 11,064 Adjusted Rentable Square Feet (“Suite 380”), (c) Suite 450 located on the fourth floor containing approximately 12,549 Adjusted Rentable Square Feet (“Suite 450”), (d) Suite 460 located on the fourth floor containing approximately 14,279 Adjusted Rentable Square Feet (“Suite 460”), (e) Suite 475 located on the fourth floor containing approximately 20,531 Adjusted Rentable Square (“Suite 475”), (f) Suite 480 located on the fourth floor containing approximately 4,703 Adjusted Rentable Square Feet (“Suite 480”), (g) the Suite 500 Premises, and (h) Suite 600 located on the sixth floor containing approximately 59,056 Adjusted Rentable Square Feet (“Suite 600”), as depicted on the floor plans attached hereto as Exhibit A-3.

1.1.82 Expense Claim. The term “Expense Claim” shall have the meaning set forth in Section 5.2 below.

1.1.83 Expense Resolution Period. The term “Expense Resolution Period” shall have the meaning set forth in Section 5.2 below.

1.1.84 Extension Option. The term “Extension Option” shall have the meaning set forth in Section 3.4.1 below.

1.1.85 Extension Term. The term “Extension Term” shall have the meaning set forth in Section 3.4.1 below.

1.1.86 Fair Market Rent. The term “Fair Market Rent” shall have the meaning set forth in Section 3.4.4 below.

1.1.87 Fee Transfer. The term “Fee Transfer” shall have the meaning set forth in Section 36.2.1 below.

1.1.88 First Offer Space. The term “First Office Space” shall have the meaning set forth in Section 35.1 below.

1.1.89 First Refusal Election Period. The term “First Refusal Election Period” shall have the meaning set forth in Section 34.2 below.

1.1.90 First Refusal Exercise Notice. The term “First Refusal Exercise Notice” shall have the meaning set forth in Section 34.2 below.

1.1.91 First Refusal Notice. The term “First Refusal Notice” shall have the meaning set forth in Section 34.2 below.

1.1.92 First Refusal Space. The term “First Refusal Space” shall have the meaning set forth in Section 34.1 below.

 

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1.1.93 Force Majeure Event. The term “Force Majeure Event” shall have the meaning set forth in Section 32.12 below.

1.1.94 FSHP. The term “FSHP” shall have the meaning set forth in Section 32.25 below.

1.1.95 Green Rating Systems. The term “Green Rating Systems” means the U.S. EPA’s Energy Star® rating system, the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system and other third party rating systems.

1.1.96 Hazardous Materials. The term “Hazardous Materials” means any substance or material that is described as a toxic, hazardous, corrosive, ignitable, flammable or reactive substance, waste or material or a pollutant or contaminant, or words of similar import, in any Environmental Laws, and includes asbestos, petroleum, petroleum products, polychlorinated biphenyls, radon gas, radioactive matter, and chemicals that may cause cancer or reproductive toxicity.

1.1.97 HVAC. The term “HVAC” means the heating, ventilation and air conditioning system serving the Building in general.

1.1.98 Impasse Date. The term “Impasse Date” shall have the meaning set forth in Section 3.4.6 (a) below.

1.1.99 Impositions. The term “Impositions” means any and all taxes, excluding Real Property Taxes, payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties hereto imposed upon, measured by or reasonably attributable 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 (other than (i) the Tenant Improvements excluding the Cafeteria improvements and (ii) standard office improvements), regardless of whether title to such improvements shall be in Tenant or Landlord. Impositions do not include income, franchise, transfer, inheritance or capital stock taxes, unless any such taxes are levied or assessed against Landlord as a substitute for, in whole or in part, any Imposition.

1.1.100 Indemnitees. The term “Indemnitees” shall have the meaning set forth in Section 16.1.1 below.

1.1.101 Independent Arbitrator. The term “Independent Arbitrator” shall have the meaning set forth in Section 3.4.6 (c) below.

1.1.102 Independent CPA. The term “Independent CPA” shall have the meaning set forth in Section 5.8.2 below.

1.1.103 Initial Deposit. The term “Initial Deposit” shall have the meaning set forth in Section 36.2.2 below.

1.1.104 Interest Rate. The term “Interest Rate” means the greater of (a) six percent (6%) per annum and (b) the Prime Rate plus four percent (4%); provided, however, that if such rate of interest shall exceed the maximum rate allowed by law, the Interest Rate shall be automatically reduced to the maximum rate of interest permitted by applicable law.

1.1.105 Janitorial Credit. The term “Janitorial Credit” shall have the meaning set forth in Section 8.8 below.

 

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1.1.106 Land. The term “Land” means the parcel of land shown as Lot 9, Assessor’s Block 3783, on that certain map entitled “Parcel Map of a Portion of 100 VARA Block No. 412, Also Being a Portion of Assessor’s Block 3783,” which map was filed November 29, 1988, at Page 36, in Book 38, of Parcel Maps, of the Official Records of the City and County of San Francisco, California.

1.1.107 Landlord Affiliate. The term “Landlord Affiliate” means (a) any corporation, limited liability company, limited partnership or other entity which Controls, is Controlled by or is under common Control with Landlord and (b) TMG Partners, a California corporation.

1.1.108 Landlord Delays. The term “Landlord Delays” shall have the meaning set forth in the Work Letter.

1.1.109 Landlord Parties. The term “Landlord Parties” means Landlord and its employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, and members and each of the foregoing is a “Landlord Party.”

1.1.110 Landlord’s Casualty Notice. The term “Landlord’s Casualty Notice” shall have the meaning set forth in Section 12.1 below.

1.1.111 Landlord’s Dispute Period. The term “Landlord’s Dispute Period” shall have the meaning set forth in Section 5.8.2 below.

1.1.112 Landlord’s Initial Proposal. The term “Landlord’s Initial Proposal” shall have the meaning set forth in Section 3.4.5 (a) below.

1.1.113 Landlord’s Lease Expenses. The term “Landlord’s Lease Expenses” shall have the meaning set forth in Section 3.3.1 below.

1.1.114 Landlord’s Market Rate Proposal. The term “Landlord’s Market Rate Proposal” shall have the meaning set forth in Section 3.4.5 (b) below.

1.1.115 Landlord’s Records. The term “Landlord’s Records” shall have the meaning set forth in Section 5.8.1 below.

1.1.116 LC Expiration Date. The term “LC Expiration Date” shall have the meaning set forth in Section 26.1 below.

1.1.117 Lease Terms Expansion Date. The term “Lease Terms Expansion Date” shall have the meaning set forth in Section 33.1.2 below.

1.1.118 Lease Terms Expansion Notice. The term “Lease Terms Expansion Notice” shall have the meaning set forth in Section 33.1.2 below.

1.1.119 Lease Terms Expansion Option. The term “Lease Terms Expansion Option” shall have the meaning set forth in Section 33.1.1 below.

1.1.120 Lease Year. The term “Lease Year” means each consecutive twelve (12) month period during the Term, commencing on the first day of the first full month following the Commencement Date, except that the first Lease Year shall include any partial month between the Commencement Date and the first day of the following month. For example, if the Commencement Date

 

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occurs on January 15, the first Lease Year will commence on January 15 and end on January 31 of the immediately succeeding calendar year, and each subsequent Lease Year shall commence on February 1 and end on January 31 of the immediately succeeding calendar year.

1.1.121 LED Signs. The term “LED Signs” shall have the meaning set forth in Section 44.3.1 below.

1.1.122 Letter of Credit. The term “Letter of Credit” shall have the meaning set forth in Section 26.1 below.

1.1.123 Letter of Credit Amount. The term “Letter of Credit Amount” shall have the meaning set forth in Section 26.1 below.

1.1.124 License. The term “License” shall have the meaning set forth in Section 38.1 below.

1.1.125 License Area. The term “License Area” shall have the meaning set forth in Section 38.1 below.

1.1.126 Line Problems. The term “Line Problems” shall have the meaning set forth in Section 31.3 below.

1.1.127 Lines. The term “Lines” shall have the meaning set forth in Section 31.1 below.

1.1.128 Mandatory Controls. The term “Mandatory Controls” shall have the meaning set forth in Section 8.10 below.

1.1.129 Market Terms Expansion Date. The term “Market Terms Expansion Date” shall have the meaning set forth in Section 33.3.2 below.

1.1.130 Market Terms Expansion Notice. The term “Market Terms Expansion Notice” shall have the meaning set forth in Section 33.3.2 below.

1.1.131 Market Terms Expansion Option. The term “Market Terms Expansion Option” shall have the meaning set forth in Section 33.3.1 below.

1.1.132 Material First Refusal Economic Terms. The term “Material First Refusal Economic Terms” shall have the meaning set forth in Section 34.2 below.

1.1.133 Material ROFO Economic Terms. The term “Material ROFO Economic Terms” shall have the meaning set forth in Section 35.2 below.

1.1.134 Minimum Credit Test. The term “Minimum Credit Test” shall have the meaning set forth in Section 26.6.1 below.

1.1.135 Minor Alterations. The term “Minor Alterations” means Alterations that are not visible from the exterior of the Premises and do not (i) affect the roof, walls, structural portions of the Building, Building Systems, or any Common Area or (ii) cost in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any one project.

 

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1.1.136 Modified Lease Terms Expansion Date. The term “Modified Lease Terms Expansion Date” shall have the meaning set forth in Section 33.2.2 below.

1.1.137 Modified Lease Terms Expansion Notice. The term “Modified Lease Terms Expansion Notice” shall have the meaning set forth in Section 33.2.2 below.

1.1.138 Modified Lease Terms Expansion Option. The term “Modified Lease Terms Expansion Option” shall have the meaning set forth in Section 33.2.1 below.

1.1.139 Modified Tenant Allowance. The term “Modified Tenant Allowance” shall have the meaning set forth in Section 33.2.3 below.

1.1.140 Net Worth. The term “Net Worth” means the excess of total assets over total liabilities, determined in accordance with generally accepted accounting principles, excluding, however, from the determination of total assets, goodwill and other intangibles and deferred revenue (i.e. revenue for which a party has received cash not yet recognized for accounting purposes).

1.1.141 Notice of Proposed Transfer. The term “Notice of Proposed Transfer” shall have the meaning set forth in Section 17.2 below.

1.1.142 Occupancy Agreement. The term “Occupancy Agreement” shall have the meaning set forth in Section 41 below.

1.1.143 Offering Notice. The term “Offering Notice” shall have the meaning set forth in Section 35.2 below.

1.1.144 Operating Expenses.

(a) The term “Operating Expenses” means the total costs and expenses that are, subject to the provisions of Section 1.1.144(c) below, actually incurred by Landlord in connection with the ownership, management, operation, maintenance and repair of the Project, including, without limitation, the following costs: (1) salaries, wages, bonuses and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare and other fringe benefits, and vacation, holidays and other paid absence benefits) relating to employees of Landlord or its agents engaged in the management, operation, repair, or maintenance of the Project and costs of training such employees; (2) payroll, social security, workers’ compensation, unemployment and similar taxes with respect to such employees of Landlord or its agents, and the cost of providing disability or other benefits imposed by law or otherwise, with respect to such employees; (3) uniforms (including the cleaning, replacement and pressing thereof) provided to such employees; (4) except as expressly excluded below, premiums and other charges incurred by Landlord with respect to fire, other casualty, boiler and machinery, theft, rent interruption and liability insurance, and any other insurance (including earthquake insurance) as may be deemed necessary or advisable in the reasonable judgment of Landlord, or as may be required by any Encumbrancer, all in such amounts as Landlord determines to be appropriate, and, after the Base Year, costs of repairing an insured casualty solely to the extent of the deductible amount under the applicable insurance policy; (5) water charges and sewer rents or fees; (6) license, permit and inspection fees and charges, the cost of contesting any governmental enactments that may affect Operating Expenses, and the costs incurred in connection with any transportation system management program or similar program, including the costs of operating any shuttle bus or similar program; (7) sales, use and excise taxes on goods and services purchased by Landlord in connection with the operation, maintenance or repair of the Project and Building Systems; (8) telephone, facsimile, postage, courier, stationery supplies and other expenses

 

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incurred in connection with the operation, maintenance, or repair of the Project; (9) management fees and expenses (including fees and expenses for accounting, financial management, data processing and information services) and costs of tenant service programs; provided, however, that Tenant’s Percentage Share of the amounts set forth in this clause (9) for any calendar year shall not include any property management fees (A) payable to Landlord or an affiliate of Landlord to the extent that such amount exceeds the arms-length competitive price at Comparable Buildings for similar services and (B) in any case to the extent greater than three percent (3%) of the Building’s revenues plus expenses; (10) repairs to and physical maintenance of the Project (excluding any capital repairs or replacements, except as expressly provided below), including Building Systems and appurtenances thereto, and repair and replacement of worn out equipment, facilities and installations (excluding any capital repairs or replacements, except as expressly provided below); (11) janitorial, window cleaning, security services, extermination, water treatment, rubbish removal, plumbing, riser management and other services, and inspection or service contracts for elevator, electrical, mechanical, sanitary, HVAC, and other building equipment and systems; (12) supplies, tools, materials and equipment used in connection with the operation, maintenance or repair of the Project; (13) painting the exterior of the Building or the Common Areas and the cost of maintaining and repairing or replacing the sidewalks, landscaping and other Common Areas; (14) all costs and expenses for electricity, chilled or condenser water, air conditioning, water for heating, gas, fuel, steam, heat, lights, sewer service, communications service, power and other energy related utilities required in connection with the operation, maintenance and repair of the Project; (15) the cost of any capital improvements, repairs or replacements (as defined by the generally accepted accounting principals) made by Landlord to the Project after the Base Year or capital assets (as defined by the generally accepted accounting principals) acquired by Landlord after the Base Year, in each case only as required to comply with any Applicable Laws first enacted after the Commencement Date, such cost or allocable portion to be amortized over the useful life thereof as reasonably determined by Landlord in accordance with industry standard practices (commencing upon the completion of such capital improvement, repair or replacement), together with interest on the unamortized balance at the Amortization Rate; (16) the cost of any capital improvements made by Landlord to the Project or capital assets acquired by Landlord after the Base Year (each as defined by the generally accepted accounting principals) that are reasonably anticipated by Landlord to reduce other Operating Expenses, and only to the extent of such reasonably anticipated savings, such cost or allocable portion thereof to be amortized over the useful life thereof as reasonably determined by Landlord in accordance with industry standard practices (commencing upon the completion of such capital improvement), together with interest on the unamortized balance at the Amortization Rate; (17) the cost of furniture, window coverings, carpeting, decorations, landscaping and other customary and ordinary items of personal property provided by Landlord for use in the Common Areas or in the Building office (to the extent that such Building office is dedicated to the operation and management of the Building); (18) property management office rent or rental value (which rent or rental shall be subject to increases after the Base Year not to exceed $1.00 per Adjusted Rentable Square Foot per year); (19) payments under any Recorded Documents pertaining to the sharing of costs by the Building; and (20) the cost of operation, repair, maintenance and other expenses relating to the Parking Garage, including resurfacing, restriping and cleaning in excess of revenues payable to Landlord from the Parking Garage.

(b) To the extent costs and expenses described above relate to both the Project and other property or relate to the Common Areas, such costs and expenses shall, in determining the amount of Operating Expenses, be equitably allocated by Landlord in its reasonable discretion.

(c) Operating Expenses shall not include the following: (1) depreciation on the Building; (2) debt service, rental under any ground or underlying lease, or interest, principal, points and fees on any mortgage or other debt instrument encumbering the Building (except that, as provided in Section 1.1.144(a) above, Landlord may include interest in the amortization of certain

 

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capital expenditures); (3) Real Property Taxes; (4) attorneys’ fees and expenses, brokerage commissions, or other related expenses incurred in connection with leasing of the Project including lease concessions, rental abatements and construction allowances; (5) the cost of any improvements or equipment that would be properly classified as capital expenditures (except for any capital expenditures expressly included in Operating Expenses); (6) the cost of decorating, improving for tenant occupancy, painting or redecorating portions of the Building to be demised to tenants; (7) advertising expenses relating to vacant space; (8) real estate brokers’ or other leasing commissions; (9) rentals incurred in leasing HVAC systems, elevators or other equipment that if purchased rather than rented, would constitute a capital item that is excluded, except for (i) rental costs incurred in making repairs or in keeping Building Systems in operation while repairs are being made and (ii) rental costs of equipment not affixed to the Building that is used in providing janitorial or similar services; (10) costs for which Landlord is reimbursed by insurance carried by, or required to be carried by, Landlord or condemnation proceeds, other tenants or any other source, and Landlord shall use commercially reasonable efforts to pursue claims under insurance policies, existing warranties and/or guaranties or against other third parties, as applicable, to pay such costs; provided, that, the cost of pursuing such claims shall be included in Operating Expenses; (11) any bad debt loss, rent loss, or reserves for bad debt loss or rent loss; (12) costs incurred in connection with the operation of the business of the entity constituting Landlord, as distinguished from the costs of operating the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building; (13) overhead and profit increment paid to Landlord or its affiliates for goods and/or services in the Building to the extent the same materially exceed the cost of such goods and/or services of comparable quality rendered by unaffiliated third parties of similar skill, competence and experience in Comparable Buildings; (14) costs for which Landlord has been compensated by a management fee to the extent that the inclusion of such costs in Operating Expenses would result in a double charge; (15) Landlord’s political or charitable contributions; (16) the cost of any “tenant relations” parties, events or promotions; (17) costs attributable to an increase in the size of the Project management office or rent attributable to any such increase; (18) insurance which is not customarily carried by institutional owners of Comparable Buildings; (19) costs to repair or replace the Project resulting from any casualty (except commercially reasonable deductibles under Landlord’s insurance policies may be included in Operating Expenses); (20) repairs, alterations, additions, improvements or replacements made to rectify or correct any defect in the design, materials or workmanship of the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable construction materials and equipment) or to comply with any Applicable Laws in effect as of the Phase 1 Substantial Completion Date (based on the current interpretation thereof by applicable governmental entity(ies) as of the Phase 1 Substantial Completion Date); (21) repairs, alterations, additions, improvements or replacements made to rectify or correct damage caused by the negligence or willful misconduct of Landlord or any Landlord Party; (22) costs incurred in installing, operating and maintaining any specialty improvement not normally installed, operated and maintained in projects comparable to the Project, including, without limitation, an observatory, luncheon club, or athletic or recreational facilities, if not generally available to all office tenants of the Project, including Tenant; (23) salaries, wages, bonuses and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare and other fringe benefits, and vacation, holidays and other paid absence benefits) relating to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (24) fines, penalties or interest incurred due to violation by Landlord of the terms and conditions of any lease or any Applicable Laws or due to violation by any other tenant in the Project of the terms and conditions of any lease or any Applicable Laws; (25) interest, penalties or other costs arising out of Landlord’s failure to make timely payment of its obligations; (26) property management fees in excess of the amount set forth in clause (9) of Section 1.1.144(a) above; (27) costs incurred to test, survey, cleanup, contain, abate, remove, or otherwise remedy Hazardous Materials or mold from the Project (except that Operating Expenses shall include costs incurred in

 

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connection with the prudent operation and maintenance of the Project, such as monitoring air quality); (28) costs incurred to correct defective equipment installed in the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable equipment); (29) sale or financing costs incurred in connection with any sale, financing or refinancing of the Project; (30) any reserves; (31) costs of any artwork; (32) the cost of operation, repair, maintenance and other expenses relating to the portions of the Building used for retail and restaurant use, to the extent that, in Landlord’s reasonable judgment, such costs exceed the costs that which would have been incurred by Landlord if the entirety of the Building had been office space (rather than a mixture of office and retail and restaurant space); (33) costs and expenses of providing HVAC service to other tenant spaces in the Building outside of Building Standard Hours; (34) costs and expenses of providing electricity to areas of the Building outside of the Common Areas; (35) costs and expenses to provide water, gas, fuel, steam, lights, sewer service and other utilities to other tenants or occupants of the Building materially in excess of amounts typically used in connection with ordinary office use; (36) costs relating to the repair of structural portions of the roof, foundations, floors and exterior walls; (37) costs incurred in connection with re-certification pursuant to one or more Green Rating Systems or to support achieving any energy and carbon reduction targets (except costs incurred pursuant to Section 7.6.2 below); (38) the cost of labor and employees with respect to personnel not located at the Building on a full-time basis unless such costs are appropriately allocated between the Building and the other responsibilities of such personnel; (39) any of the amounts set forth in clause (1) or clause (2) of Section 1.1.144(a) above to the extent paid to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (40) costs for janitorial services for any rentable area in the Project to the extent Tenant continues to provide such services to the Premises as set forth herein; and (41) the amount of any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority. In addition, Operating Expenses for the Base Expense Year shall not include market-wide cost increases due to Force Majeure Events, boycotts, strikes, conservation surcharges, embargoes or other shortages, or market-wide security or insurance cost increases due to extraordinary circumstances, such as an act of terrorism.

1.1.145 Outside Phase 1 Premises Delivery Date. The term “Outside Phase 1 Premises Delivery Date” shall have the meaning set forth in Section 2.4.1 below.

1.1.146 Outside Phase 2 Premises Delivery Date. The term “Outside Phase 2 Premises Delivery Date” shall have the meaning set forth in Section 2.4.1 below.

1.1.147 Parking Charge. The term “Parking Charge” shall have the meaning set forth in Section 30.1 below.

1.1.148 Parking Garage. The term “Parking Garage” means the parking structure within the Building and the parking spaces located on the roof of the Building.

1.1.149 Parking Garage Roof Space. The term “Parking Garage Roof Space” shall have the meaning set forth in Section 37.1 below.

1.1.150 Parking Spaces. The term “Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.151 Permitted Assignee. The term “Permitted Assignee” shall have the meaning set forth in Section 17.7.1 below.

1.1.152 Permitted Expansion TI Items. The term “Permitted Expansion TI Items” shall have the meaning set forth in Section 33.1.3 below.

 

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1.1.153 Permitted Transfer Costs. The term “Permitted Transfer Costs” shall have the meaning set forth in Section 17.4 below.

1.1.154 Permitted Transferee. The term “Permitted Transferee” shall have the meaning set forth in Section 17.7.1 below, and collectively as “Permitted Transferees.”

1.1.155 Permitted Use. The term “Permitted Use” means general office and administrative use and any Ancillary Uses.

1.1.156 Phase 1 Premises. The term “Phase 1 Premises” means the Concourse Premises, the First Floor Premises, the Third Floor Premises, the Fifth Floor Premises and the Sixth Floor Premises (as those terms are defined in the Basic Lease Information), excepting the Suite 375 Premises.

1.1.157 Phase 1 Substantial Completion. The term “Phase 1 Substantial Completion” shall have the meaning set forth in the Work Letter.

1.1.158 Phase 1 Tenant Completion Date. The term “Phase 1 Tenant Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

1.1.159 Phase 2 Premises. The term “Phase 2 Premises” means the Second Floor Premises as defined in the Basic Lease Information and the Suite 375 Premises.

1.1.160 Phase 2 Substantial Completion. The term “Phase 2 Substantial Completion” shall have the meaning set forth in the Work Letter.

1.1.161 Phase 2 Tenant Completion Date. The term “Phase 2 Tenant Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

1.1.162 Phase 2 Termination. The term “Phase 2 Termination” shall have the meaning set forth in Section 2.4.1 below.

1.1.163 Preexisting Hazardous Materials. The term “Preexisting Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

1.1.164 Premises. The term “Premises” shall have the meaning set forth in the Basic Lease Information.

1.1.165 Prime Rate. The term “Prime Rate” means the latest U.S. prime rate reported in the Money Rates column of The Wall Street Journal on the first day on which The Wall Street Journal is published in the month in which the applicable sums are payable or incurred. If the Wall Street Journal is no longer published, the Prime Rate shall mean the publicly announced prime rate or reference rate charged by the San Francisco Main Office of Bank of America, N.A. (or any successor bank) on the first day of the month in which the applicable sums are payable or incurred (or if there is no such publicly announced rate, the rate quoted by such bank in pricing ninety (90) day commercial loans to substantial commercial borrowers on said date).

1.1.166 Prohibited Person. The term “Prohibited Person” means (a) a person or entity that is listed in the Annex to Executive Order No. 13224, or a person or entity owned or controlled by an entity that is listed in the Annex to Executive Order No. 13224; (b) a person or entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or (c) a person or entity that is named as a “specially designated national and blocked person” on the most

 

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current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other official publication of such list.

1.1.167 Project. The term “Project” means the Land, the Building and other improvements at any time located on the Land, and all appurtenances related thereto, including the loading dock area.

1.1.168 Protection Period. The term “Protection Period” shall have the meaning set forth in Section 5.7 below.

1.1.169 PSA Assignment Party. For purposes of this Lease, the term “PSA Assignment Party” shall mean (a) any Tenant Affiliate or (b) Mark Pincus or (c) any corporation, limited liability company, limited partnership or other entity which is Controlled by Mark Pincus.

1.1.170 PSA Negotiation Period. The term “PSA Negotiation Period” shall have the meaning set forth in Section 36.3 below.

1.1.171 Purchase Agreement. The term “Purchase Agreement” shall have the meaning set forth in Section 36.3 below.

1.1.172 Purchase Offer Notice. The term “Purchase Offer Notice” shall have the meaning set forth in Section 36.2.1 below.

1.1.173 Purchase Option. The term “Purchase Option” shall have the meaning set forth in Section 36.1 below.

1.1.174 Real Property Taxes. The term “Real Property Taxes means all taxes, assessments (whether general or special), excises, transit charges, housing fund assessments or other housing charges, levies or fees, ordinary or extraordinary, unforeseen as well as foreseen, of any kind, which are assessed, levied, charged or imposed (1) on the Project or any part thereof, (2) on Landlord with respect to the Project, (3) on the act of entering into this Lease or any other lease of space in the Project, (4) on the use or occupancy of the Project or any part thereof, (5) with respect to services or utilities consumed in the use, occupancy or operation of the Project, (6) on or attributable to personal property used in connection with the Building, including the Common Areas, (7) related to any governmentally-mandated transportation plan, fund or system affecting the Building, and (8) relating to or on or measured by the rent payable under this Lease or in connection with the business of renting space in the Project, including, without limitation, any gross income tax, gross receipts tax or excise tax levied with respect to the receipt of such rent, by the United States of America, the State of California, the City and County of San Francisco, any political subdivision, public corporation, district or other political or public entity or public authority, and shall also include any other tax, fee or other excise, however described, which may be levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes. Real Property Taxes shall include reasonable attorneys’, accountants’, and consultants’ fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Property Taxes. Real Property Taxes shall not include (1) income, franchise, transfer, inheritance or capital stock taxes, unless levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes; or (2) any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority allocable to each calendar year that exceeds the amount of such taxes allocable to the Base Year.

 

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1.1.175 Reassessment. The term “Reassessment” shall have the meaning set forth in Section 5.7 below

1.1.176 Recorded Documents. The term “Recorded Documents” means all easement agreements, cost sharing agreements, covenants, conditions, and restrictions and all similar agreements affecting the Project, whether now or hereafter recorded against the Project.

1.1.177 Relocation. The term “Relocation” shall have the meaning set forth in Section 2.6.1 below.

1.1.178 Relocation Agreement. The term “Relocation Agreement” shall have the meaning set forth in Section 2.6.1 below.

1.1.179 Renewal Premises. The term “Renewal Premises” shall have the meaning set forth in Section 3.4.2 below.

1.1.180 Rent. The term “Rent” means the Base Rent, Escalation Rent, Parking Charges, and all other additional rent, additional charges and amounts payable by Tenant in accordance with this Lease.

1.1.181 Rent Abatement. The term “Rent Abatement” shall have the meaning set forth in Section 4.5 below.

1.1.182 Rent Abatement Period. The term “Rent Abatement Period” shall have the meaning set forth in Section 4.5 below.

1.1.183 Rent Payment Notice. The term “Rent Payment Notice” shall have the meaning set forth in Section 21.4 below.

1.1.184 Repairs to Generator Area. The term “Repairs to Generator Area” shall have the meaning set forth in Section 7.10.3 below.

1.1.185 Restore. The terms “Restore” or “Restoration” shall have the meaning set forth in Section 12.1 below.

1.1.186 Right of First Offer. The term “Right of First Offer” shall have the meaning set forth in Section 35.1 below.

1.1.187 Right of First Refusal. The term “Right of First Refusal” shall have the meaning set forth in Section 34.1 below.

1.1.188 ROFO Exercise Notice. The term “ROFO Exercise Notice” shall have the meaning set forth in Section 35.3.3 below.

1.1.189 ROFO Exercise Period. The term “ROFO Exercise Period” shall have the meaning set forth in Section 35.3.1 below.

1.1.190 ROFO Target Date. The term “ROFO Target Date” shall have the meaning set forth in Section 35.2 below.

1.1.191 ROFR Target Date. The term “ROFR Target Date” shall have the meaning set forth in Section 34.2 below.

 

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1.1.192 Roof Repairs. The term “Roof Repairs” shall have the meaning set forth in Section 38.3 below.

1.1.193 Rooftop Equipment. The term “Rooftop Equipment” shall have the meaning set forth in Section 38.1 below.

1.1.194 Sidewalk Area. The term “Sidewalk Area” shall have the meaning set forth in Section 39 below.

1.1.195 SNDA. The term “SNDA” shall have the meaning set forth in Section 21.5 below.

1.1.196 Standard Janitorial Services. The term “Standard Janitorial Services” shall have the meaning set forth in Section 8.8 below.

1.1.197 Storage Rent. The term “Storage Rent” shall have the meaning set forth in Section 43 below.

1.1.198 Storage Space. The term “Storage Space” shall have the meaning set forth in Section 43 below.

1.1.199 Subject Space. The term “Subject Space” shall have the meaning set forth in Section 17.2 below.

1.1.200 Suite 375 Premises. The term “Suite 375 Premises” means Suite 375 located on the third floor of the Building and containing approximately 14,163 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-1.

1.1.201 Suite 375 Relocation Expenses. The term “Suite 375 Relocation Expenses” shall have the meaning set forth in Section 2.6.2 below.

1.1.202 Suite 375 Tenant’s New Premises. The term “Suite 375 Tenant’s New Premises” shall have the meaning set forth in Section 2.6.2 below.

1.1.203 Suite 460 Premises. The term “Suite 460 Premises” means Suite 460, located on the fourth floor of the Building and containing approximately 14,279 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-2.

1.1.204 Suite 500 Premises. The term “Suite 500 Premises” means Suite 500 located on the fifth floor of the Building containing approximately 60,864 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-3.

1.1.205 Suite 500/600 Parking Spaces. The term “Suite 500/600 Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.206 Superior Rights. The term “Superior Rights” means: (A) (i) the rights of the tenant under the existing lease of Suite 265, currently set to expire April 2, 2013; (ii) the rights of the tenant under the existing lease of Suite 380, currently set to expire April 30, 2012 with one (1) two (2)-year option to renew; (iii) the rights of the tenant under the existing lease of Suite 450, currently set to expire May 31, 2012 with two (2) three (3)-year options to renew; (iv) the rights of the tenant under the existing lease of Suite 475, currently set to expire September 30, 2015 with two (2) five (5)-year options

 

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to renew; (v) the right of the tenant under the existing lease of Suite 480, currently set to expire November 30, 2010; and (vi) the first refusal right of the tenant under the existing lease of Suite 450 with respect to Suite 460 (each such existing lease, an “Existing Expansion Premises Lease”) and (B) any renewal of an Existing Expansion Premises Lease, whether or not pursuant to an express written provision in such lease and without regard to whether such renewal is characterized by the parties thereto as a “renewal” or as a “new lease.”

1.1.207 Supplemental Cooling Equipment. The term “Supplemental Cooling Equipment” shall have the meaning set forth in Section 8.5 below.

1.1.208 Taken. The term “Taken” shall have the meaning set forth in Section 13.1 below.

1.1.209 Taking. The term “Taking” shall have the meaning set forth in Section 13.1 below.

1.1.210 Target Completion Date. The term “Target Completion Date” shall have the meaning set forth in Section 2.2.1 below.

1.1.211 Tax Increase. The term “Tax Increase” shall have the meaning set forth in Section 5.7 below.

1.1.212 Temporary OpEx Pass Through Payments. The term “Temporary OpEx Pass Through Payments” shall have the meaning set forth in Section 2.7.1 below.

1.1.213 Temporary Premises. The term “Temporary Premises” shall have the meaning set forth in Section 2.7.1 below.

1.1.214 Temporary Premises Expansion Notice. The term “Temporary Premises Expansion Notice” shall have the meaning set forth in Section 2.7.2 below.

1.1.215 Temporary Premises Expansion Option. The term “Temporary Premises Expansion Option” shall have the meaning set forth in Section 2.7.2 below.

1.1.216 Temporary Premises Term. The term “Temporary Premises Term” shall have the meaning set forth in Section 2.7.1 below.

1.1.217 Tenant Affiliate. The term “Tenant Affiliate” shall have the meaning set forth in Section 17.7.1 below.

1.1.218 Tenant Competitor. The term “Tenant Competitor” shall have the meaning set forth in Section 41 below.

1.1.219 Tenant Delay. The term “Tenant Delay” shall have the meaning set forth in the Work Letter.

1.1.220 Tenant Draw Package. The term “Tenant Draw Package” shall have the meaning set forth in Section 33.1.3 below.

1.1.221 Tenant Improvements. The term “Tenant Improvements” shall have the meaning set forth in the Work Letter.

 

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1.1.222 Tenant Parties. The term “Tenant Parties” means Tenant and Tenant’s Transferees and Business Affiliates, and their respective employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, members, and each of the foregoing is a “Tenant Party.”

1.1.223 Tenant Shuttle. The term “Tenant Shuttle” shall have the meaning set forth in Section 30.6 below.

1.1.224 Tenant Subsidiaries. The term “Tenant Subsidiaries” shall have the meaning set forth in Section 26.6.2 below.

1.1.225 Tenant’s Additional Signs. The term “Tenant’s Additional Signs” shall have the meaning set forth in Section 44.3.4 below.

1.1.226 Tenant’s Address Sign. The term “Tenant’s Address Sign” shall have the meaning set forth in Section 44.3.2 below.

1.1.227 Tenant’s Exterior Signs. The term “Tenant’s Exterior Signs” shall have the meaning set forth in Section 44.4 below

1.1.228 Tenant’s Construction Representative. The term “Tenant’s Construction Representative” shall have the meaning set forth in Section 3.2 below.

1.1.229 Tenant’s CPA. The term “Tenant’s CPA” shall have the meaning set forth in Section 5.8.1 below.

1.1.230 Tenant’s Expansion FF&E. The term “Tenant’s Expansion FF&E” shall have the meaning set forth in Section 33.1.3 below.

1.1.231 Tenant’s First Refusal Rejection. The term “Tenant’s First Refusal Rejection” shall have the meaning set forth in Section 34.2 below.

1.1.232 Tenant’s Fixturing Work. The term “Tenant’s Fixturing Work” shall have the meaning set forth in Section 3.2 below.

1.1.233 Tenant’s Percentage Share. The term “Tenant’s Percentage Share” means the percentage stated in the Basic Lease Information as Tenant’s Percentage Share, which may be adjusted pursuant to the terms of this Lease.

1.1.234 Tenant’s Review. The term “Tenant’s Review” shall have the meaning set forth in Section 5.8.1 below.

1.1.235 Tenant’s ROFO Rejection. The term “Tenant’s ROFO Rejection” shall have the meaning set forth in Section 35.3.3 below.

1.1.236 Tenant’s Security Equipment. The term “Tenant’s Security Equipment” shall have the meaning set forth in Section 8.9 below.

1.1.237 Termination Date. The term “Termination Date” shall have the meaning set forth in Section 3.3.1 below.

 

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1.1.238 Termination Fee. The term “Termination Fee” shall have the meaning set forth in Section 3.3.1 below.

1.1.239 Termination Notice. The term “Termination Notice” shall have the meaning set forth in Section 3.3.1 below.

1.1.240 Termination Space. The term “Termination Space” shall have the meaning set forth in Section 3.3.1 below.

1.1.241 Third Party Hazardous Materials. The term “Third Part Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

1.1.242 Third Party Purchaser. The term “Third Party Purchaser” shall have the meaning set forth in Section 36.4 below.

1.1.243 Townsend Street Signage. The term “Townsend Street Signage” shall have the meaning set forth in Section 44.3.4 below.

1.1.244 Transfer. The term “Transfer” shall have the meaning set forth in Section 17.1 below.

1.1.245 Transfer Premium. The term “Transfer Premium” shall have the meaning set forth in Section 17.4 below.

1.1.246 Transferee. The term “Transferee” shall have the meaning set forth in Section 17.1 below.

1.1.247 Unused Parking Spaces. The term “Unused Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.248 USA Patriot Act. The term “USA Patriot Act” means the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as may be amended from time to time.

1.1.249 Wattage Allowance. The term “Wattage Allowance” for electricity (demand load for general office, light and convenience power and for office equipment and supplemental air conditioning) means the product obtained by multiplying the Adjusted Rentable Square Feet of the Premises by eight (8) watts.

1.1.250 Weighted Average Abatement Period. The term “Weighted Average Abatement Period” means the average number of days in each Abatement Period for each Phase of the Premises delivered to Tenant taking into account and giving proportional relevance to each Abatement Period for each Phase based on the Adjusted Rentable Square Feet delivered in such Phase. An example of the calculation of the Weighted Average Abatement Period is attached hereto as Exhibit H.

1.1.251 Work Letter. The term “Work Letter” means the agreement attached hereto as Exhibit C and incorporated herein by reference.

1.2 Basic Lease Information. The Basic Lease Information is incorporated into and made a part of this Lease. Each reference in this Lease to any Basic Lease Information shall mean the

 

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applicable information set forth in the Basic Lease Information, except that in the event of any conflict between an item in the Basic Lease Information and this Lease, this Lease shall control.

2. Premises.

2.1 Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises described in the Basic Lease Information (the “Premises”). The parties acknowledge that Exhibit A-1 is intended only to show the approximate location of the Premises in the Building, and not to constitute an agreement, representation or warranty as to the construction or precise area of the Premises or as to the specific location or elements of the Common Areas or of the accessways to the Premises or the Project. The parties hereby stipulate that the Premises and the Project contain the number of Adjusted Rentable Square Feet set forth in the Basic Lease Information. The Adjusted Rentable Square Feet of the Building shall not be decreased at any time during the Term. If the Premises include an entire floor, all elevator lobbies, corridors and restroom facilities located on such floor shall be considered part of the Premises. All the outside walls and windows of the Premises and any space in the Premises used for shafts, stacks, pipes, conduits, ducts, electric or other utilities, or other Building facilities or equipment, and the use thereof and, subject to the restrictions set forth in Section 19.1 below, access thereto through the Premises for the purposes of operation, maintenance, improvements and repairs, are reserved to Landlord.

2.2 Delivery of Premises.

2.2.1 Delivery. Landlord shall deliver the Premises in two phases (each a “Phase”). Landlord shall use commercially reasonable efforts to cause (a) the Phase 1 Substantial Completion to occur on or before the Target Phase 1 Completion Date and (b) the Phase 2 Substantial Completion to occur on or before the Target Phase 2 Completion Date (each of the Target Phase 1 Completion Date and the Target Phase 2 Completion Date being referred to herein as a “Target Completion Date”); provided, however, that (i) a Target Completion Date shall be extended by the number of days that the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, is delayed due to Force Majeure Events and (ii) notwithstanding anything to the contrary set forth in this Lease or in the Work Letter and regardless of the actual Phase 1 Substantial Completion Date or the actual Phase 2 Substantial Completion Date hereunder, the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, shall be deemed to be the date the Phase 1 Substantial Completion Date or Phase 2 Substantial Completion Date would have occurred but for any Tenant Delay as determined in accordance with the Work Letter.

2.2.2 Phasing of Occupancy. Subject to the provisions of this Section 2.2.2, Tenant may elect (each such election, an “Early Phase 2 Occupancy”), in its sole and absolute discretion, prior to Phase 2 Substantial Completion with respect to the Phase 2 Premises only to occupy any portion of the Phase 2 Premises (each occupied portion of the Phase 2 Premises being an “Early Phase 2 Occupancy Space”) for which Landlord and its construction manager, in consultation with Tenant and Tenant’s Architect, mutually agree that the Tenant Improvement Work in such Early Phase 2 Occupancy Space has been completed in accordance with the Approved Working Drawings and any Change Orders, except for Punch-List Items (as such terms are defined in the Work Letter) and for which Tenant is legally permitted to occupy (as evidenced by a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Tenant Improvement Work, or reasonable equivalent), provided that no Early Phase 2 Occupancy Space shall consist of less than an entire suite as shown on Exhibit A-1. Tenant shall provide Landlord reasonable prior notice before commencing any Early Phase 2 Occupancy. Tenant’s Early Phase 2 Occupancy shall be conditioned upon Landlord’s reasonable determination that such Early Phase 2 Occupancy is not likely to interfere with or delay the construction of the Ancillary Tenant Improvements, the Tenant Improvements or any other work in the Building. Any

 

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Early Phase 2 Occupancy shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Article 14 below and Tenant’s indemnity obligations contained in Section 16.1.1 below. Tenant shall pay Base Rent applicable to any Early Phase 2 Occupancy Space at the rate of $19.60 per Adjusted Rentable Square Foot per year from the period commencing on the date Tenant commences business operations in the applicable Early Phase 2 Occupancy Space until the Phase 2 Rent Commencement Date.

2.3 Delay Rent Credits. If the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred pursuant to Section 2.2 above due to any Tenant Delay) on or before the date that is forty five (45) days after the Target Phase 1 Completion Date (as such date may be extended pursuant to Section 2.2 above for any Force Majeure Event), then Tenant shall be entitled to a credit against Base Rent hereunder in addition to the Rent Abatement (as defined in Section 4.5 below) in the amount of one and one-half (1.5) days of Base Rent for every day that the Phase 1 Substantial Completion Date is actually delayed beyond the date that is forty-five (45) days after the Target Phase 1 Completion Date (the “Delay Rent Credits”). If the Phase 1 Substantial Completion Date does not occur (or is not deemed to have occurred) within one hundred fifty (150) days after the Target Phase 1 Completion Date, Tenant shall be entitled to no additional Delay Rent Credits with respect to the Phase 1 Premises, provided that the foregoing shall not limit Tenant’s rights or remedies pursuant to Sections 2.4 or 2.8 hereof. The parties agree that the actual damages to be suffered by Tenant in the event of a delay in the Phase 1 Substantial Completion Date would be extremely difficult if not impossible to ascertain and that the amount of Delay Rent Credits set forth in this Section 2.3 is a reasonable estimate of the actual damages to be suffered by Tenant if Tenant does not exercise its termination rights under Section 2.4 hereof and that such sum represents liquidated damages and not a penalty. By executing this provision where indicated below, each party specifically confirms the accuracy of the statements made above and the fact that each party fully understood the consequences of these liquidated damages provisions at the time this Lease was made.

Landlord’s Initials: MAC                         Tenant’s Initials: MV

2.4 Termination for Delay in Completion.

2.4.1 In the event that (a) the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the date that is one hundred fifty (150) days after the Target Phase 1 Completion Date (the Outside Phase 1 Premises Delivery Date) or (b) the Phase 2 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the date that is one hundred fifty (150) days after the Target Phase 2 Completion Date (the Outside Phase 2 Premises Delivery Date), then Tenant shall have the right to terminate this Lease either (i) in its entirety if the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the Outside Phase 1 Premises Delivery Date (a Complete Termination) or (ii) with respect to the Phase 2 Premises only if the Phase 2 Substantial Completion Date has not occurred (or be deemed to have occurred) on or before the Outside Phase 2 Premises Delivery Date (a Phase 2 Termination), in each case by giving written notice of such termination to Landlord at any time (A) after the Outside Phase 1 Premises Delivery Date and prior to delivery of the Phase 1 Premises or (B) after the Outside Phase 2 Premises Delivery Date and prior to delivery of the Phase 2 Premises, as applicable; provided, however, that (x) the Outside Phase 1 Premises Delivery Date and the Outside Phase 2 Premises Delivery Date shall each be extended by the number of days that the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, is delayed due to Force Majeure Events and (y) notwithstanding anything to the contrary set forth in this Lease or in the Work Letter and regardless of the actual Phase 1 Substantial Completion Date or the actual Phase 2 Substantial Completion Date hereunder, the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, shall be deemed to be the date the Phase 1 Substantial Completion Date

 

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or Phase 2 Substantial Completion Date would have occurred but for any Tenant Delay as determined in accordance with the Work Letter. Tenant’s right to terminate this Lease with respect to the Phase 2 Premises pursuant to clause (ii) above shall automatically terminate and be of no further force or effect upon Tenant’s election under Section 2.2.2 to occupy any Early Phase 2 Occupancy.

2.4.2 In the event of a Complete Termination or a Phase 2 Termination, Tenant shall be entitled to seek payment from Landlord of such losses, costs, expenses or damages incurred by Tenant as a result of the termination of the Lease and exercise any other rights or remedies available to Tenant under Applicable Laws, in each case subject to the provisions set forth in Section 22.2 of the Lease.

2.5 Acceptance of the Premises. Tenant agrees to accept possession of (i) the Phase 1 Premises upon the Phase 1 Substantial Completion Date and (ii) the Phase 2 Premises on the Phase 2 Substantial Completion Date, without representation or warranty by Landlord, except as expressly provided herein, and with no obligation of Landlord to repaint, remodel, repair, improve or alter the Premises, or to perform any construction, remodeling or other work of improvement upon the Premises, or contribute to the cost of any of the foregoing, except as expressly set forth in this Lease (including the Work Letter). Without limiting the generality of the foregoing, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building, or the Project, the suitability of the Premises for Tenant’s use, the condition, capacity or performance of the Tenant Improvements or the Ancillary Tenant Improvements or Building Systems, or the identity of other tenants or potential tenants of the Project, except as expressly set forth in this Lease.

2.6 Conditions of Delivery of Certain Premises.

2.6.1 Relocation of Existing Tenants. Portions of the Premises as depicted on the floor plans attached hereto as Exhibit A-4 are currently leased to other tenants (“Existing Tenants”). Landlord has executed agreements prior to or concurrent with the date hereof (each a “Relocation Agreement”) to (a) relocate Existing Tenants to other premises in the Building or (b) terminate the leases with such Existing Tenants (each a “Relocation”). Each Relocation shall be at the sole cost and expense of Landlord, except as otherwise provided in Section 2.6.2 below. If Landlord is unable to cause the Relocation of any Existing Tenant on or before the date set forth in the Construction Schedule, except due to a default by Landlord under any applicable Relocation Agreement, then the Target Phase 2 Completion Date with respect solely to the Phase 2 Premises leased by such Existing Tenant (the “Delayed Delivery Premises”) shall be extended by the number of days that the Phase 2 Substantial Completion Date with respect to the Delayed Delivery Premises is actually delayed due to the lease or occupancy by the applicable Existing Tenant. If any portion of the Second Floor Premises becomes Delayed Delivery Premises, Landlord, at Tenant’s option, shall substantially complete (in accordance with the Work Letter) and deliver possession of those portions of the Second Floor Premises that are not Delayed Delivery Premises, but Tenant’s obligation to pay Base Rent with respect to any portion of the Second Floor Premises shall not commence until the Phase 2 Substantial Completion Date (as defined in the Work Letter). In no event shall Landlord be in default or liable to Tenant for any loss or damage resulting solely from any Existing Tenant’s default under any Relocation Agreement, provided that Landlord shall use commercially reasonable efforts to enforce the terms of such Relocation Agreements and shall use commercially reasonable efforts to cause the Phase 2 Substantial Completion Date to occur on or before the Target Phase 2 Commencement Date for those portions of the Second Floor Premises which are not Delayed Delivery Premises.

2.6.2 Suite 375 Premises. With respect to the Suite 375 Premises and notwithstanding anything to the contrary contained in Section 2.6.1 above, Tenant shall pay the Suite 375

 

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Relocation Expenses to Landlord as set forth in this Section 2.6.2. As used herein, the term “Suite 375 Relocation Expenses” means the difference between (i) the base rent payable by the Existing Tenant under the current lease for the Suite 375 Premises for the remaining term of such lease less (ii) the base rent payable by the Existing Tenant under a new lease or amended lease for the premises within the Building to which the Existing Tenant is relocated (the “Suite 375 Tenant’s New Premises”) for the equivalent term. The calculation of Suite 375 Relocation Expenses is subject to the following: (1) the annual base rent payable by Existing Tenant under the current lease is $33.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from the Lease Date until February 3, 2011, $34.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from February 4, 2011 to February 3, 2012, and $35.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from February 4, 2012 to February 3, 2013; (2) the remaining term and the equivalent term shall mean the period from the effective date of the Relocation to February 3, 2013; (3) notwithstanding the actual base rent payable by the Existing Tenant under the new or amended lease, the base rent for purposes of calculating the Suite 375 Relocation Expenses shall not be less than $20.91 (net of electrical) multiplied by the Adjusted Rentable Square Feet of the Suite 375 Tenant’s New Premises; and (4) if Suite 375 Tenant’s New Premises is less than 14,163, the Suite 375 Relocation Expenses shall be calculated assuming that the Adjusted Rentable Square Feet of the Suite 375 Tenant’s New Premises is 14,163. Landlord shall provide to Tenant the amount of the Suite 375 Relocation Expenses on or prior to the effective date of the Relocation (along with reasonable supporting backup documentation). Subject to the application of any Delay Rent Credits or other offset rights of Tenant hereunder, Tenant shall pay the Suite 375 Relocation Expenses as the same accrue, in advance, on or before the first day of each successive calendar month during the Term and otherwise in accordance with Article 4 hereof; provided, however, that Tenant may elect at any time to pay the net present value of the Suite 375 Relocation Expenses, discounted at the Interest Rate.

2.7 Lease of Temporary Premises.

2.7.1 Temporary Lease of Suite 225 Premises. During the period commencing on the date which is ten (10) days after this Lease is executed and delivered by Landlord and Tenant and ending on the Phase 2 Rent Commencement Date (the “Temporary Premises Term”), Tenant shall lease from Landlord certain temporary premises commonly referred to as Suite 225, located on the second floor of the Building, containing approximately 16,257 Adjusted Rentable Square Feet and shown on the floor plans attached hereto as Exhibit A-2 (the “Temporary Premises”). Tenant’s lease of the Temporary Premises shall be on all of the terms and conditions of this Lease, except as modified by this Section 2.7. Landlord shall deliver the Temporary Premises broom-clean, free of furniture and equipment. Except as set forth in the immediately preceding sentence, Tenant acknowledges and agrees that Tenant accepts the Temporary Premises in its “as-is” condition, without any representations or warranties by Landlord, and with no obligation of Landlord to make any alterations or improvements to the Temporary Premises or to provide any tenant improvement allowance. Notwithstanding anything to the contrary contained herein, Tenant’s occupancy of the Temporary Premises during the Temporary Premises Term shall be subject to all of the terms, covenants and conditions of this Lease, including Tenant’s insurance obligations contained in Article 14 and Tenant’s indemnity obligations contained in Article 16; provided, however, that (a) Tenant shall not be obligated to pay Base Rent or Escalation Rent for the Temporary Premises during the Temporary Premises Term, (b) Tenant shall be obligated to pay the pro rata share (which is a fraction, the numerator of which is the Adjusted Rentable Square Feet of the Temporary Premises and the denominator of which is the Adjusted Rentable Square Feet of the Building) of all Operating Expenses and Real Property Taxes allocable to the pro rata portion of the calendar year and tax year, as applicable, during the Temporary Premises Term (the “Temporary OpEx Pass Through Payment”), (c) Tenant shall pay all costs of electrical consumption that is separately metered to the Temporary Premises, (d) Tenant shall have the right but not the obligation to perform the obligations set forth in Section 9.3 below with respect to the Temporary Premises, provided, that, Tenant shall repair any damage to the Temporary

 

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Premises resulting from the acts or omissions of Tenant, (e) at the end of the Temporary Premises Term, Tenant shall surrender the Temporary Premises broom-clean and free from furniture and equipment but shall have no other restoration obligations, (f) Tenant shall have the right to terminate the lease of the Temporary Premises with notice thereof after any casualty or condemnation materially affecting the Temporary Premises and (g) Landlord shall provide janitorial service to the Temporary Premises in accordance with the Standard Janitorial Services (as defined in Section 8.8). Landlord shall cause the entity providing janitorial services to the Temporary Premises to execute a confidentiality agreement in connection with the provision of such services in the form attached hereto as Exhibit R, but the individual employees of such service provider shall not be obligated to sign any confidentiality agreement. As of the date hereof, the Temporary OpEx Pass Through Payment is Eight Dollars and 81/100 ($8.81) per Adjusted Rentable Square Foot. On the first day of each month of the Temporary Premises Term, Tenant shall pay to Landlord the monthly estimate of Tenant’s pro rata share of Operating Expenses and Real Property Taxes as provided by Landlord. Within ninety (90) days after the termination of the Temporary Premises Term, Landlord shall provide Tenant a statement of the actual pro rata share of Operating Expenses and Real Property Taxes and adjustments with respect to the estimated pro rata share of Operating Expenses and Real Property Taxes paid by Tenant under this Section and appropriate credits and payments shall be made in the same manner as provided in Section 5.2 above. Notwithstanding anything to the contrary contained herein, beginning on the date that is three (3) months after the Phase 1 Rent Commencement Date, Tenant’s obligation to make the Temporary OpEx Pass Through Payments shall cease, but such cessation shall not prevent Tenant’s continued use and occupancy of the Temporary Premises for the duration of the Temporary Premises Term. Tenant shall bear all costs related to furnishing, equipping, and moving into and out of the Temporary Premises, including, without limitation, the installation of Lines. During the Temporary Premises Term, Tenant shall have the right, but not the obligation, to lease seventeen (17) Parking Spaces (as hereinafter defined) at the initial Parking Charge and otherwise in accordance with Article 30 hereof. Except as expressly provided above with respect to repair, restoration and maintenance obligations, on or before the expiration or earlier termination of the Temporary Premises Term, Tenant shall surrender the Temporary Premises in accordance with Section 32.13 of this Lease. If Tenant remains in possession of the Temporary Premises after the expiration of the Temporary Premises Term, Article 25 hereof shall apply. For purposes of calculating Base Rent payable with respect to the Temporary Premises after the Temporary Premises Term under Article 25, Tenant shall be deemed to have paid Base Rent during the Temporary Premises Term at the rate of $19.60 per Adjusted Rentable Square Foot. Notwithstanding the rights granted under Article 42, Tenant shall not be permitted to have dogs in the Temporary Premises.

2.7.2 Option to Temporarily Lease the Suite 460 Premises. Subject to the Superior Rights and the terms and conditions of this Section 2.7.2, Tenant shall have the right, in its sole discretion, to expand the Temporary Premises by leasing the Suite 460 Premises (“Temporary Premises Expansion Option”). Tenant may exercise the Temporary Expansion Option, if at all, by giving Landlord an unconditional, irrevocable written notice of such election (the “Temporary Premises Expansion Notice”) on or before December 31, 2010, the time of such exercise being of the essence. The Temporary Expansion Notice shall specify the date upon which Landlord shall deliver the Suite 460 Premises, which date shall be not less than fifteen (15) days and not more than forty five (45) days after the date of Tenant’s delivery of the Temporary Premises Expansion Notice. If Tenant delivers the Temporary Premises Expansion Notice, Landlord shall deliver the Suite 460 Premises on such date specified in the Temporary Premises Expansion Notice and Tenant shall lease the Suite 460 Premises on the same terms and conditions as set forth in Section 2.7.1 effective as of the delivery of the Suite 460 Premises until the expiration of the Temporary Premises Term, provided, however, that there shall be no cessation of the obligation to pay the Temporary OpEx Pass Through Payments at any time.

2.8 Tenant Construction.

 

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(a) Change in Terms. If Tenant elects to manage construction of the Ancillary Tenant Improvements and/or Tenant Improvements pursuant to Section 7.4.3 of the Work Letter, then the following shall apply: (i) all of Tenant’s termination rights as set forth in Section 2.4 above shall lapse and be of no further force and effect, (ii) notwithstanding that either the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date has not occurred (or is not deemed to have occurred), Landlord shall be deemed without further action to have immediately delivered possession of the Premises to Tenant as of the occurrence of such election, (iii) the Phase 1 Tenant Completion Date and the Phase 2 Tenant Completion Date (as defined in Section 2.8(b) below) shall each be determined in accordance with Section 2.8(b) below, (iv) the “Expiration Date” shall mean the last day of the eighty-fourth (84th) month after the Phase 1 Tenant Completion Date (or, if the Phase 1 Tenant Completion Date occurs on a date other than the first day of a calendar month, after the first day of the first full month occurring after the Phase 1 Tenant Completion Date), (v) all references to “Commencement Date” shall mean the Phase 1 Tenant Completion Date, (vi) subject to Sections 2.2.2, 4.1 and 4.5, Tenant shall commence paying Base Rent for the Phase 1 Premises as of the Phase 1 Tenant Completion Date and for the Phase 2 Premises as of the Phase 2 Tenant Completion Date, and (vii) Delay Rent Credits shall remain in effect and shall be determined assuming the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date occurred on the applicable Construction Completion Date (hereinafter defined).

(b) Tenant Completion Date; Delay Days. If Tenant elects to manage construction of the Ancillary Tenant Improvements and/or Tenant Improvements pursuant to Section 7.4.3 of the Work Letter, then within thirty (30) days thereafter, Tenant’s Architect, the General Contractor and Landlord’s construction manager shall reasonably determine the date construction of the Ancillary Tenant Improvements and/or Tenant Improvements with respect to each of the Phase 1 Premises and the Phase 2 Premises, as applicable, would likely be completed by Tenant using commercially reasonable efforts (without payment of overtime or premium time wages) as of the date Tenant elects the remedy set forth in Section 7.4.3 of the Work Letter (as applicable to either the Phase 1 Premises or the Phase 2 Premises, the “Construction Completion Date”). The “Phase 1 Tenant Completion Date” shall mean the earlier to occur of (i) the date which is thirty (30) days after the applicable Construction Completion Date for the Phase 1 Premises and (ii) the date Tenant commences business operations in at least one hundred nineteen thousand (119,000) Adjusted Rentable Square Feet of the Phase 1 Premises (provided, however, that the Phase 1 Tenant Completion Date shall be extended for delays resulting from Force Majeure Events and Landlord Delays). The “Phase 2 Tenant Completion Date” shall mean the earlier to occur of (A) the date which is thirty (30) days after the applicable Construction Completion Date for the Phase 2 Premises and (B) the date Tenant commences business operations in the entire Phase 2 Premises (provided, however, that the Phase 2 Tenant Completion Date shall be extended for delays resulting from Force Majeure Events and Landlord Delays). Any dispute between Landlord and Tenant regarding any Construction Completion Date shall be submitted to binding arbitration in accordance with Article 45 below; provided that, (x) until such arbitration is concluded, the “Construction Completion Date” as reasonably determined by Tenant’s Architect shall be deemed to be the Construction Completion Date for purposes of this Lease and (y) following the completion of such arbitration, the “Construction Completion Date” shall be the date determined by the Arbitrator. Except for any Landlord Delay resulting from Landlord’s failure to take any action prior to any deadline for taking such action, no Landlord Delay shall be deemed to have occurred unless Tenant gives Landlord prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Landlord Delay, and Landlord shall fail to correct or cure such Landlord Delay within one (1) business day. There shall be excluded from the number of days of any Landlord Delay any days of delay which are primarily caused by Force Majeure Events. If any Construction Completion Date is actually delayed due to Landlord Delay, then Tenant and Tenant’s Architect shall reasonably determine in consultation with Landlord and Landlord’s construction

 

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manager the date on which the Tenant Improvements would have been completed but for such Landlord Delay and such certified date shall be the Construction Completion Date.

3. Term.

3.1 Term of Lease. The Term of this Lease shall commence as of the Lease Date and shall expire on the Expiration Date, unless sooner terminated or extended pursuant to the provisions of this Lease. After the Commencement Date and Expiration Date have been established, then within ten (10) business days following request by either party, the other party agrees to execute and deliver to the requesting party a Confirmation of Lease Term (“Confirmation”) in the form of Exhibit D attached hereto. This Lease shall be a binding contractual obligation effective upon execution and delivery hereof by Landlord and Tenant.

3.2 Early Access. Subject to the provisions of this Section 3.2, Landlord shall allow Tenant access to the Premises prior to the Commencement Date for purposes of installing Tenant’s furniture, fixtures, equipment, millwork and telephone/data cabling (“Tenant’s Fixturing Work”). Tenant and Tenant’s employees, agents, contractors, subcontractors, suppliers or any other person requiring access to the Premises in connection with the performance of Tenant Fixturing Work (each, “Tenant’s Construction Representative” and collectively, “Tenant’s Construction Representatives”) shall be subject to reasonable approval by Landlord prior to the commencement of their work, and Tenant shall cause Tenant’s Construction Representatives to engage only labor that is harmonious and compatible with other labor working in the Building. Tenant and Tenant’s Construction Representatives shall work cooperatively with Landlord to coordinate the scheduling and performance of Tenant’s Fixturing Work so as not to delay the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date. As a condition to entering the Building, each of Tenant’s Construction Representatives shall provide Landlord with satisfactory evidence of such commercially reasonable insurance as Landlord may reasonably require. Tenant’s Construction Representatives shall comply with Landlord’s current contractor rules and regulations, while in the Premises or elsewhere in the Project. Tenant’s Construction Representatives shall not interfere with or delay the construction of the Tenant Improvements or any other work in the Building. If at any time any of Tenant’s Construction Representatives hinders or delays construction of the Tenant Improvements or any other work in the Building or performs any work that impairs the quality, integrity or performance of the Tenant Improvements or other work in any portion of the Building, upon written notice from Landlord, Tenant shall promptly cause such Tenant’s Construction Representative to leave the Building and remove all of its tools, equipment and materials. Tenant shall reimburse Landlord for the cost of any repairs to the Premises or other portions of the Building or Common Areas to the extent necessitated by the acts or omissions of Tenant’s Construction Representatives. All entries into the Premises by Tenant or Tenant’s Construction Representatives prior to the Commencement Date shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Article 14 and Tenant’s indemnity obligations contained in Article 16, but excluding the obligation to pay Base Rent. In addition, Tenant shall not be charged for utilities or HVAC services, the use of freight elevators or loading docks, or security services during the periods of time that Tenant has access to the Premises solely for purposes of performing Tenant’s Fixturing Work or in connection with Tenant’s move into the Premises.

3.3 Tenant’s Early Termination Options.

3.3.1 Options; Exercise. Subject to the terms and conditions contained herein, Tenant shall have a one (1) time option to terminate the Lease as to each of the following portions of the Premises on the following dates: (a) the Sixth Floor Premises as of the last day of the sixtieth (60th) full calendar month after the Commencement Date, (b) the Fifth Floor Premises as of the last day of the seventy-second (72nd) full calendar month after the Commencement Date, and (c) the Third Floor

 

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Premises as of the last day of the seventy-second (72nd) full calendar month after the Commencement Date (each such option, a “Early Termination Option,” each such portion of the Premises, a “Termination Space,” and each such date a “Early Termination Date”). Each Termination Option shall be exercisable only by giving Landlord unconditional and irrevocable written notice (“Termination Notice”) thereof no earlier than three hundred sixty (360) days prior to, and no later than two hundred seventy (270) days prior to, the applicable Early Termination Date, time being of the essence. If Tenant elects to so terminate this Lease as to any Termination Space, Tenant shall pay to Landlord, concurrently with Tenant’s delivery to Landlord of any Termination Notice, a termination fee (the “Termination Fee”) equal to the unamortized amount, as of the applicable Early Termination Date, of Landlord’s Lease Expenses (as defined below) (such unamortized amount to be computed by amortizing such amounts over the initial Term, with interest at the rate of six percent (6%) per annum on a straight line basis from the Commencement Date) allocated to the applicable Termination Space. As used herein, “Landlord’s Lease Expenses” means the following: (A) all brokerage commissions paid by Landlord in connection with this Lease, plus (B) the amount of the Tenant Improvement Allowance paid by Landlord pursuant to the Work Letter, plus (C) the cost of the Ancillary Tenant Improvements plus (D) the amount of the Rent Abatement for the Weighted Average Abatement Period minus (E) the sum of the portions of the costs of the Ancillary Tenant Improvements funded by Tenant and the portions of the costs of improvements to restrooms that are funded by Tenant. An example of the calculation of the Termination Fee is set forth on Exhibit S attached hereto. For purposes of calculating the Termination Fee, Landlord’s Lease Expenses shall be allocated to a Termination Space by multiplying the Landlord’s Lease Expense by a fraction, the numerator of which is the Adjusted Rentable Square Feet of such Termination Space and the denominator of which is the Adjusted Rentable Square Feet of the Premises. Landlord shall provide to Tenant the total amount of Landlord’s Lease Expenses (along with reasonable supporting backup documentation) within thirty (30) days following Tenant’s request therefor; and if Landlord has not provided such amount and documentation prior to Tenant’s delivery of a Termination Notice hereunder, then, notwithstanding the foregoing, the Termination Fee shall be payable to Landlord within thirty (30) days following Tenant’s receipt of such amount and documentation. Effective on an Early Termination Date, this Lease shall terminate as though the Term of the Lease had expired as to the applicable Termination Space and all provisions herein applicable to the expiration of the Term of the Lease and the surrender of the Premises shall be applicable to such Termination Space. If Tenant fails to timely exercise the Termination Option, or fails to pay the Termination Fee as required herein, then, at Landlord’s sole option, Tenant’s exercise of the Termination Option shall be null and void and this Lease shall continue in full force and effect as to the entirety of the Premises.

3.3.2 Conditions. The following provisions apply to Tenant’s Termination Option:

(a) Surrender of Termination Space. If Tenant exercises a Termination Option and pays the applicable Termination Fee as provided above, Tenant shall surrender the applicable Termination Space to Landlord as required pursuant to Section 32.13 below on or before the applicable Early Termination Date. If Tenant fails to so vacate and surrender possession of the Termination Space on the Early Termination Date, then the provisions of Article 25 hereof shall apply to Tenant’s continued occupancy.

(b) Amendment. Within thirty (30) days after the date of a Termination Notice, Landlord and Tenant shall enter into modifications to this Lease which are necessary to (i) amend the schedule of Base Rent set forth in the Basic Lease Information to reduce the Base Rent applicable to the Termination Space, (ii) cause the separation and securing of the Termination Space from the remaining Premises and (iii) amend other provisions of the Lease (such as Tenant’s Percentage Share and the Letter of Credit Amount) to account for the reduced Adjusted Rentable Square Footage of the remaining Premises. The Letter of Credit Amount shall be reduced by multiplying the then current Letter

 

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of Credit Amount (as may have been previously increased in accordance with Articles 33, 34 and/or 35) by a fraction, the numerator of which shall be the Adjusted Rentable Square Feet of the applicable Termination Space and the denominator of which shall be the Adjusted Rentable Square Feet of the Premises immediately prior to the applicable Early Termination Date.

(c) No Subtenant Exercise. No subtenant shall have any right to exercise the Early Termination Option on behalf of Tenant.

3.4 Option to Extend.

3.4.1 Option to Extend Term. Landlord hereby grants to Tenant two (2) successive options (each a “Extension Option” and collectively, the “Extension Options” ) to extend the initial Term for additional periods of five (5) years each (each an “Extension Term” and collectively, the “Extension Terms”) commencing on the first day following the Expiration Date on the terms and subject to the conditions set forth in this Section 3.4; provided, however, that (a) Tenant may exercise each Extension Option with respect to all or a portion of the Premises then leased by Tenant hereunder, provided that (i) in the event Tenant exercises an Extension Option as to any of the Concourse Premises, the First Floor Premises or the Second Floor Premises, Tenant must exercise such Extension Option as to all of the Concourse Premises, the First Floor Premises and the Second Floor Premises and (ii) in all events Tenant must exercise an Extension Option with respect to a minimum of 100,000 Adjusted Rentable Square Feet that is contiguous and, if located on more than one floor, on adjacent floors and (b) the second Extension Option may be exercised only if the first Extension Option has been duly exercised.

3.4.2 Exercise. Tenant shall exercise an Extension Option, if at all, by giving Landlord unconditional, irrevocable written notice of such election no earlier than twelve (12) months and no later than nine (9) months prior to the scheduled Expiration Date, the time of such exercise being of the essence. Tenant’s notice shall specify the portions of the Premises which Tenant intends to exercise the Extension Option (the “Renewal Premises”). Subject to the provisions of this Section 3.4, upon the giving of such notice (which must specify the portion of the Premises to which the Extension Option shall apply), this Lease and the Term shall be extended without execution or delivery of any other or further documents, with the same force and effect as if the applicable Extension Term had originally been included in the initial Term.

3.4.3 Conditions. If Tenant exercises an Extension Option pursuant to Section 3.4.2 above, all of the terms, covenants and conditions of this Lease shall continue in full force and effect during the applicable Extension Term, except that: (a) the Base Rent during the applicable Extension Term shall be determined as set forth below; (b) the Base Year during the applicable Extension Term shall be the calendar year during which such Extension Term commences, provided that Tenant shall have no obligation to pay any Escalation Rent whatsoever during the first (1st) twelve (12) months of the applicable Extension Term; (c) Tenant shall continue to possess and occupy the Renewal Premises in their existing condition, “as is”, as of the commencement of the applicable Extension Term, and Landlord shall have no obligation to repair, remodel, improve or alter the Renewal Premises, to perform any other construction or other work of improvement upon the Renewal Premises, or to provide Tenant with any construction or refurbishing allowance whatsoever; (d) Tenant shall have no further rights to extend the Lease Term after the expiration of the second Extension Term; (e) the Parking Charge per the Parking Space shall be determined as provided in Section 3.4.4 below; (f) the term “Premises” as used in this Lease shall refer to the Renewal Premises; (g) the term “Tenant’s Percentage Share” shall mean the ratio of the Adjusted Rentable Square Feet of the Renewal Premises to the Adjusted Rentable Square Feet of the Project.

 

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3.4.4 Fair Market Rent. The Base Rent payable by Tenant for the Renewal Premises during the first Extension Term shall be ninety-five percent (95%) of the Fair Market Rent (as defined below) for the Renewal Premises, valued as of the commencement of the first Extension Term, determined in the manner set forth below. The Base Rent payable by Tenant for the Renewal Premises during the second Extension Term shall be ninety-five percent (95%) of the Fair Market Rent for the Renewal Premises, valued as of the commencement of the second Extension Term, determined in the manner set forth below. The Parking Charge payable by Tenant for the Parking Spaces during the first Extension Term shall be the lesser of Two Hundred Dollars ($200.00) per Parking Space per month and one hundred percent (100%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the first Extension Term, determined in the manner set forth below. The Parking Charges payable by Tenant for the Parking Spaces during the second Extension Term shall be the lesser of Two Hundred Fifty Dollars ($250.00) per Parking Space per month and one hundred percent (100%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the second Extension Term, determined in the manner set forth below. As used herein, the term “Fair Market Rent” means the annual Base Rent and Parking Charges that a willing tenant would pay, and that a willing landlord would accept, at arm’s length, as of the commencement of the applicable Extension Term, for space comparable to the Renewal Premises in Comparable Buildings and parking comparable to the Parking Spaces in Comparable Buildings, respectively, based upon binding lease transactions for tenants in the Building and Comparable Buildings that, where possible, commence or are to commence within six (6) months prior to or within six (6) months after the commencement of the applicable Extension Term (“Comparison Leases”) excluding the rental value attributable to any Alterations (but not the Tenant Improvements or Ancillary Tenant Improvements) paid for by Tenant. Comparison Leases shall include renewal and new non-renewal tenancies, but shall exclude subleases and leases of space subject to another tenant’s expansion rights. Rent rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to, among other things: (a) the length of the applicable Extension Term compared to the lease term of the Comparison Leases; (b) rental structure, including, without limitation, rental rates per rentable square foot (including type, gross or net, and if gross, adjusting for the base year or expense stop), and escalation provisions, (c) the size of the Renewal Premises compared to the size of the premises of the Comparison Leases; (d) location, floor levels, efficiencies and outlook of the floor(s) of the Renewal Premises compared to the premises of the Comparison Leases; (e) free rent, moving allowances and other cash payments affecting the rental rate; (f) the age and quality of construction of the Building (including compliance with applicable codes on the applicable floors) compared to the Comparable Buildings; (g) leasehold improvements and/or allowances, including the amounts thereof in renewal leases, and taking into account, in the case of renewal leases (including this Lease), the value of existing leasehold improvements to the renewal tenant; (h) access to public transit and the availability of parking; (i) the amenities available to tenants in the Building compared to amenities available to tenants in Comparable Buildings; (j) the energy efficiencies and environmental elements of the Building compared to Comparable Buildings, including current LEED certification; (k) the uses of the Comparison Leases as compared to the use of the Renewal Premises; (l) the type and quality of any base building work in the Comparable Buildings compared to the Building; (m) the type and quality of tenant improvements in the Renewal Premises as compared to Comparable Buildings; and (n) the fact that landlords are or are not paying real estate brokerage commissions in connection with such Comparison Leases. In determining the Market Rate, the most weight shall be given to Comparison Leases in the Building. The Fair Market Rent may include annual or other periodic increases and may be less or may be more than the Base Rent existing as of the exercise of the applicable Extension Option. The Fair Market Rent for (i) the Renewal Premises and (ii) for the Parking Charge per Parking Space (as defined below) shall be determined separately.

3.4.5 Determination of Base Rent and Parking Charges.

 

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(a) Without limiting any provision of Section 3.4.2 above, within thirty (30) days following Tenant’s written request, which may be given no earlier than thirteen (13) months and no later than ten (10) months prior to the scheduled Expiration Date, Landlord shall provide Tenant in writing with a good faith written proposal of the Fair Market Rent for the Renewal Premises and the Parking Spaces for the applicable Extension Term (“Landlord’s Initial Proposal”). Provided that Tenant subsequently give valid notice of exercise of the applicable Extension Option, Landlord agrees that neither Landlord’s Market Rent Proposal given pursuant to Section 3.4.5(b) below or Landlord’s Determination of the Fair Market Rent for the applicable Extension Term pursuant to Section 3.4.6(a) below shall be higher than Landlord’s Initial Proposal.

(b) Not later than six (6) months prior to the commencement of the applicable Extension Term, provided Tenant has given valid notice of exercise of the Extension Option, Landlord shall deliver to Tenant a good faith written proposal of the Fair Market Rent for the Renewal Premises and for the Parking Spaces for the applicable Extension Term (“Landlord’s Market Rate Proposal”), provided that in no event shall Landlord’s Market Rate Proposal be higher than Landlord’s Initial Proposal given pursuant to Section 3.4.5(a) above. Within thirty (30) days after receipt of Landlord’s Market Rate Proposal, Tenant shall notify Landlord in writing that Tenant accepts Landlord’s Market Rate Proposal or disputes Landlord’s Market Rate Proposal. If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s Market Rate Proposal shall be binding upon Tenant.

3.4.6 Arbitration.

(a) If Tenant timely disputes Landlord’s Market Rate Proposal, the parties shall first negotiate in good faith to reach agreement upon the Fair Market Rent for the applicable Extension Term. If Landlord and Tenant are able to agree upon the Fair Market Rent within thirty (30) days after Tenant’s notice to Landlord disputing Landlord’s Market Rate Proposal (“Impasse Date”), then such agreement shall constitute a final determination of Fair Market Rent. If Landlord and Tenant are unable to agree upon the Fair Market Rent prior to the Impasse Date, then within fifteen (15) days after the Impasse Date, the parties shall meet and concurrently deliver to each other their respective written estimates of the Fair Market Rent for the applicable Extension Term, supported by the reasons therefor (each, a “Determination”). Landlord’s Determination may be more or less than Landlord’s Market Rent Proposal (but may be no more than Landlord’s Initial Proposal). If either party fails to deliver its Determination in a timely manner, then the Fair Market Rent shall be the Determination by the other party. If the higher Determination is no more than one hundred five percent (105%) of the lower Determination, then the Fair Market Rent shall be the average of the two. In every other case, the Fair Market Rent shall be determined as set forth below.

(b) Within ten (10) days after the parties exchange their respective Determinations, the parties shall each appoint an arbitrator who shall be a licensed California real estate broker with at least ten (10) years’ experience in leasing commercial office space similar to the Building in the San Francisco market immediately prior to his or her appointment, and be familiar with the rentals then being charged in the Building and in the Comparable Buildings. The parties may appoint the real estate brokers who assisted them in making their Determinations as their respective arbitrators. If either Landlord or Tenant fails to timely appoint an arbitrator, then the Fair Market Rent for the applicable Extension Term shall be the Determination of the other party.

(c) Within twenty (20) days following appointment of the second arbitrator to be appointed, the two arbitrators appointed by the parties shall appoint a third, similarly qualified, independent arbitrator (the “Independent Arbitrator”), and notify Landlord and Tenant of the identity of the Independent Arbitrator. If an Independent Arbitrator has not been so appointed by the end

 

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of such twenty (20) day period, then either party, on behalf of both, may request such appointment by the San Francisco office of the American Arbitration Association (or any successor thereto), or in the absence, failure, refusal or inability of such entity to act, then either party may apply to the presiding judge of the San Francisco Superior Court, for the appointment of such an Independent Arbitrator, and the other party shall not raise any question as to the court’s full power and jurisdiction to make the appointment.

(d) Within five (5) days following notification of the identity of the Independent Arbitrator, Landlord and Tenant shall submit copies of Landlord’s Determination and Tenant’s Determination to the three arbitrators (the “Arbitration Panel”). The Arbitration Panel, by majority vote, shall select either Landlord’s Determination or Tenant’s Determination as the Base Rent for the Extension Term, and shall have no right to propose a middle ground or to modify either of the two Determinations or the provisions of this Lease. The Arbitration Panel shall attempt to render a decision within thirty (30) days after appointment of the Independent Arbitrator. In any case, the Arbitration Panel shall render a decision within forty five (45) days after appointment of the Independent Arbitrator.

(e) The decision of the Arbitration Panel shall be final and binding upon the parties, and may be enforced in accordance with the provisions of California law. In the event of the failure, refusal or inability of any member of the Arbitration Panel to act, a successor shall be appointed in the manner that applied to the selection of the member being replaced. Each party shall pay the fees and expenses of the arbitrator designated by such party, and one half of the fees and expenses of the Independent Arbitrator and the expenses incident to the proceedings (excluding attorneys’ fees and similar expenses of the parties which shall be borne separately by each of the parties).

(f) Each party may submit any written materials to the Arbitration Panel within five (5) business days of selection of the Independent Arbitrator. No witnesses or oral testimony (i.e. no hearing) shall be permitted in connection with the Arbitration Panel’s decision unless agreed to by both parties. No ex parte communications shall be permitted between any member of the Arbitration Panel and either Landlord or Tenant following appointment of the Arbitrator Panel until conclusion of the arbitration process. The members of the Arbitration Panel are authorized to walk both the Renewal Premises and any comparable space (to the extent access is made available).

3.4.7 Rent Payment Pending Resolution. Until the matter is resolved by agreement between the parties or a decision is rendered in any arbitration commenced pursuant to this Section 3.4, Tenant’s monthly payments of Base Rent for the Renewal Premises and the Parking Charge for the Parking Spaces as of the commencement of the Extension Term shall be in an amount equal to one hundred five percent (105%) of the monthly Base Rent and Parking Charge payable by Tenant immediately prior to the scheduled expiration of the Term on a per Adjusted Rentable Square Foot basis. Within thirty (30) business days following determination of the Fair Market Rent by agreement by the parties or the decision of the arbitrators, as applicable, Tenant shall pay to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or excess, as the case may be, in the Base Rent and Parking Charges previously paid.

3.4.8 General Provisions. The following general provisions shall apply to each Extension Option:

(a) Assignment. Tenant’s right to exercise each Extension Option is personal to, and may be exercised only by, the original named Tenant under this Lease (or a Permitted Assignee). If Tenant shall assign this Lease (other than to a Permitted Assignee), then immediately upon such assignment, Tenant’s right to exercise the Extension Option shall automatically terminate and be of

 

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no further force or effect. No assignee (other than to a Permitted Assignee) or subtenant shall have any right to exercise the Extension Option granted herein.

(b) Amendment to Lease. After the Base Rent payable during the applicable Extension Term is determined, the parties shall promptly execute an amendment to this Lease in a form reasonably acceptable to both parties extending the Term and stating the amount of the Base Rent payable during the applicable Extension Term. The Letter of Credit Amount shall be reduced by multiplying the then current Letter of Credit Amount (as may have been previously increased in accordance with Articles 33, 34 and/or 35) by a fraction, the numerator of which shall equal (i) the Adjusted Rentable Square Feet of the Premises immediately prior to the commencement of the applicable Extension Term minus (ii) the Adjusted Rentable Square Feet of the Renewal Premises and the denominator of which shall be the Adjusted Rentable Square Feet of the Premises immediately prior to the commencement of the applicable Extension Term.

(c) References to Term. Subject to the provisions of this Section 3.4, after exercise of an Extension Option, all references in this Lease to the Term shall be deemed to refer to the Term as extended, unless the context clearly provides to the contrary.

(d) Additional Condition. Notwithstanding anything to the contrary contained herein, Tenant’s exercise of an Extension Option shall, at Landlord’s election, be null and void if an Event of Default exists at the time of exercise of the applicable Extension Option.

(e) Impact of Lease Termination. If Tenant shall fail to properly exercise an Extension Option, the Extension Option shall terminate and be of no further force and effect. If this Lease shall terminate for any reason, then immediately upon such termination, the Extension Options shall automatically terminate and become null and void.

4. Rent.

4.1 Obligation to Pay Base Rent. Tenant agrees to pay to Landlord as “Base Rent” for the Premises, the sums specified in the Basic Lease Information. Base Rent shall be paid to Landlord, in advance, on or before the first day of each and every successive calendar month during the Term after the Phase 1 Rent Commencement Date; provided, however, that upon signing this Lease, Tenant shall pay to Landlord an amount equal to the Base Rent for the first full month of the Term, which amount shall be applied to the Base Rent owing for the first month of the Term after the Rent Abatement Period. If the Phase 1 Rent Commencement Date is other than the first day of a calendar month, the installment of prepaid Base Rent for the first month of the Term for which Base Rent is payable shall be prorated on the basis of a 360-day year consisting of twelve 30-day months, and the balance shall be credited to Base Rent owing for the following month of the Term. If the Expiration Date is other than the last day of a calendar month, or if this Lease shall be terminated as of a day other than the last day of a calendar month, the installment of Base Rent for the last fractional month of the Term shall be prorated on the basis of a 360-day year consisting of twelve 30-day months.

4.2 Manner of Rent Payment. All Rent shall be paid by Tenant without notice, demand, abatement, deduction or offset (except as expressly set forth in the Lease), in lawful money of the United States of America, that at the time of payment shall be legal tender for the payment of all obligations, in immediately available funds or by good check as described below, and if payable to Landlord, at Landlord’s Address for Payments in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate by notice to Tenant.

 

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4.3 Additional Rent. All Rent not characterized as Base Rent, Escalation Rent or Parking Charges shall constitute additional rent, and if payable to Landlord shall, unless otherwise specified in this Lease, be due and payable thirty (30) days after Tenant’s receipt of Landlord’s invoice therefor.

4.4 Late Payment of Rent; Interest. All amounts of Rent, if not paid within five (5) business days after the due date, shall bear interest from the due date until paid at the Interest Rate. In addition, Tenant acknowledges that late payment by Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord under the terms of its loan documents. Therefore, if any installment of Rent is not received within five (5) business days after the due date, Tenant shall pay to Landlord an additional one-time sum of two percent (2%) of the delinquent Rent as a late charge. A late charge shall not be imposed more than once with respect to any particular payment not paid by Tenant when due. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment of Rent by Tenant. Acceptance of any late charge shall not constitute a waiver of Tenant’s default with respect to the overdue amount, or prevent Landlord from exercising any of the other rights and remedies available to Landlord. Notwithstanding anything to the contrary set forth herein, Tenant shall not be liable for the late charge set forth in this Section 4.4 with respect to the first delinquency by Tenant in any calendar year, provided that Tenant shall pay any such delinquent amount within five (5) business days after receipt of notice of such delinquency from Landlord.

4.5 Abatement of Base Rent. Notwithstanding the provisions of the Basic Lease Information and Tenant’s obligation to pay monthly Base Rent pursuant to Section 4.1 above, Tenant shall be entitled to an abatement of Base Rent (the “Rent Abatement”) for the following periods after the Commencement Date (each a “Rent Abatement Period”) with respect to the following portions of the Premises: (a) from the Commencement Date to the date which is nine (9) months after the Commencement Date with respect to the Concourse Premises, (b) from the Commencement Date to the date which is fifteen (15) months after the Commencement Date with respect to the Sixth Floor Premises, (c) from the Commencement Date to the date which is twenty one (21) months after the Commencement Date with respect to the Fifth Floor Premises, (d) from the Commencement Date to the date which is twenty five (25) months after the Commencement Date with respect to the Second Floor Corridor Space; (e) from the Commencement Date to the date which is twenty seven (27) months after the Commencement Date with respect to the First Floor Premises and Third Floor Premises (other than the Suite 375 Premises), (f) from the Commencement Date to the date which is twenty nine (29) months after the Commencement Date with respect to the Second Floor Premises (other than the Second Floor Corridor Space), and (g) from the Commencement Date to the date which is twenty nine (29) months after the Commencement Date with respect to the Suite 375 Premises.

5. Calculation and Payments of Escalation Rent. Tenant shall pay to Landlord Escalation Rent in accordance with the following procedures:

5.1 Payment of Estimated Escalation Rent. During December of each calendar year, Landlord shall give Tenant notice of its commercially reasonable estimate of Escalation Rent due for the succeeding calendar year. On or before the first day of each month during the succeeding calendar year, Tenant shall pay to Landlord, as additional rent, one twelfth (1/12) of such estimated amounts. If Landlord fails to deliver such notice to Tenant in December, Tenant shall continue to pay Escalation Rent on the basis of the prior year’s estimate until the first day of the next calendar month after such notice is given, provided that within thirty (30) days after receipt of Landlord’s estimate, Tenant shall pay to Landlord the amount of such estimated adjustment payable to Landlord for prior months during the year in question, less any portion thereof previously paid by Tenant. If it reasonably appears to Landlord that

 

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the amounts payable under this Section 5.1 for the current calendar year will vary from Landlord’s estimate, Landlord may, by giving written notice to Tenant, but not more than two (2) times in any calendar year, revise Landlord’s estimate for such year, and subsequent payments by Tenant for such year shall be based on such revised estimate. Landlord’s failure or delay in providing Tenant with Landlord’s estimate of Escalation Rent for any calendar year shall not constitute a default by Landlord hereunder, or a waiver by Landlord of Tenant’s obligation to pay Escalation Rent for such calendar year or of Landlord’s right to send such an estimate to Tenant on a later date. Notwithstanding anything to the contrary set forth in this Lease (i) Tenant shall have no obligation to pay any Escalation Rent or portion thereof until the date that is twelve (12) months after the Commencement Date as to the Phase 1 Premises and until the date that is twelve (12) months after the Phase 2 Rent Commencement Date as to the Phase 2 Premises and (ii) Landlord shall operate the Building in a cost-conscious manner and shall use reasonable efforts to minimize increases in the Operating Expenses on an ongoing basis.

5.2 Escalation Rent Statement and Adjustment. On or before March 31 of each calendar year, Landlord shall deliver to Tenant a statement of the actual Escalation Rent for such calendar year, showing in reasonable detail (a) the Operating Expenses and the Real Property Taxes comprising the actual Escalation Rent, and (b) payments made by Tenant on account of Operating Expenses and Real Property Taxes for such calendar year (an “Annual Statement”). Landlord’s failure or delay in providing Tenant with an Annual Statement for any calendar year shall not constitute a default by Landlord hereunder, or a waiver by Landlord of Tenant’s obligation to pay Escalation Rent for such calendar year or of Landlord’s right to send such Annual Statement on a later date. If Landlord fails to deliver the Annual Statement on or before March 31 of a given calendar year and Tenant has paid to Landlord an amount in excess of the Escalation Rent paid for the preceding calendar year, then Tenant shall be entitled to interest on such overpayment at the Interest Rate after March 31 until such amount is refunded or credited in accordance with this Section 5.2. In addition, on or before March 31, 2012, Landlord shall deliver an Annual Statement listing the Operating Expenses and Real Property Taxes allocable to the Base Year, including any adjustments made pursuant to Section 5.3 below. If the Annual Statement shows that Tenant owes an amount that is more than the payments previously made by Tenant for such calendar year, Tenant shall pay the difference to Landlord within thirty (30) days after delivery of the Annual Statement. If the Annual Statement shows that Tenant owes an amount that is less than the payments previously made by Tenant for such calendar year, and Tenant is not in monetary default in the performance of any of its obligations under this Lease, Landlord shall credit the difference first against any sums then owed by Tenant to Landlord and then against the next payment or payments of Rent due Landlord, except that if a credit amount is due Tenant after the termination of this Lease, Landlord shall pay to Tenant any excess remaining after Landlord credits such amount against any sums owed by Tenant to Landlord. Tax refunds shall be credited against Real Property Taxes or refunded to Tenant regardless of when received, based on the calendar year to which the refund is applicable. If, after Landlord’s delivery of any Annual Statement, an increase or decrease in Real Property Taxes allocable to any calendar year (including the Base Year) occurs, whether by reason of reassessment, error, or otherwise, Real Property Taxes for such calendar year or the Base Year, as the case may be, shall be retroactively adjusted. If, as a result of such adjustment, Tenant has underpaid Escalation Rent, Tenant shall pay Landlord the amount of such underpayment within thirty (30) days after demand. If, as a result of such adjustment, Tenant has overpaid Escalation Rent, Landlord, at its election, shall either credit such overpayment against the Rent next due hereunder or refund the amount of the overpayment to Tenant within thirty (30) days after such adjustment is made; provided, however, that if this Lease has expired or terminated and Tenant has vacated the Premises, Landlord shall pay Tenant the amount of such overpayment (less any Rent due), within thirty (30) days after such adjustment is made. Tenant shall have two hundred seventy (270) days after receipt of an Annual Statement to notify Landlord in writing that Tenant disputes the correctness of the Annual Statement (“Expense Claim”). If Tenant does not object in writing to an Annual Statement within said two hundred seventy (270) day period, such Annual Statement shall be final and binding upon Tenant. If Tenant delivers an Expense Claim to Landlord

 

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within said two hundred seventy (270) day period, the parties shall promptly meet and attempt in good faith to resolve the matters set forth in the Expense Claim. If the parties are unable to resolve the matters set forth in the Expense Claim within thirty (30) days after Landlord’s receipt of the Expense Claim (“Expense Resolution Period”), then Tenant shall have the right to examine Landlord’s records, subject to the terms and conditions set forth in Section 5.8 below. This Section 5.2 shall survive the expiration or earlier termination of this Lease.

5.3 Adjustments to Operating Expenses.

5.3.1 If the Building is less than 100% occupied during any calendar year of the Term, including the Base Year, Operating Expenses for such calendar year shall be adjusted to the amount of Operating Expenses that would have been incurred if the Building had been 100% occupied. Notwithstanding anything to the contrary set forth in this Lease, if in any calendar year subsequent to the Base Year, the amount of Operating Expenses decreases below the amount of Operating Expenses allocable to the Base Year, Tenant shall not be entitled to receive any refund or credit. In no event shall any adjustments to Operating Expenses in any calendar year result in Landlord receiving from Tenant and other tenants more than one hundred percent (100%) of the cost of the actual Operating Expenses incurred by Landlord in any such calendar year.

5.3.2 In addition, the Operating Expenses for the Base Year shall be adjusted to include, when Building Systems are under warranty during the Base Year, an adjustment for the cost of service contracts that would have been incurred in the absence of such warranties. The purpose of the adjustments set forth in this Section 5.3 is to include in Operating Expenses for the Base Year all reasonable cost components that occur or are likely to occur in later years. If a new category of expense is incurred after the Base Year (including, without limitation, costs and expenses incurred in complying with or administering Landlord’s transportation demand management program), the first full year’s expense for such item shall be added to Operating Expenses for the Base Year, so that Tenant shall only be required to pay subsequent increases in such expense. Conversely, if, subsequent to the Base Year, Landlord no longer incurs a category of expense, then the Operating Expenses for the Base Year shall be deemed reduced by the amounts Landlord incurred during the Base Expense Year for such category of expense. Notwithstanding the preceding sentence, if Landlord fails to carry earthquake, flood or terrorism insurance, then there shall be no reduction of expenses for the Base Year resulting therefrom. If a new category of Real Property Taxes is incurred after the Base Year, the first full year’s expense for such item shall be added to Real Property Taxes for the Base Year, so that Tenant shall only be required to pay subsequent increases in such expense.

5.3.3 Landlord represents and warrants, to Landlord’s knowledge (as defined below) that there are no special assessments other than Real Property Taxes presently assessed, levied, charged or imposed on the Project or any part thereof. The phrase “to Landlord’s knowledge” shall mean, and be limited to, the current, actual knowledge (as distinguished from implied, imputed or constructive knowledge) of Michael A. Covarrubias, Brian Fleming and Sean Donnelly and without said person having any obligation to make independent inquiry or investigation. Landlord shall pay, without being entitled to reimbursement from Tenant under this or any other Section of this Lease, any and all one-time assessments, impositions, costs of mitigation, impact fees, connection fees, tap-in fees and similar one-time charges imposed as a condition of or in connection with development of the initial Project or any expansion thereof. Landlord shall pay when due all assessments for municipal improvements levied against the Project during the Term, which shall be paid in the maximum number of installments permitted by Applicable Law and shall be included in Real Property Taxes. Landlord shall pay subsequent special assessments for which it is entitled to obtain reimbursement from Tenant in the maximum number of installments permitted by Applicable Law.

 

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5.3.4 Landlord may revise the Annual Statement for any calendar year if Landlord first receives invoices from third parties, tax bills or other information relating to adjustments to Operating Expenses or Real Property Taxes allocable to such calendar year after the initial issuance of such Annual Statement. Notwithstanding the foregoing, in no event shall Tenant be obligated to pay for any Operating Expenses or Real Property Taxes that are not billed by Landlord within one (1) year of the date on which such Operating Expense or Real Property Taxes were incurred by Landlord and the recovery thereof shall be deemed waived by Landlord; provided that, the foregoing one (1) year limitation shall not apply to any Operating Expenses or Real Property Taxes as to which Landlord, operating in a commercially reasonable manner with respect to its management of the Project: (i) did not receive an invoice, bill or other notice thereof (except to the extent such Operating Expense or Real Property Tax amount was available to Landlord on an “on-line” electronic basis unless the Operation Expense or Real Property Tax was not posted thereon); and (ii) had no knowledge thereof, in each case prior to expiration of said one (1)-year period, as reasonably demonstrated to Tenant’s satisfaction, including by provision of invoices, bills or notices evidencing the date upon which such Operating Expense or Real Property Tax was first billed (or notice thereof provided) to Landlord.

5.4 Adjustments to Tenant’s Percentage Share. Landlord shall reasonably adjust Tenant’s Percentage Share to account for changes in the physical size of the Premises or the Project. Notwithstanding anything to the contrary contained in this Lease, Landlord shall equitably allocate Operating Expenses among the office and retail/restaurant portions or occupants of the Building, in Landlord’s reasonable discretion, if and to the extent such Operating Expenses are incurred exclusively for the benefit of the office or retail/restaurant portions or occupants of the Building. With respect to any Operating Expense item that Landlord allocates to only a portion of the Building, Tenant’s Percentage Share (assuming Tenant benefits from such Operating Expense item) shall be a percentage, the numerator of which is the Adjusted Rentable Square Feet of the Premises, and the denominator of which is the total Adjusted Rentable Square Feet of the space in the Building that benefits from the particular Operating Expense item, as determined by Landlord in its reasonable discretion.

5.5 Payment of Real Property Taxes in Installments. If, by law, any Real Property Taxes may be paid in installments (whether or not interest accrues on the unpaid balance), then, for any calendar year (including the Base Year), Landlord shall include in the calculation of such Real Property Taxes only the amount of the installments (with any interest) due and payable during such year had Landlord selected the longest permissible period of payment, provided that following the retirement or completed payment of any such Real Property Taxes, the amount of Real Property Taxes allocable to the Base Year shall be adjusted to eliminate that portion included therein, if any, that related to such retired or paid Real Property Taxes.

5.6 Proration for Partial Year. If this Lease terminates on a day other than the last day of a calendar year, the amounts of Escalation Rent payable by Tenant with respect to the calendar year in which such termination occurs shall be prorated on the basis of a 360-day year consisting of twelve 30-day months.

5.7 Certain Real Property Taxes Limited. Notwithstanding any other provision of this Lease to the contrary, if during the period commencing upon the Lease Date and ending on the fifth (5th) anniversary of the Commencement Date (the “Protection Period”), (a) there is any sale of all or a portion of the Project or of interests in Landlord, a refinancing or securitization of any interest in the Project, any ground or master lease of the Project or a “change of ownership” (as defined in California Revenue and Taxation Code Sections 60-62 or any amendments or successors to those sections) of the Project and/or (b) there are capital improvements made to the Project and, as a result, the Project is reassessed (“Reassessment”) for real estate tax purposes by the appropriate government authority higher than the previous amount of Real Property Taxes, the terms of this Section 5.7 shall apply to such

 

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Reassessment of the Project. For the purposes of this Section 5.7, the term Tax Increase (“Tax Increase”) shall mean that portion of the Real Property Taxes allocable to the Project that is attributable solely to the Reassessment. Accordingly, a Tax Increase shall not include any portion of the Taxes that is or would be (i) attributable to the initial assessment of the value of the Project or any portion thereof; (ii) attributable to assessments pending immediately before the Reassessment that were conducted during, and included in, that Reassessment or that were otherwise rendered unnecessary following the Reassessment; (iii) attributable to the annual inflationary increase in real estate taxes actually permitted under Proposition 13 (as adopted by the voters of the State of California in the June 1978 election); or (iv) attributable to any statutory increase in real estate taxes or other reassessment by any other Applicable Laws permitted for reasons other than those described hereinabove. If a Reassessment results from any change of ownership or a capital improvement that occurs during the Protection Period, the Tax Increase shall not be included in Real Property Taxes. The Tax Increase shall be paid by Landlord and not recouped from Tenant in any manner.

5.8 Inspection of Landlord’s Records.

5.8.1 Tenant’s Review. Provided that Tenant has timely delivered an Expense Claim to Landlord, Tenant or a certified public accountant engaged by Tenant (“Tenant’s CPA”) shall have the right, at Tenant’s cost and expense, to examine, inspect, and copy the records of Landlord concerning the components of Operating Expenses and/or Real Property Taxes (“Landlord’s Records”) for the calendar year in question that are disputed in the Expense Claim (“Tenant’s Review”). Any examination of Landlord’s Records shall take place upon reasonable prior written notice, at the offices of Landlord or Landlord’s property manager, during normal business hours. Tenant agrees to keep, and to cause Tenant’s CPA to keep, all information obtained by Tenant or Tenant’s CPA confidential, (except as required under Applicable Laws or disclosure to persons or entities who, because of their involvement with Tenant’s Review, need to know such information; provided, that, such parties shall be informed by Tenant of the confidential nature of such information and shall be directed by Tenant to keep all such information confidential), and Landlord may require all persons inspecting Landlord’s records to sign a commercially reasonable confidentiality agreement prior to making Landlord’s Records available to them. In no event shall Tenant be permitted to examine Landlord’s Records or dispute any Annual Statement unless Tenant has paid and continues to pay all Rent (excluding the amount disputed in the Expense Claim).

5.8.2 Landlord’s Dispute. If Landlord disputes the results of any Tenant’s Review, Landlord shall provide written notice of such dispute and Landlord and Tenant shall promptly thereafter work in good faith in an attempt to address Landlord’s dispute for a period of thirty (30) days after completion of Tenant’s Review (the “Landlord’s Dispute Period”). If Landlord and Tenant are unable to resolve Landlord’s dispute within Landlord’s Dispute Period, Landlord may provide Tenant written notice within fifteen (15) days after the Landlord’s Dispute Period of its election to seek resolution of the dispute by an Independent CPA (as defined below) together with a list of five (5) independent, certified public accounting firms that are not currently providing, and have not within the three (3) previous years provided, services to Landlord or Tenant or any entity Controlling, Controlled by or under common Control of Landlord or Tenant. All of the firms shall be nationally or regionally recognized firms with annual revenues in excess of Twenty Million Dollars ($20,000,000.00) during the preceding two (2) fiscal years and have experience in accounting related to commercial office buildings. In order to accommodate the foregoing, Tenant shall provide Landlord, within ten (10) business days after request, a complete list of all certified public accounting firms that are currently providing, or have within the three (3) previous years provided, services to Tenant or any entity Controlling, Controlled by or under common Control of Tenant. Landlord’s failure to deliver a notice of dispute and such list of accounting firms within thirty (30) days after Landlord’s Dispute Period shall be deemed to be Landlord’s acceptance of the results of Tenant’s Review. Within thirty (30) days after receipt of the list of accounting firms

 

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from Landlord, Tenant shall choose one of the five (5) firms by written notice to Landlord, which firm is referred to herein as the “Independent CPA.” The Independent CPA shall examine and inspect the records of Landlord concerning the components of Operating Expenses and/or Real Property Taxes for the calendar year in question and the results of Tenant’s Review and make a determination regarding the accuracy of Tenant’s Review. If the Independent CPA’s determination shows that Tenant has overpaid with respect to Escalation Rent, by more than three percent (3%), then Landlord shall pay all costs associated with the Independent CPA’s review and if less than three percent (3%) the costs shall be borne by Tenant. The determination of the Independent CPA shall be final and binding upon Landlord and Tenant.

5.8.3 Adjustments. If the Independent CPA (or, if Landlord does not dispute Tenant’s Review as provided in Section 5.8.2 above, Tenant’s Review) shows that the payments actually made by Tenant with respect to Escalation Rent for the calendar year in question exceeded Tenant’s Percentage Share of Operating Expenses or Real Property Taxes for such calendar year, Landlord shall at Landlord’s option either (a) credit the excess amount to the next succeeding installments of estimated Escalation Rent or (b) pay the excess to Tenant within thirty (30) days after delivery of the determination of the Independent CPA (or, if Landlord does not dispute Tenant Review, after delivery of Tenant’s Review), except that after the expiration or earlier termination of this Lease, Landlord shall pay the excess to Tenant. If the Independent CPA (or, if Landlord does not dispute Tenant’s Review as provided in Section 5.8.2 above, Tenant’s Review) shows that Tenant’s payment of Escalation Rent was less than Tenant’s Percentage Share of Operating Expenses or Real Property Taxes for such calendar year, Tenant shall pay the deficiency to Landlord within thirty (30) days after delivery of the determination of the Independent CPA (or, if Landlord does not dispute Tenant Review, after delivery of Tenant’s Review). If the Independent CPA (or, if Landlord does not dispute Tenant’s Review as provided in Section 5.8.2 above, Tenant’s Review) shows that Tenant has overpaid with respect to Operating Expenses and Real Property Taxes, in the aggregate, by more than three percent (3%), then Landlord shall reimburse Tenant for all costs incurred by Tenant for Tenant’s Review.

5.8.4 Records. Landlord shall retain Landlord Records for the greater of (x) two (2) years after the expiration of the applicable calendar year to which such Landlord Records relate and (y) the resolution of any dispute between Landlord and Tenant regarding Operating Expenses for the applicable calendar year. Tenant shall have a one-time right to perform Tenant’s Review of Landlord’s Records relating to the Base Year. Landlord shall retain Landlord Records related to the Base Year until Tenant has completed Tenant’s Review of Landlord’s Records relating to the Base Year. This Section 5.8 shall survive the expiration or earlier termination of this Lease.

6. Payments by Tenant.

6.1 Impositions. Tenant shall pay all Impositions prior to delinquency. If billed directly, Tenant shall pay such Impositions and concurrently present to Landlord satisfactory evidence of such payments. If any Impositions are billed to Landlord or included in bills to Landlord for Real Property Taxes, then Tenant shall pay to Landlord all such amounts within thirty (30) days after receipt of Landlord’s invoice therefor. If Applicable Law prohibits Tenant from reimbursing Landlord for an Imposition, but Landlord may lawfully increase the Base Rent to account for Landlord’s payment of such Imposition, the Base Rent payable to Landlord shall be increased to net to Landlord the same return without reimbursement of such Imposition as would have been received by Landlord with reimbursement of such Imposition.

6.2 Net of Electricity. Tenant acknowledges that in addition to the Base Rent and Escalation Rent, and other charges payable under this Lease, commencing on the Commencement Date, Tenant is responsible for paying for all electricity supplied to the Premises during the Term. Prior to the

 

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Commencement Date, Landlord, at Landlord’s expense, shall submeter the Premises in a manner satisfactory to Tenant. Landlord at Landlord’s expense shall submeter any Expansion Premises or First Refusal Space or First Offer Space in a manner satisfactory to Tenant, prior to the respective date any such space is added to the Premises. Tenant shall pay Landlord for all electricity supplied to the Premises, as additional rent, on a monthly basis, within thirty (30) days after delivering an invoice and reasonable supporting documentation to Tenant. Landlord shall not impose any administrative fee or other similar mark-up on such costs. Landlord acknowledges that certain of Tenant’s Permitted Uses shall utilize more than eight (8) watts per Adjusted Rentable Square Feet of electrical capacity and agrees that Tenant shall be permitted to install additional bus duct switches and other electrical systems in the Premises in order to allocate electricity among the various portions of the Premises in a fashion reasonably determined by Tenant; provided that this right of Tenant shall not expand Landlord’s obligation to provide electricity hereunder in an amount not less than the Wattage Allowance.

7. Use of Premises.

7.1 Permitted Use. The Premises shall be used solely for the Permitted Use, subject to Tenant’s compliance with the terms and conditions set forth in this Article 7 and in Article 40. Tenant shall not do anything in or about the Premises or the Building that (i) violates any Applicable Laws, any provision of the Recorded Documents, or any of the Building Rules; (ii) is prohibited by a standard form of fire insurance policy or that materially increases the rate of fire or other insurance on the Building or any of its contents (provided that this clause (ii) shall not prohibit the operation of the Cafeteria); or (iii) constitutes waste or a nuisance. Without limiting the generality of the foregoing, the Premises shall not be used for a call center, school, or medical or dental office. The provisions of this Section 7.1 are for the benefit of Landlord only and shall not be construed to be for the benefit of any tenant or occupant of the Building. Landlord shall use commercially reasonable efforts to ensure that other occupants of the Project do not create any nuisance.

7.2 Ancillary Uses. Tenant’s obligations under this Lease shall not be contingent on Tenant’s ability to obtain all or any of the governmental approvals or permits that may be required for use of the Premises for any Ancillary Use and the failure of Tenant to obtain such permits and approvals shall not delay the Commencement Date or release Tenant from any obligations under this Lease. In no event shall any approval or permit obtained by Tenant for any Ancillary Uses impose any conditions or restrictions on the Premises, the Building or the Project without Landlord’s consent, which may be withheld in its reasonable discretion. Tenant agrees that neither Landlord nor any agent or consultant of Landlord shall be responsible for obtaining any approvals or permits for or on behalf of Tenant with respect to the use of the Premises for the Ancillary Uses. Tenant also acknowledges that neither Landlord nor any agent or consultant of Landlord has made any representation or warranty regarding the ability to use the Premises for any of the Ancillary Uses, the likelihood of obtaining the required approvals or permits for any of the Ancillary Uses or the condition or suitability of the Premises for any Ancillary Uses.

7.3 Landlord Cooperation. Landlord, in its capacity as the owner of the Project, shall use diligent efforts to assist and cooperate with Tenant in Tenant’s efforts to apply for, receive and implement any permits, licenses or other approvals required by any governmental or quasi-governmental authority, department, agency, commission or board in order for Tenant to use the Premises and other areas of the Project as described in this Lease and in accordance with this Lease, including, without limitation, to (i) use of the Premises for the Permitted Uses, (ii) installation of signage as set forth in Article 44, (iii) bringing of dogs onto the Premises as set forth in Article 42, (iv) constructing (or causing to be constructed) and using the Premises for a Cafeteria as set forth in the Work Letter and Article 40, (v) utilizing the Sidewalk Area as set forth in Article 39, (vi) constructing improvements on and using the

 

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Parking Garage Roof Space as set forth in Article 37 and (vii) segregating the Parking Spaces and/or using a valet service as set forth in Article 30.

7.4 Compliance with Requirements.

7.4.1 Tenant’s Obligations. Tenant, at its expense, shall comply with all Applicable Laws, the occupancy certificate issued for the Premises, and the provisions of all Recorded Documents relating to (a) the operation of its business at the Project, or (b) the use, condition, configuration or occupancy of the Premises. In addition, if a change to the structural portions of the Building, the Building Systems or the Common Areas becomes required under any Applicable Laws as a result of any Alteration or use of the Premises other than for general office use, Tenant, at Landlord’s option, shall either (i) make such change pursuant to the provisions of Article 10 at Tenant’s cost or (ii) reimburse Landlord for the reasonable, out-of-pocket costs incurred by Landlord in making such change plus a supervision fee equal to five percent (5%) of the first $100,000 in costs of performing such work and one percent (1%) of costs in excess of $100,000. The judgment 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 such Applicable Laws shall be conclusive of that fact as between Landlord and Tenant. Tenant shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws.

7.4.2 Landlord’s Obligation. Subject to reimbursement as an Operating Expense to the extent permitted pursuant to Article 5 and Tenant’s obligations under the Work Letter and Section 7.4.1 above, Landlord shall be responsible for (a) operating the Building in accordance with all Applicable Laws, the occupancy certificate issued for the Project, and the provisions of all Recorded Documents relating to (1) the operation of its business at the Project, or (2) the use, condition, configuration or occupancy of the Project and (b) causing the structure of the Building, the Building Systems, and the Common Areas to comply with all Applicable Laws. Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws.

7.5 Compliance With Environmental Laws; Use of Hazardous Materials.

7.5.1 Tenant shall not: (i) bring or keep, or permit to be brought or kept, in the Premises or in or on the Project any Hazardous Materials; (ii) manufacture, generate, treat, handle, store or dispose of any Hazardous Materials in the Premises or in or on the Project; or (iii) emit, release or discharge any Hazardous Materials into any air, soil, surface water or groundwater comprising the Premises or the Project, or permit any person using or occupying the Premises to do any of the foregoing; provided, however, that Tenant shall have the right, without providing notice to or obtaining the consent of Landlord, to store reasonable quantities of and use standard cleaning solvents and chemicals commonly found in offices, provided that Tenant complies with all Applicable Laws and prudent industry practice in connection with such use. In no event shall Landlord be designated as the “generator” on, nor shall Landlord be responsible for preparing, any manifest relating to Hazardous Materials generated or used by Tenant or any other Tenant Parties.

7.5.2 Tenant shall comply, and shall cause all persons using or occupying the Premises to comply, with all Environmental Laws applicable to the Premises, the use or occupancy of the Premises or any operation or activity therein. Tenant shall promptly furnish Landlord with any (i) notices

 

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received from any insurance company or governmental authority or inspection bureau regarding any unsafe or unlawful conditions within the Premises, and (ii) notices or other communications sent by or on behalf of Tenant to any person relating to Environmental Laws or Hazardous Materials. If, as a result of Tenant’s use, handling, storage, treatment, transportation, discharge or disposal of Hazardous Materials, any governmental agency shall require testing for Hazardous Materials in the Premises, Tenant shall pay for such testing. Tenant shall indemnify, defend and hold Landlord harmless from and against any Claims (including, but not limited to, diminution in the value of the Premises or the Project, damages for the loss of or restriction on use of rentable space or of any amenity of the Premises or the Project, remedial work, and sums paid in settlement of Claims), which result from or arise out of the use, storage, treatment, transportation, release, or disposal of any Hazardous Materials on or about the Project by Tenant or any other Tenant Parties. Tenant’s obligations under this Section shall survive the expiration or earlier termination of this Lease until all Claims within the scope of this Section are fully, finally, and absolutely barred by the applicable statutes of limitations.

7.5.3 If any remedial work is required under any Environmental Laws as a result of any act or omission of Tenant or any other Tenant Parties at the Project, then Tenant shall perform or cause the remedial work to be performed in compliance with Environmental Laws. All remedial work performed by Tenant shall be performed by one or more contractors, selected by Tenant and approved in advance in writing by Landlord, and under the supervision of a consulting engineer selected by Tenant and approved in advance in writing by Landlord. All costs and expenses of such remedial work shall be paid by Tenant, including, but not limited to, the charges of such contractor(s), the consulting engineer and Landlord’s reasonable attorneys’ and experts’ fees and costs incurred in connection with the monitoring or review of such remedial work. Notwithstanding the foregoing, Landlord may, at its option, perform any such remedial work and Tenant shall reimburse Landlord for Landlord’s reasonable, out-of-pocket expenses incurred in performing such work plus a supervision fee equal to five percent (5%) of the first $100,000 of such work, and one percent (1%) of amounts in excess of $100,000, within thirty (30) days after demand therefor.

7.5.4 If any Hazardous Materials are discovered to have been present in the Premises as of the Lease Date in violation of Environmental Laws (“Preexisting Hazardous Materials”), then, Landlord, at Landlord’s expense (without pass through as an Operating Expense), shall diligently remove or otherwise remediate such condition, as required by Environmental Laws. Further, in no event shall Tenant be required to abate, remediate and/or clean up any Hazardous Materials in, on, or about the Premises, that were not brought upon, produced, treated, stored, used, discharged or disposed of by Tenant or Tenant Parties (collectively, “Third Party Hazardous Materials”), except to the extent that any hazard posed by such Third Party Hazardous Materials is exacerbated by the negligent acts or omissions or willful misconduct of Tenant or Tenant Parties. For purposes hereof, Third Party Hazardous Materials shall include Hazardous Materials in, on, or about the Premises that were brought upon, produced, treated, stored, used, discharged or disposed of by Landlord. Landlord, at Landlord’s expense (without pass through as an Operating Expense), shall remove or otherwise remediate any Third Party Hazardous Materials, as required by Environmental Laws.

7.6 Sustainable Building Operations.

7.6.1 Operation of Building. The Building is or may in the future become certified under any one or more Green Rating Systems or operated pursuant to Landlord’s sustainable building practices. Landlord’s sustainability practices address whole-building operations and maintenance issues, including, but not limited to, chemical use, indoor air quality, energy efficiency, water efficiency, recycling programs, exterior maintenance programs, and systems upgrades to meet green building energy, water, indoor air quality, and lighting performance standards. All construction and maintenance methods and procedures, material purchases, and disposal of waste must be in compliance

 

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with minimum standards and specifications so as to conform with all Applicable Laws. Tenant shall cooperate, at no cost to Tenant (except as permitted pursuant to Section 7.5.2 above), with Landlord in causing recertification of the Building from time to time under one or more Green Rating Systems.

7.6.2 Rating of Premises. Upon Tenant’s request but not more often than once every twelve (12) months, Landlord shall use commercially reasonable efforts to provide to Tenant the data required to calculate benchmarks for the energy efficiency of the Premises using the ENERGY STAR® Portfolio Manager and, at Tenant’s cost and expense, cause a professional engineer to analyze the energy efficiency of the Premises and issue a Statement of Energy Performance as required by the ENERGY STAR® Portfolio Manager.

7.7 Recycling and Waste Management. Tenant agrees, at its sole cost and expense: (a) to comply with all Applicable Laws regarding the collection, sorting, separation, and recycling of garbage, trash, rubbish and other refuse; (b) endeavor to comply with Landlord’s recycling policy as part of Landlord’s sustainability practices where it may be more stringent than Applicable Laws, at no additional cost to Tenant; and (c) to sort and separate its trash and recycling into such categories as are required by Applicable Laws and to place each separately sorted category of trash and recycling in separate receptacles as directed by Landlord. Landlord reserves the right to refuse to collect or accept from Tenant any trash that is not separated and sorted as required by clause (c) above, and to require Tenant to arrange for such collection at Tenant’s sole cost and expense, utilizing a contractor reasonably satisfactory to Landlord. In addition, Tenant shall pay all costs, expenses, fines, penalties or damages that may be imposed on Landlord or Tenant by reason of Tenant’s failure to comply with the provisions of clause (c) above.

7.8 Landlord Covenants. Landlord will not use, generate, manufacture, produce, store, release, discharge or dispose of on, under or about the Premises and/or Project (or off-site of the Premises and/or Project that might affect the Premises and/or Project), or transport to or from the Premises, any Hazardous Material, except in compliance with Environmental Laws. Landlord will give prompt written notice to Tenant of:

(a) Any proceeding or inquiry by any governmental authority known to Landlord with respect to the presence of any Hazardous Material on the Premises or Project (or off-site of the Premises and/or the Project that might affect the Premises and/or the Project) or relating to any loss or injury resulting from any Hazardous Material not caused by Tenant; and

(b) All Claims made or threatened by any third party against Landlord or the Project relating to any loss or injury resulting from any Hazardous Material; and

(c) Landlord’s discovery of any occurrence or condition on the Premises and/or Project (or off-site of the Premises and/or the Project that might affect the Premises and/or the Project) that could cause the Premises and/or the Project or any part thereof to be subject to any restrictions on occupancy or use of the Premises and/or the Project under any Environmental Laws.

7.9 No Third Party Beneficiary. The provisions of this Article 7 are for the benefit of Landlord only and shall not be construed to be for the benefit of any tenant or occupant of the Building.

7.10 Generators.

7.10.1 Existing Generators. Tenant shall, at no additional cost to Tenant, have the sole and exclusive right to use, operate, maintain, repair and connect the Building’s two (2) existing generators (collectively, the “Existing Generators”) to the electrical power distribution system within the

 

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Premises for the benefit of equipment located within the Premises (as the same may be expanded or modified); provided, that all installation of any lines or equipment for purposes of connecting the Existing Generators to the Premises shall be governed by Article 10 hereof. Tenant may from time to time, at its sole cost and expense and for any reason, replace either of the Existing Generators, which replacement generator shall thereafter be deemed an “Existing Generator”. The location and specifications of the Existing Generators are set forth on Exhibit I attached hereto. The fuel tank which is part of the Existing Generator identified as Generator 1 on Exhibit I is connected to a separate fuel tank located at the Project (the “Building Fuel Tank”) and Tenant shall be permitted to use up to 500 gallons of fuel per fill of the Building Fuel Tank provided that Tenant shall reimburse Landlord for the cost of any such fuel used by Tenant and Tenant’s Percentage Share of Landlord’s costs for repairing and maintaining the Building Fuel Tank. The Existing Generator identified as Generator 2 on Exhibit I is not connected to the Building Fuel Tank and Tenant, at Tenant’s sole cost and expense, shall be responsible for supplying such Existing Generator with any required fuel. Tenant acknowledges that Landlord makes no representation or warranty regarding the condition, suitability, capacity or cost to operate, supply, maintain or repair the Existing Generators or of the condition of the Building Fuel Tank. Landlord shall maintain any and all permits, licenses or other approvals required by any governmental or quasi-governmental authority, department, agency, commission or board required for use of the Existing Generators, the Building Fuel Tank and any other fuel tank at the Building necessary for the operation of the Existing Generators. Tenant may at any time elect to terminate its use of an Existing Generator hereunder, following which Landlord shall be permitted to use such Existing Generator at its election.

7.10.2 Right to Install New Generator. Tenant shall, at no additional cost to Landlord, have the right but not the obligation to install, use, operate, maintain, and repair, at Tenant’s sole cost and expense, one (1) back-up generator of up to 500 KWH and required conduit and related equipment, including without limitation, uninterruptible power supply batteries, fuel tank and fuel lines (collectively, the “Additional Generator” and together with the Existing Generators, the “Generators”)), at a mutually agreeable location, and shall be permitted to connect such Additional Generator to the electrical power distribution system within the Premises (as described below) for the benefit of equipment located within the Premises (as the same may be expanded or modified), and subject to the terms and conditions of this Section 7.10 and provided that such Additional Generator shall comply with Applicable Laws and shall be installed subject to and in accordance with Article 10 (and, if the Additional Generator is also Rooftop Equipment, subject to and in accordance with Article 38). If the Additional Generator is also Rooftop Equipment located on the rooftop parking area of the Building and, as a result of such location any parking spaces are eliminated, Tenant shall pay all Parking Charges attributable to any such eliminated parking spaces, such Parking Charges shall constitute Rent hereunder and such Parking Charges shall be payable in advance, at the same time and in the same manner as provided in Section 30.1. The Additional Generator, if installed, shall be connected to electrical power distribution system within the Premises, and shall not be connected to the main electrical room of the Building or Building Systems. Tenant shall be permitted, but shall not be required, to remove the Additional Generator from time to time at its own expense, for any reason or no reason, including, without limitation, for purposes of replacing or upgrading such Additional Generator. Tenant shall repair any damage caused by such removal, including the patching of any holes to match, as closely as reasonably possible, the color surrounding the area where the equipment and appurtenances were attached. If Tenant does not remove the Additional Generator at the expiration of the Term, such Additional Generator shall become the personal property of Landlord.

7.10.3 Generally. Tenant, at Tenant’s sole cost and expense, shall maintain and repair the Generators in accordance with the requirements and recommendations prescribed by the manufacturer of each Generator. Tenant shall cause the Generators to be periodically inspected in accordance with the requirements and recommendations prescribed by the manufacturers of each Generator and Applicable Laws, and promptly following each inspection, Tenant shall provide to

 

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Landlord copies of all inspection reports. If Tenant fails to perform such periodic inspections, Landlord, at Tenant’s cost, shall have the right, but not the obligation, to conduct any such inspections but only at such times and in such a manner as to reasonably minimize the impact on Tenant. Tenant may utilize such security protocols, cameras, onsite surveillance and security patrolling as it deems reasonably necessary to monitor and secure the Generators. If Landlord desires to perform repairs, maintenance or other work in or about the space occupied by the Generators (the “Repairs to Generator Area”), Landlord shall give Tenant at least ten (10) business days’ prior written notice of the date Landlord intends to commence such Repairs to Generator Area (except in the case of emergency or an imminent threat to the health or safety of persons or damage to property), along with a description of the work scheduled to be performed and an estimate of the time frame required for that performance. Any of Tenant’s maintenance obligations in connection with the Generator identified as Generator 1 shall not include the obligation to maintain and repair the Building Fuel Tank to which the fuel lines supplying such Generator is connected.

8. Building Services.

8.1 Building-Standard Services. Subject to the terms of this Article 8, Applicable Laws and Force Majeure Events, Landlord shall furnish (or cause to be furnished) the following services to the Premises (twenty-four (24) hours a day, seven (7) days a week, unless indicated otherwise): (a) tepid and cold water; (b) electricity up to the Wattage Allowance; (c) HVAC in sufficient amounts to cause the portions of the Premises used for ordinary business office purposes (excluding, by way of example, the Cafeteria, computer server rooms or other “hot spots” resulting from the use of machines or equipment) to be heated and/or cooled to a temperature between 68 and 72 degrees Fahrenheit during Building Standard Hours, subject to temporary interruptions due to repairs and maintenance and provided that (i) the occupancy of the Premises shall not exceed one person per 150 square feet of Adjusted Rentable Square Feet and (ii) Tenant shall make proper use of window coverings to reduce solar load; (d) passenger elevator service; (e) freight elevator service, subject to the Building Rules; (f) lighting replacement, as necessary, for lights, fluorescent tubes, bulbs and ballasts, excluding any art or other specialty lighting; (g) window washing as reasonably determined by Landlord consistent with Comparable Buildings; (i) garbage removal from the Project on a weekly basis; and (j) fuel for the Building Fuel Tank (provided that Tenant shall reimburse Landlord for (i) Landlord’s charges for Tenant’s usage of any fuel contained in the Building Fuel Tank, and (ii) Tenant’s Percentage Share of Landlord’s charges for maintaining the Building Fuel Tank, each as set forth in Section 7.10.1 and within thirty (30) days after Tenant’s receipt of Landlord’s invoice). Tenant’s failure to make proper use of window coverings as provided in clause (c) above shall not constitute an Event of Default on behalf of Tenant hereunder; rather, such failure shall excuse Landlord’s obligation to furnish HVAC in an amount sufficient to cause the Premises to be heated or cooled within the temperature range provided in clause (c). In addition, Landlord shall furnish to the Common Areas (twenty-four (24) hours a day, seven (7) days a week, unless indicated otherwise): (1) tepid and cold water to restrooms; (2) lighting; (3) HVAC during Building Standard Hours; (4) security service; (5) restroom supplies on a daily basis Monday through Friday; and (6) janitorial service Monday through Friday (excluding Building Holidays) for the Common Areas only (and not for the Premises, the Parking Garage Roof Space or the Sidewalk Area) in a manner consistent with Comparable Buildings.

8.2 No Representation. Except as expressly set forth herein, Landlord makes no representation to Tenant regarding the adequacy or fitness of Building Systems for the Permitted Use.

8.3 Building Security Services and Access.

8.3.1 Security. Landlord shall have the right from time to time to adopt such reasonable policies, procedures and programs as Landlord shall, in its reasonable discretion, deem

 

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necessary or appropriate for the security of the Building, and Tenant shall cooperate with Landlord in the enforcement of, and shall comply with, the policies, procedures and programs adopted by Landlord. Landlord shall provide security services for the Project (but not individually for Tenant or the Premises, the Parking Garage Roof Space or the Sidewalk Area) in a manner consistent with Comparable Buildings and as more particularly described on Exhibit J. Tenant acknowledges that the safety and security devices, services and programs provided by Landlord from time to time, if any, may not prevent theft or other criminal acts, or insure the safety of persons or property, and Tenant expressly assumes the risk that any safety device, service or program may not be effective or may malfunction or be circumvented. In all events and notwithstanding any provision of this Lease to the contrary, Landlord and the other Landlord Parties shall not be liable to Tenant, and to the maximum extent permitted by law, Tenant hereby waives any claim against the Landlord Parties for any unauthorized or criminal entry of third parties into the Premises or the Building, any injury to or death of persons, or any loss of property in and about the Premises or the Building caused by or resulting from any unauthorized or criminal acts of third parties, regardless of any action, inaction, failure, breakdown, malfunction and/or insufficiency of the security services provided by Landlord, except to the extent caused by the negligence or willful misconduct of Landlord and/or any Landlord Parties. Tenant shall obtain insurance coverage to the extent Tenant desires protection against criminal acts and other losses. Upon learning of any material incident of Casualty, crime, theft, burglary, robbery, assault, trespass, unauthorized entry or vandalism occurring in the Premises or the Building and after notifying the police, fire department and/or emergency service providers, as appropriate, Landlord shall endeavor to provide notice to Tenant via telephone call and email to the following: (a) via telephone to (650) 303-1500 and (b) via email to Guard@Zynga.com, or such other number(s) and/or email address(es) as Tenant shall from time to time notify Landlord in writing. Tenant shall obtain insurance coverage to the extent Tenant desires protection against criminal acts and other losses.

8.3.2 Access Control. In the case of invasion, mob, riot, public demonstration or other circumstances rendering such action advisable in Landlord’s reasonable opinion, Landlord reserves the right to temporarily prevent access to the Building during the continuance of the same by such action as Landlord may reasonably deem appropriate.

8.3.3 Tenant’s Access. After the Commencement Date, subject to the provisions of Sections 8.3.1 and 8.3.2 above, Tenant shall have access to the Premises and the Common Areas twenty-four (24) hours per day, seven (7) days a week. The Building currently has a card key system for access to the Building. Elevators of the Building (other than the bank of elevators located on the westerly side of the Building’s atrium) may be programmed to require use of a card key to cause the elevators to stop on those floors of the Building in which the Premises are located, and Landlord and Tenant shall reasonably cooperate to coordinate such programming.

8.3.4 Non-Disturbance. In the event any threat to the security of the Building is attributable solely to Tenant, Tenant shall reimburse Landlord for any costs reasonably incurred by Landlord in connection therewith.

8.4 Interruption or Unavailability of Services. Notwithstanding anything to the contrary set forth herein, if Tenant is prevented from using, and does not use, the Premises or any portion thereof as a result of any failure of Landlord to provide utilities and services in accordance with this Article 8, then Tenant shall give Landlord written notice of such failure. If such failure continues for three (3) consecutive days after Landlord’s receipt of any such notice (the “Eligibility Period”) and is due to Landlord’s or any Landlord Party’s acts or omissions (an “Abatement Event”), then Base Rent and Escalation Rent shall be abated or reduced, as the case may be, beginning on the first day the Abatement Event commenced, for such time that such Abatement Event continues (the “Abatement Period”), either (i) in the proportion that the Adjusted Rentable Square Feet of the portion of the Premises

 

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that Tenant is prevented from using, and does not use, bears to the total Adjusted Rentable Square Feet of the Premises or (ii) if Tenant is prevented from using a material portion of the Premises and if Tenant ceases using the entire Premises, then Base Rent and Escalation Rent shall be abated in its entirety. Landlord shall use its diligent efforts to promptly restore utilities and services to the extent the cause of such interruption or the means to restore same is within the reasonable control of Landlord. To the extent Tenant is entitled to abatement without regard to the Eligibility Period, because of an event covered by Article 12 or Article 13 of this Lease, then the Eligibility Period shall not be applicable.

8.5 Tenant’s Use of Excess Electricity and Water; Premises Occupancy Load. Tenant shall not, without Landlord’s prior consent: (a) install in the Premises (i) equipment, and/or machines which requires a voltage other than 110 volts single-phase (provided that Tenant may install copiers, Cafeteria equipment, supplemental HVAC equipment and other typical office machines which require a voltage in excess of 110 volts-single phase), or (ii) heat-generating or heat-sensitive lighting other than Building-standard lights. If Tenant permits occupancy levels in excess of one person per 150 Adjusted Rentable Square Feet in the Premises, and such occupancy levels cause Landlord to be unable to cause the portions of the Premises used for ordinary business office purposes (excluding, by way of example, the Cafeteria, computer server rooms or other “hot spots” resulting from the use of machines or equipment) to be cooled to a temperature between 68 and 72 degrees Fahrenheit (an Excess Cooling Problem), then Landlord shall notify Tenant. Upon receipt of such notice, Tenant may elect, in its sole and absolute discretion, to either (A) reduce occupancy levels in the Premises to one person per 150 Adjusted Rentable Square Feet in the Premises (or such lesser density as Tenant may elect) or (B) install supplementary air conditioning facilities in the Premises (“Supplemental Cooling Equipment), or otherwise modify the HVAC system serving the Premises in order to remedy the Excess Cooling Problem to Landlord’s reasonable satisfaction. Tenant shall pay the cost of any transformers, additional risers, panel boards, and all other facilities if required to furnish power for any Supplemental Cooling Equipment, and all costs of supplying and maintaining, any Supplemental Cooling Equipment. The capital, maintenance and service costs of installing, supplying, and maintaining any Supplemental Cooling Equipment and modifications shall be paid by Tenant as additional rent. Landlord, at its election and at Landlord’s expense, may also install and maintain a water meter to measure water usage.

8.6 Provision of Additional Services; After-Hours HVAC Services. If Tenant desires services in amounts additional to or at times different from those set forth in Section 8.1 above, or any other services that are not provided for in this Lease, Tenant shall make a request for such services to Landlord with such advance notice as Landlord may reasonably require. Landlord shall use commercially reasonable efforts to accommodate Tenant’s request for such services. If Landlord provides such services to Tenant, Tenant shall pay Landlord’s actual costs and expense incurred in providing such services within thirty (30) days after Tenant’s receipt of Landlord’s invoice. Notwithstanding the foregoing, upon Tenant’s giving reasonable advance notice in making any request for air circulation, cooling and/or heating required outside of Building Standard Hours, Landlord shall provide the same. Tenant agrees to pay, as additional rent, within thirty (30) days after demand therefor, Landlord’s then standard charge for providing after-hours HVAC and fans, which charge shall be based on Landlord’s actual direct and indirect costs of providing such services (including utility costs, taxes, engineers’ costs, and a reasonable charge for wear and tear on the applicable Building System), provided that in no event shall Landlord impose any administrative fee or other similar mark-up on such costs. As of the date hereof, Landlord’s standard charge for providing after-hours (i) HVAC is $149.39 per hour for the first quadrant of the Building and $13.87 per hour for each additional quadrant of the Building for which after hours HVAC service is requested and (ii) air circulation is $20.94 per hour for the first quadrant of the Building and $13.87 per hour for each additional quadrant of the Building for which after hours air circulation is requested.

 

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8.7 Tenant’s Supplemental Air Conditioning. Notwithstanding anything to the contrary contained in this Lease, at any time during the Term, Tenant shall have the right but not the obligation to install in the Premises, at Tenant’s sole cost and expense, subject to the application of the Tenant Improvement Allowance, as applicable and to the extent available, Supplemental Cooling Equipment in order to provide Tenant’s computer rooms, data center and/or other area(s) in the Premises with additional heating and cooling capacity. The manner of Tenant’s installation of any such Supplemental Cooling Equipment shall be governed by Article 10 hereof. Tenant shall have access to and use of the Building’s condenser water up to and not to exceed fifty (50) tons for such Supplemental Cooling Equipment. Landlord shall have the right to install, at Landlord’s cost and expense, meters to measure Tenant’s usage hereunder for purposes of calculating the charges payable by Tenant for such condenser water. At the end of the Term, at Tenant’s option, Tenant shall either: (1) remove, at Tenant’s sole cost and expense, any Supplemental Cooling Equipment and restore all portions of the Premises and the Building affected by such removal to their condition immediately prior to the installation of such equipment, ordinary wear and tear excepted; or (2) leave any such Supplemental Cooling Equipment in place, in which event the Supplemental Cooling Equipment shall be owned by Landlord.

8.8 Janitorial Service. Tenant shall provide janitorial service to the Premises, which at minimum shall meet the standards set forth on Exhibit E attached hereto (“Standard Janitorial Services”). Landlord shall have no obligation to provide janitorial services to the Premises. Provided that Tenant performs the Standard Janitorial Services, (a) Base Rent shall be reduced by $0.08422 per Adjusted Rentable Square Feet of the Premises per month (the “Janitorial Credit”), (b) Operating Expenses shall exclude the cost of providing Standard Janitorial Services to portions of the Building intended for lease by tenants or occupants and (c) Operating Expenses allocable to the Base Year shall be adjusted to exclude the cost of providing Standard Janitorial Services to portions of the Building intended for lease by tenants or occupants. Tenant shall, at its option, use a janitorial contractor selected by Tenant (or its own employees) or shall contract directly with Landlord’s janitorial contractor for the Standard Janitorial Services to be provided to the Premises. Tenant may elect, from time to time upon thirty (30) days prior written notice to Landlord, to cease providing the Standard Janitorial Services to the Premises, in which case (i) Landlord shall be obligated to provide such services in accordance with the standards set forth on Exhibit E, (ii) Tenant shall have no further right to the Janitorial Credit, (iii) Operating Costs allocable to the Base Year shall be adjusted to include the annualized amount of the Janitorial Credit (iv) Operating Expenses shall include the increased cost over the Base Year amount to provide such janitorial services to the Building and (v) notwithstanding the requirements of Section 19.1 below, Landlord’s janitorial staff or janitorial contractor may enter the Premises without prior notice to perform janitorial services to the Premises. In no event shall Landlord be obligated to provide (A) any janitorial services required as a result of Tenant’s Ancillary Uses, including any services required for compliance with Article 40 relating to the Cafeteria and any services required in connection with the bringing of dogs onto the Premises pursuant to Article 42 and (B) any janitorial services in excess of the Standard Janitorial Services.

8.9 Tenant to Provide Security Services. Tenant shall have the right to (a) institute such security measures entirely within the Premises as it may determine in its sole discretion, at Tenant’s sole cost and expense and at no cost to Landlord, including, without limitation, the installation of key-card systems, access gates, security lighting and video monitoring equipment and (b) install video monitoring equipment in the ceilings and on the walls of the Common Areas adjacent to the Premises subject to Landlord’s reasonable approval of the locations of such monitoring equipment (collectively, “Tenant’s Security Equipment”); provided, that, Landlord approves, the installation of video monitoring equipment in the ceilings and on the walls (1) adjacent to the external doors of the Premises (as the same may be expanded or modified), (2) adjacent to the exterior Building entrances on 8th Street, (3) at the corners of the Building as necessary to view the exterior Building entrances on Townsend and Brannan and (4) adjacent to the areas in the Parking Garage designated for Tenant’s use. At Tenant’s sole

 

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cost, Tenant shall be permitted to tie Tenant’s Security Equipment into the Building Systems if requested by Tenant provided that (i) Tenant’s Security Equipment is compatible with the Building Systems and (ii) Tenant’s Security System does not materially and adversely interfere with the Building Systems. In addition, Tenant shall have the right to contract directly with Landlord’s security contractor as well as utilize its own employees or third parties to perform security services within the Premises. In no event shall Tenant be entitled to any credit against Rent (including Escalation Rent) or to any exclusions from Operating Expenses in the determination of Escalation Rent as a result of Tenant’s election to provide security services to its Premises.

8.10 Controls. In the event any governmental authority having jurisdiction over the Project or the Building promulgates or revises any law, ordinance or regulation or building, fire or other code or imposes mandatory controls or guidelines on Landlord or the Project or the Building relating to the use or conservation of energy or utilities or the reduction of automobile or other emissions (collectively “Mandatory Controls”) or in the event Landlord is required to make alterations to the Project or the Building in order to comply with such Mandatory Controls, Landlord may, in its sole discretion, comply with such Mandatory Controls or make such alterations to the Project or the Building related thereto. Such compliance and the making of such alterations shall not constitute an eviction of Tenant, constructive or otherwise, or impose upon Landlord any liability whatsoever, including, but not limited to, liability for consequential damages or loss of business by Tenant.

8.11 Service Providers. Tenant acknowledges that Landlord may, at Landlord’s sole option, to the extent permitted by Applicable Laws, elect to change, from time to time, the company or companies which provide services (including electrical service, gas service, water, telephone and technical services) to the Building, the Premises and/or its occupants, including, but not limited to, the right to purchase green or renewable energy. Further, Tenant acknowledges that Landlord has not and does not make any representations or warranties concerning the identity or identities of the company or companies which provide services to the Project and the Premises or its occupants, and that the choice of service providers and matters concerning the engagement and termination thereof shall be in Landlord’s sole discretion. The foregoing provision is not intended to modify, amend, change or otherwise derogate any provision of this Lease concerning the nature or type of service to be provided or any specific information concerning the amount thereof to be provided. Tenant agrees to cooperate, at no cost to Tenant, with Landlord and each of its service providers in connection with any change in service or service provider.

8.12 Property Management. Landlord shall provide on-site building management services during the Building Hours. During hours outside the Building Hours, Tenant may alert Landlord of any emergencies by contacting Landlord’s designated representative by calling the telephone number provided by Landlord for such purpose.

9. Maintenance and Repair.

9.1 Landlord’s Maintenance Obligations. Landlord shall be responsible for repairs to and maintenance of: (a) the Common Areas, (b) all exterior landscaping, (c) the exterior doors, walls and windows in the Building, (d) the windows within those walls demising the Premises from any Common Areas, (e) the Building Systems, including, but not limited to (i) the HVAC system, including the main distribution loop and portions of the system located throughout the Premises, (ii) the electrical systems until the point of connection with electrical panels exclusively serving the Premises and (iii) all plumbing systems (except any specialized plumbing for the Cafeteria, kitchens and fitness/health facilities), (f) the structural elements of the Building (including the structural elements located in the Premises), (g) the foundation and roof (except for improvements to the surface of the Parking Garage Roof Space made by or for Tenant) of the Building and (h) the elevators serving the Building, in a manner consistent with

 

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Comparable Buildings, except for ordinary wear and tear, damage by Casualty or condemnation. The cost of performing such repairs and maintenance shall be included in Operating Expenses, to the extent permitted pursuant to Article 5. Notwithstanding the foregoing, if any such repair or maintenance is necessary due to the act or omission of Tenant or any Tenant Party, Tenant shall pay the cost of such work.

9.2 Operable Building Systems upon Lease Commencement. Landlord shall deliver the Premises with the Building Systems in operable and good working condition. If it is determined that any of the Building Systems were not in the required condition as of the Commencement Date, then Landlord shall not be liable to Tenant for any damages, but as Tenant’s sole remedy, Landlord, at no cost to Tenant (including as Operating Expenses), shall perform such work or take such other action as may be necessary to place the applicable Building System in the operable and good working condition; provided, however, that if Tenant does not give Landlord written notice of any deficiency of any of the Building Systems within three (3) months after the Commencement Date, Landlord shall not be responsible for correcting such condition pursuant to this Section 9.2 but rather such condition shall be corrected as otherwise provided in the Lease and the cost of performing such correction shall be included in Operating Expenses, to the extent permitted pursuant to Article 5.

9.3 Tenant’s Obligations. Tenant shall, at Tenant’s cost and expense, perform all maintenance and repairs (including replacement) to the Premises that are not Landlord’s express responsibility hereunder, and shall keep the Premises in good condition and repair, reasonable wear and tear excepted. Tenant’s repair and maintenance obligations shall include, but not be limited to, repairs to and replacement of: (a) supplemental HVAC equipment installed in any server room or other specialty HVAC installations; (b) the electrical systems from the point of interconnection with those electrical panels exclusively serving the Premises; (c) plumbing for the Cafeteria, kitchens and fitness/health facilities; (d) raised flooring and floor coverings; (e) ceiling tiles; (f) interior partitions; (g) interior doors; (h) the interior side of demising walls; and (i) Tenant Improvements and Alterations (except to the extent such Tenant Improvements and Alterations are Landlord’s responsibility under Section 9.1 above). Except as specifically set forth in this Lease, Landlord (i) has no obligation to alter, remodel, improve, repair, decorate or paint the Premises, or any part thereof, and (ii) has no obligation respecting the condition, maintenance and repair of the Premises or any other portion of the Project. Except as expressly set forth in Sections 20.7.2 and 20.7.3 hereof or in the Work Letter, Tenant hereby waives all rights, including under Sections 1941 and 1942 of the California Civil Code and under any similar law now or hereafter in effect, to make repairs which are Landlord’s obligation under this Lease at the expense of Landlord or to receive any setoff or abatement of Rent.

10. Alterations to Premises.

10.1 Landlord Consent; Procedure.

10.1.1 Except to the extent set forth herein, Tenant shall not make any Alterations, without Landlord’s written consent. The term “Alterations” as used in this Lease shall not include the Tenant Improvements or Ancillary Tenant Improvements. Tenant shall submit complete and detailed architectural, mechanical and engineering plans and specifications for the proposed Alterations (to the extent that such plans and specifications would customarily be prepared given the nature of the proposed Alterations) to Landlord at least twenty (20) days prior to the commencement of the work. Landlord shall not unreasonably withhold or delay its consent to the proposed Alterations, provided that by way of example and without limitation, it shall be reasonable for Landlord to withhold its consent to any proposed Alteration that (i) would adversely affect the structural portions of the Building or Building Systems, (ii) require work to be performed in portions of the Building outside the Premises in order to comply with Applicable Laws (unless Tenant agrees to pay for such work) or (iii) would materially

 

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adversely affect the cooling of the Premises. Landlord shall grant or withhold its approval of any Alterations within eight (8) business days from receipt of Tenant’s request accompanied by all documentation reasonably necessary to evaluate the proposed Alterations, provided that Landlord must notify Tenant of any additional information Landlord deems reasonably necessary to evaluate the proposed Alterations within five (5) business days after receipt of Tenant’s submittal, or the information submitted by Tenant shall be deemed sufficient. If Landlord fails to respond to Tenant’s request within such eight (8) business day period, Tenant may provide a second request for approval to Landlord, and if Landlord fails to respond within two (2) business days after receipt of Tenant’s second request, then Landlord’s approval shall be deemed given. If Landlord reasonably disapproves of proposed Alterations, or requests additional information regarding such Alterations, Tenant shall revise the plans and specifications for those Alterations reasonably disapproved by Landlord and resubmit such plans to Landlord or otherwise provide such additional information to Landlord. Landlord shall, within five (5) business days after receipt of Tenant’s revised plans and specifications for proposed Alterations, approve or reasonably disapprove such Alterations, and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord fails to respond within such five (5) business day period, then such revised plans and specifications shall be deemed approved. This process shall continue until Landlord has approved (or been deemed to have approved) the applicable Alterations or Tenant has withdrawn its request for Landlord’s approval. Notwithstanding the preceding, Landlord may not subsequently disapprove of proposed Alterations or any portion thereof that it has previously approved. No review or approval by Landlord of such plans and specifications shall be deemed to create any liability of any kind on the part of Landlord or to constitute a representation on the part of Landlord or any professional consulted by Landlord in connection with such review and approval, that such plans and specifications are correct or accurate, or comply with Applicable Laws.

10.1.2 Subject to the terms and conditions of this Article 10, Tenant shall have the right to install supplemental HVAC units within the Premises. Landlord hereby consents to the installation of supplemental HVAC units within the Premises by Tenant (provided, that, Landlord shall have the right to reasonably approve plans and specifications and the manner in which such supplemental HVAC units will be installed in the Premises in accordance with Section 10.1.1 above).

10.2 General Requirements.

(a) All Alterations shall be constructed or installed by Tenant, at Tenant’s expense (including all expenses incurred in complying with Applicable Laws).

(b) All Alterations shall be designed and performed by Tenant at Tenant’s cost and expense. All Alterations shall be performed only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed; provided that: (i) Landlord may, in its sole discretion, specify engineers, general contractors, subcontractors, and architects to perform work affecting the Building Systems; and (ii) if Landlord consents to any Alteration that requires work to be performed outside the Premises, Landlord may elect to perform such work at Tenant’s expense.

(c) All contractors, subcontractors, and materialmen of Tenant shall, while in the Premises or elsewhere in the Project, be subject to and under the control and direction of the Building manager (but not as an agent of the Building manager or Landlord) and shall comply with Landlord’s then current construction rules and regulations.

(d) Tenant shall carry “Builder’s All Risk” insurance in a commercially reasonable amount reasonably approved by Landlord covering the construction of any Alteration, and

 

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require its general contractor and subcontractors to carry such insurance as Landlord may reasonably require.

(e) Prior to commencement of any Alteration, Tenant shall deliver to Landlord: (i) any building or other permit required by Applicable Laws in connection with the Alteration, (ii) a construction schedule, which shall be delivered for informational purposes only, and (iii) satisfactory evidence of required insurance.

(f) All Alterations shall be diligently constructed in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord, all Applicable Laws, and the Building’s reasonable construction rules and regulations, as revised from time to time. Tenant shall cause all Alterations to be made in such a manner and at such times so that any such work shall not unreasonably disrupt or interfere with the use or occupancy of other tenants or occupants of the Building. All trash that may accumulate in connection with Tenant’s construction activities shall be stored within the Premises and removed by Tenant, at its expense, from the Premises and the Building. If any part of the Building Systems or Common Areas shall be damaged during the performance of any Alteration, Tenant shall promptly notify Landlord, and Landlord may elect either to repair such damage at Tenant’s expense or to require Tenant to repair such damage at Tenant’s expense, using contractors approved by Landlord.

(g) Tenant acknowledges that the San Francisco Green Building Ordinance applies to certain Alterations involving significant upgrades to structural and mechanical, electrical and/or plumbing systems. Landlord makes no representation or warranty as to the interpretation or application of the San Francisco Green Building Ordinance, and Tenant shall be responsible for determining and satisfying all requirements that may be imposed by the San Francisco Green Building Ordinance in connection with Alterations undertaken by Tenant.

10.3 Landlord’s Right to Inspect. Subject to the restrictions set forth in Section 19.1 below, Landlord may, at its election, inspect the Alteration during construction, and require corrections of faulty construction or any material deviation from the plans and specifications approved by Landlord, provided that no such inspection shall be deemed to create any liability on the part of Landlord, or constitute a representation by Landlord or any person hired to perform such inspection that the work so inspected conforms with such plans and specifications or complies with any Applicable Laws, and no such inspection shall give rise to a waiver of, or estoppel with respect to, Landlord’s continuing right at any time or from time to time to require the correction of any faulty work or any material deviation from such plans and specifications.

10.4 Tenant’s Obligations Upon Completion. Upon completion of any Alteration, Tenant shall (a) cause a timely notice of completion to be recorded in the Office of the Recorder of the City and County of San Francisco in accordance with Civil Code Section 3093 or any successor statute and (b) deliver to Landlord the following documentation relating to such Alteration: (i) evidence of full payment and unconditional final waivers of all liens for labor, services, or materials; (ii) all governmental permits and approvals; and (iii) if plans were initially prepared for such Alteration, “as built” plans prepared on an AutoCAD Computer Assisted Drafting and Design System.

10.5 Ownership and Removal of Alterations.

10.5.1 Alterations made by Tenant, including without limitation, any partitions (movable or otherwise) or carpeting, shall become a part of the Building and belong to Landlord (subject to Tenant’s right to use the Alteration during the Term); provided, however, that equipment, trade fixtures and movable furniture shall remain the property of Tenant.

 

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10.5.2 Tenant, prior to the expiration or earlier termination of this Lease, shall, at Tenant’s sole cost and expense: (i) remove any or all Alterations (except any Alterations that are customary for general office use, provided that Landlord may require Tenant to remove any demising walls and corridors that are not constructed as part of the Tenant Improvements), (ii) restore the Premises to the condition existing prior to the installation of such Alterations, and (iii) repair all damage to the Premises, the Building, or the Project caused by the removal of such Alterations. Tenant shall use a contractor reasonably approved by Landlord for such removal and repair. Notwithstanding the foregoing, Landlord may elect to waive all or any portion of such removal and restoration requirements by giving written notice of such waiver to Tenant at least one hundred eighty (180) days prior to the Expiration Date or within ten (10) business days after any earlier termination of this Lease. If Tenant fails to remove such Alterations and perform such restoration and repair, then Landlord may perform such work, and Tenant shall reimburse Landlord for costs and expenses incurred by Landlord in performing such removal, restoration and repair.

10.5.3 Notwithstanding Section 10.5.2 above, if Tenant’s request for Landlord’s approval of any Alteration contains a request that Landlord identify whether Landlord intends to require Tenant to remove all or any portion of such Alteration on the expiration or earlier termination of this Lease, then Landlord agrees to identify, at the time it approves such Alteration, whether Landlord intends to require Tenant to remove all or any portion of such Alteration on the expiration or earlier termination of this Lease. Tenant shall have no obligation to remove any Alteration on the expiration or earlier termination of this Lease not so identified by Landlord to be removed or any Alterations that are customary for general office use, except that Landlord may require Tenant to remove any demising walls and corridors that are not constructed as part of the Tenant Improvements; provided, that, Landlord gives notice to Tenant requiring such removal at least one hundred eighty (180) days prior to the Expiration Date or within ten (10) business days after any earlier termination of this Lease.

10.6 Minor Alterations. Notwithstanding any provision in the foregoing to the contrary, Tenant may construct Minor Alterations in the Premises without Landlord’s prior written consent, but with prior notification to Landlord. Tenant shall provide Landlord with at least ten (10) business days’ notice prior to commencing any Minor Alterations, which notice shall include a general description of the nature and estimated cost of the proposed Minor Alteration, and the anticipated completion dates for such work. The provisions of this Article 10 shall apply to the performance of Minor Alterations, except for the requirement to obtain Landlord’s prior written consent. All references in this Lease to “Alterations” shall mean and include Minor Alterations, unless specified to the contrary.

10.7 Landlord’s Fee. Tenant shall pay Landlord, within thirty (30) days after receipt of invoice and reasonable supporting documentation, Landlord’s reasonable, actual out-of-pocket expenses incurred in reviewing the plans and specifications for the proposed Alteration, and a fee equal to five percent (5%) of the first $100,000 in hard costs of the Alteration and one percent (1%) of hard costs of the Alteration in excess of $100,000, for Landlord’s coordination of such work.

11. Liens. Tenant agrees to keep the Premises and the Project free from any liens or encumbrances arising out of any work performed, materials furnished or obligations incurred by Tenant. Tenant shall remove any such lien or encumbrance by bond or otherwise within thirty (30) days after notice by Landlord (or within ten (10) business days if required in connection with any pending financing or sale of the Project), and if Tenant fails to do so, Landlord may cause the lien to be released by any means it deems proper, including by payment of the amount necessary to remove such lien or encumbrance, without responsibility for investigating the validity thereof. All sums paid by Landlord for such purpose, and all expenses incurred by it in connection therewith, shall be payable to Landlord by Tenant, as additional rent, within thirty (30) days after receipt of invoice.

 

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12. Damage or Destruction.

12.1 Repair Obligations. If the Premises or any portions of the Project affecting Tenant’s use and enjoyment of the Premises are damaged by Casualty following the Lease Date, then (a) Landlord shall notify Tenant in writing (a “Landlord’s Casualty Notice”) within sixty (60) days after discovery of such damage as to the amount of time (the “Estimated Restoration Period”) Landlord reasonably estimates it will take to restore the Project and/or the Premises and (b) Landlord shall, subject to the provisions of Sections 12.2 and 12.3 below, proceed with reasonable promptness to repair such damage and restore the Premises (including Tenant Improvements and Alterations (to the extent Landlord receives insurance proceeds pursuant to Section 12.3 below to repair and restore such Alterations)) and such portions of the Project to substantially the same condition as existed before the Casualty (collectively, “Restore” or “Restoration”); provided, however, that any such Restoration shall be subject to (i) modifications required by zoning or building codes and other Applicable Laws and, in the case of Restoration to the Common Areas, to modifications then considered desirable by Landlord; and (ii) delays resulting from a failure to promptly receive insurance proceeds or Force Majeure Events. Notwithstanding the foregoing, Landlord shall have no obligation with respect to, and if Landlord elects or is required to perform any Restoration hereunder, Tenant shall be responsible for and shall, repair and replace at its sole cost all of Tenant’s equipment, furniture, fixtures and other personal property in the Premises, including, without limitation, any telecommunication cables and related devices located in or serving the Premises.

12.2 Termination Rights.

12.2.1 Landlord’s Termination Rights. In any of the following circumstances, Landlord may elect to terminate this Lease:

(a) The Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two hundred seventy (270) days following the date of the Casualty (when such Restoration is made without the payment of overtime or other premiums); or

(b) If the Casualty occurs during the last twelve (12) months of the Term, and the Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two (2) months following the date of the Casualty; or

(c) If the uninsured portion of costs to Restore the Project (excluding deductibles) exceeds One Million Dollars ($1,000,000.00) and Landlord does not actually proceed to Restore the Building; or

(d) If insurance proceeds sufficient to complete the Restoration in excess of One Million Dollars ($1,000,000.00) are not available due to the exercise of rights of any Encumbrancer to collect such proceeds, provided that Landlord does not actually proceed to Restore the Building.

Any election by Landlord to terminate this Lease shall be given to Tenant concurrently with Landlord’s Casualty Notice.

Notwithstanding the foregoing, if Landlord elects to terminate this Lease pursuant to Sections 12.2.1(a) or 12.2.1(b) and Tenant has one or more unexercised Extension Options remaining, then Tenant may elect within thirty (30) after Landlord terminates this Lease, to immediately exercise its next available Extension Option, in which case Landlord’s termination of this Lease pursuant to Section 12.2.1(a) or 12.2.1(b) shall be rendered null and void and of no further force and effect and

 

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Landlord shall proceed to Restore the Premises and/or the Project, subject to the other provisions of Section 12.2.1.

12.2.2 Tenant’s Termination Rights. In any of the following circumstances, Tenant may elect to terminate this Lease by delivering written notice to Landlord within thirty (30) days after receipt of Landlord’s Casualty Notice:

(a) The Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two hundred seventy (270) days following the date of the Casualty (when such Restoration is made without the payment of overtime or other premiums); or

(b) If the Casualty occurs during the last twelve (12) months of the Term and the Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two (2) months following the date of the Casualty.

12.2.3 Late Delivery. If Restoration of the Premises and/or the Project is not substantially complete as of the end of the later of (i) two hundred seventy (270) days following the date of the Casualty or (ii) the Estimated Restoration Period as extended for delays resulting from a failure to promptly receive insurance proceeds or Force Majeure Events or Tenant Delays (as defined in the Work Letter), then Tenant may deliver written notice to Landlord that Landlord has thirty (30) days to complete the Restoration of the Premises and/or the Project. If after the expiration of such thirty (30) day period Landlord has not completed Restoration of the Premises and/or the Project, then Tenant may, in its sole and absolute discretion, elect to terminate this Lease by delivering written notice to Landlord at any time thereafter until repair or restoration of the Premises is substantially completed.

12.2.4 Consequences of Termination. If Landlord or Tenant elects to terminate this Lease as provided above, this Lease and all interest of Tenant in the Premises shall terminate thirty (30) days after (i) delivery of Landlord’s termination notice given concurrently with Landlord’s Casualty Notice or (ii) delivery of Tenant’s termination notice given pursuant to Section 12.2.2 above, and the Base Rent and Escalation Rent (reduced to the extent set forth in Section 12.4 below) shall be paid up to the date of such termination.

12.3 Completion of Repairs. If neither party elects to terminate this Lease, then Landlord shall diligently complete the Restoration. If Landlord is required to or elects to perform the Restoration, Tenant shall assign or otherwise make available to Landlord all proceeds of insurance carried by Tenant with respect to the Alterations to the extent actually received by Tenant. Landlord shall have no liability to Tenant, if the Restoration is not in fact completed within the Estimated Restoration Period set forth in Landlord’s Casualty Notice, so long as Landlord proceeds with reasonable diligence to complete the Restoration.

12.4 Rent Abatement. If neither party elects to terminate this Lease under Section 12.2 above, this Lease shall remain in full force and effect, provided that Tenant shall be entitled to a reduction of Base Rent and Escalation Rent in the proportion that the area of the Premises rendered untenantable (and not occupied by Tenant) by such damage bears to the total area of the Premises. Tenant shall be entitled to such rent abatement from the date of the Casualty for as long as any portion of the Premises remains untenantable (and not occupied by Tenant) due to the Casualty.

12.5 Waiver of Statutory Provisions. The provisions of this Lease, including this Article 12, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises or the Building resulting from a Casualty, and any common law or statute of the State of California, including, without limitation, subsection 2 of

 

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Section 1932, subsection 4 of Section 1933, and Sections 1941 and 1942 of the California Civil Code, with respect to any rights or obligations concerning damage or destruction resulting from a Casualty in the absence of an express agreement between the parties, and common law or any other statute, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises or the Building resulting from a Casualty.

12.6 Casualty Following Exercise of Purchase Option. The provisions of Article 12 shall be unaffected by any Tenant exercise of the Purchase Option under Article 36.

13. Eminent Domain.

13.1 Lease Termination. If all or part of the Premises shall be taken by any public or quasi public authority under the power of eminent domain or conveyance in lieu thereof (“Taken” or “Taking”), this Lease shall terminate as to any portion of the Premises so Taken or conveyed on the date when title or the right to possession vests in the condemnor.

13.2 Partial Taking. If (a) a part of the Premises or the Project shall be Taken and (b) in Tenant’s reasonable business judgment such Taking would neither prevent nor materially interfere with Tenant’s use of the Premises, then subject to Landlord’s termination right pursuant to Section 13.3 below, this Lease shall remain in effect as to said portion of the Premises remaining, with Landlord, at Landlord’s cost, restoring the Building to an architectural whole and the Base Rent payable from the date of the Taking shall be reduced in the same proportion as the area of the Premises Taken bears to the total area of the Premises. If, in Tenant’s reasonable business judgment, such Taking would prevent or materially interfere with Tenant’s use of the Premises, this Lease may be terminated by Tenant by giving written notice to Landlord within thirty (30) days of the date of the Taking. Such notice shall specify the date of termination which shall be not more than sixty (60) days after the date of said notice.

13.3 Landlord’s Termination Right. If twenty percent (20%) or more of the Building is Taken, whether or not any portion of the Premises is Taken, and in Landlord’s reasonable business judgment it is not economically feasible to continue operating the portion of the Building remaining, then Landlord shall have the option for a period of thirty (30) days after such determination to terminate this Lease. If in Landlord’s reasonable business judgment it is economically feasible to continue operating the portion of the Building remaining after such Taking, then this Lease shall remain in effect, with Landlord, at Landlord’s cost, restoring the Building to an architectural whole, and the Base Rent payable from the date of the Taking shall be reduced in the same proportion as the area of the Premises Taken bears to the total area of the Premises.

13.4 Compensation. All compensation awarded or received in connection with a Taking or conveyance described in this Article 13 shall be the property of Landlord, and Tenant hereby assigns to Landlord any and all elements of said compensation which Tenant would, in the absence of said assignment, have been entitled to receive. Specifically, and without limiting the generality of the foregoing, said assignment is intended to include: (a) the “bonus value” represented by the difference, if any, between Rent under this Lease and market rent for the unexpired Term, (b) the value of improvements to the Premises, (c) the value of any trade fixtures paid for by Landlord, and (d) the value of any and all other items and categories of property for which payment of compensation may be made in any such proceeding. Notwithstanding the foregoing, Tenant shall be entitled to receive any award of compensation for loss of or damage to the goodwill of Tenant’s business (but only to the extent the same does not constitute “bonus value”), Tenant’s trade fixtures, the value of improvements to the Premises paid for by Tenant, and for any moving or relocation expenses which Tenant is entitled under Applicable Laws to recover directly from the public agency which acquires the Premises.

 

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13.5 Waiver. Tenant hereby waives Sections 1265.110 through 1265.160 of the California Code of Civil Procedure.

14. Insurance.

14.1 Liability Insurance. Tenant, at its cost and expense, shall procure and maintain, from the Lease Date and throughout the Term, the following insurance:

(a) Commercial General Liability Insurance. Tenant shall maintain a policy(ies) of commercial general liability insurance written on an “occurrence” basis, with limits of liability, in the aggregate, of not less than Five Million Dollars ($5,000,000.00). Such policy(ies) shall cover bodily injury, property damage arising out of or relating directly to Tenant’s business operations, conduct, assumed liabilities, or use or occupancy of the Premises or the Project, and shall include all the coverages typically provided by the Commercial General Liability Endorsement CG0001 (10/04), including property damage coverage and completed operations. Tenant’s liability coverage shall further include premises-operations coverage, products liability coverage (if applicable), and products-completed operations coverage.

(b) Tenant’s Workers’ Compensation and Employer Liability Coverage. Tenant shall maintain workers’ compensation insurance as required by law and employer’s liability insurance with limits of no less than One Million Dollars ($1,000,000.00) per occurrence.

(c) Tenant’s Property Insurance. Tenant shall maintain property insurance coverage, extended coverage and special extended coverage insurance for all office furniture, trade fixtures, office equipment, merchandise, and all other items of Tenant’s personal property in, on, at, or about the Premises and the Project. Such policy shall (i) be written on the broadest available (special-causes-of-loss) policy form or an equivalent form acceptable to Landlord, (ii) be for no less than the full replacement cost (new without deduction for depreciation) of the covered items and property, and (iii) include vandalism and malicious mischief coverage.

(d) Business Interruption, Loss of Income, and Extra Expense Coverage. Tenant shall maintain business interruption, loss of income, and extra expense insurance covering all direct loss of income and charges and costs incurred arising out of all perils, failures, or interruptions, including any failure or interruption of Tenant’s business equipment (including, without limitation, telecommunications equipment), and the prevention of, or denial of use of or access to, all or part of the Premises or the Project, as a result of those perils, failures, or interruptions. The business interruption, loss of income, and extra expense coverage shall provide coverage for no less than twelve (12) months and shall be carried in amounts necessary to avoid any coinsurance penalty that could apply. The business interruption, loss of income and extra expense coverage shall be issued by the insurer that issues Tenant’s property insurance under Section 14.1(c) above.

14.2 Form of Policies. The minimum limits of policies and Tenant’s procurement and maintenance of such policies described in Section 14.1 above shall in no event limit the liability of Tenant under this Lease. All insurance required by this Article 14 shall be issued on an occurrence basis by solvent companies qualified to do business in the State of California, and with a Best & Company rating of A-:VIII or better. Any insurance policy under this Article 14 may be maintained under a “blanket policy,” insuring other parties and other locations, so long as the amount and coverage required to be provided hereunder is not thereby diminished. No policy maintained by Tenant under this Article 14 shall contain a deductible which is not commercially reasonable. Tenant shall provide Landlord a certificate of each policy of insurance required hereunder evidencing that the policies contain the provisions required. Tenant shall deliver such certificates to Landlord within thirty (30) days after the Lease Date, but in no

 

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event later than the date that Tenant or any other Tenant Parties first enter the Premises and, upon renewal, not fewer than ten (10) days prior to the expiration of such coverage. All Tenant’s liability insurance shall provide (i) that Landlord, Landlord’s managing agent and any Encumbrancer is designated as an additional insured as to coverage afforded under such policy pursuant to an endorsement providing coverage at least as broad as ISO form CG 20 37 10 01 or its equivalent; (ii) for severability of interests or that acts or omissions of one of the insureds or additional insureds shall not reduce or affect coverage available to any other insured or additional insured (if available); and (iii) that Tenant’s insurance is primary and noncontributory with any insurance carried by Landlord. Tenant shall endeavor to cause all Tenant’s insurance to provide that the insurer agrees not to cancel the policy without at least thirty (30) days’ prior written notice to all additional insureds (except in the event of a cancellation as a result of nonpayment, in which event the insurer shall give all additional insureds at least ten (10) days’ prior notice). Tenant shall notify Landlord within ten (10) days after any material modification of any policy of insurance required under this Article. Any self insurance or self insured retention provisions under, or with respect to, any insurance policies maintained by Tenant hereunder shall be subject to Landlord’s prior written approval, which Landlord may give or withhold in its reasonable discretion.

14.3 Landlord’s Insurance. Landlord shall procure and maintain in effect throughout the Term, property insurance at least as broad as the most commonly available ISO Special Form Causes of Loss (“all risk”) policy form CP 1030 with an agreed amount endorsement, and including coverage for vandalism and malicious mischief, in an amount equal to one hundred percent (100%) of the replacement cost of the Building (including the Tenant Improvements, but excluding any Alterations), which shall include loss of rent coverage. Landlord shall maintain a policy(ies) of commercial general liability insurance written on an “occurrence” basis, with limits of liability, in the aggregate, of not less than Five Million Dollars ($5,000,000.00). Such policy(ies) shall cover bodily injury, property damage arising out of or relating directly to Landlord’s business operations, conduct, assumed liabilities, or use or occupancy of the Premises or the Project, and shall include all the coverages typically provided by the Commercial General Liability Endorsement CG0001 (10/04), including property damage coverage and completed operations. Landlord’s liability coverage shall further include premises-operations coverage, products liability coverage (if applicable), and products-completed operations coverage. Notwithstanding the foregoing provisions of this Section 14.3, the coverage and amounts of insurance carried by Landlord in connection with the Project shall, at a minimum, be comparable to the coverage and amounts of insurance which are carried by reasonably prudent landlords of buildings comparable to and in the vicinity of the Project. The premiums for all such insurance shall be included as an Operating Expense. If such insurance policies cover other assets owned by Landlord or its affiliate in addition to the Project, the cost of such insurance shall be equitably allocated. Upon request, Landlord shall deliver to Tenant certificates of insurance evidencing compliance with the insurance requirements hereunder.

15. Waiver of Subrogation Rights. Each party, for itself and, without affecting any insurance maintained by such party, on behalf of its insurer, releases and waives any right to recover against the other party, including officers, employees, agents and authorized representatives (whether in contract or tort) of such other party, that arise or result from any and all loss of or damage to any property of the waiving party located within or constituting part of the Project, including the Premises, to the extent of amounts payable under a standard ISO Commercial Property insurance policy, or such additional property coverage as the waiving party may carry (with a commercially reasonable deductible), whether or not the party suffering the loss or damage actually carries any insurance, recovers under any insurance or self-insures the loss or damage. Each party shall have their property insurance policies issued in such form as to waive any right of subrogation as might otherwise exist. This mutual waiver is in addition to any other waiver or release contained in this Lease.

16. Waiver of Liability and Indemnification.

 

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16.1 Indemnification.

16.1.1 By Tenant. Subject to Article 15, Tenant agrees to indemnify and hold Landlord, any Encumbrancers, and the Landlord Parties (together, the “Indemnitees”) harmless from and to protect and defend the Indemnitees against any and all Claims, incurred in connection with or arising from any of the following: (i) the use or occupancy or manner of use or occupancy of the Premises (including the Parking Garage Roof Space) and the Sidewalk Area by Tenant or any Tenant Party; or (ii) any injury or death of any person or damage to or destruction of property occurring in the Premises (including the Parking Garage Roof Space), from any cause whatsoever; or (iii) any injury or death of any person or damage to or destruction of property occurring in, on or about any Common Areas, or elsewhere in or about the Project or in the vicinity of the Project, including the Parking Garage, to the extent such injury, death or damage is caused by the negligence or willful misconduct of Tenant or any Tenant Parties; or (iv) Tenant’s use of the roof of the Building pursuant to Article 37; or (v) the presence of dogs brought into the Project by Tenant or Tenant Parties, including, but not limited to, any Claims arising in or about the Parking Garage. Tenant’s obligations under this Section 16.1.1 shall be inapplicable to the extent such Claims arise from the negligence or willful misconduct of any Indemnitee or to the extent such obligations are limited or prohibited by Applicable Laws. If any action or proceeding is brought against any Indemnitee by reason of any such claim or liability, Tenant, upon notice from Landlord, covenants to resist and defend at Tenant’s sole expense such action or proceeding by counsel reasonably satisfactory to Landlord or the applicable Landlord Party or Encumbrancer. Tenant’s obligations under this Article 16 shall not be construed as in any way restricting, limiting, or modifying Tenant’s insurance or other obligations under this Lease. Further, Tenant’s compliance with the insurance requirements and other obligations of this Lease shall not in any way restrict, limit or modify Tenant’s obligations under this Article 16.

16.1.2 By Landlord. Subject to Article 15, Landlord agrees to indemnify and hold Tenant and the Tenant Parties harmless from and to protect and defend Tenant and the Tenant Parties against any and all Claims incurred by Tenant and the Tenant Parties (i) to the extent caused by the negligence or willful misconduct of Landlord or a Landlord Party or (ii) in connection with any injury or death of any person or damage to or destruction of property occurring in, on or about any Common Areas, the Parking Garage or elsewhere in or about the Project or in the vicinity of the Project, except to the extent such Claims arise from the negligence or willful misconduct of Tenant or any Tenant Party. If any action or proceeding is brought against Tenant or any of the Tenant Parties by reason of any such claim or liability, Landlord, upon notice from Tenant, covenants to resist and defend at Landlord’s sole expense such action or proceeding by counsel reasonably satisfactory to Tenant. Landlord’s obligations under this Article 16 shall not be construed as in any way restricting, limiting, or modifying Landlord’s insurance or other obligations under this Lease. Further, Landlord’s compliance with the insurance requirements and other obligations of this Lease shall not in any way restrict, limit or modify Landlord’s obligations under this Article 16.

16.2 Duty to Defend. Each party’s duty to defend as set forth in this Article 16 is separate and independent of such party’s duty to indemnify. The duty to defend applies immediately, regardless of whether the applicable party has paid any sums or incurred any detriment arising out of or relating (directly or indirectly) to any Claims.

16.3 Survival. The provisions of this Article 16 shall survive the expiration or earlier termination of this Lease.

17. Assignment and Subletting.

 

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17.1 Restriction on Transfers. Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld: (a) assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, by operation of law or otherwise; (b) sublet the Premises or any part thereof; or (c) permit the use of the Premises by any persons other than Tenant and its employees (each of the foregoing is referred to herein as a Transfer and are collectively referred to as “Transfers” and any person to whom any Transfer is made or sought to be made is referred to as a “Transferee”). Any Transfer made without complying with this Article 17 shall, at Landlord’s option, be null, void and of no effect. For purposes of this Lease, the term “Transfer” shall include: (a) if Tenant is a partnership, the withdrawal or change, voluntary, involuntary or by operation of law, of a general partner or a majority of the partners, or a transfer of a majority of partnership interests, or the dissolution of the partnership; (b) if Tenant is a limited liability company, the withdrawal or change, voluntary, involuntary, or by operation of law, of a majority of members, or a transfer of a majority of the membership interests, or the dissolution of the limited liability company; (c) if Tenant is a corporation, the dissolution, merger, consolidation or other reorganization of Tenant, or the sale or other transfer of more than an aggregate of fifty percent (50%) of the voting shares of Tenant (other than transfers to immediate family members by reason of gift or death), and (d) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty percent (50%) of Tenant’s assets (each of (a) through (d), a “Change of Ownership Transaction”). No issuing of stock of Tenant or a Tenant Affiliate (hereinafter defined) in a public offering or sale on a public stock exchange of Tenant’s stock shall be deemed to be a “Transfer” for purposes of this Lease or subject to the terms and conditions of this Article 17.

17.2 Notice of Proposed Transfer. If Tenant shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing (“Notice of Proposed Transfer”). Any such Notice of Proposed Transfer shall include: (a) the proposed effective date (which shall not be less than thirty (30) nor more than two hundred seventy (270) days after the date of Tenant’s Notice of Proposed Transfer); (b) the portion of the Premises to be Transferred (the “Subject Space”); and (c) the name and address of the proposed Transferee, a description of the nature of such Transferee’s business and proposed use of the Subject Space, a copy of the assignment or sublease pertaining to the proposed Transfer, and an estimated calculation of the “Transfer Premium” (as defined in Section 17.4 below) in connection with such Transfer. Whether or not Landlord shall grant consent, Tenant shall pay, within thirty (30) days after written request by Landlord, all reasonable, actual out-of-pocket legal fees incurred by Landlord in connection with any proposed Transfer, not to exceed Three Thousand Dollars ($3,000.00) in connection with any proposed Transfer. Within fifteen (15) days after receipt of a Notice of Proposed Transfer (with all required information), Landlord shall approve or disapprove a proposed Transfer. If Landlord fails to respond to a Notice of Proposed Transfer within such fifteen (15) day period, then Landlord shall be deemed to have approved the proposed Transfer. Landlord’s consent or refusal of consent shall be in writing and, if Landlord refuses consent, the reasons for refusal shall be stated with reasonable particularity. Landlord’s consent to a Transfer of this Lease shall, if requested by Tenant in writing, be accompanied by a statement addressed to Tenant and the Transferee, upon which statement Tenant and the Transferee may conclusively rely, stating that Landlord has not delivered any notice of default to Tenant under the Lease, which default remains uncured (or setting forth in what respects Tenant is in default), that this Lease has not been amended or modified (or setting forth such amendments or modifications), the expiration date of this Lease, and the date to which Base Rent and Escalation Rent have been paid. Furthermore, for Permitted Transfers of all of Tenant’s right, title and interest in this Lease and for all assignments to which Landlord has given its consent under this Article 17, Landlord agrees, upon request by Tenant, (a) to amend the notice address for Tenant to add the assignee, and (b) to deliver to Tenant or its successor concurrently with the delivery thereof to such assignee, copies of any notices of default delivered pursuant to the terms of this Lease.

 

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17.3 Reasonable Conditions. By way of example and without limitation, the parties hereby agree that it shall be deemed to be reasonable under this Lease and under any Applicable Laws for Landlord to withhold consent to any proposed Transfer if, in the good faith judgment of Landlord, one or more of the following apply:

(a) The proposed use of or operation in the Premises by the proposed Transferee (i) would be unlawful; or (ii) would likely cause an increase in insurance premiums for insurance policies applicable to the Building (unless Tenant agrees to pay such increased costs); or

(b) The proposed Transferee is a governmental entity, or is entitled, directly or indirectly, to diplomatic or sovereign immunity, or is not subject to the service of process in, or the jurisdiction of the courts of, the State of California, or holds any exemption from the payment of ad valorem or other taxes which would prohibit Landlord from collecting from such Transferee any amounts otherwise payable under this Lease.

By way of example and without limitation, the parties hereby agree that it shall be deemed to be unreasonable under this Lease and under any Applicable Laws for Landlord to withhold consent to any proposed Transfer based on one or more of the following:

(A) Either the proposed Transferee, or any person or entity that directly or indirectly, Controls, is Controlled by, or is under common Control with, the proposed Transferee: (i) occupies space in the Building at the time of the 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 six (6) month period immediately preceding Tenant’s request for consent; or

(B) The effective rent charged by Tenant to such proposed Transferee during the term of such Transfer, calculated using a present value analysis, is less than the effective rent being quoted by Landlord at the time of such Transfer for comparable space in the Building for a comparable term, calculated using a present value analysis; or

(C) If the effective rent charged by Tenant to such proposed Transferee is less than the fair market rental value of the Subject Space as of the date of the proposed Transfer.

17.4 Transfer Premium. If Landlord consents to a Transfer, Tenant shall pay Landlord fifty percent (50%) of any Transfer Premium to the extent actually received by Tenant from such Transfer. No Transfer Premium shall be owed in connection with any Permitted Transfer or occupancy by any Business Affiliate. The term “Transfer Premium” means all rent, additional rent or other consideration paid by such Transferee (including, but not limited to, payments in excess of fair market value for Tenant’s assets, trade fixtures, equipment and other personal property), in excess of the Rent payable by Tenant under this Lease (on a monthly basis during the Term, and on a per Adjusted Rentable Square Foot basis, if less than all of the Premises is Transferred), after deducting Permitted Transfer Costs. As used herein, “Permitted Transfer Costs” means the actual costs incurred and paid by Tenant for (a) any leasing commissions, (b) reasonable legal fees and expenses in connection with the Transfer, (c) any Alterations to the Subject Space made by Tenant in connection with the Transfer, (d) marketing expenses, and (e) improvement allowances, moving allowances, out-of-pocket leasing concessions, and any other reasonable out-of-pocket expenses reasonably incurred by Tenant in connection with the Transfer, provided that Tenant shall furnish Landlord with copies of bills or other documentation reasonably substantiating such costs. If Tenant shall enter into multiple Transfers, the Transfer Premium payable to Landlord shall be calculated independently with respect to each Transfer. The Transfer Premium due Landlord hereunder shall be paid within thirty (30) days after Tenant receives any Transfer Premium from the Transferee. Landlord or its authorized representatives shall have the right at all

 

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reasonable times to audit the books and records of Tenant relating to any Transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found to be understated, Tenant shall pay the deficiency within thirty (30) days after demand, and if understated by more than three percent (3%), Tenant shall pay the costs of Landlord’s audit.

17.5 Terms of Consent. If Landlord consents to a Transfer: (a) the terms and conditions of this Lease, including among other things, Tenant’s liability for the Subject Space, and Rent with respect thereto, shall in no way be deemed to have been released, waived or modified; (b) such consent shall not be deemed consent to any further Transfer by either Tenant or the Transferee; (c) no Transferee (other than a Permitted Assignee) shall succeed to any rights provided in this Lease or any amendment hereto to extend the Term, expand the Premises, or lease additional space, any such rights being deemed personal to Tenant (other than a Permitted Assignee); (d) Tenant shall deliver to Landlord promptly after execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord; and (e) Tenant shall furnish upon Landlord’s request, a complete statement, setting forth in detail the computation of any Transfer Premium Tenant has derived and will derive from such Transfer. In addition, if Landlord consents to a Transfer, but applicable sublease and assignment documents are not executed within one hundred eighty (180) days after Tenant’s Notice of Proposed Transfer, or if the terms of the proposed Transfer materially change from those set forth in Tenant’s Notice of Proposed Transfer, Tenant shall submit a new Notice of Proposed Transfer, requesting Landlord’s consent. Each Transferee under an assignment of this Lease, other than Landlord, must expressly assume all of the provisions, covenants and conditions of this Lease on the part of Tenant to be kept and performed. If an Event of Default occurs under this Lease, Tenant hereby authorizes Landlord to direct any Transferee to make all payments under or in connection with the Transfer directly to Landlord (which Landlord shall apply towards Tenant’s obligations under this Lease) until such Event of Default is cured. Notwithstanding anything to the contrary contained herein and without limiting the rights of Tenant that may be transferred to any Transferee, Tenant’s rights to use the Parking Spaces under Article 30 and Tenant’s signage rights under Article 44 may be Transferred to an assignee or sublessee of the Premises. Each Transferee under a sublease may be permitted to use the 650 Townsend address for its subleased premises.

17.6 Subsequent Consents. Consent by Landlord to any Transfer made pursuant to this Lease shall not operate to relieve Tenant from any covenant or obligation hereunder or be deemed to be a consent to or relieve Tenant from obtaining Landlord’s consent to any subsequent Transfer by Tenant or anyone claiming by, through or under Tenant. No subtenant shall have the right to further Transfer its interest in the Subject Space without complying with this Article 17.

17.7 Permitted Transfers.

17.7.1 Notwithstanding anything to the contrary contained in this Article 17, Tenant shall have the right, without the prior written consent of Landlord, but subject to the other provisions of this Section 17.7, to assign this Lease or to sublease all or any portion of the Premises to the following (each, a “Permitted Transferee” and, collectively, “Permitted Transferees”): (a) an entity which is Controlled by, Controls, or is under common Control with, Tenant (a “Tenant Affiliate”), (b) any successor entity to Tenant by way of merger, consolidation or other non bankruptcy corporate reorganization, (c) an entity which acquires all or substantially all (i.e., at least eighty-five percent (85%)) of Tenant’s assets or stock, (d) an entity acquiring and continuing Tenant’s business operations at or from the Premises, or (e) in connection with any Change in Ownership Transaction (collectively, “Permitted Transferees,” and, individually, a “Permitted Transferee”). In the case of a transaction pursuant to clauses (b), (c), (d) or (e) above, if the surviving entity or transferee shall have a Net Worth less than the lesser of (A) the Net Worth of Tenant immediately prior to the proposed transaction and (B) Fifty Million Dollars ($50,000,000), then within ten (10) business days after the consummation of such transaction,

 

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Tenant shall cause the Letter of Credit to be increased to an amount equal to twenty five percent (25%) of Base Rent due for the remainder of the Term as of the consummation of such transaction (if higher than the amount of the Letter of Credit as of such date). For purposes of this Lease, the term “Permitted Assignee” shall mean a Permitted Transferee to whom Tenant assigns all of its right, title and interest in and to this Lease, and which assumes all of Tenant’s obligations under this Lease.

17.7.2 Any Transfer pursuant to Section 17.7.1 above must comply with each of the following additional conditions: (i) Tenant shall not be in default (beyond applicable notice and cure periods) in the performance of any of its obligations under this Lease at the time of the Transfer; (ii) within ten (10) days after the Transfer, Tenant shall give Landlord written notice of the Transfer, which notice shall be accompanied by such documents or information as is reasonably necessary to substantiate that the proposed Transfer falls within the parameters of Section 17.7.1 above, including financial statements of the proposed Transferee; (iii) Landlord receives no later than the tenth (10th) business day after effective date of the Transfer a fully executed duplicate original assignment or sublease (if applicable), in a commercially reasonable form; (iv) any such Transfers shall not, whether in a single transaction or in a series of transactions, be entered into as a subterfuge to evade the obligations and restrictions relating to Transfers set forth in this Article 17; (v) no Transfer to a Permitted Transferee shall release Tenant from its obligations under this Lease; and (vi) Tenant shall pay Landlord’s reasonable out-of-pocket attorneys’ fees and costs incurred in connection with any Transfer to a Permitted Transferee not to exceed Two Thousand Dollars ($2,000.00) in connection with any proposed Transfer to a Permitted Transferee.

17.8 Permitted Occupancy by Certain Business Affiliates. Tenant shall have the right, from time to time, to allow one or more persons or entities with whom Tenant has a previously existing and continuing business relationship (“Business Affiliates”) to occupy with Tenant up to 15,000 Adjusted Rentable Square Feet on a shared basis with Tenant, subject to the following terms and conditions: (a) at least ten (10) business days before a Business Affiliate takes occupancy, Tenant shall provide Landlord with the name and address of such Business Affiliate; (b) Tenant shall exercise a reasonable degree of supervision over all activity occurring in the Premises; (c) the Business Affiliate’s use and occupancy of the Premises shall be subject to the terms, covenants and conditions of this Lease, including, without limitation, the Building Rules, and Tenant shall cause such Business Affiliate to observe or perform each of the provisions of this Lease which the Business Affiliate is obligated to observe or perform, including, without limitation, the Building Rules; (d) The Business Affiliate shall direct to Tenant (and not Landlord) any and all requests, concerns, complaints and other communications regarding the Premises; (e) Tenant’s occupancy arrangements with the Business Affiliates shall not, whether in a single transaction or in a series of transactions, be entered into as a subterfuge to avoid the obligations and restrictions relating to Transfers set forth in this Article 17. Nothing set forth in this Section 17.8 is intended to or shall relieve Tenant of any obligation to be performed by Tenant under this Lease, including the obligation to obtain Landlord’s consent to any other Transfer.

17.9 Arbitration. If Landlord has the right pursuant to this Article 17 to reasonably disapprove a particular proposed Transfer and Landlord disapproves such proposed Transfer and Tenant disputes Landlord’s failure to approve such Transfer, then the dispute shall be submitted to arbitration in accordance with Article 45 below.

18. Rules and Regulations. Tenant agrees to diligently observe and comply with, and to cause all Tenant Parties to diligently observe and comply with, the Building Rules and Regulations (“Building Rules”) set forth in Exhibit B-1 attached hereto, and all modifications of and additions thereto adopted from time to time by Landlord; provided, that, such modifications and additions do not have a material adverse effect on the operation of Tenant’s business at or access to the Premises. No modifications of or additions to the Building Rules shall be effective until thirty (30) days after delivery

 

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to Tenant. The Building Rules are in addition to, and shall not be construed in any way to modify, in whole or in part, any of the provisions of this Lease. If any of the Building Rules conflict with any express provisions of this Lease, the provisions of this Lease shall govern. Landlord shall enforce the Building Rules in a nondiscriminatory manner. Landlord shall use commercially reasonable efforts (but not requiring the initiation of any legal action) to enforce the Building Rules against other occupants of the Project in order to ensure that the Project is operated in manner consistent with Comparable Buildings.

19. Entry of Premises by Landlord; Modification to Common Areas.

19.1 Entry of Premises. Landlord reserves the right, during Building Standard Hours and upon at least twenty-four (24) hours notice to Tenant (except in the case of an emergency), to enter the Premises to (a) inspect the Premises; (b) show the Premises to governmental or utility representatives, prospective purchasers, to current or prospective Encumbrancers or insurers, or, during the last nine (9) months of the Term, to prospective tenants; (c) post notices of nonresponsibility; (d) perform maintenance, repairs or alterations. Landlord shall at all times have a key with which to unlock all the doors in the Premises. In an emergency, Landlord shall have the right to use any means Landlord may reasonably deem proper to open the doors in and to the Premises and such entry shall not be deemed to be a forcible entry or unlawful entry into or detainer of the Premises, or any portion thereof. Access by Landlord shall be in accordance with the security, safety and confidentiality requirements that Tenant may reasonably adopt from time to time, including, without limitation, a requirement that persons (including Landlord and Landlord Parties) having access to the Premises shall sign and deliver to Tenant a confidentiality agreement in form attached hereto as Exhibit R. Tenant may reasonably restrict access by any visitor whom Landlord intends to bring onto the Premises who is, or may reasonably be suspected by Tenant to be or represent a competitor of Tenant. Landlord’s entry shall cause the least interference to Tenant’s business as commercially reasonable. Landlord shall use commercially reasonable efforts to promptly finish any work for which it entered. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or its agents, representatives, contractors or guests while the same are in the Premises.

19.2 Modifications to Common Areas. Landlord shall have the right, in its sole discretion, from time to time, to: (a) make changes to the Common Areas and/or the Project, including, without limitation, changes in the location, size, shape and number of any Common Area amenity, installation or improvement, such as the driveways, entrances, parking spaces, parking areas, ingress, direction of driveways, hallways, corridors, lobby areas and walkways; provided, that, such changes do not have a material adverse effect on the operation of Tenant’s business at or access to the Premises; (b) add additional improvements to the Common Areas and/or the Project or remove existing improvements therefrom; provided, that, such changes do not have a material adverse effect on the operation of Tenant’s business at or access to the Premises; (c) close temporarily any of the Common Areas and/or the Project while engaged in making additional improvements, repairs or alterations to the Project or any portion thereof; and (d) do and perform any other acts, alter or expand, or make any other changes in, to or with respect to the Common Areas and/or the Project as Landlord may, in its sole discretion, deem to be appropriate; provided, that, the same do not have a material adverse effect on the operation of Tenant’s business at or access to the Premises. Without limiting the foregoing, such changes may include, without limitation, (i) installing monitoring, repairing, relocating and replacing pipes, ducts, conduits, wires, meters and equipment, including those located above the ceiling surfaces, below the floor surfaces, and within the walls of the Premises, (ii) modifying the Common Areas to comply with Applicable Laws, including regulations relating to the physically disabled, seismic conditions, and building safety and security, and (iii) installing new floor covering, lighting, and wall coverings in the Common Areas; provided, that, in each such case, such changes do not have a material adverse effect on the operation of Tenant’s business at or access to the Premises or (y) the continued exercise by Tenant of its rights with

 

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respect to the Parking Garage Roof Space, the License Area, the Sidewalk Area, the Cafeteria, having dogs in the Building or Building or Premises signage, each as set forth herein. Landlord shall have the right to utilize the atrium portion of the Common Areas located near the 650 Townsend entrance to the Building for entertainment or events not more than two (2) times per year. Landlord shall have the right to utilize the atrium portion of the Common Areas located near the 650 Townsend entrance to the Building for displays, leasing of food and beverage kiosks or other such similar uses; provided, however, that Landlord shall not be permitted to locate (and shall not allow to be located) within such Common Area any advertisement.

19.3 Waiver of Claims. Tenant acknowledges that Landlord, in connection with Landlord’s activities under this Article 19, may, among other things, erect scaffolding or other necessary structures in the Premises and/or the Project, limit or eliminate access to portions of the Project, including portions of the Common Areas, or perform work in the Premises and/or the Project, which work may create noise, dust, vibration, odors or leave debris in the Premises and/or the Project. Landlord shall exercise commercially reasonable efforts to minimize interference with the conduct of Tenant’s business in the Premises in performing activities under this Article 19, but Tenant hereby agrees that such activities shall not: constitute an actual or constructive eviction of Tenant; entitle Tenant to any abatement of Rent; make Landlord liable to Tenant for any direct or indirect injury to or interference with Tenant’s business; or entitle Tenant to any compensation or damages for loss of the use of the whole or any part of the Premises or of Tenant’s personal property or improvements, or for any inconvenience or annoyance resulting from such activities.

20. Default and Remedies.

20.1 Events of Default. The occurrence of any one or more of the following events (each, an “Event of Default”) shall constitute a breach of this Lease by Tenant:

20.1.1 Tenant fails to pay any Rent when due, and such failure continues for more than five (5) business days after written notice; or

20.1.2 Tenant fails to obtain Landlord’s prior written consent to any Transfer in violation of Article 17, and such failure continues for more than thirty (30) days after written notice; or

20.1.3 Tenant fails to deliver evidence of insurance, an estoppel certificate, or financial statements to Landlord within the time periods required by Article 14 and Sections 23.1 and 32.19, respectively; or

20.1.4 Tenant fails to remove any lien or encumbrance arising out of any work performed, materials furnished or obligations incurred by Tenant within the time period required by Article 11; or

20.1.5 Tenant fails to increase the Letter of Credit as required pursuant to Section 26.6 below or elsewhere in this Lease, and such failure continues for more than ten (10) business days after written notice; or

20.1.6 Tenant fails to observe or perform any other agreement or covenant of this Lease, and such failure continues for more than thirty (30) days after written notice from Landlord; provided that if such failure cannot reasonably be cured within a thirty (30) day period, an Event of Default shall not be deemed to have occurred if Tenant promptly commences such cure within said period of thirty (30) days, thereafter diligently pursues and completes such cure; or

 

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20.1.7 Tenant (i) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy, insolvency or other debtors’ relief law of any jurisdiction, (ii) makes an assignment for the benefit of its creditors, or (iii) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to such person or entity or with respect to any substantial part of their respective property; or

20.1.8 Without consent by Tenant, a court or government authority enters an order, and such order is not vacated within ninety (90) days, (i) appointing a custodian, receiver, trustee or other officer with similar powers with respect to such person or entity or with respect to any substantial part of their respective property, or (ii) constituting an order for relief or approving a petition for relief or reorganization or arrangement or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy, insolvency or other debtors’ relief law of any jurisdiction, or (iii) ordering the dissolution, winding-up or liquidation of such person or entity; or

20.1.9 This Lease or any estate of Tenant hereunder is levied upon under any attachment or execution and such attachment or execution is not vacated within thirty (30) days.

20.2 Landlord’s Remedies Upon Occurrence of Event of Default. Even though Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession, and Landlord, in addition to all other rights and remedies, shall have the right described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). Acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord’s interest under this Lease shall not constitute a termination of Tenant’s right to possession unless written notice of termination is given by Landlord to Tenant.

20.3 Damages Upon Termination. If an Event of Default occurs, Landlord shall have the right at any time to give a written termination notice to Tenant and, on the date specified in such notice, Tenant’s right to possession shall terminate and this Lease shall terminate. Upon such termination, Landlord shall have the right to recover from Tenant:

20.3.1 The worth at the time of award of all unpaid Rent which had been earned at the time of termination;

20.3.2 The worth at the time of award of the amount by which all unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided;

20.3.3 The worth at the time of award of the amount by which all unpaid Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided; and

20.3.4 All other amounts necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform all of Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom.

The “worth at the time of award” of the amounts referred to in Sections 20.3.1 and 20.3.2 above shall be computed by allowing interest at the Interest Rate. The “worth at the time of award” of the amount

 

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referred to in Section 20.3.3 above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

20.4 Computation of Certain Rent for Purposes of Default. For the purpose of determining unpaid Rent under Sections 20.3.1, 20.3.2 and 20.3.3 above, the Rent reserved in this Lease shall be deemed to be the total Rent payable by Tenant under Articles 4 and 5 above, including the benefit to Tenant of the Rent Abatement Periods. For purposes of computing the amount of Rent hereunder that would have accrued after the time of award, the amount of increases in Escalation Rent shall be projected based upon the average rate of increase, if any, in Escalation Rent from the Commencement Date through the time of award.

20.5 Landlord’s Right to Cure Defaults. Upon the occurrence of an Event of Default, Landlord may, at its option, take any reasonable action to cure the Event of Default, without waiving its rights and remedies against Tenant or releasing Tenant from any of its obligations hereunder. Notwithstanding the preceding sentence, in the event of an emergency or other circumstance in which Tenant’s failure to take immediate action may result in injury to persons or damage to property, Landlord may, at its option, take any reasonable action to perform any obligation of Tenant, after first giving such prior notice to Tenant as may be reasonable under the circumstances. All reasonable out-of-pocket costs actually paid by Landlord in performing Tenant’s obligations as set forth in this Section 20.5 plus a supervision fee equal to five percent (5%) of the first $100,000 in costs of performing the obligation and one percent (1%) of costs in excess of $100,000, shall be paid by Tenant to Landlord within thirty (30) days after demand.

20.6 Remedies Cumulative. The remedies provided for in this Lease are in addition to all other remedies available to Landlord at law or in equity by statute or otherwise.

20.7 Landlord’s Default.

20.7.1 General. Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease unless Landlord fails to perform such obligation within thirty (30) days after the receipt by Landlord of written notice from Tenant specifying in detail Landlord’s alleged failure to perform; provided, however, if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be in default under this Lease if it commences such performance within such thirty (30) day period and thereafter diligently pursues the same to completion. Nothing contained in this Section 20.7.1 shall affect Tenant’s rights to self-help set forth in Section 20.7.2 below.

20.7.2 Tenant’s Cure Right. If Landlord fails to comply with any of Landlord’s obligations set forth in this Lease, including, without limitation, the failure to pay monetary sums owing to any party, which failure adversely affects Tenant’s ability to conduct business in the Premises, and such failure continues for eight (8) business days (or such lesser period of time as is reasonable under the circumstances), following written notice from Tenant to Landlord and any Encumbrancer, then, following an additional two (2) business days’ notice to Landlord and any Encumbrancer specifying that Tenant intends to exercise its self-help rights pursuant to this Section (provided, however, that such additional notice shall not be required in the event of an emergency), Tenant may, but shall not be obligated to, proceed to take the required action on behalf of, and for the account of, Landlord (including payment of monetary sums), and Landlord shall promptly reimburse Tenant for all reasonable costs and expenses paid or incurred on behalf of Landlord in connection with performing the obligations set forth herein plus a supervision fee equal to five percent (5%) of the first $100,000 in costs of performing or payment of the obligation and one percent (1%) of costs in excess of $100,000. Any work performed by Tenant pursuant

 

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to the foregoing shall be conducted in accordance with the terms of Article 10 below (excluding any requirement to obtain Landlord’s consent as provided in Article 10). Notwithstanding the foregoing, Landlord may deliver to Tenant a good faith written objection before the expiration of the required notice periods above, (i) setting forth with reasonable particularity Landlord’s reasons for its claim that Tenant is not entitled to exercise its rights pursuant to this Section and (ii) submitting the dispute to binding arbitration in accordance with Article 45 below. If and to the extent Landlord properly objects and submits the dispute to arbitration in accordance with the preceding sentence, then Tenant shall not exercise its rights pursuant to this Section unless and until the Arbitrator determines Tenant is entitled to exercise its rights pursuant to this Section.

20.7.3 Tenant’s Off-Set Rights. Subject to any express limitations set forth herein to the contrary, the remedies provided for in this Lease are in addition to all other remedies available to Tenant at law or in equity by statute or otherwise. Without limiting the generality of the foregoing, if Landlord fails to pay or reimburse Tenant when due any amount owed to Tenant under this Lease, including, without limitation: (i) Tenant fails to receive any Tenant Improvement Allowance (as defined in the Work Letter) or other amounts owed to Tenant in connection with construction of the Tenant Improvements or Ancillary Tenant Improvements after submission of all required documents and information as required by this Lease, either in connection with the initial Premises demised hereunder and/or any Expansion Premises and/or First Refusal Space and/or First Offer Space; (ii) Landlord fails to reimburse Tenant in connection with the exercise of Tenant’s rights pursuant to Section 20.7.2 above; (iii) Landlord fails to pay when due any brokerage commissions payable to Tenant’s Broker in connection with this Lease pursuant to that certain Commission Agreement dated September 15, 2010 by and between Landlord and Tenant’s Broker; or (iv) monetary damages awarded to Tenant in any arbitration proceeding or by a court in any legal proceeding, then Tenant shall have the right, in addition to all other remedies available to Tenant at law or in equity by statute or otherwise, to either off-set against Rent due under this Lease or otherwise abate payments of Base Rent, Escalation Rent or other Rent an amount equal to (a) the applicable amounts owed to Tenant plus (b) interest on the amounts owed to Tenant from the date incurred until such off-set occurs at the Interest Rate plus (c) a supervision fee equal to five percent (5%) of the first $100,000 off-set and one percent (1%) of amounts in excess of $100,000. Notwithstanding the foregoing, Tenant shall deliver notice to Landlord of Tenant’s intent to off-set against Rent under clauses (i) and (iii) of this Section 20.7.3 at least ten (10) business days prior to exercising its right of off-set. If Landlord delivers to Tenant a written good faith objection to Tenant’s right of off-set before the expiration of such notice period, (A) setting forth with reasonable particularity Landlord’s reasons for its claim that Tenant is not entitled to exercise its rights pursuant to this Section and (B) submitting the dispute to binding arbitration in accordance with Article 45 below, then Tenant shall not then be entitled to such off-set unless and until the Arbitrator determines that Tenant has the right to exercise such set-off rights (but Tenant may exercise such set-off rights as to any amount not in dispute). If Tenant prevails in the arbitration, the amount of the award (which shall include interest at the Interest Rate from the time of delivery of Tenant’s notice of its intent to off-set Rent until the date Tenant is entitled to off-set and attorneys’ fees and related costs) may be deducted by Tenant from the Rent next due and owing under this Lease. The foregoing two (2) sentences shall not apply with respect to a set-off following Tenant’s rightful exercise of its self-help rights pursuant to the terms of Section 20.7.2 above. Notwithstanding anything to the contrary contained above in this Section 20.7.3, Tenant shall have no right under this Section 20.7.3 to off-set from Rent payable by Tenant under this Lease, nor to proceed to arbitration as provided above in this Section 20.7.3, so long as an Event of Default of Tenant under this Lease has occurred and remains uncured.

21. Subordination, Attornment and Nondisturbance.

21.1 Subordination and Attornment. Landlord’s interest herein may be assigned as security at any time to any Encumbrancer. This Lease and all of Tenant’s rights hereunder shall be

 

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subject and subordinate to any and all Encumbrances, and to any and all advances made or hereafter made on the security thereof or Landlord’s interest therein, all without the necessity of any further instrument executed or delivered by or on the part of Tenant for the purpose of effectuating such subordination, unless an Encumbrancer requires in writing that this Lease be superior to its Encumbrance. Upon any termination or foreclosure (or any delivery of a deed in lieu of foreclosure) of any Encumbrance, Tenant, upon request, shall attorn to the Encumbrancer or purchaser or any successor thereto and shall recognize such party as Landlord hereunder; provided, however that Landlord shall have obtained for the benefit of Tenant from any Encumbrancer of a future Encumbrance a commercially reasonable non-disturbance agreement which provides, among other things, that so long as there is no Event of Default hereunder, this Lease shall not be terminated and Tenant shall be entitled to the benefit of each of the agreements, terms, covenants and conditions set forth herein. Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver, upon demand, such further commercially reasonable instruments evidencing such subordination or superiority of this Lease to any such Encumbrance, and such attornment, as may be required by Landlord or by the Encumbrancer of such Encumbrance. Landlord shall pay all costs and expenses charged by any Encumbrancer in connection with obtaining any subordination, non-disturbance and attornment agreement required to be delivered pursuant to this Section 21.1.

21.2 Mortgage Subordination. Notwithstanding anything to the contrary in this Article 21 or otherwise in this Lease, any Encumbrancer may at any time subordinate such mortgage or deed of trust to this Lease in whole or in part, without any need to obtain Tenant’s consent, by execution of a written document subordinating such mortgage or deed of trust to this Lease to the extent set forth in such document and thereupon this Lease shall be deemed prior to such mortgage or deed of trust to the extent set forth in such document without regard to this Lease, such mortgage or deed of trust, or their respective dates of execution, delivery and/or recording.

21.3 Notice to Encumbrancer. Tenant agrees to give any Encumbrancer, by certified mail, a copy of any notice of default served upon Landlord by Tenant, including pursuant to the Work Letter, provided that prior to such notice Tenant has received notice (by way of service on Tenant of a copy of an assignment of rents and leases, or otherwise) of the address of such Encumbrancer.

21.4 Rent Payment Direction. From and after Tenant’s receipt of written notice from a Encumbrancer or from a receiver appointed pursuant to the terms of such Encumbrancer’s Encumbrance (a “Rent Payment Notice”), Tenant shall pay all Rent under this Lease to such Encumbrancer or as such Encumbrancer shall direct in writing. Tenant shall comply with any Rent Payment Notice notwithstanding any contrary instruction, direction or assertion from Landlord. An Encumbrancer’s delivery to Tenant of a Rent Payment Notice, or Tenant’s compliance therewith, shall not be deemed to: (a) cause such Encumbrancer to succeed to or to assume any obligations or responsibilities of Landlord under this Lease, all of which shall continue to be performed and discharged solely by Landlord unless and until such Encumbrancer or a foreclosure sale purchaser succeeds to Landlord’s interest hereunder, or (b) relieve Landlord of any obligations under this Lease. Landlord irrevocably directs Tenant to comply with any Rent Payment Notice, notwithstanding any contrary direction, instruction, or assertion by Landlord. Tenant shall be entitled to rely on any Rent Payment Notice.

21.5 SNDA. Concurrently with its execution of this Lease, Tenant shall execute and deliver to Landlord the subordination, nondisturbance and attornment agreement (“SNDA”) in the form attached hereto as Exhibit F, and concurrently with its execution of this Lease, Landlord shall deliver such SNDA, executed by Landlord and Wells Fargo Bank, N.A. (“Existing Security Holder”). Landlord shall pay all costs and expenses charged by any Existing Security Holder in connection with obtaining any subordination, non-disturbance and attornment agreement required to be delivered pursuant to this Section 21.5.

 

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22. Sale or Transfer by Landlord; Lease Non-Recourse.

22.1 Release of Landlord on Transfer. Landlord may at any time transfer, in whole or in part, its right, title and interest under this Lease and in the Project, or any portion thereof. Landlord shall not transfer its interest in the Project without also transferring its interest in this Lease. Upon such a transfer, Landlord shall automatically be released from all further liability accruing under this Lease from and after such transfer, and, provided the transferee assumes Landlord’s obligations under this Lease, Tenant agrees to attorn to the transferee and to look solely to the transferee for the performance of Landlord’s obligations under this Lease after the date of transfer; provided, however, that if Tenant provides Landlord with a Letter of Credit or other security for Tenant’s performance of its obligations hereunder, and Landlord does not transfer, or provide a credit with respect to, such security to the grantee or transferee of Landlord’s interest in the Building, Landlord shall remain liable to Tenant for such security, and Tenant shall not be obligated to deliver additional security or a new Letter of Credit to the grantee or transferee of Landlord’s interest in the Project in substitution for the Letter of Credit not so transferred by Landlord.

22.2 Lease Nonrecourse to Landlord; Limitation of Liability. Any liability of Landlord (including, without limitation, Landlord’s direct or indirect partners, shareholders, members, affiliates, or agents, and the officers, directors, members and employees of Landlord or any such other person) (collectively, “Landlord Parties”) to Tenant under this Lease shall be limited to the equity interest of Landlord in the Project, and Tenant agrees to look solely to such interest for the recovery of any judgment, it being intended that Landlord and such other persons shall not be personally liable for any deficiency or judgment. In no event shall any of Landlord, Landlord Parties, Tenant or Tenant Parties be liable under any circumstances for any consequential damages or for injury or damage to, or interference with the other party’s business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill, or loss of use, however occurring.

23. Estoppel Certificate.

23.1 Tenant Estoppel. Tenant shall, from time to time, within fifteen (15) business days following request from Landlord, execute, acknowledge and deliver to Landlord an estoppel certificate, which shall be substantially in the form of Exhibit Q attached hereto, indicating therein any exceptions thereto that may exist at that time, and shall also contain any other factual information reasonably requested by Landlord or Landlord’s prospective lender or mortgagee. Any such certificate may be relied upon by, and shall upon Landlord’s request be addressed to, any such prospective lender or purchaser. If Tenant fails to execute, acknowledge and deliver any such estoppel certificate within such fifteen (15) business day period, Landlord may deliver a written notice (the “Estoppel Reminder Notice”) to Tenant stating that Tenant has failed to deliver such estoppel certificate within the required time period. Failure of Tenant to execute, acknowledge and deliver an estoppel certificate to Landlord within five (5) business days after delivery of an Estoppel Reminder Notice, shall, at Landlord’s option, constitute (i) an acknowledgment by Tenant that statements included in good faith by Landlord in the estoppel certificate are true and correct or (ii) an Event of Default.

23.2 Landlord Estoppel. Landlord shall, from time to time, within fifteen (15) business days following request from Tenant, execute, acknowledge and deliver to Tenant an estoppel certificate, (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (b) acknowledging that to Landlord’s actual knowledge without duty of investigation there are not any uncured defaults on the part of Tenant or Landlord hereunder, or specifying such defaults if any are claimed, and (c) setting forth such further factual information with respect to the status of this Lease or the Premises as may reasonably be

 

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requested thereon. Any such certificate may be relied upon by, and shall upon Tenant’s request be addressed to, any parties reasonably requested by Tenant. If Landlord fails to execute, acknowledge and deliver any such estoppel certificate within such fifteen (15) business day period, Tenant may deliver an Estoppel Reminder Notice to Landlord stating that Landlord has failed to deliver such estoppel certificate within the required time period. Failure of Landlord to execute, acknowledge and deliver an estoppel certificate to Tenant within five (5) business days after delivery of an Estoppel Reminder Notice, shall, at Tenant’s option, constitute (i) an acknowledgment by Landlord that statements included in good faith by Tenant in the estoppel certificate are true and correct and (ii) a default by Landlord under this Lease without additional cure periods.

24. No Light, Air, or View Easement. Tenant agrees that no diminution or shutting off of light, air or view by any structure which may be erected (whether or not by Landlord) on property adjacent to the Building shall in any way affect this Lease, entitle Tenant to any reduction of Rent hereunder or result in any liability of Landlord to Tenant.

25. Holding Over. Any holding over after the expiration or earlier termination of this Lease with the written consent of Landlord shall be a tenancy from month to month on the terms set forth herein. Any holding over after the expiration or earlier termination of this Lease without the written consent of Landlord shall be a tenancy at sufferance on all the terms set forth herein, except that the Base Rent for the first three (3) months of such holdover shall be an amount equal to one hundred twenty-five percent (125%) of the Base Rent payable by Tenant immediately prior to such holding over, and thereafter an amount equal to one hundred fifty percent (150%) of the Base Rent payable by Tenant immediately prior to such holding over. Acceptance by Landlord of Rent after the expiration or termination of this Lease shall not constitute a consent by Landlord to any such tenancy from month to month or result in any other tenancy or any renewal of the term hereof. The provisions of this Article 25 are in addition to, and do not affect, Landlord’s right of re entry or other rights hereunder or provided by Applicable Laws.

26. Letter Of Credit.

26.1 Delivery of Letter of Credit. Within five (5) business days after the execution and delivery of this Lease, Tenant shall deliver to Landlord, as protection for the full and faithful performance by Tenant of all of its obligations under this Lease and for all losses and damages Landlord may suffer as a result of any breach or default by Tenant under this Lease, an irrevocable and unconditional negotiable standby letter of credit (the “Letter of Credit”) in the form attached hereto as Exhibit G and containing the terms required herein, payable upon presentation to an operating retail branch located in San Francisco, California, running in favor of Landlord and issued by a bank with a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, under the supervision of the Superintendent of Banks of the State of California, or a national banking association, in an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000,00) (the “Letter of Credit Amount”). Landlord agrees that Wells Fargo Bank, N.A. meets all the requirements set forth in this Lease for the bank issuing the Letter of Credit as of the Lease Date and if selected by Tenant is deemed approved by Landlord to issue the Letter of Credit. The Letter of Credit shall (a) be “callable” at sight, irrevocable and unconditional, (b) be maintained in effect, whether through renewal or extension, for the period from the Lease Date and continuing until the date (the “LC Expiration Date”) that is sixty (60) days after the expiration of the Term (provided, however, that, if Landlord terminates this Lease as a result of an Event of Default by Tenant pursuant to Section 20.3 above, and thereafter proceeds to bring an action or proceeding for damages pursuant to Section 1951.2 of the California Civil Code, then the LC Expiration Date shall be extended to the date that is sixty (60) days after the final adjudication of such action or proceeding (after all appeals and the expiration of time to appeal) of a court of competent jurisdiction), and Tenant shall

 

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deliver a new Letter of Credit, or certificate of renewal or extension amendment to Landlord at least sixty (60) days prior to the expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the part of Landlord, (c) be fully assignable by Landlord, its successors and assigns, upon delivery of any assignment documents required by the issuing bank and payment by Landlord of any charge, fee or premium charged by the issuing bank in connection with such assignment, (d) permit partial draws and multiple presentations and drawings, and (e) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (2007-Rev), International Chamber of Commerce Publication #600, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. In addition to the foregoing, the bank issuing the Letter of Credit (the “Bank”) shall be acceptable to Landlord, in Landlord’s reasonable discretion. If Landlord notifies Tenant in writing that the Bank (w) no longer maintains an operating retail branch located in San Francisco, California, (x) no longer has a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, (y) is no longer under the supervision of the Superintendent of Banks of the State of California or a national banking association, or (z) has filed bankruptcy or reorganization proceedings or is placed into a receivership or conservatorship, then Tenant shall have thirty (30) days to provide Landlord with a substitute Letter of Credit complying with all of the requirements of this Article 26. If Tenant does not so provide Landlord with a substitute Letter of Credit within such thirty (30) day period, then Landlord, or its then managing agent, shall have the right to draw upon the then current Letter of Credit. In addition to Landlord’s rights to draw upon the Letter of Credit in Section 26.4 below and as otherwise described in this Article 26, Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit if any of the following shall have occurred or be applicable: (A) Tenant has filed a voluntary petition under any Bankruptcy Code, (B) an involuntary petition has been filed against Tenant under any Bankruptcy Code, or (C) the Bank has notified Landlord that the Letter of Credit will not be renewed or extended through the LC Expiration Date, and Tenant fails to deliver a new Letter of Credit or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the Letter of Credit then held by Landlord. The Letter of Credit will be honored by the Bank regardless of whether Tenant disputes Landlord’s right to draw upon the Letter of Credit.

26.2 Transfer of Letter of Credit. The Letter of Credit shall provide that Landlord, its successors and assigns, may, at any time and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the Letter of Credit to another party, person or entity; provided, that, in each case, Landlord provides Tenant written notice of such transfer. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part, to the transferee and provide written notice of such transfer to Tenant and upon such transfer and notice Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor arising after such transfer, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new landlord. In connection with any such transfer of the Letter of Credit, Landlord shall execute and submit to the Bank such applications, documents and instruments, each in commercially reasonable form, as may be necessary to effectuate such transfer, and Landlord shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.

26.3 In General. If, (a) as a result of any drawing by Landlord on the Letter of Credit in which the proceeds are applied towards a default or breach of Tenant in accordance with this Article 26, the amount of the Letter of Credit shall be less than the Letter of Credit Amount or (b) the Letter of Credit Amount is required to be increased due to an increase in the Adjusted Rentable Square Feet of the Premises or (c) the Letter of Credit Amount is required to be increased as otherwise required under Section 26.6, Tenant shall, within ten (10) business days following notice that Landlord has drawn down the Letter of Credit with respect to clause (a) or within the applicable time frame provided elsewhere in this Lease with respect to clauses (b) and (c), either provide Landlord with a cash security deposit equal to

 

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such difference or provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total Letter of Credit Amount), and any such additional (or replacement) letter of credit shall comply with all of the provisions of this Article 26. If Tenant fails to comply with the foregoing, then, notwithstanding anything to the contrary contained in Section 20.1 above, the same shall constitute an incurable default by Tenant under this Lease (without the need for any additional notice and/or cure period). Tenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, Landlord will accept a renewal thereof (such renewal letter of credit to be in effect and delivered to Landlord, as applicable, not later than thirty (30) days prior to the expiration of the Letter of Credit), which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Landlord in its reasonable discretion. However, if the Letter of Credit is not timely renewed, or if Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Article 26, Landlord shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this Article 26, and the proceeds of the Letter of Credit may be applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due (subject to applicable notice and cure periods) and/or to pay for all losses and damages that Landlord has suffered as a result of any breach or default by Tenant under this Lease (subject to applicable notice and cure periods), including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code. Any unused proceeds need not be segregated from Landlord’s other assets. Landlord agrees to pay to Tenant within thirty (30) days after the LC Expiration Date the amount of any proceeds of the Letter of Credit received by Landlord and not applied against any Rent payable by Tenant under this Lease that was not paid when due or used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease (including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code); provided, however, that if prior to the LC Expiration Date a voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such payment in the amount of the unused Letter of Credit proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.

26.4 Application of Letter of Credit. Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the Letter of Credit upon the occurrence of any breach or default on the part of Tenant under this Lease. If Tenant shall breach any provision of this Lease or otherwise be in default hereunder, in each case beyond applicable notice and cure periods, Landlord may, but without obligation to do so, and without notice to Tenant, draw upon the Letter of Credit, in part or in whole, to cure any breach or default of Tenant and/or to compensate Landlord for any and all damages of any kind or nature sustained resulting from Tenant’s breach or default, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code. The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any Applicable Laws, it being intended that Landlord shall not first be required to proceed against the Letter of Credit, and the use, application or retention of the Letter of Credit shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a “draw” by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw upon the Letter of Credit; provided, however, that nothing contained herein shall be deemed to prohibit Tenant from

 

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challenging the validity or amount of such draw following the occurrence thereof. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees and acknowledges that (i) the Letter of Credit constitutes a separate and independent contract between Landlord and the Bank, (ii) Tenant is not a third party beneficiary of such contract, (iii) Tenant has no property interest whatsoever in the Letter of Credit, and (iv) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise.

26.5 Security Deposit. Any proceeds drawn under the Letter of Credit and not applied as set forth above shall be held by Landlord as a security deposit (the “Deposit”). No trust relationship is created herein between Landlord and Tenant with respect to the Deposit, and Landlord shall not be required to keep the Deposit separate from its general accounts. The Deposit shall be held by Landlord as security for the faithful performance by Tenant of all of the provisions of this Lease to be performed or observed by Tenant. If Tenant fails to pay any Rent, or otherwise defaults with respect to any provision of this Lease, Landlord may (but shall not be obligated to), and without prejudice to any other remedy available to Landlord, use, apply or retain all or any portion of the Deposit for the payment of any Rent in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant’s default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby, including, without limitation, prospective damages and damages recoverable pursuant to California Civil Code Section 1951.2. Tenant waives the provisions of California Civil Code Section 1950.7, or any similar or successor laws now or hereinafter in effect, that restrict Landlord’s use or application of the Deposit, or that provide specific time periods for return of the Deposit. Without limiting the generality of the foregoing, Tenant expressly agrees that if Landlord terminates this Lease due to an Event of Default or if Tenant terminates this Lease in a bankruptcy proceeding, Landlord shall be entitled to hold the Deposit until the amount of damages recoverable pursuant to California Civil Code Section 1951.2 is finally determined. If Landlord uses or applies all or any portion of the Deposit as provided above, Tenant shall within ten (10) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the Deposit to the full amount thereof, and Tenant’s failure to do so shall, at Landlord’s option, be an Event of Default under this Lease. At any time that Landlord is holding proceeds of the Letter of Credit pursuant to this Section 26.5, Tenant may deposit a Letter of Credit that complies with all requirements of this Article 26, in which event Landlord shall return the Deposit to Tenant within ten (10) days after receipt of the Letter of Credit. If Tenant performs all of Tenant’s obligations hereunder, the Deposit, or so much thereof as has not previously been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlord’s option, to the last assignee, if any, of Tenant’s interest hereunder) within sixty (60) days following the later of the expiration of the Term or Tenant’s vacation and surrender of the Premises in accordance with the requirements of this Lease. Landlord’s return of the Deposit or any part thereof shall not be construed as an admission that Tenant has performed all of its obligations under this Lease. Upon termination of Landlord’s interest in this Lease, if Landlord transfers the Deposit (or the amount of the Deposit remaining after any permitted deductions) to Landlord’s successor in interest, and thereafter notifies Tenant of such transfer and the name and address of the transferee, then Landlord shall be relieved of any further liability with respect to the Deposit.

26.6 Increase in Letter of Credit Amount. The Letter of Credit Amount shall be increased as provided in this Section 26.6. On or before the thirtieth (30th) day following the end of each calendar quarter, commencing with the first full calendar quarter following the Commencement Date and continuing until the earlier of (A) last full calendar quarter preceding the fifth (5th) anniversary of the Commencement Date and (B) the issuance of stock of Tenant or any Tenant Subsidiary in a public offering or sale on a public stock exchange of Tenant’s or any Tenant Subsidiary’s stock, Tenant shall

 

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provide a certification that it has satisfied the Minimum Credit Test (defined below) for the preceding calendar quarter. Such quarterly certification shall be accompanied by Tenant’s financial statements for the immediately preceding calendar quarter certified as accurate, complete and correct in all material respects by the President or Chief Financial Officer of Tenant. If, in any quarter, Tenant has not satisfied the Minimum Credit Test, the Letter of Credit Amount shall be increased by Two Million Dollars ($2,000,000.00). Within twenty (20) business days from Tenant’s failure to satisfy the Minimum Credit Test, Tenant shall deliver to Landlord a new Letter of Credit (or amendment to the existing Letter of Credit) to increase the stated amount of the Letter of Credit to the increased Letter of Credit Amount as required by the preceding sentence and in compliance with Section 26.3 above. Notwithstanding the foregoing, if Tenant delivers a certification (accompanied by Tenant’s financial statements and twelve-month operating statement projections certified as accurate, complete and correct in all material respects by the President or Chief Financial Officer of Tenant) certifying that it has met the Minimum Credit Test for any two (2) consecutive calendar quarters after any calendar quarter in which Tenant fails to satisfy the Minimum Credit Test, (i) the Letter of Credit Amount shall be reduced by Two Million Dollars ($2,000,000.00), (ii) Tenant may deliver to Landlord a new Letter of Credit (or amendment to the existing Letter of Credit) to decrease the amount thereof to equal such new Letter of Credit Amount, and (iii) if Tenant delivers to Landlord a new Letter of Credit in accordance with the preceding clause (ii), then within ten (10) days after receipt of such new Letter of Credit, Landlord shall return to Tenant the existing Letter of Credit. Thereafter, if Tenant again fails to satisfy the Minimum Credit Test, the Letter of Credit shall again be increased in accordance with this Section 26.6.

For purposes hereof, the following terms shall have the meanings specified:

26.6.1 “Minimum Credit Test” shall mean at any date of determination (a) Tenant’s and Tenant Subsidiaries’ cash and cash equivalent investments shall equal at least Four Hundred Million Dollars ($400,000,000.00) and (b) the ratio of the Current Assets of Tenant to the Current Liabilities of Tenant shall be no less than 3 to 1.

26.6.2 “Tenant Subsidiaries” shall mean any subsidiary of Tenant for which the business and activities of such subsidiary are carried on the books of Tenant and reported on Tenant’s consolidated financial statements and presented on a United States generally accepted accounting principles basis.

26.6.3 “Current Assets” shall mean at any date of determination (a) cash available for current operations and items that are cash equivalents, (b) inventories of merchandise, raw materials, goods in progress, finished goods, operating supplies and ordinary maintenance material and parts; (c) trade accounts and notes; (d) receivables from officers, employees, affiliates and others, if collectible in the ordinary course of business within one year, (e) installments of deferred accounts and notes if they conform generally to normal trade practices and terms within Tenant’s business; (f) marketable securities representing the investment of cash available for current operations, including investments in debt and equity securities classified as trading securities; and (g) prepaid insurance, interest, rents, and taxes, unused royalties, paid advertising services not yet received, and operating supplies, and as otherwise determined in accordance with FASB Codification of Accounting Standards Sections 210-10-45-1 to 210-10-45-4.

26.6.4 “Current Liabilities” shall mean at any date of determination the estimated or accrued amounts that are expected to be required to cover expenditures within the ensuing twelve (12) months for known obligations, including notes payable, dividends and interest payable, deposits, accounts payable, accrued royalties, accrued salaries and wages, accrued employee benefits, and sales and income taxes payable, and as otherwise determined in accordance with FASB Codification of

 

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Accounting Standards Sections 210-10-45-5 to 210-10-45-12, but excluding deferred revenues (namely, collections received in advance of the delivery of goods or performance of services).

26.7 Reduction in Letter of Credit. If, on the fifth (5th) anniversary of the Commencement Date, (a) the stock of Tenant or any Tenant Subsidiary has been issued in a public offering and is sold on a public stock exchange, (b) the Minimum Credit Test is satisfied as of such date and (c) no Event of Default of Tenant under this Lease has occurred and is continuing, then (i) the Letter of Credit Amount (as may have been previously increased in accordance with Articles 33, 34 and/or 35) shall be reduced by fifty percent (50%) of the then current Letter of Credit Amount for the remaining term of the Lease, subject to subsequent increases in accordance with Articles 33, 34 and/or 35, (ii) the term “Letter of Credit Amount” shall be deemed to be such reduced amount for all purposes of this Lease, (iii) Tenant may deliver to Landlord a new Letter of Credit (or amendment to the existing Letter of Credit) to decrease the stated amount thereof to equal such new Letter of Credit Amount, (iv) if Tenant delivers to Landlord a new Letter of Credit in accordance with the preceding clause (iii), then within ten (10) days after receipt of such new Letter of Credit, Landlord shall return to Tenant the existing Letter of Credit and (v) the requirements set forth in Section 26.6 above shall no longer be applicable.

27. Waiver. The failure of either party to object to or to assert any remedy by reason of the other party’s failure to perform or observe any covenant or term hereof or its failure to assert any rights by reason of the happening or non happening of any condition hereof shall not be deemed a waiver of its right to assert and enforce any remedy it may have by reason of such failure on the part of the other party or the happening or non happening of such condition or a waiver of its rights to enforce any of its rights by reason of any subsequent failure of the other party to perform or observe the same or any other term or covenant or by reason of the subsequent happening or non happening of the same or any other condition. No custom or practice which may develop between the parties hereto during the Term shall be deemed a waiver of, or in any way affect, the right of either party to insist upon performance and observance by the other party in strict accordance with the terms hereof. The acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding failure of Tenant to perform or observe any term or covenant of this Lease, other than the failure of Tenant to pay the particular Rent so accepted, irrespective of any knowledge on the part of Landlord of such preceding failure at the time of acceptance of such Rent, and no endorsement or statement on any check or any letter accompanying any check or payment of Rent shall be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such installment or payment of Rent or pursue any other remedies available to Landlord. No receipt of money by Landlord from Tenant after the termination of this Lease or Tenant’s right of possession of the Premises shall reinstate, continue or extend the Term. Receipt or acceptance of payment from anyone other than Tenant, including a Transferee, is not a waiver of any breach of Article 17, and Landlord may accept such payment on account of the amount due without prejudice to Landlord’s right to pursue any remedies available to Landlord.

28. Notices; Tenant’s Agent for Service. Except in circumstances in which oral notice is expressly permitted in this Lease, all notices, demands, requests or other communications that may be or are required to be given by either party to the other hereunder shall be in writing. All notices by Landlord to Tenant shall be sufficiently given, made or delivered if hand delivered (which may be by messenger service) to the address for notices set forth in the Basic Lease Information, or if sent by United States certified return receipt requested, postage prepaid, or by a reputable overnight courier service addressed to Tenant at Tenant’s address for notices set forth in the Basic Lease Information. All notices by Tenant to Landlord shall be sufficiently given, made or delivered if hand delivered (which may be by messenger service) to Landlord, or sent by United States certified mail, return receipt requested, postage prepaid, or by a reputable overnight courier service addressed to Landlord at Landlord’s addresses for notices specified in the Basic Lease Information. Each notice shall be deemed received upon the earlier of receipt

 

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or three (3) days after the date it was mailed as provided in this Article 28, if sent by certified mail, or, one (1) business day after delivery to the overnight courier specifying “next business day” delivery, or upon the date delivery is made; provided, however, that any refusal to accept delivery shall be deemed to constitute receipt. Any approval, consent or other notice under this Lease may be given on behalf of a party by the attorney for such party.

29. Authority.

29.1.1 If Tenant is a corporation (or other business organization), Tenant and each person executing this Lease on behalf of Tenant represents and warrants to Landlord that (i) Tenant is duly incorporated (or organized) and validly existing under the laws of its state of incorporation (or organization), (ii) Tenant is qualified to do business in California, (iii) Tenant has full right, power and authority to enter into this Lease and to perform all of Tenant’s obligations hereunder, and (iv) the execution, delivery and performance of this Lease has been duly authorized by Tenant and each person signing this Lease on behalf of the Tenant is duly and validly authorized to do so.

29.1.2 If Landlord is a corporation (or other business organization), Landlord and each person executing this Lease on behalf of Landlord represents and warrants to Tenant that (i) Landlord is duly incorporated (or organized) and validly existing under the laws of its state of incorporation (or organization), (ii) Landlord is qualified to do business in California, (iii) Landlord has full right, power and authority to enter into this Lease and to perform all of Landlord’s obligations hereunder, and (iv) the execution, delivery and performance of this Lease has been duly authorized by Landlord and each person signing this Lease on behalf of the Landlord is duly and validly authorized to do so.

30. Parking; Transportation.

30.1 Lease of Parking Spaces. Tenant shall be obligated to lease the number of reserved parking spaces in the Parking Garage as specified in the Basic Lease Information as generally shown on Exhibit K and as may be increased as provided below in this Section 30.1 (“Parking Spaces”) throughout the Term and any extension thereof, subject, however, to the provisions of this Article 30. Landlord and Tenant shall agree upon a site plan depicting the exact number and location of the Parking Spaces to be leased by Tenant and such site plan shall be attached to the Confirmation of Lease Term. The parking charges for such Parking Spaces (a) shall be One Hundred Twenty Dollars ($120.00) per parking space per month during the initial Term, and (b) shall be determined as provided in Section 3.4 during the Extension Term (the “Parking Charge”). The Parking Charge shall be subject to increase from time to time solely as set forth above and by the amount that any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority allocable to each calendar year exceeds the amount of such taxes allocable to the Base Year. The increase in the Parking Charge per Parking Space shall be calculated by dividing such increase by the total number of parking spaces within the Parking Garage. Parking Charges shall constitute Rent hereunder and shall be payable in advance, at the same time and in the same manner as Base Rent (but shall not be subject to abatement as provided in Section 4.5 above). From time to time throughout the Term, upon thirty (30) days prior written notice, Tenant may reduce the number of Parking Spaces leased by Tenant, in whole or in part. As a condition to the right to reduce the number of Parking Spaces leased by Tenant, Tenant, at its sole costs, shall within such thirty-day period relocate any gate and/or security fence installed by Tenant pursuant to Section 30.2 to a location and in a configuration acceptable to Landlord. Any Parking Spaces which Tenant had the right to lease (i.e. a total number of Parking Spaces calculated by dividing the Adjusted Rentable Square Feet of the Premises by One Thousand Eight Hundred (1,800)), but which Tenant elects not to lease, shall be referred to herein as “Unused Parking Spaces.” Landlord shall have the right to lease any Unused Parking Spaces to any third party. Upon Tenant’s request, from time to

 

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time, Landlord shall inform Tenant how many Unused Parking Spaces have not been currently leased to third parties. Tenant shall have the right, by delivering written notice(s) to Landlord from time to time, to lease any Unused Parking Spaces which Landlord has not leased to third parties at the then current Parking Charge. Subject to availability, Tenant shall also have the right to rent on a month-to-month basis additional unreserved parking spaces in the Parking Garage at the rate of the then current Parking Charge. The Parking Spaces shall be available to Tenant twenty-four (24) hours a day, seven (7) days a week. Upon exercise of any right to expand the Premises pursuant to Articles 33, 34 and/or 35 with respect to the Suite 500 Premises or Suite 600, Tenant shall be obligated to rent a number of parking spaces within the area of the Parking Garage located on the fifth or sixth floor thereof, as applicable, and adjacent to such Expansion Premises calculated by multiplying the total number of parking spaces located in such area of the Parking Garage by a ratio, the numerator of which is the Adjusted Rentable Square Feet of the applicable Expansion Premises, and the denominator of which is the total Adjusted Rentable Square Feet of the Suite 500 Premises or Suite 600, as applicable (the “Suite 500/600 Parking Spaces”). The Suite 500/600 Parking Spaces shall be leased on a reserved basis and at the rate of the Parking Charge. Upon Tenant’s exercise of either Extension Option, Tenant shall have the right, but not the obligation, to lease the maximum number of Parking Spaces as specified in the Basic Lease Information regardless of whether or not Tenant elected prior to such exercise of an Extension Option to lease fewer than such maximum number of Parking Spaces (or to reduce the number of Parking Spaces leased by Tenant) but provided that any additional number of parking spaces required by Tenant have not been previously leased to third parties. Tenant shall make such election in Tenant’s notice to Landlord exercising the applicable Extension Option. After making such election, Tenant shall again have the same rights as set forth in this Section 30.1 to either reduce the number of Parking Spaces Tenant leases or to lease any Unused Parking Spaces. At no time shall the total number of Parking Spaces leased by Tenant pursuant to this Section 30.1 together with the total number of parking spaces that are eliminated by the use of the Parking Garage Roof Space pursuant to Article 37 exceed the maximum number of Parking Spaces as provided in the Basic Lease Information (i.e. a total number of Parking Spaces calculated by dividing the Adjusted Rentable Square Feet of the Premises by One Thousand Eight Hundred (1,800)).

30.2 Tenant’s Right to Secure Parking. Subject to compliance with Applicable Law and obtaining any necessary approvals and permits, Tenant, at its sole cost and expense, shall have the right to install a gate and security fence to secure a portion of the Parking Spaces located on the roof of the Parking Garage in the area along the Eighth Street side of the Building. Tenant shall obtain Landlord’s prior written consent to the design and installation of the gate and fence and comply with all of the other provisions of Article 10 with respect to the construction and installation of the same. Tenant shall pay all Parking Charges attributable to any parking spaces that are eliminated to accommodate installation of the gate and fence on the same terms and in the same manner as provided in Section 30.1 above. If such gate and fence are installed pursuant to the terms of this Section 30.2, at Tenant’s sole cost and expense and without affecting Tenant’s obligations to pay Parking Charges, Tenant shall be permitted to contract for valet service from the Eighth Street entrance to the Premises for parking within such gated area subject to Landlord’s reasonable approval of the terms and conditions of such services, including weight, safety and maintenance concerns.

30.3 Use of the Parking Spaces. The use of the Parking Spaces shall be for the parking of motor vehicles used by Tenant or Tenant Parties, and shall be subject to Applicable Laws. Parking Spaces may not be assigned or transferred separate and apart from this Lease but may be assigned, sublet or licensed in connection with any Transfer permitted hereunder and fifty percent (50%) of the parking fees, rent or other consideration paid by any Transferee for such Parking Space in excess of the Parking Charge for such Parking Spaces shall be paid by Tenant to Landlord. Upon the expiration or earlier termination of this Lease, Tenant’s rights with respect to all leased Parking Spaces shall immediately terminate. If Tenant’s rights to Parking Spaces terminate, or if Tenant relinquishes its rights

 

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to any parking, Tenant shall not have any right to any such terminated or relinquished parking for the remainder of the Term, except as expressly set forth herein, and Landlord shall have no obligation to procure substitute parking for Tenant.

30.4 Management of Parking Garage. The Parking Garage shall be subject to the reasonable control and management of Landlord, which may, from time to time, establish, modify and enforce reasonable rules and regulations with respect thereto not in conflict with the express terms of this Lease. If parking spaces are not assigned pursuant to the terms of this Lease, Landlord reserves the right at any time to assign parking spaces, and Tenant shall thereafter be responsible to insure that Tenant Parties park in the designated areas. Landlord reserves the right to change, reconfigure, or rearrange any portion of the Parking Garage (other than the Suite 500/600 Parking Spaces if Tenant has expanded into the applicable Expansion Premises and that portion of the Parking Garage controlled by Tenant pursuant to Section 30.2 above) to reconstruct or repair any portion of the Parking Garage, and to restrict or eliminate the use of any portion of the Parking Garage (other than the Suite 500/600 Parking Spaces if Tenant has expanded into the applicable Expansion Premises and that portion of the Parking Garage controlled by Tenant pursuant to Section 30.2 above) and do such other acts in and to such areas as Landlord deems necessary or desirable, without such actions being deemed an eviction of Tenant or a disturbance of Tenant’s use of the Premises, and without Landlord being deemed in default hereunder, provided that Landlord shall use commercially reasonable efforts (without any obligation to engage overtime labor or commence any litigation) to minimize the extent and duration of any resulting interference with Tenant’s parking. Landlord may, in its sole discretion, convert the Parking Garage to a reserved and/or controlled parking facility, or operate the Parking Garage (or a portion thereof) as a tandem, attendant assisted and/or valet parking facility. Landlord may delegate its responsibilities with respect to the Parking Garage to a parking operator, in which case such parking operator shall have all the rights of control and management granted to Landlord. In such event, Landlord may direct Tenant, in writing, to enter into a parking agreement directly with the operator of the Parking Garage, which parking agreement shall be subject to the reasonable approval of Tenant, and to pay some or all of the Parking Charges directly to such operator.

30.5 Abatement. Notwithstanding anything to the contrary set forth herein, if Tenant is prevented from using all or any parking stall(s) in the Parking Garage for any reason whatsoever, then the Parking Charge shall be proportionately abated based upon the number of parking stalls Tenant is prevented from using and the length of time Tenant is prevented for using such stalls. If Tenant is prevented from using all or any parking stalls in the Parking Garage for any reason whatsoever, then Landlord shall use commercially reasonable efforts to assist Tenant in locating alternate parking.

30.6 Shuttle Service. Landlord, as part of Operating Expenses, shall provide shuttle service to and from BART and Caltrain from 7:00 a.m. to 7:00 p.m. Monday through Friday (excluding Building Holidays). Two (2) buses shall operate during the hours of 7:00 a.m. and 9:00 a.m. and during the hours of 4:00 p.m. and 6:00 p.m. If Tenant requires additional shuttle service continuing until 12:00 a.m. on Monday through Friday (excluding Business Holidays), Tenant shall pay for such extra service, which is currently Sixty Dollars ($60.00) per hour for a 21 passenger shuttle bus. Landlord shall not be entitled to any mark up costs on such additional charges to Tenant. To the extent Tenant elects to operate its own shuttle service (“Tenant Shuttle”), the same shall have no impact on Tenant’s obligation to pay Escalation Rent hereunder.

31. Communications and Computer Lines.

31.1 Tenant’s Rights. Subject to the terms and conditions of this Article 31, and at no additional cost or expense to Tenant, Tenant and/or Tenant’s telecommunications provider shall be permitted access to the Building’s riser system or alternative space in the Building (which alternative

 

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space shall be reasonably acceptable to Tenant and its telecommunications provider) for the installation of telecommunications cabling and other equipment, and, in order to install, maintain, operate and remove telecommunications cabling or other equipment to the Premises. AT&T has installed telecommunications service to the Building terminating in the Building’s MPOE room. Landlord shall allow access to the Building (including the Building’s riser system and MPOE room) to all other telecommunications carriers requested by Tenant (including ATT, MFS (Verizon), Time Warner, Above Net Comm, and Wi Line) for the installation of telecommunications service, at no additional cost to Tenant. Tenant may install, maintain, replace, remove or use any communications or computer wires, cables and related devices (collectively the “Lines”) at the Building in or serving the Premises, provided: (a) Tenant shall obtain Landlord’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, and use an experienced and qualified contractor approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and comply with all of the other provisions of Article 10, (b) any such installation, maintenance, replacement, removal or use shall be coordinated with any riser management company designated by Landlord and shall comply with all Applicable Laws and good work practices, and shall not interfere with the use of any then existing Lines at the Building, (c) an acceptable number of spare Lines and space for additional Lines shall be maintained for existing and future occupants of the Building, as determined in Landlord’s reasonable discretion, (d) if Tenant at any time uses any equipment that may create an electromagnetic field exceeding the normal insulation ratings of ordinary twisted pair riser cable or cause radiation higher than normal background radiation, the Lines therefor (including riser cables) shall be appropriately insulated to prevent such excessive electromagnetic fields or radiation, (e) as a condition to permitting the installation of new Lines, Landlord may require that Tenant remove existing Lines located in or serving the Premises and installed by or on behalf of Tenant or any Tenant Party, (f) Tenant’s rights shall be subject to the rights of any regulated telephone company, and (g) Tenant shall pay all costs in connection therewith. Landlord reserves the right to require that Tenant remove any Lines located in or serving the Premises which are installed in violation of these provisions, or which are at any time in violation of any Applicable Laws, within thirty (30) days after notice.

31.2 Landlord’s Rights. Landlord may (but shall not have the obligation to): (a) install new Lines at the Building, (b) create additional space for Lines at the Building, and (c) reasonably direct, monitor and/or supervise the installation, maintenance, replacement and removal of, the allocation and periodic re-allocation of available space (if any) for, and the allocation of excess capacity (if any) on, any Lines now or hereafter installed at the Building by Landlord, Tenant or any other party (but Landlord shall have no right to monitor or control the information transmitted through such Lines); provided, that, in each case, such actions shall not have a material adverse effect on Tenant’s existing use of Lines or business at the Premises. Such rights shall not be in limitation of other rights that may be available to Landlord pursuant to this Lease or by law or otherwise.

31.3 Removal; Line Problems. Notwithstanding anything to the contrary contained in Article 10, Tenant shall remove all Lines installed by or for Tenant within or serving the Premises upon expiration or sooner termination of this Lease, unless Landlord notifies Tenant at least thirty (30) days prior to expiration of this Lease or within ten (10) days after the earlier termination of this Lease that Tenant may leave all or any portion of the Lines in place. Any Lines not required to be removed pursuant to this Section 31.3 shall, at Landlord’s option, become the property of Landlord (without payment by Landlord). If Tenant fails to remove such Lines as required hereunder, Landlord may, after five (5) days’ written notice to Tenant, remove such Lines or remedy such other violation, at Tenant’s expense (without limiting Landlord’s other remedies available under this Lease or Applicable Laws). Landlord shall have no liability for damages arising from, and Landlord does not warrant that the Tenant’s use of any Lines will be free from the following (collectively called “Line Problems”): (a) any eavesdropping or wire tapping by unauthorized parties, (b) any failure of any Lines to satisfy Tenant’s requirements, or (c) any shortages, failures, variations, interruptions, disconnections, loss or damage caused by the installation,

 

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maintenance, replacement, use or removal of Lines, by any failure of the environmental conditions or the power supply for the Building to conform to any requirements for the Lines. Under no circumstances shall any Line Problems be deemed an actual or constructive eviction of Tenant, render Landlord liable to Tenant for abatement of Rent, or relieve Tenant from performance of Tenant’s obligations under this Lease. In addition, in no event shall Landlord be liable for damages by reason of loss of profits, business interruption or other consequential damage arising from any Line Problems.

32. Miscellaneous.

32.1 No Joint Venture. This Lease does not create any partnership or joint venture or similar relationship between Landlord and Tenant.

32.2 Successors and Assigns. Subject to the provisions of Article 17 regarding assignment, all of the provisions, terms, covenants and conditions contained in this Lease shall bind, and inure to the benefit of, the parties and their respective successors and assigns.

32.3 Construction and Interpretation. The words “Landlord” and “Tenant” include the plural as well as the singular. If there is more than one person comprising Tenant, the obligations under this Lease imposed on Tenant are joint and several. References to a party or parties refer to Landlord or Tenant, or both, as the context may require. The captions preceding the Articles, Sections and subsections of this Lease are inserted solely for convenience of reference and shall have no effect upon, and shall be disregarded in connection with, the construction and interpretation of this Lease. Use in this Lease of the words “including,” “such as,” or words of similar import, when following a general matter, shall not be construed to limit such matter to the enumerated items or matters whether or not language of nonlimitation (such as “without limitation”) is used with reference thereto. The term “person” includes the plural as well as the singular and individuals, firms, associations, partnerships and corporations. The term “Lease” means this Lease, and the exhibits and any addenda attached hereto, as the same may from time to time be supplemented, amended or modified. The term “business days” means Monday through Friday, excluding legal holidays in the State of California. Words used in any gender include other genders. All provisions of this Lease have been negotiated at arm’s length between the parties and after advice by counsel and other representatives chosen by each party and the parties are fully informed with respect thereto. Therefore, this Lease shall not be construed for or against either party by reason of the authorship or alleged authorship of any provision hereof, or by reason of the status of the parties as Landlord or Tenant, and the provisions of this Lease and the Exhibits hereto shall be construed as a whole according to their common meaning in order to effectuate the intent of the parties under the terms of this Lease. The language in all parts of this Lease shall be construed according to its normal and usual meaning and not strictly for or against either Landlord or Tenant.

32.4 Severability. If any provision of this Lease, or the application thereof to any person or circumstance, is determined to be illegal, invalid or unenforceable, the remainder of this Lease, or its application to persons or circumstances other than those as to which it is illegal, invalid or unenforceable, shall not be affected thereby and shall remain in full force and effect.

32.5 Entire Agreement. This Lease is the entire and integrated agreement between Landlord and Tenant with respect to the subject matter of this Lease, the Premises, the Building, and the Project. There are no oral agreements between Landlord and Tenant affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, offers, agreements and understandings, oral or written, if any, between Landlord and Tenant or displayed by Landlord to Tenant with respect to the subject matter of this Lease, the Premises or the Building. There are no representations between Landlord and Tenant or between any real estate broker and Tenant other than

 

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those expressly set forth in this Lease and all reliance with respect to any representations is solely upon representations expressly set forth in this Lease.

32.6 Governing Law. This Lease shall be governed by and construed pursuant to the laws of the State of California.

32.7 Costs and Expenses. In any lawsuit, action, arbitration, quasi-judicial proceeding, administrative proceeding, or any other proceeding brought by either party to enforce any of such party’s rights or remedies under this Lease, including, without limitation, any action or proceeding for declaratory relief, the prevailing party shall be entitled to reasonable attorneys’ fees and all costs, expenses and disbursements in connection with such action or proceeding, including, but not limited to, all costs of reasonable investigation, and all costs associated with expert witnesses and consultants, which sums may be included in any judgment or decree entered in such action in favor of the prevailing party. The non-prevailing party shall also be obligated to pay attorneys’ fees and costs incurred in any post-judgment proceedings to enforce and collect the judgment, which obligation shall survive the merger of this Lease into any judgment on this Lease. In addition, if either party utilizes the services of an attorney for the purpose of collecting any delinquent amounts owed to such party or in connection with any other breach of this Lease, the other party agrees to pay the reasonable attorneys’ fees and costs incurred by such party in enforcing this Lease, irrespective of whether an action is filed. Each party also shall pay all attorneys’ fees and other fees and costs, including but not limited to, investigative costs and expert witness and consultant fees and costs, that the other party incurs in enforcing, defending, or interpreting this Lease, or otherwise protecting such party’s rights under this Lease, in any voluntary or involuntary bankruptcy case, assignment for the benefit of creditors, or other insolvency, liquidation, or reorganization proceeding involving the other party or this Lease, including, but not limited to, all motions and proceedings related to relief from the automatic stay, lease assumption or rejection and/or extensions of time related thereto, lease designation, use of cash collateral, claim objections, and disclosure statements and plans of reorganization.

32.8 Standards of Performance and Approvals. Unless otherwise provided in this Lease, whenever approval, consent or satisfaction (collectively, an “approval”) is required of a party pursuant to this Lease or an Exhibit hereto, such approval shall not be unreasonably withheld or delayed. Unless provision is made for a specific time period, approval (or disapproval) shall be given within thirty (30) days after receipt of the request for approval. Nothing contained in this Lease shall limit the right of a party to act or exercise its business judgment in a subjective manner with respect to any matter as to which it has been (i) specifically granted such right, (ii) granted the right to act in its sole discretion or sole judgment, or (iii) granted the right to make a subjective judgment hereunder, whether “objectively” reasonable under the circumstances, and any such exercise shall not be deemed inconsistent with any covenant of good faith and fair dealing implied by law to be part of this Lease. The parties have set forth in this Lease their entire understanding with respect to the terms, covenants, conditions and standards pursuant to which their obligations are to be judged and their performance measured, including the provisions of Article 17 with respect to assignments and sublettings.

32.9 Brokers. Landlord shall pay to each of Landlord’s Broker and Tenant’s Broker a commission in connection with such Broker’s negotiation of this Lease with respect to the initial Premises pursuant to a separate written agreement. Other than such Brokers, Landlord and Tenant each represent and warrant to the other that no broker, agent, or finder has procured, or was involved in the negotiation of, this Lease and no such broker, agent or finder is or may be entitled to a fee, commission or other compensation in connection with this Lease. Landlord and Tenant shall each indemnify, defend, protect and hold the other harmless from and against Claims that may be asserted against the indemnified party in breach of the foregoing warranty and representation. Landlord shall also pay a market standard brokerage commission in regard to Tenant’s leasing of any Expansion Space, First Refusal Space or First Offer

 

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Space to Tenant’s broker at the time of Tenant’s leasing of such Expansion Space, First Refusal Space or First Offer Space as evidenced by written notice of Tenant to Landlord.

32.10 Memorandum of Lease. This Lease shall not be recorded except as permitted in this Section 32.10. Concurrently with the execution and delivery of this Lease, the parties shall promptly execute and Landlord shall record, at its sole cost and expense, a short form memorandum in substantially the form attached hereto as Exhibit L. Within ten (10) business days after Landlord’s written request following the expiration or earlier termination of this Lease, Tenant shall execute and deliver to Landlord in recordable form, a quitclaim deed designating Landlord as the transferee.

32.11 Quiet Enjoyment. Landlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as Tenant is in compliance with the covenants and conditions set forth in this Lease, Tenant shall have the right to quiet enjoyment of the Premises, the Storage Space, Parking Garage Roof Space, Sidewalk Area and the Parking Garage without hindrance or interference from Landlord or those claiming through Landlord, subject to the covenants and conditions set forth in this Lease and the Recorded Documents.

32.12 Force Majeure. Notwithstanding anything contained in this Lease to the contrary, if either party is unable to perform or delayed in performing any of its obligations under this Lease on account of strikes, lockouts, inclement weather, labor disputes, inability to obtain labor, materials, fuels, energy or reasonable substitutes therefor, governmental restrictions, regulations, controls, actions or inaction, civil commotion, fire or other acts of God, national emergency, acts of war or terrorism or any other similar cause of any kind beyond the reasonable control of such party (except financial inability) (each a “Force Majeure Event”), such party shall not be in default under this Lease.

32.13 Surrender of Premises.

32.13.1 Condition of Premises. Subject to Tenant’s removal, restoration and repair obligations under Section 32.13.2 below, upon the expiration or sooner termination of this Lease, Tenant shall surrender the Premises to Landlord in the same condition as existed upon delivery thereof to Tenant (or, in the case of Alterations, in the same condition as existed when first constructed), ordinary wear and tear and damage thereto by fire or other casualty excepted. Tenant expressly agrees that ordinary wear and tear does not include damage caused by the presence of dogs in the Premises, including, but not limited to, carpet stains or odors, chewing or clawing of doors or other improvements, or infestation by fleas or other pests, and Landlord shall be entitled to draw under the Letter of Credit to remedy any such conditions at the expiration or earlier termination of this Lease.

32.13.2 Restoration Obligations.

(a) Rooftop Equipment. Prior to the expiration or upon earlier termination of this Lease, Tenant, at Tenant’s expense, shall remove all Rooftop Equipment and restore the roof to the condition existing prior to the installation of such equipment, or, at Landlord’s option, Landlord shall perform all or any portion of such removal and restoration, at Tenant’s reasonable expense. Notwithstanding the foregoing, Landlord may elect to waive all or any portion of such removal and restoration requirements with respect to Rooftop Equipment by giving written notice of such waiver to Tenant at least one hundred eighty (180) days prior to the Expiration Date or within ten (10) business days after any earlier termination of this Lease.

(b) Parking Garage Roof Space Improvements. Prior to the expiration or upon earlier termination of this Lease, Tenant, at Tenant’s expense, shall remove all improvements to the Parking Garage Roof Space installed by Tenant pursuant to Article 37 and restore

 

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the roof to the condition existing prior to the installation of such improvements, or, at Landlord’s option, Landlord shall perform all or any portion of such removal and restoration, at Tenant’s reasonable expense.

(c) General Restoration Obligations. Tenant shall not be required to remove any of the Tenant Improvements or Ancillary Tenant Improvements constructed pursuant to the Work Letter or any other initial improvements to the Premises, including, without limitation, the Cafeteria, except as set forth in Sections 32.13.2(a) and 32.13.2(b) above or elsewhere in this Lease. Landlord reserves the right, however, to require removal of Alterations pursuant to the provisions of Article 10, and Tenant may be required to remove all Lines in accordance with Section 31.3 above. Tenant shall be deemed to be in holdover in the Premises without Landlord’s consent until Tenant’s removal and restoration obligation are complete.

32.13.3 Abandoned Property. After the Expiration Date or earlier termination of this Lease, any movable furniture, equipment, trade fixtures, or other personal property left on the Premises shall, at the option of Landlord, be deemed to be abandoned and, whether or not the property is deemed abandoned, Landlord shall have the right to remove such property from the Premises and charge Tenant for the removal and any restoration of the Premises. Landlord may charge Tenant for the storage of Tenant’s property left on the Premises at such rates as Landlord may from time to time reasonably determine (not to exceed the cost of storing Tenant’s property in a public warehouse), or, Landlord may, at its option, store Tenant’s property in a public warehouse at Tenant’s expense. Notwithstanding the foregoing, neither the provisions of this Section 32.13.3 nor any other provision of this Lease shall impose upon Landlord any obligation to care for or preserve any of Tenant’s property left upon the Premises, and Tenant hereby waives and releases Landlord from any claim or liability in connection with the removal of such property from the Premises and the storage thereof and specifically waives the provisions of California Civil Code Section 1542 with respect to such release. Landlord’s action or inaction with regard to the provisions of this Section 32.13.3 shall not be construed as a waiver of Landlord’s right to require Tenant to remove its property, restore any damage to the Building caused by such removal, and make any restoration required pursuant to this Lease.

32.14 Exhibits. The Exhibits referenced in the Basic Lease Information are a part of this Lease and are incorporated herein by this reference. Unless the applicable Exhibit expressly provides to the contrary, in the event of any discrepancy between this Lease and any such Exhibit, the provisions of this Lease shall control.

32.15 Survival of Obligations. The waivers of claims or rights, the releases, and the obligations of either party under this Lease to pay any sums to the other party and to indemnify, protect, defend and hold harmless the other party (and/or Landlord Parties or Tenant Parties, as applicable), shall survive the expiration or termination of this Lease, and so shall all other obligations or agreements of Landlord or Tenant which by their terms survive expiration or termination of this Lease.

32.16 Time of the Essence. Time is of the essence of this Lease and of the performance of each of the provisions contained in this Lease.

32.17 Waiver of Trial By Jury; Waiver of Counterclaim. IN GRAFTON PARTNERS L.P. v. SUPERIOR COURT, 36 CAL.4TH 944 (2005), THE CALIFORNIA SUPREME COURT RULED THAT CONTRACTUAL, PRE-DISPUTE JURY TRIAL WAIVERS ARE UNENFORCEABLE. THE PARTIES, HOWEVER, ANTICIPATE THAT THE CALIFORNIA LEGISLATURE WILL ENACT LEGISLATION TO PERMIT SUCH WAIVERS IN CERTAIN CASES. IN ANTICIPATION OF SUCH LEGISLATION, LANDLORD AND TENANT HEREBY WAIVE, AS OF THE EFFECTIVE DATE OF SUCH LEGISLATION AND TO THE EXTENT

 

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PERMITTED BY APPLICABLE REQUIREMENTS, TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE OR ANY EMERGENCY OR STATUTORY REMEDY.

32.18 Consent to Venue. Each party stipulates and agrees that the State and Federal courts of the State of California shall have personal jurisdiction over each of them for the purpose of litigating any action or proceeding arising out of or in any way connected with this Lease. Each party further stipulates that any action or proceeding arising out of or in any way connected with this Lease shall be filed and litigated exclusively in the State and Federal courts located in the City and County of San Francisco. Each party hereby waives its right to assert the doctrine of forum non conveniens or to object to venue in the State and Federal courts of the City and County of San Francisco in any action or proceeding arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or any claim of injury or damage, or the enforcement of any remedy under any statute, emergency or otherwise, whether any of the foregoing is based on this Lease or on tort law. The provisions of this Section 32.18 shall survive the expiration or earlier termination of this Lease.

32.19 Financial Statements. Within fifteen (15) business days after Landlord’s written request, but not more often than once in any given Lease Year (except in connection with a bona fide sale, financing or other similar transaction involving the Building, in which case, Landlord may make one additional request in a given Lease Year), Tenant shall deliver to Landlord the financial statements of Tenant (including a balance sheet and profit and loss statement) for the most recent prior fiscal year and for interim periods following the end of the last fiscal year for which financial statements are available. Such statements shall be certified by Tenant’s chief financial officer (if unaudited financial statements are not available); provided, however, that Tenant shall submit financial statements that are audited by a certified public accountant if such statements are available. If Tenant fails to respond to Landlord’s request within such fifteen (15) business day period, then Landlord may deliver a second written request to Tenant. If Tenant fails to respond within five (5) business days after receipt of such second written request, then such failure shall be an Event of Default. Landlord shall keep the content of Tenant’s financial statements confidential, provided that Landlord may disclose such financial statements to Landlord’s accountants, attorneys, advisors, lenders and prospective lenders and prospective buyers, provided that Landlord advises such persons of the confidential nature of such financial statements. Landlord agrees to keep Tenant’s financial statements strictly confidential (except as required under Applicable Laws or disclosure to persons or entities who, because of their involvement with a proposed sale or loan transaction involving the Building, need to know such information; provided, that, such parties shall be informed by Landlord of the confidential nature of such information and shall be directed by Landlord to keep all such information confidential), and Tenant may require Landlord and all other persons receiving Tenant’s financial statements to sign a commercially reasonable confidentiality agreement prior to making Tenant’s financial statements available to them. Tenant shall have no obligation to deliver financial statements of Tenant pursuant to this Section 32.19 following the issuance of stock of Tenant or any Tenant Subsidiary in a public offering or sale on a public stock exchange of Tenant’s or any Tenant Subsidiary’s stock.

32.20 Subdivision; Future Ownership. Landlord reserves the right to (A) subdivide all or a portion of the Project and (B) if the Building or the Parking Garage, or other portions of the Project are at any time owned by an entity other than Landlord, enter into agreements with such other owners to provide for (i) reciprocal rights of access and/or use, including in connection with repairs, maintenance, construction and/or excavation (ii) common management, operation, maintenance, improvement and/or

 

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repairs, and (iii) the allocation of operating expenses and taxes; provided in each case that the same shall not materially adversely affect Tenant’s business at or access to the Premises or result in any increase to Operating Expenses or Real Property Taxes. Subject to Section 22.1 and Articles 36 and 41, nothing contained herein shall be deemed or construed to limit or otherwise affect Landlord’s right to sell all or any portion of the Building or any other of Landlord’s rights described in this Lease.

32.21 Modification of Lease. This Lease may be modified or amended only by an agreement in writing signed by both parties.

32.22 No Option. The submission of this Lease to Tenant for review or execution does not create an option or constitute an offer to Tenant to lease the Premises on the terms and conditions contained herein, and this Lease shall not become effective unless and until it has been executed and delivered by both Landlord and Tenant.

32.23 Reserved.

32.24 Compliance with Anti-Terrorism Law.

32.24.1 Tenant represents, warrants and covenants to Landlord that: (a) Tenant is, nor at any time during the Term will be, (1) in violation of any Anti Terrorism Law (defined below); (2) conducting any business or engaging in any transaction or dealing with any Prohibited Person (defined below), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (3) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 (defined below); or (4) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in, any Anti-Terrorism Law; and (b) Tenant is not, nor at any time during the Term will be, a Prohibited Person.

32.24.2 Landlord represents, warrants and covenants to Tenant that: (a) Landlord is, nor at any time during the Term will be, (1) in violation of any Anti Terrorism Law; (2) conducting any business or engaging in any transaction or dealing with any Prohibited Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (3) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; or (4) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in, any Anti-Terrorism Law; and (b) Landlord is not, nor at any time during the Term will be, a Prohibited Person.

32.25 First Source Hiring Program. The City and County of San Francisco adopted a City-wide “First Source Hiring Program” on August 3, 1998 by Ordinance No. 264-98, codified at San Francisco Administrative Code Sections 83.1-83.18. The First Source Hiring Program (“FSHP”) is designed to identify entry level positions associated with commercial activities and provide first interview opportunities to graduates of City-sponsored training programs. Tenant acknowledges that its activities on the Premises is or may be subject to FSHP. Although Landlord makes no representation or warranty as to the interpretation or application of FSHP to the Premises, or to Tenant’s activities thereon, Tenant acknowledges that (i) FSHP may impose obligations on Tenant, including good faith efforts to meet requirements and goals regarding interviewing, recruiting, hiring and retention of individuals for entry level positions; (ii) FSHP requirements could also apply to certain contracts and subcontracts entered into by Tenant regarding the Premises, including construction contracts; and (iii) FSHP requirements, if applicable, may be imposed as a condition of permits, including building permits, issued for construction or occupancy of the Premises.

 

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32.26 Landlord Lien Waiver. Within fifteen (15) business days after request therefor by Tenant, Landlord shall execute and deliver a commercially reasonable agreement in favor of Tenant’s lender(s) waiving Landlord’s security interest in Tenant’s equipment and other personal property and providing such lender(s) limited access to the Premises following the occurrence of an uncured default under the applicable loan documents for the sole purpose of removing such equipment and other personal property.

32.27 Rent Not Based on Income. No Rent or other payment in respect of the Premises shall be based in any way upon net income or profits from the Premises.

32.28 Counterparts. This Lease may be executed in counterpart. All such executed counterparts shall constitute the same agreement, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

33. Expansion Options.

33.1 Expansion Option at Lease Terms.

33.1.1 Expansion Premises. Subject to the Superior Rights and the terms and conditions of this Article 33, during the period from the Lease Date to and including the date which is six (6) months following the Commencement Date (“Expansion at Lease Terms Period”), Tenant shall have an ongoing, continuous right, in its sole discretion, to expand the Premises by leasing any portion of the Available Expansion Premises comprising one or more entire suite for which Tenant has not received a First Refusal Notice pursuant to Section 34.2 below (“Lease Terms Expansion Option”). If any portion of the Expansion Premises is not Available Expansion Premises at the commencement of the Expansion at Lease Terms Period, Landlord shall notify Tenant in writing within seven (7) business days after Landlord determines to make any such Expansion Premises Available for Lease during the Expansion at Lease Terms Period, specifying the availability date for such Expansion Premises and the date by which Landlord anticipates Landlord could deliver such Expansion Premises to Tenant (the “Anticipated Delivery Date”). In no event shall Tenant be entitled to exercise the Lease Terms Expansion Option as to a partial suite within any applicable Available Expansion Premises.

33.1.2 Expansion Notice. Tenant shall exercise the Lease Terms Expansion Option, if at all, by giving Landlord one or more unconditional, irrevocable written notices of such election (each, a “Lease Terms Expansion Notice”) no later than the final day of the Expansion at Lease Terms Period, the time of such exercise being of the essence. Each Lease Terms Expansion Notice shall specify the (i) Available Expansion Premises that Tenant desires to lease pursuant to this Section 33.1 and (ii) the date (the “Lease Terms Expansion Date”) upon which Landlord shall deliver and Tenant shall take possession of such space, which date shall be the later of (A) the applicable Anticipated Delivery Date and (B) a date selected by Tenant that is not less than fifteen (15) and not more than forty five (45) days after the date of Tenant’s delivery of the Lease Terms Expansion Notice.

33.1.3 Lease of Available Expansion Premises. If Tenant delivers a Lease Terms Expansion Notice to Landlord as to any then Available Expansion Premises during Tenant’s Expansion at Lease Terms Period, then, subject to Section 33.4 below, Landlord shall lease the applicable Available Expansion Premises to Tenant on the terms and conditions set forth in this Lease including the same Expiration Date, provided, however, that (a) the Base Rent (per Adjusted Rentable Square Foot) for the applicable Available Expansion Premises shall be the same as the Base Rent (per Adjusted Rentable Square Foot) payable with respect to the Premises (other than the Concourse Premises), (b) Tenant shall receive a tenant improvement allowance not to exceed $35.00 per Adjusted Rentable Square Foot of the applicable Available Expansion Premises, (c) Tenant shall receive a period of rent abatement for the

 

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applicable Available Expansion Premises equal to the Weighted Average Abatement Period, (d) the required Letter of Credit Amount pursuant to Article 26 shall increase by the amount, if any, necessary to cause the amount of such Letter of Credit to equal seven percent (7%) of Tenant’s total obligation to pay Base Rent for the period between Landlord’s delivery of the applicable Available Expansion Premises and the end of the initial Term and in no event shall the Letter of Credit Amount be less than Two Million Five Hundred Thousand Dollars ($2,500,000) (or twelve and sixty three one-hundredths percent (12.63%) of such total Base Rent if Tenant has failed a Minimum Credit Test and in no event shall the Letter of Credit Amount in such event be less than Four Million Five Hundred Thousand Dollars ($4,500,000) unless Tenant subsequently satisfies the requirements set forth in Section 26.6 to reduce the Letter of Credit Amount after a failure of the Minimum Credit Test), (e) Tenant shall construct the tenant improvements for the applicable Available Expansion Premises, which tenant improvements shall be considered an Alteration subject to the terms and conditions of Article 10 above (but shall be considered “Tenant Improvements” for purposes of Articles 12 and 14 above), (f) Landlord shall deliver possession of the applicable Available Expansion Premises to Tenant on the applicable Lease Terms Expansion Date, (g) Tenant shall use commercially reasonable efforts to diligently prosecute construction of the tenant improvements in the applicable Available Expansion Premises (provided that Tenant shall not be required to pay for overtime or premium time labor in connection therewith unless Tenant elects to do so in its sole and absolute discretion), (h) Tenant shall commence paying Base Rent with respect to the applicable Available Expansion Premises on the earlier to occur of (i) the date which is four (4) months after Landlord delivers possession of the applicable Available Expansion Premises to Tenant (provided, however, that such date shall be extended for delays in constructing improvements to be constructed by Tenant pursuant to this Section 33.1.3 resulting from (A) Force Majeure Events or (B) subject to the provisions below, any actual delay in the construction of the tenant improvements caused by or attributable to (1) Landlord’s failure to take any action prior to any deadline for taking such action (including the failure to timely pay any amounts owed to Tenant), (2) Landlord’s failure to act reasonably where Landlord is required to act reasonably under the terms of this Lease or (3) any other act or omission of Landlord or any Landlord Parties which materially interferes with Tenant’s ability to perform such tenant improvements (collectively “Expansion Delays”)) and (ii) the date Tenant commences business operations in the entire applicable Available Expansion Premises, (i) during the course of design and construction of the tenant improvements in the applicable Available Expansion Premises, Landlord shall reimburse Tenant for the costs of preparing the construction documents, the cost of obtaining permits, and the cost of performing the tenant improvement work (excluding all costs of furnishings, fixtures, equipment, signage and other personal property, including switches, servers, routers and similar data and telecommunications equipment, except as provided below) (“Permitted Expansion TI Items”) in an amount not to exceed the tenant improvement allowance upon delivery of an Application and Certificate for Payment (AIA Document G702) signed by Tenant’s architect, invoices from all of Tenant’s contractors and suppliers for labor rendered and materials delivered to the Premises. and executed mechanic’s lien releases from all of Tenant’s contractors and suppliers (each, a “Tenant Draw Package”), (j) if Tenant desires periodic disbursements of the tenant improvement allowance and delivers all items required in the Tenant Draw Package to Landlord on or before the fifteenth (15th) day of a calendar month, Landlord shall disburse on or before the fifteenth (15) day of the month following Landlord’s receipt of the Tenant Draw Package the lesser of (i) the amount requested for reimbursement by Tenant in Tenant’s Draw Package multiplied by a fraction, the numerator of which is the total tenant improvement allowance and the denominator of which is the aggregate cost of Permitted Expansion TI Items and (ii) the balance of any remaining available tenant improvement allowance, (k) if Landlord fails to timely pay Tenant the amounts set forth in a properly submitted Tenant Draw Package, then, in addition to all other remedies set forth in this Lease or available at law or in equity, Tenant shall have the remedy set forth in Section 20.7.3 above and (l) if Landlord fails to deliver possession of the applicable Available Expansion Premises on the applicable Lease Terms Expansion Date, Sections 2.3 and 2.4 above shall apply only with respect to the applicable Available Expansion Premises. As to clause (h)(i)(B) above regarding Expansion Delays, (x) no Expansion Delay (except for any Expansion Delay resulting

 

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from Landlord’s failure to take any action prior to any deadline for taking such action) shall be deemed to have occurred unless Tenant gives Landlord prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Expansion Delay, and Landlord shall fail to correct or cure such Expansion Delay within one (1) business day and (x) there shall be excluded from the number of days of any Expansion Delay any days of delay which are primarily caused by Force Majeure. If the construction of the tenant improvements is actually delayed due to any Expansion Delay, then Tenant and Tenant’s architect shall reasonably determine in consultation with Landlord the date on which the tenant improvements would have been completed but for such Expansion Delay. If the amounts reimbursed to (or paid out on behalf of) Tenant in connection with the construction of tenant improvements in any applicable Available Expansion Premises under this Section 33.1.3 do not exceed the tenant improvement allowance given or made available to Tenant therefor, a portion of such unused tenant improvement allowance, in an amount not to exceed Seven and 50/100 Dollars ($7.50) per Adjusted Rentable Square Feet in the applicable Available Expansion Premises, may be disbursed to Tenant and applied to the cost of Tenant’s furnishings, fixtures, equipment and other personal property, including switches, servers, routers and similar data and telecommunications equipment, and/or Tenant’s moving expenses related to the applicable Available Expansion Premises (“Tenant’s Expansion FF&E”). Disbursements of such unused tenant improvement allowance shall be made on or before the fifteenth (15th) day of a calendar month following the month in which Tenant submits a written request therefor, provided such request is accompanied by reasonable supporting evidence setting forth costs and expenses incurred by Tenant and such request is made on or before the fifteenth (15th) day of the preceding calendar month.

33.2 Expansion Option at Modified Lease Terms.

33.2.1 Expansion Premises. Subject to the Superior Rights and the terms and conditions of this Article 33, during the period from the date which is the day after the expiration of the Expansion at Lease Terms Period to and including the date which is twelve (12) months following the Commencement Date (“Expansion at Modified Lease Terms Period”), Tenant shall have an ongoing, continuous right, in its sole discretion, to expand the Premises by leasing any portion of the Available Expansion Premises comprising one or more entire suite for which Tenant has not received a First Refusal Notice pursuant to Section 34.2 (“Modified Lease Terms Expansion Option”). If any portion of the Expansion Premises is not Available Expansion Premises at the commencement of the Expansion at Modified Lease Terms Period, Landlord shall notify Tenant in writing within seven (7) business days after Landlord determines to make any such Expansion Premises Available for Lease during the Expansion at Modified Lease Terms Period, specifying the Anticipated Delivery Date. In no event shall Tenant be entitled to exercise the Modified Lease Terms Expansion Option as to a partial suite within the Expansion Premises.

33.2.2 Expansion Notice. Tenant shall exercise the Modified Lease Terms Expansion Option, if at all, by giving Landlord one or more unconditional, irrevocable written notices of such election (each, a “Modified Lease Terms Expansion Notice”) no later than the final day of the Expansion at Modified Lease Terms Period, the time of such exercise being of the essence. Each Modified Lease Terms Expansion Notice shall specify (i) Available Expansion Premises that Tenant desires to lease pursuant to this Section 33.2 and (ii) the date (the “Modified Lease Terms Expansion Date”) upon which Landlord shall deliver and Tenant shall take possession of such space, which date shall be the later of (A) the applicable Anticipated Delivery Date and (B) a date selected by Tenant that is not less than fifteen (15) and not more than forty five (45) days after the date of Tenant’s delivery of the Modified Lease Terms Expansion Notice.

33.2.3 Lease of Available Expansion Premises. If Tenant delivers a Modified Lease Terms Expansion Notice to Landlord as to any then Available Expansion Premises during Tenant’s

 

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Expansion at Modified Lease Terms Period, then, subject to Section 33.4 below, Landlord shall lease the applicable Available Expansion Premises to Tenant on the terms and conditions set forth in this Lease including the same Expiration Date, provided, however, that (a) the Base Rent (per Adjusted Rentable Square Foot) for the applicable Available Expansion Premises shall be the same as the Base Rent (per Adjusted Rentable Square Foot) payable with respect to the Premises (other than the Concourse Premises), (b) Tenant shall receive a tenant improvement allowance not to exceed $35.00 per Adjusted Rentable Square Foot of the applicable Available Expansion Premises adjusted as provided below, (c) Tenant shall receive a period of rent abatement for the applicable Available Expansion Premises equal to the Weighted Average Abatement Period adjusted as provided below, (d) the required Letter of Credit Amount pursuant to Article 26 shall increase by the amount, if any, necessary to cause the amount of such Letter of Credit to equal seven percent (7%) of Tenant’s total obligation to pay Base Rent for the period between Landlord’s delivery of the applicable Available Expansion Premises and the end of the initial Term but in no event shall the Letter of Credit Amount be less than Two Million Five Hundred Thousand Dollars ($2,500,000) (or twelve and sixty three one-hundredths percent (12.63%) of such total Base Rent if Tenant has failed a Minimum Credit Test and in no event shall the Letter of Credit Amount in such event be less than Four Million Five Hundred Thousand Dollars ($4,500,000) unless Tenant subsequently satisfies the requirements set forth in Section 26.6 to reduce the Letter of Credit Amount after a failure of the Minimum Credit Test), (e) Tenant shall construct the tenant improvements for the applicable Available Expansion Premises, which tenant improvements shall be considered an Alteration subject to the terms and conditions of Article 10 above (but shall be considered “Tenant Improvements” for purposes of Articles 12 and 14 above), (f) Landlord shall deliver possession of the applicable Available Expansion Premises to Tenant on the applicable Modified Lease Terms Expansion Date, (g) Tenant shall use commercially reasonable efforts to diligently prosecute construction of the tenant improvements in the applicable Available Expansion Premises (provided that Tenant shall not be required to pay for overtime or premium time labor in connection therewith unless Tenant elects to do so in its sole and absolute discretion), (h) Tenant shall commence paying Base Rent with respect to the applicable Available Expansion Premises on the earlier to occur of (i) the date which is four (4) months after Landlord delivers possession of the applicable Available Expansion Premises to Tenant (provided, however, that such date shall be extended for delays in constructing improvements to be constructed by Tenant pursuant to this Section 33.2.3 resulting from any Expansion Delays) and (ii) the date Tenant commences business operations in the entire applicable Available Expansion Premises, (i) during the course of design and construction of the tenant improvements in the applicable Available Expansion Premises, Landlord shall reimburse Tenant for Permitted Expansion TI Items in an amount not to exceed the Modified Tenant Allowance (as defined below) upon delivery of a Tenant Draw Package, (j) if Tenant desires periodic disbursements of the Modified Tenant Allowance and delivers all items required in the Tenant Draw Package to Landlord on or before the fifteenth (15th) day of a calendar month, Landlord shall disburse on or before the fifteenth (15) day of the month following Landlord’s receipt of the Tenant Draw Package the lesser of (i) the amount requested for reimbursement by Tenant in Tenant’s Draw Package multiplied by a fraction, the numerator of which is the Modified Tenant Allowance and the denominator of which is the aggregate cost of Permitted Expansion TI Items and (ii) the balance of any remaining available Modified Tenant Allowance, (k) if Landlord fails to timely pay Tenant the amounts set forth in a properly submitted Tenant Draw Package, then, in addition to all other remedies set forth in this Lease or available at law or in equity, Tenant shall have the remedy set forth in Section 20.7.3 above and (l) if Landlord fails to deliver possession of the applicable Available Expansion Premises on the applicable Modified Lease Terms Expansion Date, Sections 2.3 and 2.4 above shall apply only with respect to the applicable Available Expansion Premises; provided, however, that the amount of the tenant improvement allowance payable under this Section 33.2 and the period of rent abatement equal to the Weighted Average Abatement Period shall each be prorated to reflect the shorter term of the Lease for the applicable Available Expansion Premises leased pursuant to this Section 33.2. For the sake of clarity, the tenant improvement allowance per Adjusted Rentable Square Foot of the Expansion Premises shall be Thirty Five Dollars ($35.00) multiplied by a fraction, the numerator of which is the number of months in

 

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the term of the Lease for the Expansion Premises (beginning with the date upon which Tenant commences paying Base Rent) and the denominator of which is eighty-four (84). The prorated amount of the tenant improvement allowance shall be referred to in this Section 33.2 as the “Modified Tenant Allowance.” As to clause (h)(i) above regarding Expansion Delay, (x) no Expansion Delay (except for any Expansion Delay resulting from Landlord’s failure to take any action prior to any deadline for taking such action) shall be deemed to have occurred unless Tenant gives Landlord prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Expansion Delay, and Landlord shall fail to correct or cure such Expansion Delay within one (1) business day and (x) there shall be excluded from the number of days of any Expansion Delay any days of delay which are primarily caused by Force Majeure. If the construction of the tenant improvements is actually delayed due to any Expansion Delay, then Tenant and Tenant’s architect shall reasonably determine in consultation with Landlord the date on which the tenant improvements would have been completed but for such Expansion Delay. If the amounts reimbursed to (or paid out on behalf of) Tenant in connection with the construction of tenant improvements in any applicable Available Expansion Premises under this Section 33.2.3 do not exceed the tenant improvement allowance given or made available to Tenant therefor, a portion of such unused tenant improvement allowance, in an amount not to exceed Seven and 50/100 Dollars ($7.50) per Adjusted Rentable Square Feet in the applicable Available Expansion Premises, may be disbursed to Tenant and applied to the cost of Tenant’s Expansion FF&E. Disbursements of such unused tenant improvement allowance shall be made on or before the fifteenth (15th) day of a calendar month following the month in which Tenant submits a written request therefor, provided such request is accompanied by reasonable supporting evidence setting forth costs and expenses incurred by Tenant and such request is made on or before the fifteenth (15th) day of the preceding calendar month.

33.3 Expansion Option at Market Terms.

33.3.1 Expansion Premises. Subject to the Superior Rights and the terms and conditions of this Article 33, during the period from the date which is the day after the expiration of the Expansion at Modified Lease Terms Period to and including the date which is thirty-six (36) months following the Commencement Date (“Expansion at Market Terms Period”), Tenant shall have an ongoing, continuous right, in its sole discretion, to expand the Premises by leasing any portion of the Available Expansion Premises (other than the Suite 500 Premises) comprising one or more suites for which Tenant has not received a First Refusal Notice pursuant to Section 34.2 (“Market Terms Expansion Option” and collectively with the Lease Terms Expansion Option and the Modified Lease Terms Expansion Option or, individually as applicable, “Expansion Options”). If any portion of the Expansion Premises is not Available Expansion Premises at the commencement of the Expansion at Market Terms Period, Landlord shall notify Tenant in writing within seven (7) business days after Landlord determines to make any such Expansion Premises Available for Lease during the Expansion at Market Terms Period, specifying the Anticipated Delivery Date. In no event shall Tenant be entitled to exercise the Market Terms Expansion Option as to a partial suite within the Expansion Premises.

33.3.2 Expansion Notice. Tenant shall exercise the Market Terms Expansion Option, if at all, by giving Landlord one or more unconditional, irrevocable written notices of such election (each, a “Market Terms Expansion Notice”) no later than the final day of the Expansion at Market Terms Period, the time of such exercise being of the essence. Each Market Terms Expansion Notice shall specify (i) Available Expansion Premises that Tenant desires to lease pursuant to this Section 33.3 and (ii) the date (the “Market Terms Expansion Date”) upon which Landlord shall deliver and Tenant shall take possession of such space, which date shall be the later of (A) the applicable Anticipated Delivery Date and (B) a date selected by Tenant that is not less than fifteen (15) and not more than forty five (45) days after the date of Tenant’s delivery of the Market Terms Expansion Notice.

 

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33.3.3 Lease of Available Expansion Premises. If Tenant delivers a Market Terms Expansion Notice to Landlord as to any then Available Expansion Premises during Tenant’s Expansion at Market Terms Period, then, subject to Section 33.4 below, Landlord shall lease the applicable Available Expansion Premises to Tenant on the terms and conditions set forth in this Lease including the same Expiration Date, provided, however, that (a) the Base Rent (per Adjusted Rentable Square Foot) shall be one hundred percent (100%) of the Fair Market Rent as determined in accordance with Sections 3.4.4 through 3.4.7 above, (b) any monetary concessions (including rent abatement, moving allowances and tenant improvement allowances) affecting the rental rate shall be determined in accordance with Sections 3.4.4 through 3.4.7 above, and adjusted to reflect the length of the term, (c) Tenant shall construct any tenant improvements for the applicable Available Expansion Premises, which tenant improvements shall be considered an Alteration subject to the terms and conditions of Article 10 above (but shall be considered “Tenant Improvements” for purposes of Articles 12 and 14 above), (d) the required Letter of Credit Amount pursuant to Article 26 shall increase by the amount, if any, necessary to cause the amount of such Letter of Credit to equal seven percent (7%) of Tenant’s total obligation to pay Base Rent for the period between Landlord’s delivery of the applicable Available Expansion Premises and the end of the initial Term and in no event shall the Letter of Credit Amount be less than Two Million Five Hundred Thousand Dollars ($2,500,000) (or twelve and sixty three one-hundredths percent (12.63%) of such total Base Rent if Tenant has failed a Minimum Credit Test and in no event shall the Letter of Credit Amount in such event be less than Four Million Five Hundred Thousand Dollars ($4,500,000) unless Tenant subsequently satisfies the requirements set forth in Section 26.6 to reduce the Letter of Credit Amount after a failure of the Minimum Credit Test), (e) Landlord shall deliver possession of the applicable Available Expansion Premises to Tenant on the applicable Market Terms Expansion Date, (f) Tenant shall use commercially reasonable efforts to diligently prosecute construction of any tenant improvements in the applicable Available Expansion Premises (provided that Tenant shall not be required to pay for overtime or premium time labor in connection therewith unless Tenant elects to do so in its sole and absolute discretion), (g) Tenant shall commence paying Base Rent with respect to the applicable Available Expansion Premises on the earlier to occur of (i) the date which is four (4) months after Landlord delivers possession of the applicable Available Expansion Premises to Tenant (provided, however, that such date shall be extended for delays in constructing improvements to be constructed by Tenant pursuant to this Section 33.3.3 resulting from any Expansion Delays) and (ii) the date Tenant commences business operations in the entire applicable Available Expansion Premises, (h) during the course of design and construction of any tenant improvements in the applicable Available Expansion Premises, Landlord shall reimburse Tenant for Permitted Expansion TI Items in an amount not to exceed any tenant improvement allowance upon delivery of a Tenant Draw Package, (i) if Tenant desires periodic disbursements of any tenant improvement allowance and delivers all items required in the Tenant Draw Package to Landlord on or before the fifteenth (15th) day of a calendar month, Landlord shall disburse on or before the fifteenth (15) day of the month following Landlord’s receipt of the Tenant Draw Package the lesser of (i) the amount requested for reimbursement by Tenant in Tenant’s Draw Package multiplied by a fraction, the numerator of which is the tenant improvement allowance and the denominator of which is the aggregate cost of Permitted Expansion TI Items and (ii) the balance of any remaining available tenant improvement allowance, (j) if Landlord fails to timely pay Tenant the amounts set forth in a properly submitted Tenant Draw Package, then, in addition to all other remedies set forth in this Lease or available at law or in equity, Tenant shall have the remedy set forth in Section 20.7.3 above and (k) if Landlord fails to deliver possession of the applicable Available Expansion Premises on the applicable Market Lease Terms Expansion Date, Sections 2.3 and 2.4 above shall apply only with respect to the applicable Available Expansion Premises. As to clause (g)(i) above regarding Expansion Delays, (x) no Expansion Delay (except for any Expansion Delay resulting from Landlord’s failure to take any action prior to any deadline for taking such action) shall be deemed to have occurred unless Tenant gives Landlord prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Expansion Delay, and Landlord shall fail to correct or cure such Expansion Delay within one (1) business day and (x) there shall

 

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be excluded from the number of days of any Expansion Delay any days of delay which are primarily caused by Force Majeure. If the construction of the tenant improvements is actually delayed due to any Expansion Delay, then Tenant and Tenant’s architect shall reasonably determine in consultation with Landlord the date on which the tenant improvements would have been completed but for such Expansion Delay.

33.4 Conditions of Exercise. Notwithstanding any provision of this Article 33 to the contrary, if at the time a Lease Terms Expansion Notice, a Modified Lease Terms Expansion Notice or a Market Terms Expansion Notice (each an “Expansion Notice”) is received by Landlord Tenant is in default beyond applicable notice and cure periods under any of the terms, covenants or conditions of this Lease, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right (but not the obligation) to terminate Tenant’s rights under this Article 33, and in such event Landlord shall not be required to deliver possession of any applicable Available Expansion Premises to Tenant. In addition, if at any time the Adjusted Rentable Square Feet of the Premises is less than one hundred nineteen thousand (119,000), Tenant’s rights under this Article 33 shall automatically terminate and be of no further force or effect. In addition, if (i) Landlord delivers a First Refusal Notice with respect to any Available Expansion Premises, (ii) Tenant does not timely elect to exercise its Right of First Refusal pursuant to Article 34 with respect to such Available Expansion Premises and (iii) Landlord enters into a lease with respect to a third party tenant which made the applicable Bona Fide Offer with respect to such Available Expansion Premises within (A) five (5) months after the date of the applicable First Refusal Notice where such First Refusal Notice was delivered with respect to one hundred thousand (100,000) Adjusted Rentable Square Feet or more of Available Expansion Premises and (B) four (4) months after the date of the applicable First Refusal Notice where such First Refusal Notice was delivered with respect to less than one hundred thousand (100,000) Adjusted Rentable Square Feet of Available Expansion Premises, then the Expansion Options granted under this Article 33 shall automatically terminate and the Expansions Options shall be of no further force and effect with respect to such Available Expansion Premises.

33.5 Expansion Premises Tenant Improvement Allowance. If the amounts reimbursed to (or paid out on behalf of) Tenant in connection with the construction of tenant improvements in any applicable Available Expansion Premises do not exceed the tenant improvement allowance given or made available to Tenant in accordance with this Article 33, the following shall apply: (i) any such unused tenant improvement allowance may be disbursed to Tenant as a reimbursement of any Tenant’s Contribution (as defined in the Work Letter) previously paid to Landlord; or (ii) if there is any remaining unused tenant improvement allowance after the application of clause (i) above, such remaining unused tenant improvement allowance may be drawn upon by Tenant in connection with future Alterations within the Premises or future Tenant Improvements constructed in any Expansion Premises or First Refusal Space or First Offer Space. Disbursements of such unused tenant improvement allowance shall be made on or before the fifteenth (15th) day of a calendar month following the month in which Tenant submits a written request therefor, provided such request is accompanied by reasonable supporting evidence setting forth costs and expenses incurred by Tenant and such request is made on or before the fifteenth (15th) day of the preceding calendar month.

33.6 Letter of Credit Amendment; Commissions. Within ten (10) business days following delivery by Landlord of the applicable Available Expansion Premises, Tenant shall deliver a replacement or amended Letter of Credit to Landlord in the form required by Article 26 reflecting the increase required under this Article 33 and any commissions due any brokers in connection with the leasing of such Available Expansion Premises shall not be due or payable until receipt by Landlord of such amended or replacement Letter of Credit.

 

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33.7 Amendment to Lease. If at any time following the Lease Date Tenant leases any Available Expansion Premises pursuant to this Article 33, Landlord shall prepare, subject to Tenant’s reasonable approval thereof, and Tenant shall promptly execute an amendment to this Lease to add any applicable Available Expansion Premises to the Premises on the terms and conditions set forth in this Article 33.

33.8 Expansion Rent Adjustment. If the Adjusted Rentable Square Feet of the Premises exceeds 300,000 as a result of Tenant’s exercise of any Expansion Options (other than as a result of a Market Terms Expansion) or Rights of First Refusal, then, upon such increase to the Adjusted Rentable Square Feet and throughout the balance of the initial term, the annual Base Rent payable for that portion of the Premises that exceeds the 300,000 Adjusted Rentable Square Feet threshold (and for any subsequent expansions of the Premises pursuant to Article 33) shall be reduced by One Dollar ($1.00) per Adjusted Rentable Square Feet. There shall be no adjustment under this Section 33.8 to the Fair Market Rent (or the determination of Fair Market Rent) with respect to the Expansion Premises leased pursuant to the exercise of a Market Terms Expansion Option.

33.9 Rights Personal to Original Tenant. Tenant right to exercise any one of Tenant’s Expansion Options pursuant to this Article 33 is personal to, and may be exercised only by, the original named Tenant under this Lease (or any Permitted Assignee). If Tenant shall assign this Lease (other than to a Permitted Assignee), then immediately upon such assignment, Tenant’s Expansion Options pursuant to this Article 33 shall automatically terminate and be of no further force or effect. No assignee (other than a Permitted Assignee) or subtenant shall have any right to lease Available Expansion Premises pursuant to this Article 33.

34. Right of First Refusal.

34.1 First Refusal Space. Subject to the Superior Rights and the terms and conditions of this Article 34, Tenant shall have an ongoing, continuous right of first refusal (“Right of First Refusal”) during the Term (as the same may be extended) to lease the Available Expansion Premises (any such space is referred to as “First Refusal Space”).

34.2 First Refusal Notice. Upon Landlord’s receipt of a bona fide offer, whether or not in the form of a letter of intent, from a third party to lease the First Refusal Space that Landlord desires to accept (a “Bona Fide Offer”), Landlord shall provide notice (“First Refusal Notice”) to Tenant of such receipt together with the material terms and conditions of such Bona Fide Offer, including the following: (a) the location and approximate Adjusted Rentable Square Footage of the First Refusal Space to be leased, (b) the anticipated date upon which possession of the First Refusal Space shall be available (the “ROFR Target Date”); (c) the term for which Landlord shall lease the First Refusal Space, (d) the net effective base rent (expressed on a per Adjustable Rentable Square Footage basis), (e) the period of rent abatement, if any; (f) the tenant improvements, if any, that Landlord shall be obligated to install and/or any tenant improvement allowance, if any, that Landlord shall be obligated to pay, and (g) the type (gross or net) of operating expense charges and if gross, setting forth the base year. Tenant shall have seven (7) business days after Tenant’s receipt of First Refusal Notice (“First Refusal Election Period”) to exercise its Right of First Refusal to lease the First Refusal Space on the terms and conditions set forth in Landlord’s First Refusal Notice. If Tenant does not deliver its notice of exercise of its right to lease the First Refusal Space (“First Refusal Exercise Notice”) on or prior to the end of the First Refusal Election Period, then Tenant’s First Refusal Right will lapse with respect to the applicable First Refusal Space, Tenant shall be deemed to have rejected Landlord’s offer (“Tenant’s First Refusal Rejection”), and the First Refusal Right with respect to the applicable First Refusal Space will be of no further force and effect (unless and until again effective pursuant to this Section). Any qualified or conditional acceptance by Tenant of the Bona Fide Offer accompanying Landlord’s First Refusal Notice shall be

 

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deemed a Tenant First Refusal Rejection of the Bona Fide Offer. Upon Tenant’s First Refusal Rejection, Landlord shall have the right to lease the First Refusal Space to a third party on the same or any other terms and conditions to the third party tenant, as set forth in the Bona Fide Offer accompanying Landlord’s First Refusal Notice; provided, however, that if the base rent, tenant improvement allowance (or Landlord’s obligation to install any tenant improvements), rent abatement or other material economic term (collectively, the “Material First Refusal Economic Terms”) to be paid by or provided to such third party for the First Refusal Space are more favorable to the tenant than the corresponding Material First Refusal Economic Term initially offered in the Bona Fide Offer by seven and one-half percent (7 1/2%), or no lease is executed between Landlord and a third party within (A) five (5) months after the date of the applicable First Refusal Notice where such First Refusal Notice was delivered with respect to one hundred thousand (100,000) Adjusted Rentable Square Feet or more of Available Expansion Premises and (B) four (4) months after the date of the applicable First Refusal Notice where such First Refusal Notice was delivered with respect to less than one hundred thousand (100,000) Adjusted Rentable Square Feet of Available Expansion Premises, then Landlord shall reoffer the First Refusal Space to Tenant, at such varying Material First Refusal Economic Terms (as applicable) and in accordance with the procedure contained in this Section 34 before leasing the First Refusal Space to any such third party. Time is of the essence with respect to the provisions of this Section 34.2.

34.3 Lease of First Refusal Space. If Tenant delivers Tenant’s First Refusal Notice to Landlord on or prior to the end of the First Refusal Election Period, then, subject to Section 34.4, the First Refusal Spaces shall become a portion of the Premises on the terms set forth in the First Refusal Notice and otherwise on the terms and conditions set forth in this Lease. In addition, Tenant shall increase the required amount of the Letter of Credit as set forth in Section 34.5 below. The general manner of construction of the any tenant improvements in any First Refusal Space (e.g., Landlord-build or Tenant-build) shall be determined by the First Refusal Notice. If the First Refusal Notice specifies a Landlord-build, then the terms and conditions of the Work Letter shall generally apply with modifications as necessary to conform with (i) any differences between the initial Premises hereunder and the First Refusal Space (such modifications to be reasonably approved by Landlord and Tenant), and (ii) any differences in such terms and conditions as may be expressly set forth in the First Refusal Notice. If the First Refusal Notice specifies a Tenant-build, then the terms and conditions set forth in Section 33.1.3 above with regards to Available Expansion Premises shall apply with modifications as necessary to conform with the differences described in clauses (i) and (ii) of the preceding sentence.

34.4 Conditions of Exercise. Notwithstanding any provision of this Article 34 to the contrary, if at the time Landlord is required to deliver a First Refusal Notice, Tenant is in default beyond applicable notice and cure periods under any of the terms, covenants or conditions of this Lease, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right (but not the obligation) to terminate Tenant’s rights under this Article 34, and in such event Landlord shall not be required to deliver possession of any First Refusal Space to Tenant. In addition, if at any time the Adjusted Rentable Square Feet of the Premises is less than one hundred nineteen thousand (119,000), Tenant’s rights under this Article 34 shall automatically terminate and be of no further force or effect. Nothing contained in this Article 34 shall be deemed to impose any obligation on Landlord to refrain from negotiating with the existing tenant(s) of the First Refusal Space, to withhold the First Refusal Space from the market, or to take any other action or omit to take any other action in order to make the First Refusal Space available to Tenant.

34.5 Letter of Credit Amendment; Commissions. Within ten (10) business days after (a) delivery by Landlord of the applicable First Refusal Space, if construction of the Tenant Improvements shall be a Tenant-build or (b) delivery of Tenant’s First Refusal Exercise Notice if construction of the tenant improvements shall be a Landlord-build, Tenant shall deliver a replacement or amendment Letter of Credit to Landlord in the form required by Article 26 reflecting an increase by the

 

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amount, if any, necessary to cause the amount of such Letter of Credit to equal seven percent (7%) of Tenant’s total obligation to pay Base Rent for the period between Landlord’s delivery of the applicable First Refusal Space and the end of the initial Term and in no event shall the Letter of Credit Amount be less than Two Million Five Hundred Thousand Dollars ($2,500,000) (or twelve and sixty three one-hundredths percent (12.63%) of such total Base Rent if Tenant has failed a Minimum Credit Test and in no event shall the Letter of Credit Amount in such event be less than Four Million Five Hundred Thousand Dollars ($4,500,000) unless Tenant subsequently satisfies the requirements set forth in Section 26.6 to reduce the Letter of Credit Amount after a failure of the Minimum Credit Test); provided, however, that the foregoing minimum Letter of Credit Amounts shall not apply if the Letter of Credit Amount has previously been reduced pursuant to Section 3.3.2(b) or Section 3.4.8(b) below such minimum Letter of Credit Amounts, in which case the terms of such Sections shall control. In no event shall any commission be due or payable to any brokers in connection with the leasing of the First Refusal Space until receipt by Landlord of such amended or replacement Letter of Credit.

34.6 Amendment to Lease. If Tenant leases any First Refusal Space pursuant to this Article 34, Landlord shall prepare, subject to Tenant’s reasonable approval thereof, and Tenant shall promptly execute an amendment to this Lease to add any applicable First Refusal Space to the Premises on the terms and conditions set forth in this Article 34.

34.7 Suite 500 Premises Limited Rights. Notwithstanding anything to the contrary contained in this Article 34, any obligation of Landlord to deliver a First Refusal Notice with respect to the Suite 500 Premises and any right of Tenant to deliver a First Refusal Exercise Notice to Landlord with respect to the Suite 500 Premises shall automatically terminate, and the Right of First Refusal with respect to the Suite 500 Premises shall be of no further force and effect, as of the first anniversary of the Commencement Date.

34.8 Rights Personal to Original Tenant. Tenant’s right to lease the First Refusal Space pursuant to this Article 34 is personal to, and may be exercised only by, the original named Tenant under this Lease (or any Permitted Assignee). If Tenant shall assign this Lease (other than to a Permitted Assignee), then immediately upon such assignment, Tenant’s right to lease the First Refusal Space pursuant to this Article 34 shall automatically terminate and be of no further force or effect. No assignee (other than a Permitted Assignee) or subtenant shall have any right to lease First Refusal Space pursuant to this Article 34.

35. Right of First Offer.

35.1 First Offer Space. If, at any time after the first anniversary of the Commencement Date, Landlord determines to make all or any portion of the Suite 500 Premises (“First Offer Space”) Available for Lease to third parties, Tenant shall have a right of first offer to lease such First Offer Space, subject to Superior Rights and the terms and conditions set forth in this Article 35 (the “Right of First Offer”).

35.2 Offering Notice. Prior to leasing any First Offer Space to a third party, Landlord shall give notice to Tenant (an “Offering Notice”) specifying Landlord’s reasonable good faith estimate of (a) the base rent (which may include periodic increases) that Landlord proposes to charge for the First Offer Space, based upon Landlord’s assessment of current market conditions, and which amount may be more or less than the Base Rent set forth in this Lease and shall be expressed on a per Adjusted Rentable Square Footage basis; (b) the tenant improvements, if any, Landlord proposes to install and/or any tenant improvement allowance, if any, that Landlord proposes to pay to a tenant in connection with a lease of the First Offer Space; (c) the anticipated date upon which possession of the First Offer Space will be available (the “ROFO Target Date”); (d) the period of rent abatement, if any; (e) the term for which

 

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Landlord proposes to lease the First Offer Space; (f) the location and approximate Adjusted Rentable Square Footage of the First Offer Space to be leased; and (g) any other material conditions or provisions relating to the leasing of the First Offer Space which vary from the provisions of this Lease (the terms in the foregoing clauses (a), (b), (c) and (d) being herein collectively referred to as “Material ROFO Economic Terms”).

35.3 Lease of First Offer Space.

35.3.1 Tenant’s Notice. If Tenant wishes to lease the First Offer Space on the terms specified by Landlord in the Offering Notice, Tenant shall so notify Landlord within seven (7) business days after receipt thereof (the “ROFO Exercise Period”), which notice shall be unconditional and irrevocable. Tenant may exercise its Right of First Offer only with respect to all of the First Offer Space identified in any Offering Notice.

35.3.2 Terms of Lease of First Offer Space. If Tenant timely exercises its Right of First Offer, then, subject to Section 35.4 below, the First Offer Space shall become a portion of the Premises on all of the terms and conditions set forth in the Offering Notice and otherwise on the terms and conditions of this Lease. The general manner of construction of any tenant improvements in any First Offer Space (e.g., Landlord-build or Tenant-build) shall be determined by the Offering Notice. If the Offering Notice specifies a Landlord-build, then the terms and conditions of the Work Letter shall generally apply with modifications as necessary to conform with (i) any differences between the initial Premises hereunder and the First Offer Space (such modifications to be reasonably approved by Landlord and Tenant), and (ii) any differences in such terms and conditions as may be expressly set forth in the Offering Notice. If the Offering Notice specifies a Tenant-build, then the terms and conditions set forth in Section 33.1.3 above with regards to Available Expansion Premises shall apply with modifications as necessary to conform with the differences described in clauses (i) and (ii) of the preceding sentence. If Landlord fails to deliver possession of the applicable First Offer Space on the applicable ROFO Target Date, Sections 2.3 and 2.4 above shall apply only with respect to the applicable First Offer Space.

35.3.3 Failure to Lease First Offer Space. If Tenant does not deliver its notice of exercise of its right to lease the First Offer Space (“ROFO Exercise Notice”) on or prior to the end of the ROFO Exercise Period, then Tenant’s Right of First Offer will lapse with respect to the applicable First Offer Space, Tenant shall be deemed to have rejected Landlord’s offer (“Tenant’s ROFO Rejection”), and the Right of First Offer will be of no further force and effect (unless and until again effective pursuant to this Section). Upon Tenant’s ROFO Rejection, Landlord shall have the right to lease the First Offer Space to any third party on the same or any other terms and conditions; provided, however, that if any of the Material ROFO Economic Terms to be paid by or provided to such third party for the First Offer Space are better from a tenant’s perspective than the corresponding Material ROFO Economic Terms initially offered to Tenant in the Offering Notice by seven and one-half percent (7 1/2%), or no lease is executed between Landlord and any third party within six (6) months after the date of the initial Tenant’s ROFO Rejection, Landlord shall reoffer the First Offer Space to Tenant, at such varying Material ROFO Economic Terms (as applicable) and in accordance with the procedure contained in this Article 35 before leasing the First Offer Space to any third party. Time is of the essence with respect to the provisions of this Section 35.3.

35.4 Conditions of Exercise. Notwithstanding any provision of this Article 35 to the contrary, if at the time Landlord intends to lease any First Offer Space, Tenant is in default beyond applicable notice and cure periods under any of the terms, covenants or conditions of this Lease, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right (but not the obligation) to terminate Tenant’s rights under this Article 35, and in such event Landlord shall not be required to deliver possession of any First Offer Space to Tenant. In addition, if at any time the

 

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Adjusted Rentable Square Feet of the Premises is less than one hundred nineteen thousand (119,000), Tenant’s rights under this Article 35 shall automatically terminate and be of no further force or effect. Nothing contained in this Article 35 shall be deemed to impose any obligation on Landlord to refrain from negotiating with the existing tenant(s) of the First Offer Space, to withhold the First Offer Space from the market, or to take any other action or omit to take any other action in order to make the First Offer Space available to Tenant.

35.5 Letter of Credit Amendment; Commissions. Within ten (10) business days after (a) delivery by Landlord of the applicable First Offer Space, if construction of the Tenant Improvements shall b a Tenant-build or (b) delivery of Tenant’s ROFO Exercise Notice if construction of the tenant improvements shall be a Landlord-build, Tenant shall deliver a replacement or amendment Letter of Credit to Landlord in the form required by Article 26 reflecting an increase by the amount, if any, necessary to cause the amount of such Letter of Credit to equal seven percent (7%) of Tenant’s total obligation to pay Base Rent for the period between Landlord’s delivery of the applicable First Offer Space and the end of the initial Term and in no event shall the Letter of Credit Amount be less than Two Million Five Hundred Thousand Dollars ($2,500,000) (or twelve and sixty three one-hundredths percent (12.63%) of such total Base Rent if Tenant has failed a Minimum Credit Test and in no event shall the Letter of Credit Amount in such event be less than Four Million Five Hundred Thousand Dollars ($4,500,000) unless Tenant subsequently satisfies the requirements set forth in Section 26.6 to reduce the Letter of Credit Amount after a failure of the Minimum Credit Test); provided, however, that the foregoing minimum Letter of Credit Amounts shall not apply if the Letter of Credit Amount has previously been reduced pursuant to Section 3.3.2(b) or Section 3.4.8(b) below such minimum Letter of Credit Amounts, in which case the terms of such Sections shall control. In no event shall any commission be due or payable to any brokers in connection with the leasing of the First Offer Space until receipt by Landlord of such amended or replacement Letter of Credit

35.6 Amendment to Lease. If Tenant leases any First Offer Space pursuant to this Article 35, Landlord shall prepare, subject to Tenant’s reasonable approval thereof, and Tenant shall promptly execute an amendment to this Lease to add any applicable First Offer Space to the Premises on the terms and conditions set forth in this Article 35.

35.7 Rights Personal to Original Tenant. Tenant’s right to lease the First Offer Space pursuant to this Article 35 is personal to, and may be exercised only by, the original named Tenant under this Lease (or any Permitted Assignee). If Tenant shall assign this Lease (other than to a Permitted Assignee), then immediately upon such assignment, Tenant’s right to lease the First Offer Space pursuant to this Article 35 shall automatically terminate and be of no further force or effect. No assignee (other than a Permitted Assignee) or subtenant shall have any right to lease First Offer Space pursuant to this Article 35.

36. Purchase Option.

36.1 Grant of Purchase Option. Landlord hereby grants Tenant a one-time right to purchase (the “Purchase Option”) the Project in accordance with the terms and conditions of this Article 36.

36.2 Offer Procedure.

36.2.1 If at any time during the Term of this Lease (as the same may be extended), Landlord desires to sell, convey or otherwise transfer the Project or any part thereof or interest therein, including, without limitation, any ground lease of the Project or any sale, conveyance or other transfer of interests in the entity constituting Landlord (collectively, a “Fee Transfer”), Landlord shall

 

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first give written notice (the “Purchase Offer Notice”) to Tenant of such proposed Fee Transfer. The Purchase Offer Notice shall state (a) the purchase price, (b) the amount of any earnest money deposit (which shall not be greater than five percent (5%) of the purchase price), (c) the length of any due diligence period (which shall not be less than thirty (30) days), pursuant to which Tenant may terminate the Purchase Agreement (defined below) for any reason in its sole discretion and receive its earnest money deposit, (d) the date of closing (which shall not be earlier than fifteen (15) days after waiver or expiration of the due diligence period), (e) the place for close of escrow, (f) the allocation of the expenses of closing between Landlord and Tenant, (g) the responsibilities for examination of the title to the Project and for issuance of title insurance to Tenant, (h) the responsibility for delivery of a survey of the Project, and (i) other material terms and conditions of the proposed Fee Transfer.

36.2.2 Upon receipt of the Purchase Offer Notice, Tenant shall have the right, for a period of fifteen (15) days (the “Acceptance Period”) to exercise the Purchase Option by giving Landlord written notice (“Acceptance Notice”) that Tenant desires to purchase the Project upon the terms and conditions contained in the Offer Notice. Tenant shall pay to Landlord or Landlord’s escrow officer designated in the Purchase Offer Notice, concurrently with Tenant’s of the Acceptance Notice, a refundable initial deposit in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the “Initial Deposit”). Any qualified or conditional acceptance by Tenant of the offer set forth in the Purchase Offer Notice shall be deemed a rejection of the offer. If Tenant fails to timely exercise the Purchase Option, or fails to timely pay the Initial Deposit as required herein, then, at Landlord’s sole option, Tenant’s exercise of the Purchase Option shall be null and void.

36.2.3 Tenant shall have no Purchase Option and Landlord need not provide Tenant with a Purchase Offer Notice, if (a) an Event of Default by Tenant under this Lease exists at the time a Purchase Offer Notice would otherwise be required to be sent under this Article 36 or (b) Tenant (or a Permitted Assignee) is not occupying at least 400,000 Adjusted Rentable Square Feet within the Building at the time a Purchase Offer Notice would otherwise be required to be sent under this Article 36.

36.3 Purchase Agreement. If, within such fifteen (15) day period, Tenant gives the Acceptance Notice, then Landlord and Tenant shall enter into a purchase and sale agreement (“Purchase Agreement”) that incorporates the terms and conditions set forth in the Offer Notice, is mutually acceptable to the parties and that is otherwise in a commercially reasonable form consistent with custom and practice for the sale of commercial properties in the City of San Francisco, State of California. Landlord will deliver a proposed Purchase Agreement within ten (10) days after receipt of the Acceptance Notice. The Purchase Agreement shall permit termination by Tenant at any time following a Casualty affecting the Premises, and a reasonable extension of the closing date following a casualty so that Tenant may assess the length of time needed to repair the Project for Tenant’s Permitted Use. In addition, the Purchase Agreement shall provide that Tenant (or a Permitted Assignee, if applicable) may assign the Purchase Agreement to a PSA Assignment Party or nominate or designate a PSA Assignment Party to take title to the Project at closing without the approval or consent of Landlord. Landlord and Tenant will execute and deliver the Purchase Agreement within thirty (30) days after delivery by Landlord of the proposed Purchase Agreement (the “PSA Negotiation Period”), with each of them being obligated to negotiate in good faith and having no right to request or otherwise seek any change in the terms set forth in the Offer Notice.

36.4 Rejection of Offer. If, within the Acceptance Period, Tenant declines or fails to give the Acceptance Notice, or Landlord and Tenant fail within the PSA Negotiation Period to enter in the Purchase Agreement notwithstanding good faith negotiation of the same, Landlord shall then (i) return or cause to be returned to Tenant the Initial Deposit and (ii) have the right, at any time thereafter for a period of nine (9) months, to consummate a Fee Transfer of the Project to any third party, unrelated to and unaffiliated with Landlord (“Third Party Purchaser”), without regard to the restrictions in the Purchase

 

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Option set forth in this Article 36 and on whatever terms and conditions Landlord may decide in its sole discretion to be acceptable, with the exception that the purchase price may not be less than ninety percent (90%) of the purchase price specified in the Offer Notice. So long as the purchase price paid by the Third Party Purchaser is not less than ninety percent (90%) of the purchase price specified in the Offer Notice, nothing contained in this Article 36 will require Landlord to give any notice of any kind to Tenant if the terms of the sale to the Third Party Purchaser are not the same as the terms of the Offer Notice. If the purchase price to be paid by the Third Party Purchaser is less than ninety percent (90%) of the purchase price specified in the Offer Notice or nine (9) months shall have passed since the Offer Notice, then Landlord shall deliver to Tenant an updated Offer Notice before selling the Project to a Third Party Purchaser, provided that Tenant shall deliver its Acceptance Notice within seven (7) days after receipt of Landlord’s updated Offer Notice.

36.5 Excluded Transfers. The Purchase Option and the terms of this Article 36 shall not apply to (a) any sales, transfers, conveyances, or encumbrances of the Project, or any part thereof, in connection with the financing or refinancing thereof, by Landlord, including, without limitation, any sale by foreclosure or deed in lieu of foreclosure, (b) any sales, transfer, conveyances of the Project, or any part thereof, to or from Landlord and any Landlord Affiliate, (c) any sales, transfers, conveyances, assignments, financing, refinancing or restructuring of any direct or indirect interest in Landlord to or from any Landlord Affiliate or (d) any sales, transfers, conveyances or encumbrances of the Project, or any part thereof, in connection with a sale by Landlord of multiple properties of which the Project, or any part thereof, is only a portion; provided that any of the foregoing sales, transfers, conveyances, financings, refinancings, restructurings or encumbrances are made for a good faith business purpose and not, whether in a single transaction or in a series of transactions, entered into as a subterfuge to evade Landlord’s obligations set forth in this Article 36.

36.6 Condition of Title. If Tenant gives an Acceptance Notice, title to the Project shall be conveyed from Landlord to Tenant by grant deed (the “Deed”), in a form reasonably satisfactory to the parties, subject to: (i) a lien to secure payment of real estate taxes and assessments not delinquent; (ii) this Lease, if not terminated by the purchase of the Project by Tenant hereunder, and any sublease made pursuant thereto; and (iii) any exceptions, reservations, easements or encumbrances of record which are approved by Tenant in accordance with the Purchase Agreement. Notwithstanding anything to the contrary contained herein, in no event shall Landlord have any obligation to remove any title exceptions disapproved by Tenant other than (a) liens or encumbrances affecting the Project which secure an obligation to pay money (including any financing obtained by Landlord and any taxes or assessments due prior to the closing of the sale); and (b) any exceptions to title and survey created by Landlord on or after the date of the Purchase Agreement without the prior written consent of Tenant.

36.7 Right to Effect a Like Kind Exchange. At the option of either party, the electing party may elect to consummate the purchase and sale as a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1954, as amended. If a party so elects, the other party shall cooperate with the electing party, executing such documents and taking such action as may be reasonably necessary in order to effectuate this transaction as a like-kind exchange; provided, however, that (i) the other party’s cooperation hereunder shall be without cost or expense to such party; (ii) the electing party shall bear all costs and expenses in connection with any such exchange transaction in excess of the costs and expenses which would have otherwise been incurred in acquiring the Project by means of a straight purchase, so that the net effect to the other party shall be identical to that which would have resulted had the transaction closed on a purchase and sale basis; (iii) the other party shall not be required to acquire or take title to (or agree to acquire to take title to) any other property in connection with such exchange; and (iv) the electing party shall indemnify, defend and hold the other party harmless from any and all Claims which the other party may incur or sustain, directly or indirectly, related to or in connection with, or arising out of, the consummation of the transaction as a like-kind exchange as contemplated hereunder.

 

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36.8 Broker’s Commission. Each party warrants and represents that it has not engaged the services of or had contacts with any licensed real estate broker or finder in connection with the Purchase Option in a manner sufficient to provide any such real estate broker or finder with a basis for claiming to be the procuring cause of the transactions contemplated by this Article 36, and each party shall indemnify, defend and hold the other harmless of and from any obligation to pay a commission or finder’s fee to any such broker or finder based upon contacts between any such person and the indemnifying party, together with any other costs or expenses, including reasonable attorneys’ fees, incurred by the indemnified party in connection with such claim.

36.9 No Implied Obligation. Nothing contained in this Article 36 is intended to imply or create any obligation of Landlord to sell any portion of or all of the Project to any person at any time. The Purchase Option will be exercisable by Tenant if, and only if, Landlord elects in its discretion to sell all or any portion of the Project.

36.10 Personal to Original Tenant. Notwithstanding anything set forth in this Lease to the contrary, the Purchase Option shall be personal to the original named Tenant herein (or a Permitted Assignee) and may only be exercised by the Tenant (or a Permitted Assignee), and may not be exercised by any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease.

36.11 Time of Essence. Time is of the essence with respect to the provisions of this Article 36.

37. Rooftop Parking Area; Terrace and Dog Run.

37.1 Use. Subject to the applicable terms and conditions contained in this Lease (including Article 10 and this Article 37), Tenant shall have the right to use a portion of the rooftop level of the Parking Garage for an outside terrace, including a dog run, within an area not to exceed Two Thousand (2,000) square feet and in a location mutually acceptable to Landlord and Tenant (the “Parking Garage Roof Space”), provided that the change in use of the Parking Garage Roof Space as an outside terrace or dog run does not impair or diminish (now or in the future) (a) the use of the Parking Garage (including the roof top level) for parking under Applicable Laws or governmental approvals or permits in effect as of the Lease Date or (b) the total number of parking spaces permitted within the Project as of the Lease Date. The Parking Garage Roof Space shall be used solely by Tenant and Tenant Parties, and in no event shall it be open to the public.

37.2 Improvements to Parking Garage Roof Space. Subject to obtaining all governmental approvals and permits and compliance with Applicable Laws, Tenant, at Tenant’s expense (with no right to apply the Tenant Improvement Allowance to such expense) may improve the Parking Garage Roof Space for Tenant’s intended use thereof as a terrace and dog run. The plans and specifications for improvements to the Parking Garage Roof Space shall be subject to the prior written approval of Landlord, not to be unreasonably withheld, conditioned or delayed, and Tenant shall comply with the provisions of Article 10 in designing and constructing such improvements. Tenant acknowledges that Landlord may withhold its approval of any proposed plans that, in Landlord’s reasonable discretion, would impair the structural elements of the Parking Garage. Landlord makes no representations or warranties regarding the suitability of the Parking for construction of the improvements, the likelihood of or conditions to obtaining permits therefor, or the estimated costs of construction or maintenance, and Tenant shall conduct its own investigation with respect to such matters.

37.3 Protection of Project. Tenant shall protect the Building from damage, and shall perform all installations, repairs and maintenance and use the Parking Garage Roof Space in a manner so as to keep in full force and effect any warranties concerning the Project. In all cases, Tenant shall use the

 

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contractor reasonably approved by Landlord to perform any penetration or other work that may affect the integrity of the Project. Tenant shall not at any time exceed the maximum load capacity of the Parking Garage Roof Space, and any damage to the Parking Garage Roof Space or any other portions of the Project resulting from Tenant’s installation, construction, maintenance, or use of the terrace and dog run on the Parking Garage Roof Space, shall be repaired by Tenant at Tenant’s expense. Landlord reserves the right to temporarily deny or restrict access to the Parking Garage Roof Space from time to time as is reasonably necessary or appropriate in connection with the repair, replacement, alteration or improvement of the Project.

37.4 Use and Maintenance.

37.4.1 Restrictions on Use. Tenant, at Tenant’s expense, shall comply with all Applicable Laws relating to the construction, installation, maintenance, operation and use of the Parking Garage Roof Space and the Building Rules. Tenant agrees not to (i) cause, maintain or permit any nuisance in, on, or about the Parking Garage Roof Space, (ii) create any safety hazard or (iii) permit music, noises, odors, lights, or other installations or activities that would unreasonably annoy or interfere with any other occupants of the Building or otherwise be inconsistent with Comparable Buildings. Without limiting the generality of the foregoing, Tenant expressly agrees not to permit any cooking on the Parking Garage Roof Space. Smoking shall be permitted within the Parking Garage Roof Space if and to the extent permitted by Applicable Laws.

37.4.2 Scope of Approvals. All furniture and other personal property shall be adequately attached or otherwise installed so as not to create a safety hazard.

37.4.3 Maintenance and Furnishings. Tenant, at Tenant’s expense, shall at all times maintain the Parking Garage Roof Space and all elements thereof in good, clean and sightly condition and repair. Tenant shall provide suitable receptacles for collecting trash on the Parking Garage Roof Space.

37.4.4 Performance of Other Obligations. In no event shall Tenant’s obligation to pay Rent or to perform any of its other obligations under this Lease unrelated to the Parking Garage Roof Space be affected by requirements imposed by governmental authorities or the Building Rules imposed by Landlord with respect to the Parking Garage Roof Space or Tenant’s inability to use or restricted use of the Parking Garage Roof Space for any reason.

37.5 Costs.

37.5.1 Charges for Parking Roof Space. Tenant shall pay all Parking Charges attributable to any parking spaces that are eliminated by use of the Parking Garage Roof Space pursuant to this Article 37. Such Parking Charges shall constitute Rent hereunder and shall be payable in advance, at the same time and in the same manner as provided in Section 30.1 above.

37.5.2 Reimbursement of Costs. In addition to other costs specified herein, Tenant shall reimburse Landlord within thirty (30) days after request (together with reasonable supporting documentation) for any incremental increase in trash removal costs incurred by Landlord above Landlord’s normal trash removal costs in connection with the remainder of the Premises as a result of or in connection with the Parking Garage Roof Space.

37.6 Conditions to Continued Use. Tenant’s right to use the Parking Garage Roof Space pursuant to this Article 37 shall not be separately assigned or subleased other than in connection with an assignment of the Lease or a sublease of all or any portion of the Premises. In addition, if at any

 

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time the Adjusted Rentable Square Feet of the Premises is less than one hundred nineteen thousand (119,000), Tenant’s rights under this Article 37 shall automatically terminate and be of no further force or effect.

37.7 Lease Provisions. The term “Premises” shall include the Parking Garage Roof Space for all purposes of this Lease (other than the payment of Base Rent and the calculation of percentages and figures based upon the Adjusted Rentable Square Footage of the Premises, including Tenant’s Percentage Share and the Tenant Improvement Allowance). Without limiting the generality of the foregoing, Tenant shall comply with Article 10 in designing and constructing any improvements to the Parking Garage Roof Space, Tenant shall cause the insurance required pursuant to Article 14 to cover its use of the Parking Garage Roof Space, and Tenant agrees that the waiver and indemnification contained in Articles 15 and 16 shall apply to the use, installation, repair and maintenance of the Parking Garage Roof Space. Tenant assumes all liability and risk related to its use of the Parking Garage Roof Space and damage to the Parking Garage Roof Space or personal property thereon from any cause whatsoever, including, but not limited to, theft, vandalism or damage by the elements, except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Parties (which liability shall be subject to Article 15).

38. Tenant’s Rooftop and Other Equipment.

38.1 Grant of License. Subject to the applicable terms and conditions contained in this Lease (including Article 10 above and this Article 38), Tenant shall have a license (the “License”), at no additional charge to Tenant, to install, operate, maintain and use, during the Term: (a) telecommunications antennae, microwave dishes, satellite dishes, cell phone boosters, an Additional Generator (in accordance with Section 7.10) and other communications equipment to serve Tenant’s business in the Premises (collectively, “Rooftop Equipment”) on the roof or other setback areas of the Building, in a location mutually agreeable to Landlord and Tenant in their reasonable discretion (the “License Area”); and (b) connections for the Rooftop Equipment for (i) electrical wiring to the Building’s existing electrical supply and (ii) cable or similar connection necessary to connect the Rooftop Equipment with Tenant’s related equipment located in the Premises. The routes or paths for such wiring and connections shall be through the Building’s existing risers, conduits and shafts, subject to reasonable space limitations and Landlord’s Building Rules for use of such areas, and in all events subject to Landlord’s reasonable approval of plans and installation pursuant to other provisions of this Lease, including Article 10 above (such routes or paths are collectively referred to as the “Cable Path” and all such electrical and other connections are referred to, collectively, as the “Connections”). The Rooftop Equipment and Connections are collectively referred to as the “Equipment”. All costs associated with the design, fabrication, engineering, permitting, installation, screening, maintenance, repair and removal of the Rooftop Equipment shall be borne solely by Tenant. Tenant shall not utilize the Equipment or the License Area as a direct means of generating revenue (as distinguished from utilizing the Equipment to generate revenue through the conduct of Tenant’s business, which shall be permitted).

38.2 Interference. Without limiting the generality of any other provision hereof, Tenant shall install, maintain and operate the Equipment in a manner so as to not cause any material adverse electrical, electromagnetic, radio frequency or other material adverse interference with the use and operation of any: (a) television or radio equipment in or about the Project; (b) transmitting, receiving or master television, telecommunications or microwave antennae equipment currently or hereafter located in any portion of the Project; or (c) radio communication system now or hereafter used or desired to be used by Landlord or any current licensee or tenant of Landlord (and, to the extent commercially reasonable, any future licensee or tenant of Landlord, but only provided that the same does not impair the

 

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functionality of Tenant’s Equipment). Upon notice of any such interference, Tenant shall promptly cooperate with Landlord to (i) promptly identify the source of the interference and (ii) promptly correct the interference to the reasonable satisfaction of Landlord. If any such interference caused by Tenant has not been corrected within thirty (30) days after notice to Tenant, or such longer period as may be reasonably necessary to correct the interference provided Tenant commences to cure such interference within such thirty (30) day period and thereafter diligently prosecutes such cure to completion, then Landlord may (A) require Tenant to remove the specific Equipment causing such interference, or (B) eliminate the interference at Tenant’s expense. If the equipment of any other party causes interference with the Equipment, Tenant shall reasonably cooperate with such other party to resolve such interference in a mutually acceptable manner.

38.3 Roof Repairs. If Landlord desires to perform roof repairs and/or roof replacements to the Building (the “Roof Repairs”), Landlord shall give Tenant at least ten (10) business days’ prior written notice of the date Landlord intends to commence such Roof Repairs (except in the event of an emergency, in which event Landlord shall furnish Tenant with reasonable notice in light of the circumstances), along with a description of the work scheduled to be performed, where it is scheduled to be performed on the roof, and an estimate of the time frame required for that performance. Tenant shall, within ten (10) business days following receipt of such notice, undertake such measures as it deems suitable to protect the Equipment from interference by Landlord, its agents, contractors or employees, in the course of any Roof Repairs.

38.4 Rules and Regulations. Without limiting the applicable provisions of this Lease, Tenant’s use of the roof or setback areas of the Building for the installation, operation, maintenance and use of the Equipment shall be subject to the terms and conditions contained in the Rooftop Work Rules and Regulations attached hereto as Exhibit B-2.

38.5 Transfer of Rights. Tenant’s rights under this Article 38 may be assigned or transferred to Permitted Transferees or other Transferees approved by Landlord pursuant to Article 17 in connection with an assignment or sublease so long as the total License Area used by Tenant, Permitted Transferees or such other approved Transferees does not exceed Tenant’s Percentage Share of the total roof area that may be used for Rooftop Equipment.

39. Sidewalk Areas. Subject to the applicable terms and conditions of this Article 39, Tenant shall be allowed to create an outdoor seating area for use by Tenant’s employees on the sidewalk contiguous to the Eighth Street side of the Building in the location depicted on Exhibit A-6 (the “Sidewalk Area”). Tenant’s use of the Sidewalk Area is subject to Tenant’s compliance, at its sole cost and expenses, with all Applicable Laws, at all times. Tenant shall not be obligated to pay Rent for the use of the Sidewalk Area. Tenant may, at Tenant’s option, make modifications to the Sidewalk Area (including, but not limited to, the addition of planters) and may place in the Sidewalk Area tables, chairs, umbrellas, and planters provided Tenant obtains the prior approval of Landlord and any governmental approvals and permits to such modifications. Landlord shall have reasonable rights of approval and control over all visual and esthetic elements of the Sidewalk Area. Without limiting the generality of the foregoing, the furniture used within the Sidewalk Area to the extent visible from the exterior of the Project, shall be subject to the prior approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. All furniture and other personal property shall be adequately attached or otherwise installed so as not to create a safety hazard. Tenant, at its cost and expense, shall keep the Sidewalk Area and the sidewalk area immediately surrounding it neat and clean of all trash, debris and food stains for a neat, clean and presentable appearance. In the event Tenant fails to so maintain the Sidewalk Area and the sidewalk area immediately surrounding it, then Landlord shall notify Tenant, and Tenant shall promptly remedy the issue without cost to the Landlord. Tenant’s failure to remedy the issue to Landlord’s reasonable satisfaction within five (5) days of notice thereof shall permit Landlord to

 

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thereafter remedy the issue at Tenant’s expense, which shall be payable to Landlord within thirty (30) days after Landlord’s demand for reimbursement for the reasonable cost thereof. Tenant shall cause the insurance required pursuant to Article 14 to cover its use of the Sidewalk Area, and Tenant and Landlord agree that the waiver and indemnification contained in Articles 15 and 16 shall apply to the use, installation, repair and maintenance of the Sidewalk Area. Tenant assumes all liability and risk related to its use of the Sidewalk Area and damage to personal property thereon from any cause whatsoever, including, but not limited to, theft, vandalism or damage by the elements.

40. Cafeteria.

40.1 Construction and Use. Subject to the terms and conditions of this Article 40 and the Work Letter as part of Tenant’s design of the initial Tenant Improvements, Tenant may include a cafeteria or kitchen with commercial grade equipment (“Cafeteria”) in the Premises; provided, however, that Tenant, at Tenant’s sole cost and expense (subject to application of the Tenant Improvement Allowance), shall pay for the purchase and installation of all fixtures in the Cafeteria that are not customary office fixtures, including stoves and ovens. The location of the Cafeteria shall be in the location set forth in the space plan attached as Schedule 2 to the Work Letter. Tenant, at Tenant’s expense, shall obtain and maintain all governmental permits and licenses necessary to operate the Cafeteria and shall comply with all Applicable Laws relating to the maintenance, operation and use thereof and the Building Rules.

40.2 Operation. Tenant acknowledges that, in the absence of adequate preventive measures, the Cafeteria could create objectionable fumes, vapors or odors, pests, unreasonable noise and other conditions that would cause annoyance to and disruption of the other tenants and occupants of the Project. Accordingly, as a material inducement to Landlord to enter into this Lease, Tenant agrees as follows:

40.2.1 Tenant shall: (i) furnish, install and maintain ventilation, exhaust and drainage systems serving the Cafeteria to the extent required by Applicable Laws and provide such other exhaust, cleaning or similar systems necessary to prevent any offensive smoke, fumes, vapors, offensive odors or other offensive substances from emanating from the Cafeteria as more fully set forth below; (ii) fireproof all window treatments in the Cafeteria, including, without limitation, draperies and curtains to the extent required by Applicable Laws, and submit to Landlord, upon Landlord’s request, current certificates evidencing such fireproofing; and (iii) operate the Cafeteria in a clean and sanitary manner so as to prevent infestation by pests, and, in addition, whenever there shall be evidence of any infestation, employ contractors reasonably approved by Landlord to eliminate the infestation.

40.2.2 Tenant shall install grease traps/interceptors located within the Cafeteria as required by Applicable Laws for all food preparation areas having pot sinks or any grease-producing appliances that discharge into the waste system. Tenant shall be responsible for the proper care, cleaning and maintenance of the grease traps located within the Cafeteria and any piping required therefor in accordance with all Applicable Laws. Tenant shall follow all reasonable recommendations of Tenant’s grease trap maintenance provider regarding the maintenance of the grease traps, including any recommended chemical treatments and any recommended intervals for the emptying and/or hydrojetting of the grease traps and connecting pipes. Landlord shall have the right to oversee any work performed by such grease trap maintenance provider. Tenant, as additional rent, shall be liable for the cost of any maintenance to or repairs of any of the Building pumps and pipes reasonably documented by Landlord to the extent necessitated by Tenant’s failure to comply with the terms and conditions of this provision.

40.2.3 If, in the reasonable opinion of Landlord, offensive odors are escaping from the Cafeteria into the Project or Common Areas, Landlord shall promptly notify Tenant and Tenant

 

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shall use diligent efforts to cure such situation. If such objectionable odors continue to escape from the Cafeteria into the Project or Common Areas after notice from Landlord, then Tenant shall have thirty (30) days to commence to cure such situation and thereafter shall diligently prosecute such cure to completion.

40.2.4 Tenant shall install such filters and shafts as required by Applicable Laws. Tenant shall be responsible for the proper care, cleaning and maintenance of the filters and shafts located within the Cafeteria, or exclusively serving the Cafeteria, in accordance with all Applicable Laws, and shall procure a qualified maintenance contractor reasonably approved by Landlord under a commercially reasonable maintenance contract for regular maintenance of the shafts. Tenant shall, at its own expense, cause any such filters to be cleaned on a monthly basis and any such shafts on an annual basis. Tenant shall follow all reasonable recommendations of Tenant’s shaft maintenance provider regarding the maintenance of the shafts.

40.2.5 If Tenant shall at any time serve alcoholic beverages in the Cafeteria, Tenant shall, at its sole cost and expense, provide and maintain all licenses and/or permits required by Applicable Laws and shall at all times comply with Applicable Law related to the service of alcoholic beverages. At all times during the Lease Term during which Tenant serves alcoholic beverages of any kind, Tenant, at its expense, shall maintain an insurance policy or endorsement covering liability related to the serving of alcoholic beverages, which policy or endorsement shall be in form and content reasonably acceptable to Landlord. All alcohol served at the Premises shall be consumed within the Premises only, and in no event may Tenant serve or permit the consumption of alcohol outside of the Premises.

40.2.6 Notwithstanding anything to the contrary set forth herein, Tenant may at any time, cease operating the Cafeteria, and subject to the provisions of Article 10, (i) remove the improvements in the Cafeteria and (ii) install improvements customary for general office use in the former Cafeteria.

40.3 Costs. In addition to other costs specified herein, Tenant shall reimburse Landlord within thirty (30) days after request (together with reasonable supporting documentation) for any incremental increase in trash removal costs incurred by Landlord above Landlord’s normal trash removal costs in connection with the remainder of the Premises as a result of or in connection with the Cafeteria.

41. Tenant Competitors. Without Tenant’s prior written consent, which consent Tenant may withhold in its sole and absolute discretion, during the Term, (i) Landlord shall not enter into a new lease, license or other agreement for space in the Project to any entity listed on Exhibit M attached hereto (each a “Tenant Competitor”), (ii) with respect to any lease entered into by Landlord on or before the Lease Date, permit any tenant or other occupant to assign its lease, license or other agreement for space in the Project or sublet any portion of its premises (an “Occupancy Agreement”) to any Tenant Competitor, if Landlord has the right under such lease to disapprove or withhold its consent to the same, or (iii) with respect to any lease entered into by Landlord following the Lease Date, permit any tenant or other occupant to enter into any Occupancy Agreement with any Tenant Competitor. The determination of whether any person or entity is a Tenant Competitor shall be made at the time Landlord proposes to enter into the applicable Occupancy Agreement. Landlord shall not be deemed to have violated this Section if any tenant, licensee or other occupant of the Project assigns its rights under any Occupancy Agreement to a Tenant Competitor by merger, acquisition or other similar corporate transaction over which Landlord has no approval rights. The restriction set forth in this Article 41 shall automatically terminate if the original named Tenant under this Lease shall assign this Lease other than to a Permitted Assignee. Once terminated, the restriction set forth in this Article 41 shall be of no force or effect for the balance of the Term, notwithstanding any subsequent change in circumstance with respect to Tenant or any Permitted

 

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Assignee, any Tenant Competitor, or otherwise. Once each Lease Year, during the thirty (30)-day period prior to the expiration of such Lease Year, Tenant shall be entitled to change up to two (2) of the entities listed on Exhibit M upon thirty (30) days’ prior written notice to Landlord, but the list shall in no event exceed a total of five (5) entities at any given time and all entities on the list shall be direct competitors of Tenant whose primary business involves online social gaming. Any change in the entities list on Exhibit M shall be effective only on a prospective basis and Landlord shall not be liable to Tenant for any Occupancy Agreement entered into by Landlord with respect to such new entity prior to receipt of Tenant’s notice adding such entity to Exhibit M. If at the time Landlord receives Tenant’s notice proposing that any new entity be added to Exhibit M Landlord is negotiating an Occupancy Agreement with any new entity who Tenant proposes to add to Exhibit M, then Landlord may nonetheless enter into such Occupancy Agreement without liability to Tenant. In addition to any other rights and remedies available at law or in equity, if Landlord defaults in the performance of its obligations set forth in this Section 41, then Tenant shall have the right to terminate this Lease upon written notice to Landlord.

42. Dogs.

42.1 General Conditions. Subject to the provisions of this Article 42, and the Building Rules, Tenant shall be permitted to have dogs in the Premises. Dogs may be brought into the Building only through (a) the entrance located at the Eighth Street entrance or (b) the elevator designated for Tenant’s exclusive use and shall immediately be taken to the Premises via the most westerly elevator. All dogs shall be under the physical control and supervision of Tenant’s employees at all times and must be on leashes while in any area of the Project outside of the Premises, including, but not limited to, interior and exterior Common Areas. All dogs brought into the Premises shall have been properly vaccinated, and Tenant shall provide Landlord with satisfactory evidence of such vaccinations within one (1) business day after request, or Tenant will not be permitted to bring the applicable dog for which Tenant cannot provide such evidence into the Premises. Tenant shall diligently endeavor to prevent any objectionable dog-related noises or odors to emanate from the Premises. Tenant shall diligently endeavor to prevent dogs from relieving themselves of bodily waste inside the Building or any landscaped area of the Project. Tenant shall immediately cause all bodily waste from dogs brought into the Project by Tenant Parties to be placed in plastic bags and disposed of in trash receptacles designated by Landlord. Tenant shall not allow any dog in the Premises or the Project if such dog has previously exhibited dangerously aggressive behavior. Tenant shall diligently endeavor to prevent any dogs to unreasonably interfere with other tenants or those having business in the Building.

42.2 Costs and Expenses. In addition to other costs specified herein, Tenant shall reimburse Landlord within thirty (30) days after request (together with reasonable supporting documentation) for any incremental increase in janitorial or trash removal costs incurred by Landlord above Landlord’s normal janitorial expenses in connection with the remainder of the Building as the result of allowing dogs into the Project.

42.3 Insurance; Indemnity. Tenant shall cause the insurance policies required to be maintained pursuant to Article 14 above to contain specific coverage for any Claims arising from or in connection with dogs brought into the Premises, the Project or the Parking Garage by Tenant Parties, and Tenant shall provide Landlord with satisfactory evidence of such coverage within one (1) business day after request. Without limiting the provisions of Article 16 above, Tenant hereby agrees to protect, defend, indemnify and hold Landlord and the other Indemnitees, and each of them, harmless from and against any and all Claims arising from or connected in any way with dogs brought into the Premises, the Project or the Parking Garage by Tenant Parties (except, with respect to any Indemnitee, to the extent caused by the gross negligence or willful misconduct of such Indemnitee and not covered by the insurance required to be carried by Tenant under this Lease or except to the extent such limitation on liability is prohibited by Applicable Laws), including (a) any violation of Applicable Laws, (b) any

 

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personal injuries or property damage and (c) any maintenance or repair costs. The foregoing indemnity shall survive the expiration or earlier termination of this Lease.

42.4 Rights Personal to Original Tenant. Tenant’s right to bring dogs into the Premises pursuant to this Article 42 is personal to the original named Tenant under this Lease (or any Permitted Assignee), and shall apply only to the portions of the Premises occupied by Tenant or a Permitted Assignee. If Tenant shall assign this Lease (other than to a Permitted Assignee) or sublet all or any portion of the Premises (other than to a Permitted Assignee), then immediately upon such assignment or subletting, the right to bring dogs into the Premises or such subleased space shall automatically terminate and be of no further force or effect.

43. Storage Premises. Tenant shall rent four hundred seventy-five (475) Adjusted Rentable Square Feet of storage space during the Term, as more particularly set forth on Exhibit A-1 (the “Storage Space”). The Storage Space shall be leased at a gross rental rate of $12.00 per Adjusted Rentable Square Feet per year (the “Storage Rent”). Tenant shall pay Storage Rent on a monthly basis at the same time and in the same manner as Base Rent, and shall constitute Rent under the Lease. All Storage Space leased by Tenant shall be leased in its existing, “as is” condition, and Tenant shall be fully responsible for repairing any damage to the Storage Space resulting from or relating to Tenant’s use thereof. Tenant acknowledges that Landlord shall have no obligation to provide security for the Storage Space beyond Landlord’s general security obligations set forth in Section 8.3 hereof. Tenant shall comply with such reasonable rules and regulations as promulgated by Landlord from time to time pertaining to the use of such Storage Space, provided they do not conflict with this Lease. Tenant’s insurance and indemnification obligations under the Lease shall also pertain to Tenant’s use of the Storage Space.

44. Signs.

44.1 Building Directory. Landlord shall, at no cost to Tenant, reserve a pro-rata share of space on the computerized Building directory displaying the name of tenants for purposes of identifying Tenant’s name. Tenant shall have the right, from time to time, to change the name or names set forth in such directories.

44.2 Interior Signage.

44.2.1 Landlord, at its cost, shall provide and install initial identifying signage for Tenant in the elevator lobby of each floor of the Building on which the Premises is located, which signage shall (at Tenant’s option) incorporate Tenant’s name, logo or other identifying marks and shall otherwise comply with the Building’s standard signage program. Any subsequent identifying signage shall be procured and installed by Landlord at Tenant’s expense. Tenant, at its sole cost, may provide and install signage at any entrance to the Premises, provided that: (a) Tenant shall obtain Landlord’s prior approval of the material, typeface, graphic format, proportions, precise location, size, design, and method of attachment of such signage, which shall not be unreasonably withheld, conditioned or delayed and (b) such signage shall comply with the Building’s standard signage program and all Applicable Laws.

44.2.2 Tenant shall not place on any portion of the Premises (excluding the door to any suite within the Premises) any sign, poster, placard, lettering, banner, displays, graphic, advertising, or other material that is visible from the exterior of the Premises without Landlord’s prior written approval, which approval may be withheld in Landlord’s sole and absolute discretion. If Tenant violates any provision of this Section 44.2.2, Landlord shall have the immediate right to remove any non-complying sign without notice to and at the expense of Tenant.

 

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44.3 Exterior Signs. Except as provided in this Section 44.3, Tenant shall not place on any portion of the exterior of the Building any sign, placard, lettering, banner, displays, graphic, decor or other advertising or communicative material without Landlord’s prior written approval, which approval may be withheld in Landlord’s sole and absolute discretion.

44.3.1 LED Signage. Beginning as of the Lease Date, Tenant shall have the exclusive right to use, control and display messages, graphics or other displays on the two (2) LED electronic message boards currently located on the exterior of the Building (“LED Signs”) to display advertisements and other non-offensive messages, graphics or other displays. Subject to the foregoing, Landlord shall have no prior approval rights with respect to the content, design or format of Tenant’s messages on the LED Signs. Tenant’s use of the LED Signs as provided in this Section 44.3.1 shall be at no cost to Tenant and shall at all times be in accordance with Applicable Laws. Landlord makes no representations or warranties as to the operation of the LED Signs or as to the quality of the electronic display of the LED Signs. Tenant shall have the right, at its cost, but not the obligation, to update or upgrade the LED Signs, including the software therefor, subject to Tenant’s compliance with Applicable Laws with respect to such updates and upgrades. Notwithstanding anything to the contrary contained herein (i) the LED Signs shall remain the property of Landlord for all purposes, (ii) Tenant shall maintain the LED Signs in good and sightly condition and repair throughout the Term, (iii) Landlord shall not remove the LED Signs from the Building or otherwise deactivate or reduce or eliminate any functionality of the LED Signs (except in the case of an emergency) and (iv) Landlord shall insure the LED Signs in accordance with Section 14.3 above and repair or replace the LED Signs after any Casualty. Landlord shall grant Tenant exclusive access to and use of all apparatus, devices and equipment necessary to program, operate, use and maintain the LED Signs and access to the portions of the Project wherein such apparatus, devices and equipment are or may be located. Subject to the requirements of Applicable Laws, Tenant shall not permit any third parties to post advertisements or other messages on the LED Signs except in connection with Tenant’s or any Tenant Affiliate’s business or the business of any direct or indirect subtenant of Tenant.

44.3.2 Building Address Signage. Subject to the terms and conditions set forth in this Article 44, beginning as of the date which is ninety (90) days prior to the Target Phase 1 Completion Date, Tenant shall have the right but not the obligation to replace the existing portion of the LED Signs bearing the address of 650 Townsend with a sign bearing the address of 699 Eighth Street and/or Tenant’s name, logo or other identifying marks (“Tenant’s Address Sign”) provided that any such change or replacement shall not result in any diminishment or impairment of the existing approvals and permits for the LED Signs. Tenant shall have the exclusive right to use the 699 Eighth Street address for its Premises so long as the Premises is comprised of at least one hundred nineteen thousand (119,000) Adjusted Rentable Square Feet.

44.3.3 8th Street Signage. Subject to the terms and conditions set forth in this Article 44, beginning as of the of the date which is ninety (90) days prior to the Target Phase 1 Completion Date and throughout the Term, Tenant shall have the exclusive right, at Tenant’s sole cost and expense, to install any additional signage (including monument signage) on the 8th Street side of the exterior of the Building to the extent permitted by Applicable Laws (“8th Street Signage”). For avoidance of doubt, Tenant’s right to install 8th Street Signage shall include, without limitation, the right to install new monument signage, utilize existing monument signage or install signage on any parapet on the 8th Street side of the Building to the extent permitted by Applicable Laws. Landlord shall have the right to approve the material, typeface, graphic format, proportions, precise location, size and design of any 8th Street Signage, such approval not to be unreasonably withheld, conditioned or delayed. Landlord shall have the right to reasonably approve the location of all penetrations and runs, cabling installations, and means of affixing or mounting the 8th Street Signage. Landlord shall grant or withhold any approval of the 8th Street Signage set forth in this Section 44.3.3 within eight (8) business days after receipt of

 

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request. If Landlord fails to respond to Tenant’s request within such eight (8) business day period, Tenant may provide a second request for approval to Landlord, and if Landlord fails to respond within two (2) business days after receipt of Tenant’s second request, then Landlord’s approval shall be deemed given. The exact location, size, design, material, graphic format, and proportions of the 8th Street Signage shall be subject to the limitations set forth under Applicable Laws and the permits and approvals obtained by Tenant for the 8th Street Signage. Subject to the terms and conditions set forth in this Section 44.3.3 and the limitations set forth under Applicable Laws and the permits and approvals obtained by Tenant for the 8th Street Signage, Tenant shall have the right from time to time to change the name, size, design, material, graphic formation and proportions of any 8th Street Signage.

44.3.4 Townsend Street Signage. Subject to the terms and conditions set forth in this Article 44, beginning as of the date which is ninety (90) days prior to the Target Phase 1 Completion Date and throughout the Term, Tenant shall have the exclusive right, at Tenant’s sole cost and expenses, to install any additional signage on the Townsend Street side of the exterior of the Building to the extent permitted by Applicable Laws (“Townsend Street Signage”). For avoidance of doubt, Tenant’s right to install Townsend Street Signage shall include, without limitation, the right to install signage on any parapet on the Townsend Street side of the Building to the extent permitted by Applicable Laws. Landlord shall have the right to approve the material, graphic format, proportions, precise location, size and design of any Townsend Street Signage, such approval not to be unreasonably withheld, conditioned or delayed. Landlord shall have the right to reasonably approve the location of all penetrations and runs, cabling installations, and means of affixing or mounting any Townsend Street Signage to the Building. Landlord shall grant or withhold any approval of any Townsend Street Signage set forth in this Section 44.3.4 within eight (8) business days after receipt of request. If Landlord fails to respond to Tenant’s request within such eight (8) business day period, Tenant may provide a second request for approval to Landlord, and if Landlord fails to respond within two (2) business days after receipt of Tenant’s second request, then Landlord’s approval shall be deemed given. The exact location, size, design, material, graphic format, and proportions of any Townsend Street Signage shall be subject to the limitations set forth under Applicable Laws and the permits and approvals obtained by Tenant for such Townsend Street Signage. Subject to the terms and conditions set forth in this Section 44.3.4 and the limitations set forth under Applicable Laws and the permits and approvals obtained by Tenant for any Townsend Street Signage, Tenant shall have the right from time to time to change the name, size, design, material, graphic formation and proportions of any Townsend Street Signage.

44.4 Approvals. Tenant, at Tenant’s expense, shall be responsible for obtaining all required permits and approvals for each of Tenant’s Address Sign, any 8th Street Signage and any Townsend Street Signage (collectively, “Tenant’s Exterior Signs”). Tenant’s Exterior Signs must comply with all Applicable Laws. Landlord, at not cost to Landlord, shall cooperate with Tenant to obtain all required permits and approvals for Tenant’s Exterior Signs and any updates, upgrades or permitted modifications of the LED Signs.

44.5 Maintenance and Removal. Any signs, once approved by Landlord in accordance with this Article 44, shall be installed and removed only in strict compliance with Landlord’s approval and Applicable Laws, at Tenant’s expense, using a contractor reasonably approved by Landlord. Tenant, at its sole expense, shall maintain such sign in good condition and repair during the Term. Landlord shall allow reasonable access to those portions of the Project outside the Premises, including the exterior of the Building, necessary or convenient to install, remove, repair and maintain Tenant’s Exterior Signs. Any electrical power required for Tenant’s Exterior Signs shall be charged to Tenant. Tenant shall pay all federal, state and local taxes applicable to Tenant’s Exterior Signs. Landlord may remove any signs (not first approved by Landlord in accordance with this Article 44), advertisements, banners, placards or pictures so placed by Tenant on or within the Building (excluding the interior of the Premises), the Common Areas or the Project and charge to Tenant the cost of such removal, together with

 

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any costs incurred by Landlord to repair any damage caused thereby (ordinary wear and tear excluded), including any cost incurred to restore the surface upon which such sign was so affixed to its original condition (ordinary wear and tear excluded). Tenant shall remove all of Tenant’s signs, including Tenant’s Exterior Signs but excluding the LED Signs, repair any damage caused thereby (ordinary wear and tear excluded), restore the surface upon which the sign was affixed to its original condition (ordinary wear and tear excluded), and restore the building address sign to 650 Townsend if changed by Tenant pursuant to Section 44.3.2 above, all to Landlord’s reasonable satisfaction, upon the expiration or earlier termination of this Lease. Landlord may request that Tenant surrender the Premises without removing the sign cabinets, hardware, mounting and/or electrical power source of or connected to the Tenant’s Exterior Signs (but not any elements of Tenant’s signage relating to Tenant’s trademarks or trade dress which Tenant shall be permitted to remove notwithstanding Landlord’s request to surrender the Premises with such signage intact).

44.6 Restriction on Competitor Signage.

Landlord agrees that it shall not place, or allow the placement of, signage upon or visible from the Building’s exterior which bears the name or logo or any other identifying marks of any of the Tenant Competitors.

44.7 Assignment and Subleasing. The right to install Tenant’s Exterior Signs granted in Section 44.3 above shall not be separately assigned or subleased other than in connection with an assignment of the Lease or a sublease of all or any portion of the Premises. In addition, if at any time the Adjusted Rentable Square Feet of the Premises is less than one hundred nineteen thousand (119,000), Tenant’s rights under Section 44.3 above shall automatically terminate.

45. JAMS ARBITRATION.

45.1 General Submittals to Arbitration. The submittal of all matters to binding arbitration in accordance with the terms of this Article 45 as expressly set forth in any Section of this Lease or the Work Letter (the “Arbitration of Disputes” provision) is the sole and exclusive method, means and procedure to resolve any and all claims, disputes or disagreements arising under those particular Sections of this Lease or the Work Letter. The parties hereby irrevocably waive any and all rights to the contrary and shall at all times conduct themselves in strict, full, complete and timely accordance with this Arbitration of Disputes provision and all attempts to circumvent the terms of the Arbitration of Disputes provision shall be absolutely null and void and of no force or effect whatsoever.

45.2 JAMS. All disputes to be arbitrated pursuant to the Arbitration of Disputes provision shall be determined by binding arbitration before a retired judge of the Superior Court of the State of California (the “Arbitrator”) under the auspices of JAMS in San Francisco, California. Such arbitration shall be initiated by the parties, or either of them, within ten (10) days after either party sends written notice (the “Arbitration Notice”) of a demand to arbitrate by registered or certified mail to the other party and to JAMS. In the event that JAMS no longer exists or if JAMS fails or refuses to accept submission of such dispute, then the dispute shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in San Francisco, California. Regardless of the alternative dispute resolution provider used (i.e., either JAMS or AAA), the arbitration shall be administered and conducted pursuant to the JAMS Streamlined Arbitration Rules & Procedures (the “Arbitration Rules”), effective March 26, 2007. Even if the Rules in effect on the date of the commencement of an arbitration have been amended, the version dated March 26, 2007 shall be used; provided, however, that the following modifications shall take precedence over the Rules:

 

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45.2.1 Unless the parties otherwise agree, the Arbitrator must be a retired judge of the Superior Court of the State of California.

45.2.2 The scope and duration of discovery will be determined by the Arbitrator based upon the reasonable need for the requested information, the availability of other discovery options and the burdensomeness of the request on the opposing parties and the witness; provided, however, that there shall be a presumption in favor of depositions of expected percipient witnesses (of approximately 3 1/2 hours each on the record) and expert witnesses (of no more than 6 hours each on the record).

45.2.3 The Arbitrator may grant any remedy or relief that is just and equitable and within the scope of the Parties’ agreement, including but not limited to specific performance, injunctive relief, damages, and interest (at such rate and from such date as the Arbitrator may deem appropriate).

45.2.4 The Arbitrator shall award reasonable attorney’s fees, expert’s fees, and costs to the prevailing Party, including without limitation the prevailing Party’s share of the Arbitrator’s and Arbitration provider’s fees and costs.

45.2.5 The Arbitrator shall be empowered to adjudicate whether the party submitting the dispute to the Arbitrator acted in good faith.

45.3 Provisional Remedies. This Section shall not preclude the Parties from seeking provisional remedies in aid of the Arbitration of Disputes from a court of appropriate jurisdiction.

45.4 Waiver of Rights to Litigate in a Court or Jury Trial. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLY IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

 

/s/ MAC

      

/s/ MV

Landlord Initials      Tenant’s Initials

46. Representations and Warranties. Landlord warrants and represents that:

46.1 No Other Third-Party Rights. Other than the Existing Tenants and Tenant, as of the date hereof, Landlord has not leased the Premises to any third party or granted to any third party the right to occupy or possess the Premises or any portion thereof.

 

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46.2 Encumbrances.

To Landlord’s knowledge (i) Landlord’s title insurance policy (a copy of which is attached hereto as Exhibit P) is true, correct and complete as of the date hereof, and (ii) Landlord has good and marketable title to the Project, free and clear of liens, easements, restrictions or encumbrances thereupon or the income accruing therefrom, except those shown on Exhibit P. Landlord has not granted any liens, easements, restriction or encumbrances on the Project or the income accruing therefrom except as set forth on Exhibit P.

Signatures follow on next page.

 

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IN WITNESS WHEREOF, the parties have executed this Lease as of the Lease Date.

 

LANDLORD:

650 TOWNSEND ASSOCIATES LLC,

a Delaware limited liability company

By:   Townsend Member LLC,      
  a Delaware limited liability company      
  Its: Sole Member      
  By:    TMG 650 Townsend LLC,              
    a Delaware limited liability company              
    Its: Administrative Manager              
    By:   TMG Partners,              
      a California corporation              
      Its: Managing Member              
      By:  

/s/ Michael Covarrubias

           
      Name:  

Michael Covarrubias

           
      Its:  

CEO

           
TENANT:        

ZYNGA GAME NETWORK INC.,

a Delaware corporation

             
By:  

/s/ Mark Vranesh

             
Name:  

Mark Vranesh

             
Its:  

CAO

             

 

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EXHIBIT A-1

FLOOR PLANS OF PREMISES AND STORAGE SPACE

[see attached]

 

Exhibit A-1, Page 1


LOGO


LOGO


LOGO


LOGO


LOGO


LOGO


LOGO


EXHIBIT A-2

FLOOR PLANS OF TEMPORARY PREMISES

[see attached]

 

Exhibit A-2, Page 1


LOGO


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EXHIBIT A-3

FLOOR PLANS OF EXPANSION PREMISES

[see attached]

 

Exhibit A-3, Page 1


LOGO


LOGO


LOGO


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EXHIBIT A-4

FLOOR PLANS DEPICTING RELOCATION TENANTS

[see attached]

 

Exhibit A-4, Page 1


LOGO


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EXHIBIT A-5

RESERVED

 

Exhibit A-5, Page 1


EXHIBIT A-6

PLAN DEPICTING LOCATION OF SIDEWALK AREA

[see attached]

 

Exhibit A-6, Page 1


LOGO


EXHIBIT B-1

RULES AND REGULATIONS

BUILDING RULES AND REGULATIONS

 

1. SIGNS: No movable or fixed sign, placard, banner, picture, advertisement, name or notice visible from the exterior of the Premises shall be inscribed, displayed, printed, painted, affixed or otherwise displayed by Tenant in or on the Premises or any part of the Building, without the prior written consent of Landlord. Landlord shall have the right to remove any objectionable sign, placard, banner, picture, advertisement, name or notice, without notice to, and at the expense of Tenant. Landlord reserves the right to impose uniform signage for all Common Areas and to change said signage standards from time to time.

 

2. DIRECTORY: The directory of the Building will be provided for display of the name and location of tenants and subtenants only, and Landlord reserves the right to exclude any other names therefrom. The initial charge to include Tenant (and the names designated by Tenant) in the building directory shall be paid by Landlord. Thereafter, Landlord may charge Tenant for each name, in addition to the name of Tenant, listed in such directory.

 

3. LOCKS: Tenant shall not alter any lock or install a new or additional lock on any door of the Premises, without providing a copy of keys to Landlord.

 

4. WIRING: When wiring of any kind is introduced, it must be connected as directed by Landlord, and no boring or cutting for wires will be allowed, except with the prior written consent of Landlord, not to be unreasonably withheld, conditioned or delayed.

 

5. WINDOWS: No curtains, draperies, blinds, shutters, shades, screens or other coverings, hangings or decorations shall be attached to, hung or placed in, or used in connection with, any window in the Premises, without the prior written consent of Landlord. If Landlord consents, all such items shall be installed inside of Landlord’s standard draperies or blinds and shall in no way be visible from the exterior of the Building. Neither the interior nor exterior of any windows shall be coated or otherwise sunscreened without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. No article shall be placed on window sills.

 

7. HALLS AND STAIRWAYS: Tenant shall keep the doors to the Building corridors closed at all times, except when in actual use for ingress or egress. Sidewalks, halls, passages, exits, entrances, elevators and stairways shall not be obstructed by Tenant, or used for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators and stairways are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the reasonable judgment of Landlord, would be prejudicial to the safety of the Building and its tenants.

 

8. PLUMBING: The toilet rooms, toilets, urinals, wash bowls and other fixtures shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule by Tenant or any Tenant Party, shall be borne by Tenant.

 

Exhibit B-1, Page 1


9. ELECTRICITY: Tenant may operate a reasonable number of typical small office machines, including adding machines, calculators, clocks, coffee machines, facsimile machines, personal computers and small copy machines. All electrical ceiling fixtures, bulbs and tubes must be of a type, quality, design and color approved in advance in writing by Landlord, not to be unreasonably withheld, conditioned or delayed. All electrical appliances must be grounded and must meet Underwriters’ Laboratory standards.

 

11. HEATING: Tenant shall not permit space heaters or use any method of heating other than that supplied or approved by Landlord.

 

12. FLOOR COVERINGS AND WALLS: Tenant shall not lay linoleum, tile, carpet or any other floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. The expense of repairing any damage resulting from a violation of this rule or the removal of any floor covering shall be borne by Tenant.

 

13. MOVING FURNITURE, SAFES, ETC.: No furniture, freight or equipment of any kind shall be brought into or removed from the Building without the consent of Landlord, and all moving of same, into or out of the Building, by Tenant, shall be done at such times and such manner as Landlord shall reasonably designate. Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy property brought into the Building, as well as the times and manner of moving the same into and out of the Building. All damage done to the Building by moving or maintaining any such safe, furniture, freight, equipment or property shall be repaired at the expense of Tenant.

 

14. FREIGHT ELEVATOR: The Building freight elevator must be used for all deliveries of supplies, packages, equipment, furniture and other deliveries.

 

17. TRASH: Tenant shall store all its trash within the interior of the 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 in the City of San Francisco without violation of any law or ordinance governing such disposal. All trash disposal shall be made only through entryways and elevators provided for such purposes.

 

20. VENDING MACHINES: No vending machine of any kind shall be installed, maintained or operated in the Premises without the written permission of Landlord, except vending machines exclusively serving the Premises.

 

21. NO ANIMALS OR VEHICLES: Except as expressly provided in the Lease, Tenant shall not bring into or keep within the Building or the Premises any animal (except for seeing eye dogs), bird, or aquarium. Tenant shall not permit any skateboards, rollerblades or scooters to be used on the Property. So long as Landlord maintains sufficient bike rakes and bike lockers for the Building, Tenant shall not bring into or keep within the Building or the Premises any bicycles or other vehicles, except that bicycles may be parked at the risk of the owner in the areas, if any, designated for such purpose by Landlord.

 

22. COMMON AREAS: Areas used in common by tenants, including mall areas, elevators, restrooms, corridors and exterior plazas shall be subject to these Rules and Regulations, to the extent applicable, and to any special regulations posted therein, including any “no smoking” regulations.

 

Exhibit B-1, Page 2


23. CLOSING PRECAUTIONS: Tenant shall diligently endeavor to cause (i) the doors of the Premises to be closed and securely locked before leaving the Building, and (ii) all water faucets or water apparatus and electricity to be shut off before Tenant or its employees leave the Building, so as to prevent waste or damage.

 

24. SAFETY PROCEDURES: Tenant shall comply with all safety, fire protection and evacuation procedures and regulations reasonably established by Landlord or any governmental agency.

 

25. NO SOLICITATION: Solicitations or promotions to other tenants in the Building are prohibited, except with the prior written approval of Landlord. If so approved, solicitations and promotions shall only be done by and through Landlord, at Tenant’s sole cost.

 

26. ACCESS: Landlord reserves the right to exclude from the Building during the hours which are not Building Standard Hours, all persons who do not present a pass to the Building. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Landlord also reserves the right to exclude or expel from the Building any person who, in Landlord’s good faith opinion, is intoxicated or under the influence of alcohol or drugs or poses a danger to persons or property.

 

Exhibit B-1, Page 3


EXHIBIT B-2

ROOFTOP RULES

This Exhibit is attached to and forms a part of the Office Lease dated September 24, 2010 (the “Lease”), by and between 650 Townsend Associates LLC, a Delaware limited liability company (“Landlord”), and Zynga Game Network Inc., a Delaware corporation (“Tenant”), pertaining to certain premises located at 699 Eighth Street, San Francisco, California. The capitalized terms used without being defined in this Exhibit B-2 shall have the meanings given them in the Lease. The provisions of this Exhibit shall prevail over any inconsistent or conflicting provisions of the Lease.

1. Roof Area. Tenant shall accept the License Area and Cable Path in their condition and “as-built” configuration existing on the date of Lease. Landlord has made no representations or promise as to the suitability or effectiveness of any part of the roof for Tenant’s proposed use, or as to any Applicable Laws relating to Tenant’s proposed use, or as to the condition of (or alteration or improvement of) the License Area or the Cable Path.

2. Rooftop Installation Work. Installation of the Equipment (“Rooftop Installation Work”) must be performed in a good and workmanlike manner and in accordance with all Applicable Laws, and shall be subject to: (a) obtaining Landlord’s prior written approval of plans and specifications, which approval shall not be unreasonably withheld, conditioned or delayed, and Tenant acknowledges and agrees that, without limiting the generality of the foregoing, it shall be reasonable for Landlord to disapprove any Equipment if it exceeds roof load limitations; (b) obtaining Landlord’s prior written approval of Tenant’s contractor for the Rooftop Installation Work, which approval shall not be unreasonably withheld, conditioned or delayed, and such contractor must provide evidence of commercially reasonable insurance reasonably satisfactory to Landlord prior to commencing work in or about the Building; and (c) all additional requirements under the Lease that apply to Alterations by Tenant. In addition, Landlord may impose reasonable screening or other reasonable requirements to minimize the visibility of the Equipment. The plans and specifications for the Equipment shall include the design, size and features thereof and mounting structure, floor and power load requirements, cabling installations, the means of affixing or mounting the Equipment, and the means of connecting the Equipment to the Building’s electrical system and to the interior of the Premises. The giving of any approval by Landlord shall not eliminate any of Tenant’s obligations under the Lease, including Tenant’s obligation to obtain all required permits and to comply with all Applicable Laws. The failure of Tenant to obtain such permits or any other governmental approvals relating to the Equipment shall not release Tenant from any of its obligations under the Lease. Tenant shall pay to Landlord all of Landlord’s actual out-of-pocket costs incurred in connection with the review and approval of the plans and specifications within thirty (30) days after receipt of an invoice therefor.

3. General Requirements. In addition to the applicable provisions of the Lease, Tenant’s use of the roof of the Building is subject to the following general requirements:

(a) Tenant shall provide Landlord with reasonable advance notice prior to commencing installation of the Equipment or other work on or to the Equipment from time to time, and agrees to afford Landlord the opportunity to be present for all such work, provided that only subsequent notice within a reasonable time shall be required in the case of an emergency that presents an immediate danger.

(b) After the initial installation of any Equipment, Tenant shall not make any material alteration, addition or improvement thereto, without first obtaining Landlord’s prior written

 

Exhibit B-2, Page 1


approval; and any such material alterations, additions or improvements shall be subject to all the conditions and restrictions that apply to the original Equipment, including the requirement that Tenant furnish Landlord with detailed plans and specifications relating to the proposed alterations, additions or improvements.

(c) Landlord shall allow Tenant full access to the roof for the purposes of installation, maintenance and repair of the Equipment twenty-four (24) hours a day, seven (7) days a week, subject to reasonable rules and restrictions of Landlord.

(d) Tenant, at its expense, shall at all times keep the Equipment in good order, condition and repair, and the Equipment location and the areas immediately surrounding same neat and clean. With respect to all operations relating to the Equipment, Tenant shall conduct its business and control other Tenant Parties in such manner as not to create any nuisance.

4. Services. Tenant shall be responsible for the cost of supplying electricity to the Equipment, including electricity usage, installation, maintenance and repair of any Connections and of any separate meter required by Landlord. Electric usage shall be determined by meter installed by Landlord at Landlord’s sole cost and expense. Tenant shall pay Landlord monthly, within thirty (30) days after being billed therefor, for all electricity used by Tenant or any Tenant Parties in connection with the operation of the Equipment.

5. Roof Damage. Tenant shall, at Tenant’s sole cost and expense, protect the roof from damage, and shall perform all installations, repairs and maintenance and use the roof in a manner so as to keep in full force and effect any warranty concerning the roof. In all cases, Tenant shall use a roofing contractor reasonably approved by Landlord to perform any roof penetration or other work that may affect the integrity of the roof or the roof warranty. Any damage to the roof or any other portion of the Building resulting from Tenant’s installation, operation, use, maintenance or removal of the Equipment, including leakage, water damage or damage to the roof membrane shall be repaired by Tenant at Tenant’s sole cost and expense.

6. Compliance With Applicable Requirements. Tenant, at its sole cost and expense, shall comply with all Applicable Laws relating to the installation, maintenance, operation, use and removal of the Equipment. Without limiting the generality of the foregoing, Tenant, at its sole cost and expense, shall be responsible for obtaining, if required, any building permits, and any licenses or permits which may be required by the Federal Communications Commission (FCC), the Federal Aviation Administration (FAA) or any other governmental authority having jurisdiction over the Equipment or the Building and shall provide copies of the same to Landlord. If necessary, Landlord agrees reasonably to cooperate with Tenant, at no out-of-pocket expense to Landlord, to obtain any appropriate licenses or permits.

7. Radio Frequency Emitting Equipment. To the extent Tenant is operating radio frequency (RF) emitting equipment on the roof of or inside the Building, Tenant shall cooperate generally with Landlord and other carriers such that the Building’s rooftop shall be and remain in compliance with all rules and regulations of the U.S. Occupational Safety and Health Administration (“OSHA”) and the FCC relating to guidelines for human exposure to radio frequency or electromagnetic emission levels, as may be issued from time to time, including the rules and regulations adopted in FCC document OET 65 (which rules and regulations have also been adopted by OSHA).

8. Temporary Removal; Relocation. Tenant, at its sole expense, shall remove or relocate the Equipment on a temporary basis and upon thirty (30) days’ written notice from Landlord at any time Landlord reasonably determines such removal or relocation is reasonably necessary or appropriate for the

 

Exhibit B-2, Page 2


expeditious repair or replacement to or of the roof or any area of the Cable Path, or to access any such areas for Project needs.

9. Termination; Equipment As Property of Tenant. Upon the expiration or earlier termination of the Lease, Tenant shall immediately cease using the License Area and Cable Path and shall, at its own cost and expense, remove the Equipment and restore the License Area and areas affected by the cabling installations to the condition in which they were found prior to the installation of the Equipment, reasonable wear and tear excepted. The Equipment shall be considered personal property of Tenant; provided, however, if Tenant fails to remove the Equipment within thirty (30) days following the expiration or earlier termination of the Lease, it shall be deemed abandoned and may be claimed by Landlord or removed and disposed of by Landlord at Tenant’s expense.

10. Landlord Exculpation. Tenant assumes full responsibility for protecting from theft or damage the Equipment and any other tools or equipment that Tenant may use in connection with the installation, operation, use, repair, maintenance or removal of the Equipment, assumes all risk of theft, loss or damage, and waives all Claims with respect thereto against Landlord and the other Landlord Parties, including any Claims caused by any active or passive act, omission or neglect of any Landlord Party or by any act or omission for which liability without fault or strict liability may be imposed, except to the extent such injury, death or damage is caused by the gross negligence or willful misconduct of Landlord or any Landlord Party. Further, in no event shall Landlord or any Landlord Parties be liable under any circumstances for any consequential damages or for injury or damage to, or interference with, Tenant’s business, including loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, resulting from damage to or any failure or interruption of use of the Equipment, however occurring.

11. Insurance. Tenant shall cause the insurance policies required to be maintained pursuant to Article 14 of the Lease to cover the Equipment and any Claims arising in connection with the presence, use, operation, installation, repair, maintenance, or removal of the Equipment.

 

Exhibit B-2, Page 3


EXHIBIT C

WORK LETTER

 

Exhibit C, Page 1


EXHIBIT C

WORK LETTER

This Work Letter is attached to and forms a part of the Office Lease dated as of September     , 2010 (the “Lease”), by and between 650 TOWNSEND ASSOCIATES LLC, a Delaware limited liability company (“Landlord”), and ZYNGA GAME NETWORK INC., a Delaware corporation (“Tenant”), pertaining to certain premises located at 699 Eighth Street, San Francisco, California. Except where clearly inconsistent or inapplicable, the provisions of the Lease are incorporated into this Work Letter, and capitalized terms used without being defined in this Work Letter shall have the meanings given them in the Lease.

The purpose of this Work Letter is to set forth the respective responsibilities of Landlord and Tenant with respect to the design and construction of (i) all alterations, additions and improvements that Tenant may deem necessary or appropriate to prepare the Premises for initial occupancy by Tenant under the Lease and (ii) the Ancillary Tenant Improvements (as hereinafter defined). Such alterations, additions and improvements to the Premises (other than the Ancillary Tenant Improvements) are referred to in this Work Letter as the “Tenant Improvements” and the work of constructing the Tenant Improvements is referred to as the “Tenant Improvement Work.”

Landlord and Tenant agree as follows:

1. Ancillary Tenant Improvements.

1.1 Construction of Ancillary Tenant Improvements. Prior to or concurrently with the construction of the Tenant Improvements, Landlord shall perform or caused to be performed the improvements (the “Ancillary Tenant Improvements”) described in the plans and specifications entitled 699 Eighth Street Ancillary Tenant Improvements, dated September 15, 2010, prepared by Studios Architecture (“Landlord’s Architect”) and attached hereto as Schedule 1 (the “Ancillary Tenant Improvement Plans”). The estimated cost of the Ancillary Tenant Improvements is Five Million Two Hundred Sixty Thousand Seven Hundred Fifty and 00/100 Dollars ($5,260,750.00) (the “Estimated ATI Costs”) based on the budget attached as Schedule 2 (the “Ancillary TI Budget”). Landlord shall pay the costs of such Ancillary Tenant Improvements, subject to Tenant’s contributions as provided in Section 1.3. Landlord shall cause the Ancillary Tenant Improvements to be constructed in accordance with the Ancillary Tenant Improvement Plans and in compliance in all material respects with all Applicable Laws. The Ancillary Tenant Improvements shall not be deemed to be Tenant Improvements nor shall the design and construction of the Ancillary Tenant Improvements be deemed to be Tenant Improvement Work. Tenant shall have the right to reasonably monitor and confirm Landlord’s completion of the Ancillary Tenant Improvements in accordance with the Ancillary Tenant Improvement Plans, and if any Ancillary Tenant Improvements have not been completed as required herein, Landlord shall promptly remedy the same, at its sole cost. With respect to the requirement that the Ancillary Tenant Improvements comply in all material respects with all Applicable Laws, the following shall apply: if Landlord or Tenant receives written notice from any governmental or quasi-governmental authority that the Ancillary Tenant Improvements violated any Applicable Laws as of the Commencement Date, then Landlord shall not be liable to Tenant for any damages, but Landlord, at no cost to Tenant, shall, as Tenant’s sole remedy, promptly and diligently perform such work or take such other action as may be necessary to cure such violation. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws, provided, that, in each case, such contest or appeal does not impose any imminent and material liability on Tenant or

 

Exhibit C, Page 1


materially interfere with Tenant’s ability to access or conduct its business in any portion of the Premises. Landlord’s obligation to perform work or take such other action to cure a violation under this Section 1.1 shall apply after the exhaustion of any and all rights to appeal or contest, provided, that, Landlord shall perform such work or take such action to cure the violation prior to the exhaustion of any right to appeal or contest if the failure to perform such work or take such action would impose any imminent and material liability on Tenant or materially interfere with Tenant’s ability to access or conduct its business in any portion of the Premises.

1.2 Modifications to Ancillary Tenant Improvements.

1.2.1 ATI Change Orders. No changes or modifications to the Ancillary Tenant Improvement Plans or the Ancillary Tenant Improvements (individually or collectively, “ATI Change Orders”) shall be made unless by written ATI Change Orders signed by Landlord and Tenant; provided, however, that Tenant’s approval shall not be required for, and Landlord may make, any ATI Change Order that may be necessary to obtain any Permits (as defined in Section 3.2.5), or that may be required by city officials or inspectors to comply with code rulings or interpretations, and ATI Change Orders relating to minor variations in the Ancillary Tenant Improvement Plans (namely, variations which are not inconsistent with the intent of the Ancillary Tenant Improvement Plans).

1.2.2 Tenant’s Proposed ATI Change Orders. Tenant may notify Landlord in writing of any ATI Change Orders which Tenant desires to make to the Ancillary Tenant Improvement Plans or the Ancillary Tenant Improvements provided that such proposed ATI Change Orders (a) do not materially, adversely affect the structural portions of the Building and (b) do not materially, adversely affect or materially, adversely interfere with the Building’s roof, elevators or bridges or the Building Systems. Tenant’s notice must be sufficiently detailed to permit Landlord to determine the impact on the Ancillary TI Budget (whether cost or savings) of making the proposed ATI Change Order. Landlord shall provide Tenant with a notice and description (“Landlord’s ATI Change Notice”) of any changes arising from Tenant’s proposed ATI Change Orders to (i) the Ancillary TI Budget and (ii) the Construction Schedule (as defined in Section 3.2.6); provided, however, that prior to any inquiry into the impact on the Ancillary TI Budget or Construction Schedule of the proposed ATI Change Order, and within two (2) business days after Tenant’s notice of a proposed ATI Change Order, Landlord shall provide Tenant with a preliminary estimate of the time required to investigate the proposed ATI Change Order and a request to expend funds required to undertake such investigation (an “ATI Investigation Notice”) whereupon Tenant may elect to withdraw the applicable proposed ATI Change Order and Landlord shall have no further obligation to process or consider Tenant’s proposed ATI Change Order until Tenant affirmatively elects in writing to continue. Landlord shall not unreasonably withhold or delay its approval of the proposed ATI Change Order and shall approve or reasonably disapprove any proposed ATI Change Order submitted by Tenant in a reasonable time period given the nature of such ATI Change Order and the circumstances under which such ATI Change Order is proposed, which time period shall in no event exceed five (5) business days (or such longer time as provided in an ATI Investigation Notice if Landlord has delivered an ATI Investigation Notice and Tenant has authorized Landlord to investigate the proposed ATI Change Order). If Landlord disapproves any ATI Change Order, Landlord shall return the ATI Change Order to Tenant with a statement of Landlord’s reasons for disapproval and/or specifying in reasonable detail any required corrections or revisions. Landlord shall approve or disapprove of any such revisions or corrections to an ATI Change Order made by Tenant within three (3) business days after receipt of such revisions or corrections. Upon receipt of the applicable Landlord’s ATI Change Notice and Landlord’s approval of the proposed ATI Change Order, Tenant may authorize Landlord in writing to proceed with such ATI Change Order and, upon such written authorization, Landlord shall proceed with construction of the Ancillary Tenant Improvements as so modified, and, subject to Section 1.3, any additional design and construction costs to be incurred by Landlord as a result of such ATI Change Order shall be paid by Tenant as part of Tenant’s ATI Contribution (hereinafter defined). If Tenant fails to

 

Exhibit C, Page 2


authorize Landlord to proceed with the ATI Change Order within three (3) business days after receipt of Landlord’s approval of the proposed ATI Change Order, Tenant shall be deemed to have withdrawn its request to so modify the Ancillary Tenant Improvements, and Landlord shall proceed with the construction of the Ancillary Tenant Improvements as provided in Section 1.1 without any ATI Change Order.

1.3 Landlord’s and Tenant’s Contributions to ATI Costs. Landlord will contribute to the costs of designing and constructing the Ancillary Tenant Improvements, as depicted on the Ancillary Tenant Improvement Plans and any approved ATI Change Order to the extent of Four Million One Hundred Fifty Two Thousand Five Hundred and 00/100 Dollars ($4,152,500.00) (“Landlord’s ATI Contribution”). Tenant shall pay all costs (other than ATI Excluded Costs as hereinafter defined) in excess of the Landlord’s ATI Contribution for (a) the costs of designing and constructing the Ancillary Tenant Improvements, as depicted on the Ancillary Tenant Improvement Plans, (b) charges and expenses for ATI Change Orders requested and authorized by Tenant (other than the cost of preparing an ATI Investigation Notice) and approved by Landlord and (c) changes and expenses for ATI Change Orders requested by Tenant but not authorized by Tenant where Tenant approved the expenditure of funds by Landlord as set forth in an ATI Investigation Notice (but not the cost of preparing such ATI Investigation Notice) (such excess being referred to herein as the “Tenant’s ATI Contribution”). Notwithstanding anything to the contrary set forth herein, to the extent that the costs of designing and constructing the Ancillary Tenant Improvements after deducting any ATI Excluded Costs, is less than Landlord’s ATI Contribution as determined on the ATI Final Reconciliation Statement (hereinafter defined), then such amounts shall be added to the Tenant Improvement Allowance (hereinafter defined).

1.3.1 Monthly ATI Budget Package. Landlord shall submit to Tenant monthly, during the performance of the Ancillary Tenant Improvements, a report setting forth in reasonable detail with respect to the prior calendar month: (a) a computation of the total costs of designing and constructing the Ancillary Tenant Improvements incurred by Landlord during the prior month other than the ATI Excluded Costs (collectively, “ATI Design/Construction Costs”) compared with the Ancillary TI Budget, accompanied by reasonable supporting evidence of the amounts shown thereon and (b) the cumulative ATI Design/Construction Costs incurred through the end of such month compared with the Ancillary TI Budget (each such submittal, a “Monthly ATI Budget Package”). Such report shall be submitted by the twentieth (20th) day of each month (or as soon thereafter as is reasonably practicable) and shall be accompanied by invoices for costs incurred during the previous month for the Ancillary Tenant Improvements and unconditional lien releases demonstrating that all previously invoiced Ancillary Tenant Improvement costs as of such date have been duly paid or reasonable evidence that such costs are being disputed in accordance with the express terms of the applicable written agreement.

1.3.2 Funding Ancillary Tenant Improvement Costs. Landlord shall pay the Landlord’s ATI Contribution in its entirety to parties entitled thereto prior to Landlord invoicing Tenant for Tenant’s ATI Contribution. Subject to the foregoing requirement that Landlord first fund Landlord’s ATI Contribution and following funding of the entire Landlord’s ATI Contribution, Landlord shall submit to Tenant, along with the Monthly Budget Package, a written invoice setting forth Tenant’s ATI Contribution required to pay costs incurred during the previous month for the Ancillary Tenant Improvements, which invoice shall be accompanied by reasonable supporting evidence of the amounts shown thereon (collectively, an “ATI Payment Request”), and Tenant shall pay the amount of the ATI Payment Request within fifteen (15) business days. If at any time Tenant disputes the amount of any ATI Payment Request, then Tenant may make the required payment under protest, in which event Landlord and Tenant shall proceed in good faith to resolve such dispute; and, if the dispute has not been resolved within fifteen (15) business days thereafter, then the dispute shall be resolved pursuant to binding

 

Exhibit C, Page 3


arbitration in accordance with Article 45 of the Lease. In no event shall Tenant have the right to withhold timely payment of any ATI Payment Request.

1.3.3 ATI Letter of Credit.

(a) ATI Letter of Credit. Within five (5) business days after the execution and delivery of this Lease, Tenant shall deliver to Landlord, an irrevocable and unconditional negotiable standby letter of credit (the “ATI Letter of Credit”) in the form attached hereto as Schedule 5 and containing the terms required herein, payable upon presentation to an operating retail branch located in San Francisco, California, running in favor of Landlord and issued by a bank with a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, in the amount of One Million One Hundred Eight Thousand Two Hundred Fifty and 00/100 Dollars ($1,108,250.00), which amount is equal to the estimated amount of Tenant’s ATI Contribution. Landlord agrees that Wells Fargo Bank, N.A. meets all requirements set forth in this Work Letter for the bank issuing the ATI Letter of Credit and if selected by Tenant is deemed approved by Landlord to issue the ATI Letter of Credit. The ATI Letter of Credit shall (i) be “callable” at sight, irrevocable and unconditional, (ii) be maintained in effect, whether through renewal or extension, for the period from the date of issuance and continuing until the earlier of (A) the first anniversary of the Lease Date and (B) the date of Tenant’s payment in full of Tenant’s ATI Contribution (the “ATI LC Expiration Date”), (iii) permit partial draws and multiple presentations and drawings, and (iv) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (2007-Rev), International Chamber of Commerce Publication #600, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. In addition to the foregoing, the bank issuing the ATI Letter of Credit (the “ATI Bank”) shall be acceptable to Landlord, in Landlord’s reasonable discretion. If Landlord notifies Tenant in writing that the ATI Bank (w) no longer maintains an operating retail branch located in San Francisco, California, (x) no longer has a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, (y) is no longer under the supervision of the Superintendent of Banks of the State of California or a national banking association, or (z) has filed bankruptcy or reorganization proceedings or is placed into a receivership or conservatorship, then Tenant shall have thirty (30) days to provide Landlord with a substitute ATI Letter of Credit complying with all of the requirements of this Section 1.3.3(a). If Tenant does not so provide Landlord with a substitute ATI Letter of Credit within such thirty (30) day period, then Landlord, or its then managing agent, shall have the right to draw upon the then current ATI Letter of Credit, and the proceeds of the ATI Letter of Credit shall be held by Landlord and may only be applied by Landlord in accordance with the terms of this Work Letter. If the final reconciliation of the Ancillary Tenant Improvements (as provided in Section 1.4 below) has not been completed (and Tenant has not terminated the Lease in compliance with Section 2.4 of the Lease or Section 7.4.2 of this Work Letter) prior to the first anniversary of the Lease Date and Tenant fails to deliver a new ATI Letter of Credit or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the ATI Letter of Credit then held by Landlord, then Landlord, or its then managing agent, shall have the right to draw upon the then current ATI Letter of Credit, and the proceeds of the ATI Letter of Credit shall be held by Landlord and may be applied by Landlord in accordance with the terms of this Work Letter. The ATI Letter of Credit will be honored by the ATI Bank regardless of whether Tenant disputes Landlord’s right to draw upon the ATI Letter of Credit. No condition or term of the Lease shall be deemed to render the ATI Letter of Credit conditional to justify the issuer of the ATI Letter of Credit in failing to honor a drawing upon such ATI Letter of Credit in a timely manner. Tenant agrees and acknowledges that (x) the ATI Letter of Credit constitutes a separate and independent contract between Landlord and the ATI Bank, (y) Tenant is not a third party beneficiary of such contract, and (z) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the ATI Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the

 

Exhibit C, Page 4


U.S. Bankruptcy Code or otherwise; provided, however, that nothing contained herein shall be deemed to prohibit Tenant from challenging the validity or amount of any draw on the ATI Letter of Credit following the occurrence thereof. The ATI Letter of Credit shall provide that Landlord, its successors and assigns, may, at any time and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the ATI Letter of Credit to another party, person or entity; provided, that, in each case Landlord provides Tenant written notice of such transfer. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the ATI Letter of Credit, in whole or in part, to the transferee, shall provide written notice of such transfer to Tenant and, upon such transfer and notice, shall, without any further agreement between the parties, be released by Tenant from all liability therefor arising after such transfer, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said ATI Letter of Credit to a new landlord. In connection with any such transfer of the ATI Letter of Credit by Landlord, Landlord shall, at Landlord’s sole cost and expense, execute and submit to the ATI Bank such applications, documents and instruments, each in commercially reasonable form, as may be necessary to effectuate such transfer, and Landlord shall be responsible for the ATI Bank’s transfer and processing fees in connection therewith.

(b) Increase in ATI Letter of Credit. In addition, if at any time prior to the ATI Substantial Completion (hereinafter defined), but not more often then once per month, Tenant’s ATI Contribution increases by greater than ten percent (10%) of the original amount thereof, and the remaining unpaid Tenant’s ATI Contribution amount following the increase as of such date is greater than the amount of the existing ATI Letter of Credit, then Tenant shall, within ten (10) business days following notice thereof, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or amend the existing ATI Letter of Credit to increase the amount thereof to equal the deficiency), and any such additional letter(s) of credit shall comply with all of the provisions of Section 1.3.3(a).

(c) Draws on Letter of Credit. If Tenant fails to timely pay any portion of Tenant’s ATI Contribution required to be paid by Tenant pursuant to Section 1.3.2 above, then Landlord shall give Tenant notice thereof and five (5) business days after such notice to cure such failure. After the expiration of such cure period, Landlord may make a draw on the ATI Letter of Credit up to such unpaid amount, which shall be deemed a satisfaction of the ATI Payment Request to the extent of such draw on the ATI Letter of Credit. Within ten (10) business days following the earlier of (i) Tenant’s payment in full of Tenant’s ATI Contribution and (ii) Tenant’s termination of the Lease in compliance with Section 2.4 of the Lease or Section 7.4.2 of this Work Letter, Landlord shall deliver to Tenant any remaining ATI Letter of Credit in Landlord’s possession and any unapplied funds previously drawn on the ATI Letter of Credit in accordance with Section 1.3.3 (a) or (c).

(d) Letter of Credit. In lieu of delivering an ATI Letter of Credit as required by Section 1.3.3(a) or any increase pursuant to Section 1.3.3(b), Tenant may elect in its sole and absolute discretion to cause the amount of the Letter of Credit (as defined in the Lease) to be increased by the amount of Tenant’s ATI Contribution or by the amount of any increase required by Section 1.3.3(b). If Tenant elects to do so, then the following shall apply:

(i) If Tenant fails to timely pay any portion of Tenant’s ATI Contribution required to be paid by Tenant pursuant to Section 1.3.2 above, then Landlord shall give Tenant notice thereof and five (5) business days after such notice to cure such failure. After the expiration of such cure period, Landlord may make a draw on the Letter of Credit up to such unpaid amount.

 

Exhibit C, Page 5


(ii) Upon the ATI LC Expiration Date, Tenant may, subject to Tenant’s obligations under Section 3.1.6(d) below, cause the Letter of Credit to be decreased to equal the Letter of Credit Amount (as defined in the Lease).

(iii) Within ten (10) business days following the ATI LC Expiration Date, Landlord shall deliver to Tenant any unapplied funds previously drawn on the Letter of Credit in accordance with this Section 1.3.3(d).

1.3.4 ATI Excluded Costs. The following costs and expenses relating to the design and construction of the Ancillary Tenant Improvement shall be borne by Landlord at no cost to Tenant in addition to Landlord’s ATI Contribution (collectively, the “ATI Excluded Costs”): (a) charges and expenses for ATI Change Orders requested by Landlord, whether or not approved by Tenant, except for (i) ATI Change Orders that may be necessary to obtain any Permits or that may be required by city officials or inspectors to comply with code rulings or interpretations, and (ii) ATI Change Orders relating to minor variations in the Ancillary Tenant Improvement Plans (namely, variations which are not inconsistent with the intent of the Ancillary Tenant Improvement Plans); (b) costs for which Landlord receives reimbursement from others, including, without limitation, insurers, bonding companies or sureties (if any), and warrantors (Landlord shall use commercially reasonable efforts to maximize the amount of all such reimbursements to which it is entitled); (c) wages, labor and overhead for overtime or premium time (unless expressly approved by Tenant in the Ancillary TI Budget or in any ATI Change Order); (d) additional costs and expenses incurred by Landlord on account of any contractor’s or subcontractor’s construction defects, to the extent covered by any applicable warranties; (e) costs arising from or in connection with the presence of Hazardous Materials in, on or under the Project; (f) liens, penalties and late charges attributable to Landlord’s failure to pay any costs or fees required to be paid by Landlord pursuant to the Ancillary TI Construction Agreement (as hereinafter defined) or any other contract or agreement to which Landlord is a party, except to the extent the foregoing are attributable to Tenant’s failure to perform any of Tenant’s obligations pursuant to this Work Letter; (g) restoration costs in excess of insurance proceeds as a consequence of casualties; (h) costs associated with bonding any contractors, subcontractors or vendors; (i) costs of utilizing freight elevators, parking, access to loading docks, security, utilities and HVAC at the Building in connection with construction of the Ancillary Tenant Improvements or otherwise prior to the Commencement Date; (j) attorneys’, experts’ and other fees and costs in connection with disputes attributable to Landlord’s failure to timely perform its covenants, obligations and agreements pursuant to the Ancillary TI Construction Agreement or any other contract or agreement to which Landlord is a party, except to the extent the foregoing are attributable to Tenant’s failure to perform any of Tenant’s obligations pursuant to this Work Letter; (k) the cost of any changes necessary to cause the Building Systems to be operational and in good condition or repair or to correct violations of the base, shell or core of the Premises or the Building or the Ancillary Tenant Improvements with Applicable Laws, unless the same are necessitated by reason of the installation of any of Tenant’s specialized personal property in the Premises, or by Tenant’s particular use or proposed use of the Premises, other than customary general office use; (l) any cost or expense arising in connection with the removal of any Lines located in the Building; (m) any other management, engineering, outside consulting and construction fees incurred by or on behalf of Landlord for the coordination of the Ancillary Tenant Improvements or Ancillary Tenant Improvement Plans (as opposed to the fees for the design of the Ancillary Tenant Improvements or the preparation of the Ancillary Tenant Improvement Plans); and (n) the cost of preparing any ATI Investigation Notice.

1.4 ATI Cost Reconciliation. Within thirty (30) days following final completion of the Ancillary Tenant Improvements, or as soon thereafter as is reasonably practicable, Landlord shall prepare for Tenant’s review and approval a final reconciliation of the total costs of the Ancillary Tenant Improvements setting forth the application of (a) Landlord’s ATI Contribution, (b) ATI Payment Requests paid by Tenant, and (c) any prior draws on the ATI Letter of Credit or, if applicable, the Letter

 

Exhibit C, Page 6


of Credit, together with conditional lien releases from the General Contractor and all subcontractors who have filed a preliminary 20-day notice (the “ATI Final Reconciliation Statement”). The ATI Final Reconciliation Statement shall also set forth the remaining unpaid amount of Tenant’s ATI Contribution (if any) or any overpayment by Tenant in connection with construction of the Ancillary Tenant Improvements. If Tenant has overpaid, then within thirty (30) days after delivery of the ATI Final Reconciliation Statement, Landlord shall refund any overpayment to Tenant. If Tenant has underpaid, then, within thirty (30) days after delivery of the ATI Final Reconciliation Statement, Tenant shall (i) either pay to Landlord the remaining unpaid amount of Tenant’s ATI Contribution (if any) set forth in the ATI Final Reconciliation Statement or (ii) deliver written notice to Landlord that Tenant disputes in whole or in part the remaining unpaid amount of Tenant’s ATI Contribution set forth in the ATI Final Reconciliation Statement. Landlord and Tenant shall proceed in good faith to resolve any dispute regarding the remaining unpaid amount of Tenant’s ATI Contribution for a period of twenty (20) days, at which time, if the dispute has not been resolved (as evidenced in a writing signed by Landlord and Tenant), the dispute shall be submitted to binding arbitration in accordance with Article 45 of the Lease. Tenant shall not be required to pay Landlord any disputed amount until such dispute is so resolved (Tenant shall, however, timely pay all amounts not in dispute). Landlord shall deliver unconditional lien releases from the General Contractor and all subcontractors who have filed a preliminary 20-day notice promptly following final payment of the General Contractor and such subcontractors.

1.5 No Liability of Tenant. Tenant shall have no liability for the completeness or accuracy of the Ancillary Tenant Improvement Plans (as the same may be modified or supplemented), and Landlord (or Landlord’s Architect) shall be responsible for performing all necessary field measurements and confirming the completeness and accuracy of such drawings. Tenant’s sole interest in reviewing the Ancillary Tenant Improvement Plans and monitoring the construction of the Ancillary Tenant Improvements is to protect Tenant’s interests, and no such review or any approval by Tenant shall be deemed to (a) create any liability of any kind on the part of Tenant, including, but not limited to, liability for design, engineering or fitness for a particular purpose, or (b) constitute a representation on the part of Tenant or any person consulted by Tenant in connection with such review and approval that the Ancillary Tenant Improvement Plans are correct or accurate or are in compliance with any Applicable Laws or the requirements of this Work Letter.

2. Design of the Tenant Improvements.

2.1 Tenant’s Architect and Designated Consultants. Tenant shall retain Nichols Booth Architects (“Tenant’s Architect”) to design the Tenant Improvements and prepare and coordinate Final Working Drawings (as defined in Section 2.2.3 below). Tenant shall retain such other engineers and consultants (“Tenant’s Consultants”) to prepare all plans and engineering working drawings relating to structural work, code compliance work or other specialized work in connection with the Tenant Improvements (excluding the MEP Drawings (hereinafter defined) which shall be Landlord’s responsibility), which Tenant’s Consultants shall be subject to Landlord’s approval, which shall not be unreasonably withheld. Tenant shall pay directly to Tenant’s Architect and Tenant’s Consultants all fees and costs of Tenant’s Architect and Tenant’s Consultants, including, without limitation, the cost of preparing the Final Working Drawings (as defined in Section 2.2.3), provided that Landlord shall contribute the Space Plan Allowance to reimburse Tenant for architectural costs as provided in Section 3.1.1. Tenant shall pay as a portion of Tenant’s Contribution (as defined hereinafter) the cost of all Tenant Permits (as defined in Section 3.2.5(a)).

2.2 Design of the Tenant Improvements.

2.2.1 Space Plan. Tenant’s final space plan for the Premises as approved by Landlord (the “Space Plan”) is attached hereto as Schedule 3.

 

Exhibit C, Page 7


2.2.2 Design Parameters. Within the period set forth in the Construction Schedule, Tenant shall (or shall cause Tenant’s Consultants) to prepare and submit for Landlord’s approval detailed parameters with respect to Tenant’s occupancy, programming and equipment for the Premises (“Design Parameters”) in sufficient detail to permit the MEP Subcontractors (hereinafter defined) to prepare the MEP Drawings.

2.2.3 Final Working Drawings. Within the period set forth in the Construction Schedule, Tenant shall cause Tenant’s Architect and Tenant’s Consultants to prepare and submit for Landlord’s approval complete and detailed construction plans and specifications in a format reasonably acceptable to Landlord, including a fully coordinated set of architectural and structural drawings for the Tenant Improvement Work (excluding the MEP Drawings which will be prepared by the MEP Subcontractors as provided in Section 2.2.5), in a form that is, when taken together with the MEP Drawings, sufficiently complete to bid on the work, obtain all required Permits and commence construction (the “Final Working Drawings”). Tenant shall furnish Landlord with four (4) copies of the Final Working Drawings. Tenant shall be permitted to deliver to Landlord for review the Final Working Drawings for portions of the Premises as opposed to the entire Premises at once at Tenant’s election, and Landlord shall review such partial delivery in the same manner per portion as if the delivery was related to the entire Premises. Landlord shall approve or disapprove of the Final Working Drawings by giving written notice to Tenant within ten (10) business days after receipt thereof. Landlord shall not unreasonably withhold or delay its approval of the Final Working Drawings, provided that, without limiting the generality of the foregoing, Landlord shall be entitled to withhold its consent to the Final Working Drawings if, in Landlord’s good faith judgment, the Final Working Drawings are materially inconsistent with, or do not materially conform to, the Space Plan and/or the Design Parameters. If Landlord disapproves the Final Working Drawings, Landlord shall return the Final Working Drawings to Tenant with a statement of Landlord’s reasons for disapproval and/or specifying in reasonable detail any required corrections and/or revisions. Landlord shall approve or disapprove of any such revisions to the Final Working Drawings within five (5) business days after receipt of such revisions. Landlord may not disapprove of any matter set forth in the Final Working Drawings which has been previously approved by Landlord or that is logically consistent with the Space Plan or the Design Parameters. This procedure shall be repeated until Landlord approves the Final Working Drawings. The Final Working Drawings, as so approved, together with the MEP Drawings, are herein referred to as the “Approved Working Drawings.” If any dispute regarding the design of the Tenant Improvements arises, which is not settled within ten (10) business days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Tenant Improvements, provided (a) Tenant acts reasonably, (b) Tenant’s decision will not adversely affect the Building’s structural components or Building Systems, (c) the applicable Tenant Improvements in dispute (i) are customary office improvements, (ii) comply with Applicable Laws and (iii) do not affect the exterior appearance of the Building and (d) Tenant’s decision will not delay either Phase 1 Substantial Completion or Phase 2 Substantial Completion. If the Final Working Drawings have not been approved by Landlord within forty (40) business days after the delivery of the Final Working Drawings to Landlord, then, unless such delay is caused by Landlord’s failure to timely approve or disapprove the Final Working Drawings (or revisions thereto) pursuant to this Section 2.2.3 or Landlord’s unreasonable withholding of approval of such Final Working Drawings (or revisions thereto), each day that the Phase 1 Substantial Completion Date (as hereinafter defined) or the Phase 2 Substantial Completion Date (as hereinafter defined), as applicable, is actually delayed by reason of such failure shall count as one (1) day of Tenant Delay.

2.2.4 No Liability of Landlord. Landlord shall have no liability for the completeness or accuracy of the set of drawings of the Building previously delivered by Landlord to Tenant, and Tenant’s Architect shall be responsible for performing all necessary field measurements and confirming the completeness and accuracy of such drawings. Landlord’s sole interest in reviewing and approving the Space Plan and the Final Working Drawings is to protect the Building and Landlord’s

 

Exhibit C, Page 8


interests, and no such review or approval by Landlord shall be deemed to (a) create any liability of any kind on the part of Landlord, including, but not limited to, liability for design, engineering or fitness for a particular purpose, or (b) constitute a representation on the part of Landlord or any person consulted by Landlord in connection with such review and approval that the Space Plan or the Final Working Drawings are correct or accurate, or are in compliance with any Applicable Laws or the requirements of this Work Letter. Without limiting the foregoing, Tenant shall be responsible for ensuring that (i) all elements of the Design Parameters and the design of the Approved Working Drawings (excluding the MEP Drawings which shall be Landlord’s responsibility) comply with Applicable Laws and are otherwise suitable for Tenant’s use of the Premises, and (ii) no element of the Design Parameters or the design of the Approved Working Drawings (excluding the MEP Drawings which shall be Landlord’s responsibility) materially impairs any Building Systems and Landlord’s approval of the Final Working Drawings shall not relieve Tenant from such responsibility. Further, if Landlord incurs any cost as a result of any failure of the Approved Working Drawings (excluding the MEP Drawings which shall be Landlord’s responsibility) or the Design Parameters to comply with Applicable Laws or as a result of any impairment of any Building Systems or resulting from any defect in the Approved Working Drawings (excluding the MEP Drawings which shall be Landlord’s responsibility), then Tenant, upon written notice and request from Landlord, shall, at Landlord’s option, either (A) assign to Landlord any right Tenant may have under the Design Professional Agreements (defined below) to recover such cost from Tenant’s Architect and/or Tenant’s Consultants, as the case may be, or (B) at Tenant’s expense, use reasonable efforts to enforce such right directly against Tenant’s Architect and/or Tenant’s Consultants, as the case may be, for Landlord’s benefit. As used herein, “Design Professional Agreements” means the agreements between Tenant and Tenant’s Architect and Tenant’s Consultants pursuant to which the Design Parameters and the Approved Working Drawings (excluding the MEP Drawings) have been or will be prepared.

2.2.5 MEP Drawings. Within the period set forth in the Construction Schedule, Landlord shall cause (or shall cause the General Contractor to cause) the MEP Subcontractors (as hereinafter defined) to prepare and submit for Tenant’s approval, in a format reasonably acceptable to Tenant, complete and detailed construction plans, specifications and engineering working drawings related to mechanical, electrical, plumbing, elevator, fire protection, and life safety work to be completed in connection with the Tenant Improvements (including any code compliance work with respect to such mechanical, electrical, plumbing, elevator, fire protection, and life safety work), in a form that is sufficiently complete to obtain all required Permits and commence construction (the “Draft MEP Drawings”). The Draft MEP Drawings shall be based on the Final Working Drawings and the Design Parameters. Landlord shall furnish Tenant with four (4) copies of the Draft MEP Drawings. Tenant shall approve or disapprove of the Draft MEP Drawings by giving written notice to Landlord within the period set forth in the Construction Schedule after receipt thereof. Tenant shall not unreasonably withhold or delay its approval of the Draft MEP Drawings, provided that, without limiting the generality of the foregoing, Tenant shall be entitled to withhold its consent to the Draft MEP Drawings if, in Tenant’s good faith judgment, the Draft MEP Drawings are materially inconsistent with, or do not materially conform to, the Final Working Drawings or the Design Parameters. If Tenant disapproves the Draft MEP Drawings, Tenant shall return the Draft MEP Drawings to Landlord with a statement of Tenant’s reasons for disapproval and/or specifying in reasonable detail any required corrections and/or revisions. Tenant shall approve or disapprove of any such revisions to the Draft MEP Drawings within the period set forth in the Construction Schedule after receipt of such revisions. Tenant may not disapprove of any matter set forth in the Draft MEP Drawings which has been previously approved by Tenant or that is logically consistent with the Final Working Drawings and the Design Parameters. This procedure shall be repeated until Tenant approves the Draft MEP Drawings (such approved drawings, shall be referred to herein as the “MEP Drawings”). If the Draft MEP Drawings have not been approved by Tenant within the period set forth in the Construction Schedule after delivery of the Draft MEP Drawings to Tenant, then, unless such delay is caused by (a) Landlord’s failure to timely submit to Tenant for approval the Draft MEP Drawings (or revisions thereto) pursuant to this Section 2.2.5 or (b) the Draft MEP Drawings being, in Tenant’s

 

Exhibit C, Page 9


good faith judgment, materially inconsistent with, or failing to materially conform to, the Final Working Drawings or the Design Parameters, each day that the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, is actually delayed by reason of such failure shall count as one (1) day of Tenant Delay.

2.2.6 No Liability of Tenant. Tenant shall have no liability for the completeness or accuracy of the Draft MEP Drawings (as the same may be modified or supplemented), and Landlord (or the MEP Subcontractors) shall be responsible for performing all necessary field measurements and confirming the completeness and accuracy of such drawings. Tenant’s sole interest in reviewing the Draft MEP Drawings is to protect Tenant’s interests, and no such review or any approval by Tenant shall be deemed to (a) create any liability of any kind on the part of Tenant, including, but not limited to, liability for design, engineering or fitness for a particular purpose, or (b) constitute a representation on the part of Tenant or any person consulted by Tenant in connection with such review and approval that the Draft MEP Drawings are correct or accurate, or are in compliance with any Applicable Laws or the requirements of this Work Letter. Without limiting the foregoing, Landlord shall be responsible for ensuring that all elements of the design of the Draft MEP Drawings comply with Applicable Laws and any Tenant approval of the Draft MEP Drawings shall not relieve Landlord from such responsibility.

3. Construction of Tenant Improvements.

3.1 Responsibility for Design and Construction Costs.

3.1.1 Space Plan Allowance. Landlord agrees to reimburse Tenant for architectural costs incurred in connection with preparation of the Space Plan in an amount not to exceed Forty Thousand One Hundred Seventy Nine and 90/100 Dollars ($40,179.90) (calculated at the rate of $0.15 per Adjusted Rentable Square Foot within the Premises) (the “Space Plan Allowance”). Tenant may submit invoices to Landlord for payment of the Space Plan Allowance to reimburse Tenant or to pay Tenant’s Architect directly (if so requested by Tenant) for the Space Plan prepared by Tenant’s Architect. Following Landlord’s receipt of such invoices, Landlord shall within thirty (30) days thereafter pay Tenant for the amount requested in such invoice; provided in no event shall Landlord be obligated to make disbursements for the Space Plan in an amount which exceeds the Space Plan Allowance. The Space Plan Allowance shall not be deducted from the Tenant Improvement Allowance.

3.1.2 Tenant Improvement Allowance.

(a) Allowance. Subject to the conditions set forth in Section 3.1.2(b), Landlord will contribute to the costs of preparing the MEP Drawings and performing the Tenant Improvement Work, as depicted on the Approved Working Drawings and any approved Change Orders (as defined in Section 4 hereof), to the extent of the lesser of (a) Nine Million Four Hundred Seventy One Thousand Three Hundred Ten and 00/100 Dollars ($9,471,310.00) (calculated at the rate of $35.00 per Adjusted Rentable Square Foot in the Premises plus a credit against the commission due Tenant’s Broker in the amount of Ninety Six Thousand and 00/100 Dollars ($96,000.00)) or (b) the actual cost for the Permitted Allowance Items (hereinafter defined) (the “Tenant Improvement Allowance”). Tenant shall not be entitled to a credit for any unused portion of the Tenant Improvement Allowance in form of rent credit, rent abatement or otherwise, except as provided in Section 3.1.2(b).

(b) Permitted Allowance Items. Except as otherwise specified in this Work Letter, the Tenant Improvement Allowance may be applied only to the payment or reimbursement of the following (“Permitted Allowance Items”): (i) the cost of preparing the MEP Drawings, (ii) the cost of obtaining Permits, (iii) the Construction Administration Costs (as defined in

 

Exhibit C, Page 10


Section 3.3), (iv) the cost of performing the Tenant Improvement Work, including insurance, bonds, testing and inspection costs, hoisting and trash removal costs, contractors’ fees and general conditions, and sales and use taxes; (v) all costs of data and telephone cabling, kitchen equipment and signage (excluding all costs of other furnishings, fixtures, equipment and other personal property, including switches, servers, routers and similar data and telecommunications equipment except as provided below in this Section 3.1.2(b)); (vi) the cost of any change to the base, shell or core of the Premises or Building, including changes to the Ancillary Tenant Improvements, required by the Approved Working Drawings or the Design Parameters, including all direct architectural and/or engineering fees and expenses incurred in connection therewith; (vii) the cost of any change to the Approved Working Drawings or Tenant Improvements required by Applicable Laws; and (viii) the costs of any extended warranties requested by Tenant and obtained by Landlord pursuant to Section 3.2.8 below. From time to time during the course of construction, Landlord may charge against the Tenant Improvement Allowance any and all Permitted Allowance Items incurred by Landlord (except any Excluded Costs) as set forth in the then-approved Budget, including, without limitation, any increased costs incurred by Landlord as a result of, or in connection with Change Orders (except if such costs are Excluded Costs) or any reasonable and actual third-party costs and expenses to the extent incurred by Landlord in connection with, or as a consequence of, any Tenant Delay, as well as any reasonable and actual increase in the cost of construction of the Tenant Improvements to the extent attributable to Tenant Delay. If the actual cost of the Permitted Allowance Items shall be less than the Tenant Improvement Allowance, such unused portion of the Tenant Improvement Allowance in an amount not to exceed Two Million Eight Thousand Nine Hundred Ninety Five and 00/100 Dollars ($2,008,995.00) (calculated at the rate of $7.50 per Adjusted Rentable Square Foot in the Premises) (the “Unused Allowance Amount”) may be disbursed to Tenant and applied to the cost of Tenant’s furnishings, fixtures, equipment, and other personal property, including switches, servers, routers and similar data and telecommunications equipment, and /or Tenant’s moving expenses. If Tenant fails to submit reasonably satisfactory documentation requesting disbursement of the Unused Allowance Amount on or before the second (2nd) anniversary of the Commencement Date, Landlord shall have no further obligation to provide the Unused Allowance Amount or any remaining balance thereof to Tenant, nor shall Tenant be entitled to any rent credit or rent abatement for any unused portion of the Unused Allowance Amount.

(c) Suite 375 Premises Reduction. Notwithstanding anything to the contrary set forth in Section 3.1.2(a) regarding the amount and the calculation of the Tenant Improvement Allowance, the Tenant Improvement Allowance allocable to the Suite 375 Premises shall be reduced in connection with the Relocation of the Existing Tenant thereof. The Tenant Improvement Allowance set forth in Section 3.1.2(a) shall be reduced by an amount resulting from the following calculation: (1) the multiplication of (A) the Adjusted Rentable Square Feet of the Suite 375 Premises by (B) the rate of $35.00 and (2) the further multiplication of the foregoing product by a fraction, the numerator of which is the number of days from the Commencement Date to and including February 3, 2013 and the denominator of which is the number of days in the initial Term (such amount the “Suite 375 Reduction”). Upon the occurrence of the Commencement Date, Landlord and Tenant shall reconcile the actual Suite 375 Reduction in connection with preparation of the Final Reconciliation Statement (as defined in Section 3.1.7).

3.1.3 Budget.

(a) Budget. Attached hereto as Schedule 6 is a detailed breakdown by trade of the costs incurred or that will be incurred in connection with the preparation of the MEP Drawings and the construction of the Tenant Improvements, which Landlord may update from time to time (including to reflect any increase in costs resulting from any approved Change Order) (the most recently approved such budget, the “Budget”). The estimated cost of the preparation of the MEP

 

Exhibit C, Page 11


Drawings and the construction of the Tenant Improvements as of the Lease Date based on the Budget attached as Schedule 6 is Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00).

(b) Excluded Costs. Notwithstanding the provisions of Section 3.1.2, the following costs and expenses relating to the Tenant Improvement Work shall be borne by Landlord at no cost to Tenant (collectively, the “Excluded Costs”): (i) charges and expenses for Change Orders requested by Landlord, whether or not approved by Tenant, except for (A) Change Orders that may be necessary to obtain any Permits or that may be required by city officials or inspectors to comply with code rulings or interpretations, (B) any change to the base, shell or core of the Premises or Building, including the Ancillary Tenant Improvements, required by the Approved Working Drawings or Design Parameters, and (C) Change Orders relating to minor variations in the Approved Working Drawings (namely, variations which are not inconsistent with the intent of the Approved Working Drawings); (ii) costs for which Landlord receives reimbursement from others, including, without limitation, insurers, bonding companies or sureties (if any), and warrantors (Landlord shall use commercially reasonable efforts to maximize the amount of all such reimbursements to which it is entitled); (iii) wages, labor and overhead for overtime or premium time (unless expressly approved by Tenant in the Budget or in any Change Order); (iv) additional costs and expenses incurred by Landlord on account of any contractor’s or subcontractor’s construction defects, to the extent covered by any applicable warranties; (v) costs arising from or in connection with the presence of Hazardous Materials in, on or under the Project; (vi) liens, penalties and late charges attributable to Landlord’s failure to pay any costs or fees required to be paid by Landlord pursuant to the TI Agreements (as hereinafter defined) or any other contract or agreement to which Landlord is a party, except to the extent the foregoing are attributable to Tenant’s failure to perform any of Tenant’s obligations pursuant to this Work Letter; (vii) restoration costs in excess of insurance proceeds as a consequence of casualties; (viii) costs associated with bonding any contractors, subcontractors or vendors; (ix) costs of utilizing freight elevators, parking, access to loading docks, security, and utilities or HVAC at the Building in connection with construction of the Tenant Improvements or Ancillary Tenant Improvements or otherwise prior to the Commencement Date; (x) attorneys’, experts’ and other fees and costs in connection with disputes attributable to Landlord’s failure to timely perform its covenants, obligations and agreements pursuant to the TI Agreements or any other contract or agreement to which Landlord is a party, except to the extent the foregoing are attributable to Tenant’s failure to perform any of Tenant’s obligations pursuant to this Work Letter; (xi) the cost of any changes necessary to cause the Building Systems to be operational and in condition or repair or to correct violations of the base, shell or core of the Premises or the Building or the Ancillary Tenant Improvements with Applicable Laws, unless the same are necessitated by reason of the installation of any of Tenant’s specialized personal property in the Premises, or by Tenant’s particular use or proposed use of the Premises other than customary general office use; (xii) except as set forth in Section 2.6.2 of the Lease, any cost or expense arising in connection with a Relocation; (xiii) any cost or expense arising in connection with the removal of any Lines located in the Premises or connecting the Premises to the Building’s riser system or MPOE Room as of the Lease Date; (xiv) other than the Construction Administration Costs (as hereinafter defined), any other management, engineering, outside consulting and construction fees incurred by or on behalf of Landlord for the coordination of the Tenant Improvement Work (as opposed to the fees for the design of the Tenant Improvements or the preparation of the Space Plan or the Approved Working Drawings); and (xv) the cost of preparing any Investigation Notice (as defined in Section 4 below).

3.1.4 Tenant’s Contribution. Except for the Excluded Costs and subject to Landlord’s obligation to disburse the Space Plan Allowance and the Tenant Improvement Allowance in accordance with Section 3.1, Tenant shall pay all costs in excess of the Tenant Improvement Allowance as set forth in the approved Budget for the costs of preparing the MEP Drawings and performance of the Tenant Improvement Work (such difference being referred to herein as the “Tenant’s Contribution”).

 

Exhibit C, Page 12


Notwithstanding anything to the contrary set forth herein, to the extent that there exists any unused contingency amounts in the Budget, then such amounts shall be used to offset Tenant’s Contribution.

3.1.5 Budget Package; Funding of Tenant’s and Landlord’s Contributions.

(a) Monthly Budget Package. Landlord shall submit to Tenant monthly, during the performance of the Tenant Improvements, a report setting forth in reasonable detail with respect to the prior calendar month: (i) a computation of the total costs of preparing the MEP Drawings and performing the Tenant Improvement Work incurred by Landlord during the prior month other than the Excluded Costs(collectively, “MEP Design/TI Construction Costs”) compared with the Budget, accompanied by reasonable supporting evidence of the amounts shown thereon, and (ii) the cumulative MEP Design/TI Construction Costs incurred through the end of such month compared with the Budget (each such submittal, a “Monthly Budget Package”). Such report shall be submitted by the twentieth (20th) day of each month (or as soon thereafter as is reasonably practicable) and shall be accompanied by invoices for costs incurred during the previous month for Tenant Improvements and unconditional lien releases demonstrating that all previously invoiced Tenant Improvement costs as of such date have been duly paid or reasonable evidence that such costs are being disputed in accordance with the express terms of the applicable written agreement. Tenant shall pay directly all costs and expenses incurred by Tenant under agreements between Tenant and Tenant’s Architect, Tenant’s Consultants and other consultants hired by Tenant in connection with the Tenant Improvements and the cost and expenses of other Permitted Allowance Items incurred directly by Tenant.

(b) Funding Tenant Improvement Costs. Landlord shall pay the Space Plan Allowance for the Space Plan and the Tenant Improvement Allowance for the Permitted Allowance Items in their entirety to parties entitled thereto prior to Landlord invoicing Tenant for Tenant’s Contribution; provided, however, that, if any MEP Design/TI Construction Costs incurred prior to the funding of the entire Space Plan Allowance and the Tenant Improvement Allowance are not either Permitted Allowance Items or Excluded Costs, then, notwithstanding the foregoing, Tenant shall pay such amounts within fifteen (15) business days following receipt of a Payment Request (hereinafter defined). Subject to the foregoing requirement that Landlord first fund Landlord’s Contribution and following the funding of Landlord’s Contribution, Landlord shall submit to Tenant, along with the Monthly Budget Package, a written invoice setting forth Tenant’s Contribution required to pay costs incurred during the previous month for the Tenant Improvements which invoice shall be accompanied by reasonable supporting evidence of the amounts shown thereon (collectively, a “Payment Request”), and Tenant shall pay the amount of the Payment Request within fifteen (15) business days. If at any time Tenant disputes the amount of any Payment Request, then Tenant may make the required payment under protest, in which event Landlord and Tenant shall proceed in good faith to resolve such dispute; and, if the dispute has not been resolved within fifteen (15) days thereafter, then the dispute shall be resolved pursuant to binding arbitration in accordance with Article 45 of the Lease. In no event shall Tenant have the right to withhold timely payment of any Payment Request.

3.1.6 TI Letter of Credit.

(a) TI Letter of Credit. Within five (5) business days after the execution and delivery of this Lease, Tenant shall deliver to Landlord, an irrevocable and unconditional negotiable standby letter of credit (the “TI Letter of Credit”) in the form attached hereto as Schedule 7 and containing the terms required herein, payable upon presentation to an operating retail branch located in San Francisco, California, running in favor of Landlord and issued by a bank with a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, in the amount of Seven Million Twenty Eight Thousand Six Hundred Ninety and 00/100 Dollars ($7,028,690.00) which amount is equal to the estimated amount of

 

Exhibit C, Page 13


Tenant’s Contribution. Landlord agrees that Wells Fargo Bank, N.A. meets all requirements set forth in this Work Letter for the bank issuing the TI Letter of Credit and if selected by Tenant is deemed approved by Landlord to issue the TI Letter of Credit. The TI Letter of Credit shall (i) be “callable” at sight, irrevocable and unconditional, (ii) be maintained in effect, whether through renewal or extension, for the period from the date of issuance and continuing until the earlier of (A) the first anniversary of the Lease Date and (B) the date of Tenant’s payment in full of Tenant’s ATI Contribution (the “TI LC Expiration Date”), (iii) permit partial draws and multiple presentations and drawings, and (iv) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (2007-Rev), International Chamber of Commerce Publication #600, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. In addition to the foregoing, the bank issuing the TI Letter of Credit (the “TI Bank”) shall be acceptable to Landlord, in Landlord’s reasonable discretion. If Landlord notifies Tenant in writing that the TI Bank (w) no longer maintains an operating retail branch located in San Francisco, California, (x) no longer has a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, (y) is no longer under the supervision of the Superintendent of Banks of the State of California or a national banking association, or (z) has filed bankruptcy or reorganization proceedings or is placed into a receivership or conservatorship, then Tenant shall have thirty (30) days to provide Landlord with a substitute TI Letter of Credit complying with all of the requirements of this Section 3.1.6. If Tenant does not so provide Landlord with a substitute TI Letter of Credit within such thirty (30) day period, then Landlord, or its then managing agent, shall have the right to draw upon the then current TI Letter of Credit, and the proceeds of the TI Letter of Credit shall be held by Landlord and may be applied by Landlord in accordance with the terms of this Work Letter. If the final reconciliation of the Tenant Improvements (as provided in Section 3.1.7 below) has not been completed (and Tenant has not terminated the Lease in compliance with Section 2.4 of the Lease or Section 7.4.2 of this Work Letter) prior to the first anniversary of the Lease Date and Tenant fails to deliver a new TI Letter of Credit or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the TI Letter of Credit then held by Landlord, then Landlord, or its then managing agent, shall have the right to draw upon the then current TI Letter of Credit, and the proceeds of the TI Letter of Credit shall be held by Landlord and may be applied by Landlord in accordance with the terms of this Work Letter. The TI Letter of Credit will be honored by the TI Bank regardless of whether Tenant disputes Landlord’s right to draw upon the TI Letter of Credit. No condition or term of the Lease shall be deemed to render the TI Letter of Credit conditional to justify the issuer of the TI Letter of Credit in failing to honor a drawing upon such TI Letter of Credit in a timely manner. Tenant agrees and acknowledges that (x) the TI Letter of Credit constitutes a separate and independent contract between Landlord and the TI Bank, (y) Tenant is not a third party beneficiary of such contract, and (z) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the TI Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise provided, however, that nothing contained herein shall be deemed to prohibit Tenant from challenging the validity or amount of any draw on the TI Letter of Credit following the occurrence thereof. The TI Letter of Credit shall provide that Landlord, its successors and assigns, may, at any time and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the TI Letter of Credit to another party, person or entity; provided, that, in each case, Landlord provides Tenant written notice of such transfer. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the TI Letter of Credit, in whole or in part, to the transferee, shall provide written of such transfer to Tenant and, upon such transfer and notice, shall, without any further agreement between the parties, be released by Tenant from all liability therefor arising after such transfer, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said TI Letter of Credit to a new landlord. In connection with any such transfer of the TI Letter of Credit by Landlord, Landlord shall, at Landlord’s sole cost and expense, execute and submit to the TI Bank such applications, documents and instruments,

 

Exhibit C, Page 14


each in commercially reasonable form, as may be necessary to effectuate such transfer, and Landlord shall be responsible for the TI Bank’s transfer and processing fees in connection therewith.

(b) Increases and Decreases in TI Letter of Credit.

(i) In addition, if at any time prior to the Phase 2 Substantial Completion Date, but not more often then once per month, Tenant’s Contribution increases by more than ten percent (10%) of the original amount thereof, and the remaining Tenant’s Contribution amount following the increase as of such date is greater than the amount of the existing TI Letter of Credit, as set forth in the then-approved Budget, then Tenant shall, within ten (10) business days following notice thereof, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or amend the existing TI Letter of Credit to increase the amount thereof to equal the deficiency), if any, and any such additional letter(s) of credit shall comply with all of the provisions of this Section 3.1.6.

(ii) Notwithstanding anything to the contrary contained in this Section 3.1.6, at any time after the Phase 1 Substantial Completion Date, Tenant shall have the one-time right to provide a substitute or amended TI Letter of Credit in an amount equal to the remaining Tenant’s Contribution, as set forth in the then-approved Budget, and any such substitute or amended letter(s) of credit shall comply with all of the provisions of this Section 3.1.6. Within five (5) business days following Tenant’s delivery of such a substitute TI Letter of Credit, Landlord shall deliver to Tenant any TI Letter of Credit in Landlord’s possession, along with any unapplied funds previously drawn on such existing TI Letter of Credit in accordance with Section 3.1.6(a) or (c).

(c) Draws on Letter of Credit. If Tenant fails to timely pay any portion of Tenant’s Contribution required to be paid by Tenant pursuant to this Section 3.1.5(b), then Landlord shall give Tenant notice thereof and five (5) business days after such notice to cure such failure. After the expiration of such cure period, Landlord may make a draw on the TI Letter of Credit up to such unpaid amount, which shall be deemed a satisfaction of the Payment Request to the extent of such draw on the TI Letter of Credit. Within ten (10) business days following the earlier of (i) Tenant’s payment in full of Tenant’s Contribution and (ii) Tenant’s termination of the Lease in compliance with Section 2.4 of the Lease or Section 7.4.2 of this Work Letter, Landlord shall deliver any remaining TI Letter of Credits in Landlord’s possession and any unapplied funds previously drawn on the TI Letter of Credit in accordance with Section 3.1.6 (a) or (c).

(d) Letter of Credit. In lieu of delivering a TI Letter of Credit as required by this Section 3.1.6 (or any increase pursuant to Section 3.1.6(b) above), Tenant may elect in its sole and absolute discretion to cause the amount of the Letter of Credit (as defined in the Lease) to be increased by Tenant’s Contribution or by the amount of any increase pursuant to Section 3.1.6(b) above. If Tenant elects to do so, then the following shall apply:

(i) If Tenant fails to timely pay any portion of Tenant’s Contribution required to be paid by Tenant pursuant to Section 3.1.5(b) above, then Landlord shall give Tenant notice thereof and five (5) business days after such notice to cure such failure. After the expiration of such cure period, Landlord may make a draw on the Letter of Credit up to such unpaid amount.

(ii) Upon the TI LC Expiration Date, Tenant may, subject to Tenant’s obligations under Section 1.3.3(d) above, cause the Letter of Credit to be decreased to equal the Letter of Credit Amount (as defined in the Lease).

 

Exhibit C, Page 15


(iii) Within ten (10) business days following the TI LC Expiration Date, Landlord shall deliver to Tenant any unapplied funds previously drawn on the Letter of Credit in accordance with this Section 3.1.6(d).

3.1.7 TI Costs Reconciliation. Within thirty (30) days following final completion of the Tenant Improvement Work (including any Punch-List Items as hereinafter defined) for the Phase 1 Premises or the Phase 2 Premises, as applicable, and acceptance thereof by Tenant, or as soon thereafter as is reasonably practicable, Landlord shall prepare for Tenant’s review and approval a final reconciliation of the total costs of the Tenant Improvements setting forth the application of (a) the Tenant Improvement Allowance, (b) Payment Requests paid by Tenant, and (c) any prior draws on the TI Letter of Credit or, if applicable, the Letter of Credit, together with conditional lien releases from the General Contractor and all subcontractors who have filed a preliminary 20-day notice (the “Final Reconciliation Statement”). The Final Reconciliation Statement shall also set forth the remaining unpaid amount of Tenant’s Contribution (if any) or any overpayment by Tenant in connection with construction of the Tenant Improvements. If Tenant has overpaid, then within thirty (30) days after delivery of the Final Reconciliation Statement, Landlord shall refund any overpayment to Tenant. If Tenant has underpaid, then within thirty (30) days after delivery of the Final Reconciliation Statement, Tenant shall (i) either pay to Landlord the remaining unpaid amount of Tenant’s Contribution (if any) set forth in the Final Reconciliation Statement or (ii) deliver written notice to Landlord that Tenant disputes in whole or in part the remaining unpaid amount of Tenant’s Contribution set forth in the Final Reconciliation Statement. Landlord and Tenant shall proceed in good faith to resolve any dispute regarding the remaining unpaid amount of Tenant’s Contribution for a period of twenty (20) days, at which time, if the dispute has not been resolved (as evidenced in a writing signed by Landlord and Tenant), the dispute shall be submitted to binding arbitration in accordance with Article 45 of the Lease. Tenant shall not be required to pay Landlord any disputed amount until such dispute is so resolved (Tenant shall, however, timely pay all amounts not in dispute). Landlord shall deliver unconditional lien releases from the General Contractor and all subcontractors who have filed a preliminary 20-day notice promptly following final payment of the General Contractor and such subcontractors.

3.2 Construction.

3.2.1 General Contractor. Landlord has selected Plant Construction (“General Contractor”) to construct the Tenant Improvements and the Ancillary Tenant Improvements. General Contractor has delivered to Landlord and Tenant a final proposal setting forth key terms of the TI Construction Contract (as defined in Section 3.2.2) (the “Final Proposal”).

3.2.2 Construction Contracts.

(a) Tenant Improvements. Landlord shall, within five (5) business days after the Lease Date, enter into a construction contract with the General Contractor to perform the Tenant Improvement Work, as shown on the Approved Working Drawings, excepting only minor variations (namely, variations which are not inconsistent with the intent of the Approved Working Drawings) and any Change Orders made pursuant to Section 4 below (the “TI Construction Contract”). The TI Construction Contract shall include, without limitation, the Required Terms (hereinafter defined). Prior to entering into the TI Construction Contract, Landlord shall deliver the final form of TI Construction Contract to Tenant. Tenant shall have three (3) business days after receipt of the form of TI Construction Contract to confirm that the TI Construction Contract conforms to the terms set forth in the Final Proposal and includes the Required Terms. Landlord shall not execute and deliver the TI Construction Contract prior to the earlier of (a) the expiration of such three (3) business day period or (b) Tenant’s earlier approval of the form of TI Construction Contract. Tenant’s failure to respond within such three (3) business day period shall be deemed to be Tenant’s approval of the form of TI Construction

 

Exhibit C, Page 16


Contract. If the TI Construction Contract conforms in all material respects to the terms set forth in the Final Proposal and includes the Required Terms, then Tenant shall have no further right to approve the form of the TI Construction Contract. If the TI Construction Contract does not conform in all material respects to the terms set forth in the Final Proposal and include all of the Required Terms, then Tenant may disapprove the form of TI Construction Contract, in which case, Landlord may not execute and deliver the TI Construction Contract until such conditions are satisfied. After the TI Construction Contract is initially executed and delivered, Landlord may not amend, modify or supplement the TI Construction Contract in any way which would cause the TI Construction Contract not to conform in all material respects to the terms set forth in the Final Proposal or not to include the Required Terms without Tenant’s prior written consent, which consent Tenant may withhold in its sole and absolute discretion. For purposes of this Work Letter, the “Required Terms” shall mean the following terms: (i) for the sole purpose of enforcing Tenant’s remedy set forth in Section 7.4.3 below, Tenant shall be an express third-party beneficiary of the TI Agreements (and any subcontracts to which Landlord is a third-party beneficiary) and may enforce the covenants, conditions and agreements set forth therein directly against the General Contractor (or the applicable subcontractor) (subject to any defenses the General Contractor or any subcontractors may have in the event of any continuing default by the “Owner” thereunder), (ii) Tenant shall be made a third-party beneficiary of all warranties set forth in the TI Agreements, (iii) General Contractor shall comply with the terms and conditions set forth in Section 2.2.5, above and Sections 3.2.4, 3.2.6 and 7.4.3 below, (iv) General Contractor shall provide notices to Tenant of any default under either of the TI Agreements (or any subcontracts) simultaneously with delivery of such notices to Landlord and Tenant may cure any default under the TI Agreements by Landlord after exercising the remedy set forth in Section 7.4.3 below, (v) General Contractor shall warrant for a period of at least one (1) year that the Ancillary Tenant Improvements and the Tenant Improvements will be constructed in accordance with, as applicable, the Ancillary Tenant Improvements Plans (and any duly made ATI Change Orders) or the Approved Working Drawings (and duly made Change Orders) and free from defects in workmanship and materials, (vi) no costs or fees shall be included that are duplicative of costs and fees included in the other TI Agreement, (vii) as to the TI Construction Contract only, the General Contractor’s fee shall reflect a market fee not to exceed three percent (3%) of the total hard construction costs and MEP/FLSS design build costs and, as to the Ancillary TI Construction Agreement, the General Contractor’s fee shall reflect a market fee not to exceed three and seventy-five hundredths percent (3.75%) of the total hard construction costs and MEP/FLSS design build costs; (viii) include a representation of the General Contractor that (A) it has not colluded with any other contractor or subcontractor to refrain from bidding in connection with the TI Construction Contract or has in any manner, directly or indirectly sought by agreement or collusion with any other contractor or subcontractor to fix prices, overhead, profit or costs in connection with bidding relating to the Tenant Improvement Work and (B) it will properly apportion costs and expenses between the Tenant Improvements and the Ancillary Tenant Improvements; (ix) each payment to the General Contractor shall be subject to a ten percent (10%) retention, which retention shall be payable to the General Contractor upon the final completion, as applicable, of the Tenant Improvement Work for the Phase 2 Premises (including Punch-List Items) and the construction of the Ancillary Tenant Improvements (including Punch-List Items).

(b) Ancillary Tenant Improvements. Landlord shall, within five (5) business days after the Lease Date, enter into a separate construction contract with the General Contractor to construct the Ancillary Tenant Improvement Work, as shown on the Ancillary Tenant Improvement Plans, excepting only minor variations (namely, variations which are not inconsistent with the intent of the Ancillary Tenant Improvement Plans) (the “Ancillary TI Construction Agreement” and together with the TI Construction Contract, the “TI Agreements”). The Ancillary TI Construction Agreement shall include, without limitation, the Required Terms. Prior to entering into the Ancillary TI Construction Agreement, Landlord shall deliver the final form of Ancillary TI Construction Agreement to Tenant. Tenant shall have three (3) business days after receipt of the form of Ancillary TI Construction Agreement to confirm that the Ancillary TI Construction Agreement conforms to the terms set forth in the

 

Exhibit C, Page 17


Final Proposal and includes the Required Terms. Landlord shall not execute and deliver the Ancillary TI Construction Agreement prior to the earlier of (A) the expiration of such three (3) business day period or (B) Tenant’s earlier approval of the form of Ancillary TI Construction Agreement. Tenant’s failure to respond within such three (3) business day period shall be deemed to be Tenant’s approval of the form of Ancillary TI Construction Agreement. If the Ancillary TI Construction Agreement conforms in all material respects to the terms set forth in the Final Proposal and includes the Required Terms, then Tenant shall have no further right to approve the form of the Ancillary TI Construction Agreement. If the Ancillary TI Construction Agreement does not conform in all material respects to the terms set forth in the Final Proposal and the Required Terms, then Tenant may disapprove the form of Ancillary TI Construction Agreement, in which case, Landlord may not execute and deliver the Ancillary TI Construction Agreement until such conditions are satisfied. After the Ancillary TI Construction Agreement is initially executed and delivered, Landlord may not amend, modify or supplement the Ancillary TI Construction Agreement in any way which would cause the Ancillary TI Construction Agreement not to conform in all material respects to the terms set forth in the Final Proposal or not to include the Required Terms without Tenant’s prior written consent, which consent Tenant may withhold in its sole and absolute discretion.

3.2.3 Selection of MEP Subcontractors. Prior to the Lease Date, Landlord, Tenant and the General Contractor agreed upon the list of qualified, licensed and reputable subcontractors and have selected the subcontractors set forth in Schedule 9 based upon proposals previously submitted to Landlord, Tenant and the General Contractor for the preparation of the MEP Drawings and the performance of Tenant Improvement Work relating to the mechanical, electrical, plumbing, life safety, and sprinkler systems in accordance with the MEP Drawings (the “MEP Work”). The subcontractors jointly selected by Landlord, Tenant and the General Contractor to perform the MEP Work are collectively referred to herein as the “MEP Subcontractors.”

3.2.4 Selection of Other Subcontractors. All subcontractors performing the Ancillary Tenant Improvements and the Tenant Improvement Work other than the MEP Subcontractors shall be referred to herein as the “Other Subcontractors.” In regard to all work to be performed by Other Subcontractors, Landlord, Tenant and the General Contractor shall compile a list of three (3) to five (5) qualified, licensed and reputable subcontractors per trade to submit bids to Landlord and the General Contractor for such work (the “Pre-Approved Other Subcontractors”). Tenant shall be entitled to designate not less than one (1) Pre-Approved Other Subcontractors per trade on each such list. Thereafter, Landlord and the General Contractor shall solicit bids from Pre-Approved Other Subcontractors set forth on each list, reconcile the bids to adjust for incorrect or inconsistent assumptions so a like kind comparison can be made and deliver the bids and such reconciliation to Tenant. The lowest responsible bidder in each case that commits to complete the Tenant Improvements in accordance with the Construction Schedule shall be selected; provided, however, that (i) Landlord may elect to select a higher bidder, in which case the amount of such increase shall be an Excluded Cost and (ii) Tenant may elect to select a higher cost proposal, in which case the amount of such increase shall be a Permitted Allowance Item; provided further, however, that if a higher bidder is required to be selected by Landlord pursuant to Applicable Laws, then the incremental increase in costs shall not be an Excluded Cost, but rather shall be a Permitted Allowance Item.

3.2.5 Permits.

(a) Tenant Permits. Tenant shall cause Tenant’s Architect to coordinate with the General Contractor to promptly submit the Approved Working Drawings (exclusive of the MEP Drawings) to the appropriate authorities to obtain city, county and state permits (the “Tenant Permits”) necessary to allow the General Contractor to commence and fully complete the construction of the Tenant Improvements described in the Approved Working Drawings. Landlord, in its capacity as the

 

Exhibit C, Page 18


owner of the Project, shall use diligent efforts to assist and cooperate with Tenant, Tenant’s Architect and the General Contractor in Tenant’s, Tenant’s Architect’s and General Contractor’s efforts to apply for, receive and implement the Permits and any other permits, licenses or other approvals required by any governmental or quasi-governmental authority, department agency, commission or board in order to construct the Tenant Improvements, Ancillary Tenant Improvements and MEP Work, as set forth in the Space Plan, Approved Working Drawings, Ancillary Tenant Improvement Plans, Design Parameters and MEP Drawings, as applicable. The General Contractor shall pick up the Tenant Permits upon issuance of the same. Neither Landlord nor Landlord’s consultants shall be responsible for submitting the Approved Working Drawings (exclusive of the MEP Drawings) to the appropriate governmental authorities for plan check in order to obtain any Tenant Permits and that submission of code compliant Approved Working Drawings (exclusive of the MEP Drawings) shall be Tenant’s responsibility. Any amendments or revisions to the Approved Working Drawings that may be necessary to obtain any such Tenant Permits, or which may be required by governmental officials or inspectors to comply with code rulings or interpretations, shall be prepared by (i) with respect to the Final Working Drawings, Tenant’s Architect, at Tenant’s expense (provided that to the extent funds are available, such expense may be reimbursed from the Tenant Improvement Allowance), and submitted to Landlord for Landlord’s review and approval, which review and approval shall be given in accordance with Section 2.2.3 hereof, except that Landlord shall approve or disapprove as set forth therein within three (3) business days or (ii) with respect to the MEP Drawings, an MEP Subcontractor, and submitted to Tenant for Tenant’s review and approval, which review and approval shall be given in accordance with Section 2.2.5 hereof, except that Tenant shall approve or disapprove as set forth therein within three (3) business days. If the Tenant Permits have not been issued within the period set forth on the Construction Schedule for obtaining such Tenant Permits after submission of the Approved Working Drawings to the appropriate authorities as provided above, then, unless such delay is caused by the failure of the Approved Working Drawings (exclusive of the MEP Drawings) to comply with Applicable Laws, then (A) any actual delay in the Phase 1 Substantial Completion beyond the later of (1) the Target Phase 1 Completion Date and (2) the date set forth for Phase 1 Substantial Completion on the then current Construction Schedule, caused by or attributable to actual delays in obtaining such Tenant Permits within such period set forth in the Construction Schedule shall constitute a Force Majeure Event with respect to the Phase 1 Premises only and (B) any actual delay in Phase 2 Substantial Completion beyond the later of (y) the Target Phase 2 Completion Date and (z) the date set forth for Phase 2 Substantial Completion on the then current Construction Schedule, caused by or attributable to actual delays in obtaining such Tenant Permits within such period set forth in the Construction Schedule shall constitute a Force Majeure Event with respect to the Phase 2 Premises only.

(b) Landlord Permits. Landlord shall cause the MEP Subcontractors to promptly submit the MEP Drawings to the appropriate authorities to obtain the city, county and state permits (the “Landlord Permits” and, together with the Tenant Permits, the “Permits”) necessary to allow the General Contractor to commence and fully complete the Tenant Improvement Work relating to the mechanical, electrical, plumbing, elevator, life safety, and sprinkler systems. The General Contractor will pick up the Landlord Permits upon issuance of same. Landlord shall be responsible for causing the submission of the MEP Drawings to the appropriate municipal authorities for plan check in order to obtain any Landlord Permits.

3.2.6 Construction; Access and Meetings; Open Book Basis.

(a) Construction; Access and Meetings. Attached hereto as Schedule 4 is a schedule setting forth milestone dates for the performance of all key actions to design, permit and construct the Ancillary Tenant Improvements and the Tenant Improvements and to otherwise reach Phase 1 Substantial Completion and Phase 2 Substantial Completion (the “Construction Schedule”). Until the Phase 2 Substantial Completion Date, if Landlord reasonably estimates that the milestone dates set forth in the Construction Schedule last delivered to Tenant are inaccurate, then

 

Exhibit C, Page 19


Landlord shall promptly revise the Construction Schedule and promptly deliver such revised Construction Schedule to Tenant. Landlord shall commence and diligently prosecute to completion construction of the Tenant Improvements described in the Approved Working Drawings following receipt of the Permits. Landlord shall use commercially reasonable efforts to cause (a) Phase 1 Substantial Completion to occur on or before the Target Phase 1 Completion Date and (b) Phase 2 Substantial Completion to occur on or before the Target Phase 2 Completion Date. During construction of the Ancillary Tenant Improvements and Tenant Improvements, Landlord shall carry “Builder’s All Risk” insurance covering the full replacement cost of the Ancillary Tenant Improvements and Tenant Improvements. Landlord shall obtain and deliver to Tenant a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Ancillary Tenant Improvements and the Tenant Improvements or reasonable equivalent. Tenant’s representatives shall be entitled to attend the regular weekly construction meetings. Landlord shall provide Tenant at least seventy-two (72) hours notice of the time and place of such weekly construction meetings. In addition, Tenant may request one additional one (1) hour meeting with Landlord and General Contractor per week to discuss the status of the Tenant Improvements and the Ancillary Tenant Improvements. Tenant shall not communicate directly with the General Contractor outside of the scheduled construction meetings without Landlord’s prior approval. Landlord shall keep Tenant informed as to all material governmental inspections and shall permit Tenant or its representatives to be present thereat. Landlord hereby agrees to permit Tenant reasonable access to the Building throughout the designing, permitting and construction of the Tenant Improvements and the Ancillary Tenant Improvements, to inspect and observe work in progress, at all reasonable times. Any entry by Tenant shall comply with all established safety practices of the General Contractor.

(b) Open Book Basis. Landlord and Tenant shall have access to each other’s records, books, correspondence, instructions, drawings, receipts, vouchers, memoranda and similar data relating to this Work Letter, the Tenant Improvements and the Ancillary Tenant Improvements (collectively, the “Records”), and General Contractor shall preserve all such Records in its custody or control, for a period of one (1) year following the Phase 2 Substantial Completion Date. Landlord shall keep (and cause the General Contractor to keep) the Records in a manner to reasonably segregate costs, expenses and other items related to the Ancillary Tenant Improvements from costs, expenses and other items related to the Tenant Improvements. All Records shall be available to Landlord and Tenant on an “open book” basis promptly upon request but in no event later than two (2) business days after such request.

3.2.7 Substantial Completion.

(a) For purposes of the Lease, “Phase 1 Substantial Completion” shall mean the satisfaction of all of the following: (i) Landlord and its construction manager, in consultation with Tenant and Tenant’s Architect, mutually agree that the Tenant Improvement Work (exclusive of any improvements for the Cafeteria or any other kitchen in the Premises, any improvements to the Sidewalk Area, any improvements to the Parking Garage Roof Space and the installation of the Cafeteria/kitchen elevators/lifts) in the Phase 1 Premises has been completed in accordance with the Approved Working Drawings and any Change Orders, except for (A) finishing details, decorative items, minor omissions, mechanical adjustments, and similar items of the type customarily found on an architectural punch-list, the correction or completion of which items collectively will not substantially interfere with Tenant’s occupancy and use of the Phase 1 Premises (such items generally, “Punch-List Items”), and (B) any trade fixtures, workstations, telecommunications or computer cabling or built-in furniture or equipment to be installed by Tenant; and (ii) Tenant is legally permitted to occupy the Phase 1 Premises (as evidenced by a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Tenant Improvement Work, or reasonable equivalent), provided, that, Tenant acknowledges that such a certificate of occupancy will not necessarily permit Tenant to operate every portion of such Phase 1 Premises for its intended Ancillary Uses at such date; (iii) the ATI Substantial

 

Exhibit C, Page 20


Completion (hereinafter defined) has occurred; and (iv) all material components of the Building Systems serving the Phase 1 Premises that are required for Tenant’s operation of its business within the Premises are in good order and operating condition. The “ATI Substantial Completion” shall mean the satisfaction of all of the following: (1) Landlord and Landlord’s Architect, in consultation with Tenant and Tenant’s Architect, mutually agree that the construction of the Ancillary Tenant Improvements has been completed in accordance with the Ancillary Tenant Improvement Plans and any ATI Change Orders, except for Punch-List Items; and (2) Tenant is legally permitted to occupy the portion of the Building improved or otherwise modified by the Ancillary Tenant Improvements (as evidenced by a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Ancillary Tenant Improvements, or reasonable equivalent).

(b) For purposes of the Lease, “Phase 2 Substantial Completion” shall mean the satisfaction of all of the following: (A) Landlord and its construction manager, in consultation with Tenant and Tenant’s Architect, mutually agree that the Tenant Improvement Work in the Phase 2 Premises has been completed in accordance with the Approved Working Drawings and any Change Orders, except for Punch-List Items; (B) Tenant is legally permitted to occupy the Phase 2 Premises (as evidenced by a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Tenant Improvement Work, or reasonable equivalent); (C) the Commencement Date has occurred; and (D) the Building Systems serving the Phase 2 Premises are in good order and operating condition.

(c) The “Phase 1 Substantial Completion Date” shall mean the date when Phase 1 Substantial Completion has occurred, and the “Phase 2 Substantial Completion Date” shall mean the date when Phase 2 Substantial Completion has occurred. Landlord shall notify Tenant of its belief that either Phase 1 Substantial Completion or Phase 2 Substantial Completion has occurred and provide Tenant reasonable documents and information regarding the satisfaction of the requirements thereof, and, promptly thereafter, Landlord and Tenant shall set a mutually convenient time for Tenant, Tenant’s Architect, Landlord and the General Contractor to inspect the applicable portion of the Tenant Improvement Work (and the Ancillary Tenant Improvements if ATI Substantial Completion has not yet been agreed upon by Landlord and Tenant) during which they shall confirm the occurrence of Phase 1 Substantial Completion or Phase 2 Substantial Completion and develop a mutually agreeable list of Punch List Items to be completed by Landlord. Landlord shall use commercially reasonable efforts to complete the Punch-List Items within thirty (30) calendar days after the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable. Tenant shall cooperate with Landlord to facilitate completion of any Punch-List Items as quickly as possible.

3.2.8 Contractor’s Warranties. Except as expressly provided in the Lease or in this Work Letter, Tenant waives all Claims against Landlord relating to any construction defects in the Tenant Improvement Work; provided, however, that (a) the foregoing shall not affect, nor shall Tenant’s taking possession and acceptance of the Premises constitute a waiver of (i) any warranty by the General Contractor with respect to workmanship (including installation of equipment) or material, or (ii) any non-compliance of the base, shell or core of the Premises or the Building or the Ancillary Tenant Improvements with Applicable Laws; and (b) Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises. If requested by Tenant, Landlord shall attempt to obtain extended warranties from manufacturers and suppliers of such equipment, and the cost of any such extended warranties shall be a Permitted Allowance Item.

3.3 Construction Administration Costs. Tenant shall pay to Landlord (a) a fee in the amount of Seventy Five Thousand and 00/100 Dollars ($75,000.00) to compensate Landlord for coordinating the Tenant Improvement Work, plus (b) fifty percent (50%) of all reasonable out of pocket

 

Exhibit C, Page 21


costs paid by Landlord to any third-party consultant to review and approve the Space Plan, the Final Working Drawings, the Design Parameters or any portion of the Tenant Improvement Work, each to the extent relating solely to the design or construction of specialty improvements in the Cafeteria (the other fifty percent (50%) of such costs shall be paid solely by Landlord and shall be Excluded Costs) (collectively, the “Construction Administration Costs”).

4. Change Orders. If (i) prior to the Phase 1 Substantial Completion Date Tenant shall request improvements or changes to the Phase 1 Premises in addition to, revision of or substitution for the Tenant Improvements identified on the Space Plan or the Approved Working Drawings or (ii) prior to the Phase 2 Substantial Completion Date Tenant shall request improvements or changes to the Phase 2 Premises in addition to, revision of or substitution for the Tenant Improvements identified on the Space Plan or the Approved Working Drawings (any such improvements or changes, individually or collectively, “Change Orders”), Tenant shall deliver to Landlord a request for such Change Order together with documents showing the applicable improvements or changes in reasonably sufficient detail given the circumstances and nature of the applicable improvements or changes for Landlord to evaluate the feasibility thereof and determine the impact on the Budget (whether cost or savings) of making the proposed Change Order. Landlord shall provide Tenant with a notice and description (“Landlord’s Change Notice”) of any changes arising from Tenant’s proposed Change Orders to (a) the Budget and (b) the Construction Schedule; provided, however, that prior to any inquiry into the impact on the Budget or Construction Schedule of the proposed Change Order, and within two (2) business days after Tenant’s notice of a proposed Change Order, Landlord may provide Tenant with a preliminary estimate of the time required to investigate the proposed Change Order and a request to expend funds required to undertake such investigation (an “Investigation Notice”), whereupon Tenant may elect to withdraw the applicable proposed Change Order and Landlord shall have no further obligation to process or consider Tenant’s proposed Change Order until Tenant affirmatively elects in writing to continue. Landlord shall not unreasonably withhold or delay its approval of the proposed Change Order and shall approve or reasonably disapprove any proposed Change Order submitted by Tenant in a reasonable time period given the nature of such Change Order and the circumstances under which such Change Order is proposed, which time period shall in no event exceed five (5) business days (or such longer time as provided in an Investigation Notice if Landlord has delivered an Investigation Notice and Tenant has authorized Landlord to investigate the proposed Change Order). If Landlord disapproves any Change Order, Landlord shall return the Change Order to Tenant with a statement of Landlord’s reasons for disapproval and/or specifying in reasonable detail any required corrections or revisions. Landlord shall approve or disapprove of any such revisions or corrections to a Change Order made by Tenant within three (3) business days after receipt of such revisions or corrections. No changes or modifications to the Approved Working Drawings shall be made unless by written Change Orders signed by Landlord and Tenant; provided, however, that Tenant’s approval shall not be required for, and Landlord may make, any Change Order that may be necessary to obtain any Permits, or that may be required by city officials or inspectors to comply with code rulings or interpretations, and Change Orders relating to minor variations in the Approved Working Drawings (namely, variations which are not inconsistent with the intent of the Approved Working Drawings. Upon receipt of the applicable Landlord’s Change Notice and Landlord’s approval of the proposed Change Order, Tenant may authorize Landlord in writing to proceed with such Change Order and, upon such written authorization, Landlord shall proceed with construction of the Tenant Improvements as so modified, and, subject to Section 3.1.4, any additional design and construction costs to be incurred by Landlord as a result of such Change Order shall be paid by Tenant as part of Tenant’s Contribution. If Tenant fails to authorize Landlord to proceed with the Change Order within three (3) business days after receipt of Landlord’s approval of the proposed Change Order, Tenant shall be deemed to have withdrawn its request to so modify the Tenant Improvements, and Landlord shall proceed with the construction of the Tenant Improvements without any Change Order.

 

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5. Delays.

5.1 Tenant Delay. To the extent any actual delay in the Phase 1 Substantial Completion Date (including the ATI Substantial Completion) or the Phase 2 Substantial Completion Date is caused by or is attributable to: (a) any Change Order or ATI Change Order (y) requested and subsequently authorized by Tenant and approved by Landlord or (z) requested by Tenant but not authorized by Tenant where Tenant approved a period of delay set forth in a Landlord’s ATI Change Notice or Landlord’s Change Notice for the investigation by Landlord of a Change Order or ATI Change Order, as applicable, but excluding (1) in each case, any period of time taken to prepare an Investigation Notice or ATI Investigation Notice, as applicable and (2) with respect to delays described in clause (y), any period of delay (except due to other Tenant Delays) beyond the period described in the Landlord’s ATI Change Notice or Landlord’s Change Notice, as applicable; (b) Tenant’s requirement for materials, components, finishes or improvements that are not (i) readily available within industry-standard lead times (for instance, items which must be custom-made or specially ordered) to the extent such items require time to procure beyond that taken for standard items or (ii) available in a commercially reasonable time given the Target Phase 1 Completion Date and the Target Phase 2 Completion Date, provided, that Landlord delivered written notice to Tenant prior to Landlord’s approval of the Final Working Drawings if any such materials, components, finishes or improvements would be long lead time items; (c) Tenant’s failure to comply with the deadlines for delivery to Landlord of the Design Parameters or the Final Working Drawings, (d) Tenant’s failure to take any action prior to any deadlines set forth in the Construction Schedule or this Work Letter; (e) failure of the Approved Working Drawings (other than the MEP Drawings) to comply with Applicable Laws, including, but not limited to, actual delays in the issuance of Tenant Permits and/or delays in the issuance of a temporary or final certificate of occupancy or final inspection and sign-off on the job card for the Tenant Improvements solely as a result of such failure; (f) any other act or omission of Tenant or of any other Tenant Party which materially interferes with Landlord’s ability to perform the Tenant Improvement Work; (g) any required change to the base, shell or core of the Premises or the Building, including the Ancillary Tenant Improvements, required by the Approved Working Drawings (excluding any changes necessary to cause the Building Systems to be operational and in good condition and repair or to correct violations of the base, shell or core of the Premises or the Building, the Building Systems or the Ancillary Tenant Improvements with Applicable Laws), (h) Tenant’s failure to act reasonably where Tenant is required to act reasonably under the terms of this Work Letter, and (i) Tenant’s failure to timely pay any amounts owed to Tenant’s Architect, Tenant’s Consultant and other consultants hired by Tenant in connection with the Tenant Improvements, such delay shall constitute a “Tenant Delay;” and, notwithstanding anything to the contrary set forth in the Lease or in this Work Letter and regardless of the actual Phase 1 Substantial Completion Date (including actual ATI Substantial Completion) or Phase 2 Substantial Completion Date hereunder, the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, shall be deemed to be the date the Phase 1 Substantial Completion Date (and/or ATI Substantial Completion) or Phase 2 Substantial Completion Date that would have occurred but for Tenant Delay(s). Notwithstanding the foregoing, to the extent any Tenant Delay only delays Phase 2 Substantial Completion and/or ATI Substantial Completion (as opposed to the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date), then there shall be no deemed change to the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable. For example, if a Tenant Delay occurs which causes the ATI Substantial Completion to be delayed by ten (10) days, but notwithstanding the Tenant Delay the ATI Substantial Completion still occurs prior to the Phase 1 Substantial Completion Date, then there shall be no deemed change in the Phase 1 Substantial Completion Date. Notwithstanding anything to the contrary contained herein, in no event shall either (A) failure by Tenant to timely pay any amounts owed to Landlord hereunder or (B) any delay of any kind in connection with improvements for the Cafeteria or any other kitchen in the Premises, any improvements to the Sidewalk Area, any improvements to the Parking Garage Roof Space or the installation of the Cafeteria/kitchen elevators/lifts, constitute a Tenant Delay; provided, however, that if

 

Exhibit C, Page 23


(i) Tenant fails to timely pay any amounts owed to Landlord hereunder, (ii) the amount of either the TI Letter of Credit or the ATI Letter of Credit, as applicable, is less than the amount Tenant fails to timely pay and (iii) an actual delay in the Phase 1 Substantial Completion Date (including the ATI Substantial Completion) or the Phase 2 Substantial Completion Date is caused by or is attributable to Tenant’s failure to timely pay, then such failure to timely pay shall constitute a Tenant Delay hereunder. Landlord may increase the Budget to pay any reasonable and actual third-party costs and expenses to the extent incurred by Landlord in connection with, or as a consequence of, any Tenant Delay, as well as any reasonable and actual increase in the cost of construction of the Tenant Improvements to the extent attributable to Tenant Delay. Except for any Tenant Delay resulting from Tenant’s failure to comply with the deadline for delivery of the Final Working Drawings, or failure to take any other action prior to any deadline specifically set forth in this Work Letter, no Tenant Delay shall be deemed to have occurred unless Landlord gives Tenant prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Tenant Delay, and Tenant shall fail to correct or cure such Tenant Delay within one (1) business day. There shall be excluded from the number of days of any Tenant Delay any days of delay which are primarily caused by a Force Majeure Event. If either the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date is actually delayed due to Tenant Delay, then Landlord and Landlord’s construction manager shall reasonably determine in consultation with Tenant and the Tenant Architect the date on which the applicable Tenant Improvements would have been completed but for such Tenant Delay and such certified date shall be the Phase 1 Substantial Completion Date or Phase 2 Substantial Completion Date, as applicable.

5.2 Landlord Delay. To the e