275 SACRAMENTO STREET OFFICE LEASE

Exhibit 10.1

275 SACRAMENTO STREET

OFFICE LEASE

This Office Lease (the “ Lease ”), dated as of the date set forth in Section 1 of the Summary of Basic Lease Information (the “ Summary ”), below, is made by and between VNO PATSON SACRAMENTO LP, a Delaware limited partnership (“ Landlord ”), and OPENTV, INC., a Delaware corporation (“ Tenant ”).

SUMMARY OF BASIC LEASE INFORMATION

 

 

 

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The Base Rent payable by Tenant pursuant to the terms of this Lease shall be subject to the terms of Section 3.2 of this Lease, below.

 

 

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ARTICLE 1

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

1.1 Premises, Building, Project and Common Areas .

1.1.1 The Premises . Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises set forth in Section 2.2 of the Summary (the “ Premises ”). The outline of the Premises is set forth in Exhibit A attached hereto. The parties hereto agree that the lease of the Premises is upon and subject to the terms, covenants and conditions herein set forth, and Tenant covenants as a material part of the consideration for this Lease to keep and perform each and all of such terms, covenants and conditions by it to be kept and performed and that this Lease is made upon the condition of such performance. The parties hereto hereby acknowledge that the purpose of Exhibit A is to show the approximate location of the Premises in the “Building,” as that term is defined in Section 1.1.2 , below, only, and such Exhibit is not meant to constitute an agreement, representation or warranty as to the construction of the Premises, the precise area thereof or the specific location of the “Common Areas,” as that term is defined in Section 1.1.3 , below, or the elements thereof or of the accessways to the Premises or the “Project,” as that term is defined in Section 1.1.2 , below. Tenant hereby acknowledges that Tenant is presently occupying the Premises pursuant to that certain Lease Agreement, dated as of March 7, 2003, by and between 340 Pine Street Inc., predecessor-in-interest to Landlord, and Tenant (the “ Existing Lease ”), which Existing Lease is scheduled to expire on January 31, 2010. Therefore, except as specifically set forth in this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the “ Tenant Work Letter ”), Tenant shall, on and after the Lease Commencement Date, continue to accept the Premises in its presently existing “as-is” condition and Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Tenant also 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 or with respect to the suitability of any of the foregoing for the conduct of Tenant’s business, except as specifically set forth in this Lease and the Tenant Work Letter.

1.1.2 The Building and The Project . The Premises are a part of the building set forth in Section 2.1 of the Summary (the “ Building ”). The term “ Project ,” as used in this Lease, shall mean (i) the Building and the Common Areas, (ii) the land (which is improved with landscaping, parking facilities and other improvements) upon which the Building and the Common Areas are located, and (iii) at Landlord’s discretion, any additional real property, areas, land, buildings or other improvements added thereto outside of the Project.

1.1.3 Common Areas . Tenant shall have the non-exclusive right to use in common with other tenants in the Project, and subject to the rules and regulations referred to in Article 5 of this Lease, those portions of the Project which are provided, from time to time, for use in common by Landlord, Tenant and any other tenants of the Project (such areas, which shall include the Building lobby on the first floor, together with such other portions of the Project designated by Landlord, in its discretion, including certain areas designated for the exclusive use of certain tenants, or to be shared by Landlord and certain tenants, are collectively referred to herein as the “ Common Areas ”). The Common Areas shall consist of the “Project Common Areas” and the “Building Common Areas.” The term “ Project Common Areas ,” as used in this Lease, shall mean the portion of the Project designated as such by Landlord. The term “ Building Common Areas ,” as used in this Lease, shall mean the portions of the Common Areas located within the Building designated as such by Landlord. The manner in which the Common Areas are maintained and operated shall be at the sole discretion of Landlord and the use thereof shall be subject to such rules, regulations and restrictions as Landlord may make from time to time. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project and the Common Areas.

1.1.4 Seventh-Floor Roof Deck .

1.1.4.1 Deck Area . Subject to the terms and conditions of this Lease, Tenant shall have the exclusive right to use the roof deck area adjacent to the seventh-floor (the “ Deck Area ”), as further set forth on Exhibit A-1 , attached hereto. Tenant shall, at Tenant’s own expense, pursuant to the terms of Article 7 of this Lease, keep the Deck Area, including all improvements, fixtures and furnishings therein, in good order, repair and condition at all times during the Lease Term. Tenant shall not be charged any Base Rent for the use of such Deck Area, nor shall such Deck Area be included in Tenant’s Share or the “rentable square footage” of the Premises. However,

 

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notwithstanding the foregoing, Tenant’s insurance policies required to be carried by Tenant pursuant to Article 10 of this Lease shall cover Tenant’s use of the Deck Area and the waiver and indemnification obligations of Tenant set forth in Section 10.1 of the Lease shall apply to the Deck Area as though the Deck Area was part of the Premises. In the event that the insurance carried by Tenant in accordance with the terms of Section 10.3.1 of this Lease would not cover a particular event, activity or other use of the Deck Area by Tenant, Tenant, at Tenant’s sole cost and expense, shall procure additional reasonable liability insurance as reasonably required to cover such event, activity or use to the levels required with respect to the Premises by such Section 10.3.1 .

1.1.4.2 Deck Area Furniture . Notwithstanding anything to the contrary on this Lease, (i) Tenant shall comply with the CC&Rs,” as that term is defined in Section 5.2 of this Lease, below, and with all “Applicable Laws,” as that term is defined in Article 24 of this Lease, below, applicable to such Deck Area, Tenant’s use of the Deck Area, and any furniture, fixtures or equipment located on the Deck Area (the “ Deck Area Furniture ”), (ii) Tenant, at Tenant’s sole cost and expense, shall keep the Deck Area Furniture in good and clean condition and repair throughout the Lease Term, reasonable wear and tear excepted, (iii) any such Deck Area Furniture shall be subject to the prior approval of Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed, (iv) Landlord may require, as a condition of its approval, that certain of the Deck Area Furniture be reasonably secured to the Deck Area in order to prevent the same from be blown off the Deck Area, and (v) Tenant shall remove the Deck Area Furniture upon the expiration or earlier termination of this Lease, and shall repair any damage to the Building caused by the installation or removal of such Deck Area Furniture.

1.1.4.3 Special Events . Notwithstanding any contrary provision contained in this Lease, any use of the Deck Area which may materially interfere with other tenant of the Building (including, without limitation, an event which includes the playing of amplified music) (a “ Special Event ”) shall be subject to Landlord’s prior approval. Any such Special Event shall be subject to the terms and conditions of this Lease, and in compliance with all Applicable Laws and Landlord’s reasonable rules and regulations (including, but not limited to, with respect to the days and hours for such use and the particular events to be held). Tenant shall reimburse to Landlord, within thirty (30) days following receipt of invoices from Landlord, any and all costs reasonably incurred by Landlord as a result of or in connection with a Special Event, including, without limitation, charges for after hours security equipment and/or security guards, supplemental janitorial staff and services, and/or repairs; provided, however, Tenant shall be permitted to provide such personnel and services directly as long as all such personnel are, and all such services are performed by, union labor reasonably approved in advance by Landlord.

1.2 Rentable Square Feet of Premises and Building . For purposes of this Lease, “ rentable square feet ” in the Premises and the Building, as the case may be, shall be calculated pursuant to Landlord’s then current method for measuring rentable square footage. Landlord and Tenant hereby stipulate and agree that the rentable area of the Building and the Premises is as set forth in Sections 2.1 and 2.2 of the Summary, respectively.

ARTICLE 2

LEASE TERM

The terms and provisions of this Lease shall be effective as of the date of this Lease; provided, however, prior to the Lease Commencement Date, Tenant’s occupancy of the Premises shall be governed by the Existing Lease; provided further that (i) in the event Tenant constructs “Tenant Improvements”, as that term is defined in the Tenant Work Letter, in the Premises prior to the Lease Commencement Date, the construction of such Tenant Improvements shall be governed by the Tenant Work Letter, and (ii) the terms of Article 21 of this Lease shall govern as of the date of this Lease with respect to Landlord’s protection for the full and faithful performance by Tenant of all of its obligations under this Lease, and for the full and faithful performance by Tenant of all of its obligations under the Existing Lease. The term of this Lease (the “ Lease Term ”) shall be as set forth in Section 3.1 of the Summary, shall commence on the date set forth in Section 3.2 of the Summary (the “ Lease Commencement Date ”), and shall terminate on the date set forth in Section 3.3 of the Summary (the “ Lease Expiration Date ”) unless this Lease is sooner terminated as hereinafter provided. For purposes of this Lease, the term “ Lease Year ” shall mean each consecutive twelve (12) month period during the Lease Term. At any time during the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth in Exhibit C , attached hereto, as a confirmation only of the information set forth therein, which Tenant shall execute and return to Landlord within five (5) business days of receipt thereof. Tenant’s failure to execute and return

 

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such notice to Landlord within such time shall be conclusive upon Tenant that the information set forth in such notice is as specified therein.

ARTICLE 3

BASE RENT

3.1 In General . Tenant shall pay, without prior notice or demand, to Landlord or Landlord’s agent at the management office of the Project, or, at Landlord’s option, at such other place as Landlord may from time to time designate in writing, by a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent (“ Base Rent ”) as set forth in Section 4 of the Summary, payable in equal monthly installments as set forth in Section 4 of the Summary in advance on or before the first day of each and every calendar month during the Lease Term, without any setoff or deduction whatsoever. The Base Rent for the first full month of the Lease Term which occurs after the expiration of any free rent period (i.e., March, 2010) shall be paid at the time of Tenant’s execution of this Lease. If any Rent payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any payment of Rent is for a period which is shorter than one month, the Rent for any fractional month shall accrue on a daily basis for the period from the date such payment is due to the end of such calendar month or to the end of the Lease Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.

3.2 Abated Base Rent . Notwithstanding the foregoing, provided that Tenant pays Landlord directly for all of its electrical use and not as part of the “Operating Expenses”( as that term is defined in Section 4.2.4 of this Lease), as required pursuant to Article 6 of this Lease, then the Base Rent attributable to the Premises, as set forth in Section 4 of the Summary, shall be reduced by $1.91 per Rentable Square Foot of the Premises per year. To illustrate the foregoing reduction, the Annualized Base Rent per Rentable Square Foot for the period of February 1, 2010 through January 31, 2011 is set forth in Section 4 of the Summary as $42.50. Following the reduction set forth in this Section 3.2 , the Annualized Base Rent per Rentable Square Foot for the period of February 1, 2010 through January 31, 2011 shall be equal to $40.59, which amount results in an Annualized Base Rent of $1,727,713.35, and a Monthly Installment of Base Rent of $143,970.11. Such reduction of Base Rent shall continue throughout the Lease Term in the same manner. In the event that this Lease is modified such that Tenant no longer pays Landlord directly for all of its electrical use and instead such costs are reimbursed to Landlord as part of Operating Expenses, then (i) the Base Rent attributable to the Premises shall not be reduced and the amount set forth in Section 4 of the Summary shall be the amount payable by Tenant under this Lease, and (ii) to the extent such electrical costs were not included in the Base Year Operating Expenses, the Operating Expenses for the Base Year shall be increased by an amount equal to $1.91 per Rentable Square Foot of the Premises per year.

ARTICLE 4

ADDITIONAL RENT

4.1 General Terms . In addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,” as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease, respectively, which are in excess of the amount of Direct Expenses applicable to the “Base Year,” as that term is defined in Section 4.2.1 , below; provided, however, that in no event shall any decrease in Direct Expenses for any “ Expense Year ,” as that term is defined in Section 4.2.6 below, below Direct Expenses for the Base Year entitle Tenant to any decrease in Base Rent or any credit against sums due under this Lease. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, are hereinafter collectively referred to as the “ Additional Rent ”, and the Base Rent and the Additional Rent are herein collectively referred to as “ Rent .” All amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner as the Base Rent. Without limitation on other obligations of Tenant which survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

 

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4.2 Definitions of Key Terms Relating to Additional Rent . As used in this Article 4 , the following terms shall have the meanings hereinafter set forth:

4.2.1 “ Base Year ” shall mean the period set forth in Section 5 of the Summary.

4.2.2 “ Direct Expenses ” shall mean “Operating Expenses” and “Tax Expenses.”

4.2.3 “ Expense Year ” shall mean each calendar year in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.

4.2.4 “ Operating Expenses ” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues during any Expense Year because of or in connection with the ownership, management, maintenance, security, repair, replacement, restoration or operation of the Project, or any portion thereof. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following: (i) the cost of supplying all utilities, the cost of operating, repairing, maintaining, and renovating the utility, telephone, mechanical, sanitary, storm drainage, and elevator systems, and the cost of maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections and the cost of contesting any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with a governmentally mandated transportation system management program or similar program; (iii) the cost of all insurance carried by Landlord in connection with the Project as reasonably determined by Landlord; (iv) the cost of landscaping, relamping, and all supplies, tools, equipment and materials used in the operation, repair and maintenance of the Project, or any portion thereof; (v) the cost of parking area operation, repair, restoration, and maintenance; (vi) fees and other costs, including management and/or incentive fees, consulting fees, legal fees and accounting fees, of all contractors and consultants in connection with the management, operation, maintenance and repair of the Project; (vii) payments under any equipment rental agreements and the fair rental value of any off-site management office space reasonably attributable to the Project (as opposed to being attributable to other projects managed by Landlord); (viii) subject to item (f), below, wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons engaged in the operation, maintenance and security of the Project; (ix) costs under any instrument pertaining to the sharing of costs by the Project; (x) operation, repair, maintenance and replacement of all systems and equipment and components thereof of the Project; (xi) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in common areas, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (xii) amortization (including interest on the unamortized cost) over its useful life, as Landlord shall reasonably determine in accordance with sound real estate management and accounting principles, , of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, or any portion thereof; (xiii) the cost of capital improvements or other costs incurred in connection with the Project (A) which are reasonably intended to reduce current or future Operating Expenses (but only to the extent of the intended reduction), or to enhance the safety or security of the Project or its occupants, or (B) that are required under any governmental law or regulation; provided, however, that any capital expenditure shall be amortized (including interest on the amortized cost) over its reasonable useful life as Landlord shall reasonably determine in accordance with sound real estate management and accounting principles; and (xiv) costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute “Tax Expenses” as that term is defined in Section 4.2.5 , below, and (xv) payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Building, including, with out limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses, and any agreements with transit agencies affecting the Property (collectively, “ Underlying Documents ”). Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:

(a) costs, including legal fees, space planners’ fees, advertising and promotional expenses, and brokerage fees incurred in connection with the original construction or development, or original or future leasing of the Project, and costs, including permit, license and inspection costs, incurred with respect to the installation of tenant improvements made for tenants or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Project (excluding, however, such costs relating to any common areas of the Project or parking facilities);

 

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(b) except as set forth in items (xii), (xiii), and (xiv) above, depreciation, interest and principal payments on mortgages and other debt costs, if any, penalties and interest, or any costs of a capital nature, including capital repairs and alterations, and costs of capital improvements and equipment;

(c) costs for which the Landlord is reimbursed by any tenant or occupant of the Project or by insurance by its carrier or any tenant’s carrier or by anyone else (provided that Landlord shall use commercially reasonable efforts to obtain such reimbursement to the extent Landlord is entitled thereto), and electric power costs for which any tenant directly contracts with the local public service company;

(d) any bad debt loss, rent loss, or reserves of any kind;

(e) costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Project (which shall specifically include, but not be limited to, accounting costs associated with the operation of the Project). Costs associated with the operation of the business of the partnership or entity which constitutes the Landlord include costs of partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Project, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Project management, or between Landlord and other tenants or occupants;

(f) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Project unless such wages and benefits are prorated to reflect time spent on operating and managing the Project vis-a-vis time spent on matters unrelated to operating and managing the Project; provided, that in no event shall Operating Expenses for purposes of this Lease include wages and/or benefits attributable to personnel above the level of Project manager;

(g) amount paid as ground rental for the Project by the Landlord;

(h) except for a Project management fee, overhead and profit increment paid to the Landlord or to subsidiaries or affiliates of the Landlord for services in the Project to the extent the same exceeds the costs of such services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

(i) any compensation paid to clerks, attendants or other persons in commercial concessions operated by the Landlord, provided that any compensation paid to any concierge at the Project shall be includable as an Operating Expense;

(j) rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment which if purchased the cost of which would be excluded from Operating Expenses as a capital cost, except equipment not affixed to the Project which is used in providing janitorial or similar services and, further excepting from this exclusion such equipment rented or leased to remedy or ameliorate an emergency condition in the Project ;

(k) all items and services for which Tenant or any other tenant in the Project reimburses Landlord or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;

(l) any costs expressly excluded from Operating Expenses elsewhere in this Lease;

(m) rent for any office space occupied by Project management personnel to the extent the size or rental rate of such office space exceeds the size or fair market rental value of office space occupied by management personnel of the comparable buildings in the vicinity of the Building, with adjustment where appropriate for the size of the applicable project;

 

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(n) costs incurred to comply with laws relating to the removal of hazardous material (as defined under applicable law) which was in existence in the Building or on the Project prior to the date of the Existing Lease, and was of such a nature that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions that it then existed in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto; and costs incurred to remove, remedy, contain, or treat hazardous material, which hazardous material is brought into the Building or onto the Project after the date hereof by Landlord or any other tenant of the Project and is of such a nature, at that time, that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions, that it then exists in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto;

(o) fines, costs, penalties or interest resulting from the negligence or fault of other tenants or of the Landlord or their agents, contractors, or employees;

(p) acquisition costs for sculptures, paintings, or other art (unless required by Applicable Law); or

(q) fees payable by Landlord for management of the Building in excess of the greater of (i) the management fee generally charged at first class office buildings comparable to the Building and located in the financial district area (North of Market) of San Francisco, California, and (ii) three and one-half percent (3.5%) (the “ Management Fee Cap ”) of Landlord’s gross rental revenues (which shall be adjusted and grossed up to reflect a one hundred percent (100%) occupancy of the Building, and which shall include base rent and pass-throughs, parking fees and the cost of after hours services or utilities) from the Project for any calendar year or portion thereof.

If Landlord does not carry earthquake insurance for the Building during the Base Year but subsequently obtains earthquake insurance for the Building during the Lease Term, then from and after the date upon which Landlord obtains such earthquake insurance and continuing throughout the period during which Landlord maintains such insurance, Operating Expenses for the Base Year shall be deemed to be increased by the amount of the premium Landlord would have incurred had Landlord maintained such insurance for the same period of time during the Base Year as such insurance is maintained by Landlord during such subsequent Expense Year. In addition, if any damage to the Building is covered by insurance carried by Landlord, then for purposes of determining the amount, if any, of the cost of such repair that may be included in Operating Expenses (it being acknowledged that any cost for which Landlord receives insurance proceeds shall not be included in Operating Expenses pursuant to exclusion (c), above), the amount of any deductible associated with such claim shall be allocated by Landlord between capital repair costs (which may not be included in Operating Expenses pursuant to exclusion (b), above, unless included in items (xii), (xiii), or (xiv) above), and non-capital repair costs (which may be included in Operating Expenses unless otherwise excluded pursuant to an exclusion expressly set forth above) in the same proportion as such capital repair costs and non-capital repair costs are incurred in connection with the repair of such damage. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Project is not at least one hundred percent (100%) occupied during all or a portion of the Base Year or any Expense Year, Landlord shall make an appropriate adjustment to the components of Operating Expenses for such year to determine the amount of Operating Expenses that would have been incurred had the Project been one hundred percent (100%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. Operating Expenses for the Base Year shall not include market-wide cost increases due to extraordinary circumstances, including, but not limited to, Force Majeure, boycotts, strikes, conservation surcharges, embargoes or shortages, or amortized costs relating to capital improvements. In no event shall the components of Direct Expenses for any Expense Year related to utility costs be less than the components of Direct Expenses related to utility costs in the Base Year.

 

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4.2.5 Taxes .

4.2.5.1 “ Tax Expenses ” shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary, (including, without limitation, real estate taxes, real estate excise taxes, general and special assessments, transit taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project, or any portion thereof), which shall be paid or accrued during any Expense Year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Project, or any portion thereof.

4.2.5.2 Tax Expenses shall include, without limitation: (i) Any tax on the rent, right to rent or other income from the Project, or any portion thereof, or as against the business of leasing the Project, or any portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“ Proposition 13 ”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants, and, in further recognition of the decrease in the level and quality of governmental services and amenities as a result of Proposition 13, Tax Expenses shall also include any governmental or private assessments or the Project’s contribution towards a governmental or private cost-sharing agreement for the purpose of augmenting or improving the quality of services and amenities normally provided by governmental agencies; (iii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the Rent payable hereunder, including, without limitation, any business or gross income tax or excise tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises or the improvements thereon.

4.2.5.3 Any costs and expenses (including, without limitation, reasonable attorneys’ and consultants’ fees) incurred in attempting to protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such expenses are incurred. Tax refunds shall be credited against Tax Expenses and refunded to Tenant regardless of when received, based on the Expense Year to which the refund is applicable, provided that in no event shall the amount to be refunded to Tenant for any such Expense Year exceed the total amount paid by Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax Expenses for any period during the Lease Term or any extension thereof are increased after payment thereof for any reason, including, without limitation, error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord upon demand Tenant’s Share of any such increased Tax Expenses. Notwithstanding anything to the contrary contained in this Section 4.2.5 (except as set forth in Section 4.2.5.1 , above), there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts or income attributable to operations at the Project), (ii) any items included as Operating Expenses, and (iii) any items paid by Tenant under Section 4.5 of this Lease. If the property tax assessment for the Project (or any portion thereof) (or Tax Expenses) for the Base Year or any Expense Year does not reflect an assessment (or Tax Expenses) for a one hundred percent (100%) leased, completed and occupied project (such that existing or future leasing, tenant improvements and/or occupancy may result in an increased assessment and/or increased Tax Expenses), Tax Expenses shall be adjusted, on a basis consistent with sound real estate accounting principles, to reflect an assessment for (and Tax Expenses for) a one hundred percent (100%) leased, completed and occupied project. For the avoidance of doubt, in the event the property tax assessment for the Project (or any portion thereof) (or Tax Expenses) for the Base Year are pending and have not been fully assessed as of the commencement of the Base Year, then the Tax Expenses for the Base Year shall be adjusted, as appropriate, to full reflect such assessment once completed.

4.2.5.4 The amount of Tax Expenses for the Base Year attributable to the valuation of the Project, inclusive of tenant improvements, shall be known as the “ Base Taxes ”. If in any comparison year subsequent to

 

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the Base Year, the amount of Tax Expenses decreases below the amount of Base Taxes, then for purposes of such subsequent comparison year only, the Base Taxes, and therefore the Base Year, shall be decreased by an amount equal to the decrease in Tax Expenses.

4.2.6 “ Tenant’s Share ” shall mean the percentage set forth in Section 6 of the Summary.

4.3 Cost Pools . Landlord shall have the right, from time to time, to equitably allocate some or all of the Direct Expenses for the Project among different portions or occupants of the Project (the “ Cost Pools ”), in Landlord’s reasonable discretion. Such Cost Pools may include, but shall not be limited to, the office space tenants of the Project, and the retail space tenants of the Project. The Direct Expenses within each such Cost Pool shall be allocated and charged to the tenants within such Cost Pool in a consistent and equitable manner in accordance with sound real estate management and accounting principles.

4.4 Calculation and Payment of Additional Rent . If for any Expense Year ending or commencing within the Lease Term, Tenant’s Share of Direct Expenses for such Expense Year exceeds Tenant’s Share of Direct Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the manner set forth in Section 4.4.1 , below, and as Additional Rent, an amount equal to the excess (the “ Excess ”).

4.4.1 Statement of Actual Direct Expenses and Payment by Tenant . Landlord shall, on or before June 30 ^th of each calendar year, give to Tenant a statement (the “ Statement ”) which shall state the Direct Expenses incurred or accrued for the preceding Expense Year, and which shall indicate the amount of the Excess. Upon receipt of the Statement for each Expense Year commencing or ending during the Lease Term, if an Excess is present, Tenant shall pay, with its next installment of Base Rent due, the full amount of the Excess for such Expense Year, less the amounts, if any, paid during such Expense Year as “ Estimated Excess ,” as that term is defined in Section 4.4.2 , below, and if Tenant paid more as Estimated Excess than the actual Excess, Tenant shall receive a credit in the amount of Tenant’s overpayment against Rent next due under this Lease. The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord or Tenant from enforcing its rights under this Article 4 . Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of Direct Expenses for the Expense Year in which this Lease terminates, if an Excess if present, Tenant shall, within thirty (30) days following Tenant’s receipt of an invoice therefore, pay to Landlord such amount, and if Tenant paid more as Estimated Excess than the actual Excess, Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of the overpayment. The provisions of this Section 4.4.1 shall survive the expiration or earlier termination of the Lease Term.

4.4.2 Statement of Estimated Direct Expenses . In addition, Landlord shall endeavor to give Tenant a yearly expense estimate statement (the “ Estimate Statement ”) which shall set forth Landlord’s reasonable estimate (the “ Estimate ”) of what the total amount of Direct Expenses for the then-current Expense Year shall be and the estimated excess (the “ Estimated Excess ”) as calculated by comparing the Direct Expenses for such Expense Year, which shall be based upon the Estimate, to the amount of Direct Expenses for the Base Year. The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Excess under this Article 4 , nor shall Landlord be prohibited from revising any Estimate Statement or Estimated Excess theretofore delivered to the extent necessary. Thereafter, Tenant shall pay, with its next installment of Base Rent due, a fraction of the Estimated Excess for the then-current Expense Year (reduced by any amounts paid pursuant to the last sentence of this Section 4.4.2 ). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year, including the month of such payment, and twelve (12) as its denominator. Until a new Estimate Statement is furnished (which Landlord shall have the right to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant.

4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible .

4.5.1 Tenant shall be liable for and shall pay ten (10) days before delinquency, taxes levied against Tenant’s equipment, furniture, fixtures and any other personal property located in or about the Premises. If any such taxes on Tenant’s equipment, furniture, fixtures and any other personal property are levied against Landlord or Landlord’s property or if the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon such

 

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equipment, furniture, fixtures or any other personal property and if Landlord pays the taxes based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof but only under proper protest if requested by Tenant, Tenant shall upon demand repay to Landlord the taxes so levied against Landlord or the proportion of such taxes resulting from such increase in the assessment, as the case may be.

4.5.2 If the tenant improvements in the Premises, whether installed and/or paid for by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, are assessed for real property tax purposes at a valuation higher than the valuation at which tenant improvements conforming to Landlord’s “building standard” in other space in the Building are assessed, then the Tax Expenses levied against Landlord or the property by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the provisions of Section 4.5.1 , above, provided that the above “building standard” charges payable by Tenant as set forth herein shall only be due to the extent Landlord charges all other office tenants of the Building for overstandard tenant improvements (to the extent such charges are applicable). Landlord hereby acknowledges that, as of the date of this Lease, the value of the tenant improvements in the Premises does not exceed the valuation at which tenant improvements conforming to Landlord’s “building standard” in other space in the Building are assessed.

4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or value added tax, or any other applicable tax on the rent or services herein or otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Project, including the Project parking facility; or (iii) taxes assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

4.6 Landlord’s Books and Records . Upon Tenant’s written request (an “ Audit Request ”) given not more than one hundred eighty (180) days after Tenant’s receipt of a Statement for a particular Expense Year, and provided that Tenant is not then in default under this Lease, Landlord shall furnish Tenant with such reasonable supporting documentation in connection with said Direct Expenses as Tenant may reasonably request. In addition, in connection with the first such Audit Request given by Tenant during the Lease Term, if also requested by Tenant, Landlord shall furnish Tenant with reasonable supporting documentation in connection with the Direct Expenses incurred by Landlord during the Base Year; provided however, such Base Year documentation shall only be provided to Tenant for the purpose of comparing such Base Year Direct Expenses with such subsequent Expense Year Direct Expenses and Tenant shall have no right to audit or otherwise dispute the Direct Expenses incurred by Landlord during such Base Year. Landlord shall provide said information to Tenant within sixty (60) days after Tenant’s written request therefor. Within sixty (60) days after receipt of such information by Tenant (the “ Review Period ”), if Tenant disputes the amount of Additional Rent set forth in the Statement, an independent certified public accountant (which accountant (A) is a member of a nationally or regionally recognized accounting firm, and (B) is not working on a contingency fee basis), designated and paid for by Tenant, may, after reasonable notice to Landlord and at reasonable times, inspect Landlord’s records with respect to the Statement at Landlord’s offices, provided that Tenant is not then in default under this Lease and Tenant has paid all amounts required to be paid under the applicable Estimate Statement and Statement, as the case may be. In connection with such inspection, Tenant and Tenant’s agents must agree in advance to follow Landlord’s reasonable rules and procedures regarding inspections of Landlord’s records, and shall execute a commercially reasonable confidentiality agreement regarding such inspection. Tenant’s failure to dispute the amount of Additional Rent set forth in any Statement within the Review Period shall be deemed to be Tenant’s approval of such Statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such Statement. If after such inspection, Tenant still disputes such Additional Rent, a determination as to the proper amount shall be made, at Tenant’s expense, by an independent certified public accountant (the “ Accountant ”) selected by Landlord and subject to Tenant’s reasonable approval; provided that if such determination by the Accountant proves that Direct Expenses were overstated by more than four percent (4%), then the cost of the Accountant and the cost of such determination shall be paid for by Landlord. Tenant hereby acknowledges that Tenant’s sole right to inspect Landlord’s books and records and to contest the amount of Direct Expenses payable by Tenant shall be as set forth in this Section 4.6 , and Tenant hereby waives any and all other rights pursuant to applicable law to inspect such books and records and/or to contest the amount of Direct Expenses payable by Tenant.

 

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ARTICLE 5

USE OF PREMISES

5.1 Permitted Use . Tenant may use the Premises solely for the Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or permit the Premises or the Project to be used for any other purpose or purposes whatsoever without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion.

5.2 Prohibited Uses . Tenant further covenants and agrees that Tenant shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the provisions of the Rules and Regulations set forth in Exhibit D , attached hereto, or in violation of the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Project) including, without limitation, any such laws, ordinances, regulations or requirements relating to hazardous materials or substances, as those terms are defined by applicable laws now or hereafter in effect, or any Underlying Documents. Tenant shall not do or permit anything to be done in or about the Premises which will in any way damage the reputation of the Project or unreasonably obstruct or interfere with the rights of other tenants or occupants of the Building, or injure or unreasonably annoy them or use or allow the Premises to be used for any improper or unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall comply with, and Tenant’s rights and obligations under the Lease and Tenant’s use of the Premises shall be subject and subordinate to, all recorded easements, covenants, conditions, and restrictions (“ CC&Rs ”) now or hereafter affecting the Project; provided, however, Landlord hereby covenants that the CC&Rs do not prevent Tenant from using the Premises for general office use.

5.3 Hazardous Substances .

5.3.1 Definitions . For purposes of this Lease, the following definitions shall apply: “ Hazardous Material(s) ” shall mean any solid, liquid or gaseous substance or material that is described or characterized as a toxic or hazardous substance, waste, material, pollutant, contaminant or infectious waste, or any matter that in certain specified quantities would be injurious to the public health or welfare, or words of similar import, in any of the “Environmental Laws,” as that term is defined below, or any other words which are intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity or reproductive toxicity and includes, without limitation, asbestos, petroleum (including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum products, polychlorinated biphenyls, urea formaldehyde, radon gas, nuclear or radioactive matter, medical waste, soot, vapors, fumes, acids, alkalis, chemicals, microbial matters (such as molds, fungi or other bacterial matters), biological agents and chemicals which may cause adverse health effects, including but not limited to, cancers and /or toxicity. “ Environmental Laws ” shall mean any and all federal, state, local or quasi-governmental laws (whether under common law, statute or otherwise), ordinances, decrees, codes, rulings, awards, rules, regulations or guidance or policy documents now or hereafter enacted or promulgated and as amended from time to time, in any way relating to (i) the protection of the environment, the health and safety of persons (including employees), property or the public welfare from actual or potential release, discharge, escape or emission (whether past or present) of any Hazardous Materials or (ii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Materials.

5.3.2 Compliance with Environmental Laws . Landlord covenants that during the Lease Term, Landlord shall comply with all Environmental Laws in accordance with, and as required by, the terms and conditions of Article 24 of this Lease. Tenant shall not sell, use, or store in or around the Premises any Hazardous Materials, except if stored, properly packaged and labeled, disposed of and/or used in accordance with applicable Environmental Laws. In addition, Landlord and Tenant each agree that it: (i) shall not cause or suffer to occur, the release, discharge, escape or emission of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises, in violation of Environmental Laws; (ii) shall not engage in activities at the Premises that could reasonably be expected to result in, give rise to, or lead to the imposition of liability upon Tenant or Landlord or the creation of a lien upon the building or land upon which the Premises is located, under applicable Environmental Laws; (iii) shall notify the other promptly following receipt of any knowledge with respect to any actual release, discharge, escape or emission (whether past or present) of any Hazardous Materials at, upon, under or within the Premises; and (iv) shall promptly forward to the

 

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other copies of all orders, notices, permits, applications and other communications and reports in connection with any release, discharge, escape or emission of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises.

5.3.3 Landlord’s Right of Environmental Audit . Landlord may, upon reasonable notice to Tenant, be granted access to and enter the Premises no more than once annually to perform or cause to have performed an environmental inspection, site assessment or audit. Such environmental inspector or auditor may be chosen by Landlord, in its sole discretion, and be performed at Landlord’s sole expense. To the extent that the report prepared upon such inspection, assessment or audit, indicates the presence of Hazardous Materials which have been introduced by Tenant in violation of Environmental Laws, or provides recommendations or suggestions to prohibit the release, discharge, escape or emission of any Hazardous Materials by Tenant at, upon, under or within the Premises, or to comply with any Environmental Laws with respect to Hazardous Materials which have been introduced by Tenant, then Tenant shall promptly, at Tenant’s sole expense, comply with such recommendations or suggestions, including, but not limited to performing such additional investigative or subsurface investigations or remediation(s) as recommended by such inspector or auditor. Notwithstanding the above, if at any time, Landlord has actual notice or reasonable cause to believe that Tenant has violated, or permitted any violations of any Environmental Law, then Landlord will be entitled to perform its environmental inspection, assessment or audit at any time, notwithstanding the above mentioned annual limitation, and Tenant must reimburse Landlord for the cost or fees incurred for such as Additional Rent.

5.3.4 Indemnification . Tenant agrees to indemnify, defend, protect and hold harmless the Landlord Parties from and against any liability, obligation, damage or costs, including without limitation, attorneys’ fees and costs, resulting directly or indirectly from any use, presence, removal or disposal of any Hazardous Materials or breach of any provision of this section, to the extent such liability, obligation, damage or costs was a result of actions caused or permitted by Tenant or a Tenant Party.

5.4 Cooking Facility . Landlord hereby acknowledges that Tenant shall have the right, at Tenant’s sole cost and expense, to install a cooking facility in the kitchen area located on the seventh (7 ^th ) floor (the “ Cooking Facility ”). The Cooking Facility, and all related systems, equipment and ducting, shall be installed pursuant the CC&Rs and all Applicable Laws. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to Tenant’s ability to legally install and/or operate the Cooking Facility, or with respect to the suitability of all or any portion of the Premises for use as a cooking facility. The rights contained in this Section 5.1 shall be personal to the Tenant originally named in this Lease (the “ Original Tenant ”) and any Non-Transferee Assignee, and may only be exercised by the Original Tenant or a any Non-Transferee Assignee (and not any other assignee, sublessee or Transferee of the Original Tenant’s interest in this Lease) if the Original Tenant or Non-Transferee Assignee, as the case may be, is in direct occupancy (as opposed to subleasing) of at least three (3) floors of the Building.

5.4.1 If Tenant elect to install the Cooking Facility, Tenant shall, at its sole cost and expense, at all times during the Lease Term, provide necessary exhaust fans and systems, ductwork and venting to ensure that all smoke, odors, vapors and steam associated with the Cooking Facility are properly exhausted from the Premises. Tenant’s exhaust and venting systems shall include fire prevention and/or extinguishment facilities or systems as may be required from time to time by Applicable Law. Tenant shall promptly deliver to Landlord a copy of the final plans for all such systems upon completion of the installation of the same. All such systems shall be maintained by Tenant at Tenant’s sole cost and expense in good working order and condition and in accordance with all Applicable Laws. Tenant shall regularly and adequately clean and maintain, or provide a contract for such cleaning and maintenance of, all such exhaust and venting systems serving the Cooking Facility, whether located within or outside the Premises. Tenant shall provide to Landlord, upon Landlord’s request, adequate proof of such cleaning and maintenance program. Tenant shall keep the Premises free from insects, rodents and all vermin. Without limiting the generality of the foregoing, Tenant shall, at Tenant’s sole cost and expense, engage professional, reputable exterminators reasonably approved by Landlord to service the Premises, including, without limitation, all food preparation and food storage areas, to the extent necessary to safely keep the Premises free of insects, rodents, vermin and other pests and to prevent insects, rodents, vermin and other pests from infesting the premises of other tenants or the Common Areas of the Project. Tenant shall, upon Landlord’s request, provide adequate proof that Tenant is causing such extermination to be performed at the Premises.

 

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5.4.2 Tenant shall, at Tenant’s sole cost and expense at all times during the Lease Term, provide the necessary piping, connections, traps, grease traps, catch basins and other facilities for the removal of all waste liquids from the Cooking Facility in compliance with all Applicable Laws. Such facilities shall be connected to the sewers and mains provided by Landlord and shall be constructed so as to prevent the backing up or discharge of any such waste liquids into the Premises, the premises of other tenants or into the Common Areas of the Building. Tenant shall not dispose of, nor permit to be disposed, any materials which tend to cause clogging or blockage of pipes and drains. Tenant shall regularly and adequately clean, or provide for the cleaning of, all grease traps, catch basins, plumbing waste lines and similar facilities serving the Cooking Facility. Tenant shall, upon Landlord’s request, provide adequate proof that Tenant is causing such drainage cleaning to be performed as needed at the Premises.

5.4.3 Notwithstanding any provision to the contrary contained in this Lease, at Landlord’s election prior to the expiration or earlier termination of this Lease, Tenant shall surrender the Cooking Facility to Landlord with the Premises upon the expiration or earlier termination of this Lease, and Tenant shall thereafter have no further rights with respect thereto. In the event that Landlord fails to elect to have the Cooking Facility surrendered to it upon the expiration or earlier termination of this Lease, then Tenant shall remove such Cooking Facility prior to the expiration or earlier termination of this Lease and shall repair any damage to the Building caused by such removal and return the affected portion of the Premises to a standard tenant-improved condition.

ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services . Landlord shall provide the following services on all days (unless otherwise stated below) during the Lease Term.

6.1.1 Subject to limitations imposed by all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating and air conditioning (“ HVAC ”) when necessary for normal comfort for normal office use in the Premises from 8:00 A.M. to 6:00 P.M. Monday through Friday (collectively, the “ Building Hours ”), except for the date of observation of New Year’s Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, Christmas Day and, at Landlord’s discretion, other locally or nationally recognized holidays which are observed by other buildings comparable to and in the vicinity of the Building (collectively, the “ Holidays ”).

6.1.2 Landlord shall provide adequate electrical conduit and related wiring and facilities for connection to Tenant’s lighting fixtures and incidental use equipment, provided that (i) the connected electrical load does not exceed the capacity of the feeders to the Building or the risers and within the Building, and the connected electrical load for each floor does not exceed the capacity of the wiring for each such floor, and (ii) the connected electrical load of Tenant’s lighting fixtures does not exceed an average of one and one-half (1  ¹ / 2 ) watts per usable square foot of the Premises during Building Hours, calculated on a monthly basis, and the electricity so furnished for Tenant’s lighting will be at a nominal two hundred seventy-seven (277) volts, which electrical usage shall be subject to applicable laws and regulations, including Title 24. Landlord, at Landlord’s sole cost and expense, shall separately meter (or sub-meter) the electrical usage for the floors of the Building upon which no part of the Premises is located (the “ Non-Tenant Floors ”), which shall include the Building lobby and the Building Common Areas. Notwithstanding anything set forth in this Lease to the contrary, Tenant shall pay for all electrical service attributable to its use of the Premises, which use shall be deemed to be the difference between (a) the use indicated by the main electrical meter for the entire Building, and (b) the sum of the uses indicated by the meters (or sub-meters) for the Non-Tenant Floors, and Tenant shall pay an administrative fee equal to four percent (4%) of Tenant electrical usage in order to reimburse Landlord for the costs incurred in connection with reading such electrical meter. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

6.1.3 Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes in the kitchen areas and bathrooms located in the Premises and the Building Common Areas.

6.1.4 Landlord shall provide janitorial services to the Premises, except the date of observation of the Holidays, in and about the Premises and window washing services, pursuant to Exhibit K , attached hereto; provided,

 

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however, Landlord may revise Exhibit K from time-to-time in order to cause the same to be consistent with the janitorial specifications implemented by landlords of other comparable first-class office buildings in the vicinity of the Building.

6.1.5 Landlord shall provide nonexclusive, non-attended automatic passenger elevator service during the Building Hours, and shall have not less than one elevator available at all other times, including on the Holidays.

Tenant shall cooperate fully with Landlord at all times and abide by all regulations and requirements that Landlord may reasonably prescribe for the proper functioning and protection of the HVAC, electrical, mechanical and plumbing systems.

6.2 Overstandard Tenant Use . Tenant shall not, without Landlord’s prior written consent, use heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than Building standard lights in the Premises, which may materially affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If Tenant uses water, heat or air conditioning in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord, upon billing, the actual cost of such excess consumption, the cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, and the cost of the increased wear and tear on existing equipment caused by such excess consumption; and Landlord may install devices to separately meter any increased use and in such event Tenant shall pay the increased cost directly to Landlord, on demand, at the rates charged by the public utility company furnishing the same, including the cost of installing, testing and maintaining of such additional metering devices. If Tenant desires to use heat, ventilation or air conditioning during hours other than those for which Landlord is obligated to supply such utilities pursuant to the terms of Section 6.1 of this Lease, Tenant shall notify Landlord of Tenant’s desired use on or before 2:00pm (local time) the business day preceding the day needed, and Landlord shall supply such utilities to Tenant at such hourly cost to Tenant (which shall be treated as Additional Rent) as reasonably determined by Landlord to be directly attributable to the increased wear and tear on existing Building Systems caused by such excess use, plus the amount of any additional electrical use not already paid by Tenant pursuant to Section 6.1.2 of this Lease, above. Notwithstanding any provision to the contrary contained in this Lease, Tenant shall promptly pay to Landlord, Landlord’s standard charge for any services provided to Tenant which Landlord is not specifically obligated to provide to Tenant pursuant to the terms of this Lease.

6.3 Interruption of Use . Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent (except as specifically set forth in Section 19.5.2 of this Lease) or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by breakage, repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after reasonable effort to do so, by any riot or other dangerous condition, emergency, accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent (except as specifically set forth in Section 19.5.2 of this Lease) or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6 .

6.4 Supplemental HVAC Units . Tenant hereby acknowledges that as of the date hereof, there is an existing supplemental HVAC system that exclusively serves all or a portion of the Premises (collectively, the “ Existing Supplemental Units ”). Landlord has made no representations or warranties with respect to the Existing Supplemental Units and Tenant hereby agrees to accept the same in their “as-is” condition on the Lease Commencement Date. Tenant hereby agrees that Landlord shall have no obligation to maintain, repair or replace the Existing Supplemental Units during the Lease Term. Tenant shall surrender the Existing Supplemental Units to Landlord with the Premises upon the expiration or earlier termination of this Lease, and Tenant shall thereafter have no further rights with respect thereto. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation, repair, replacement, and removal (subject to the foregoing terms of this Section 6.4 ), of the Existing Supplemental Units in order to keep the

 

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same in good working order and condition, reasonable wear and tear excepted; provided, however, that nothing contained herein shall obligate Tenant to make any capital repairs to, or replacements of, the Existing Supplemental Units which capital repairs and/or replacements shall be at Tenant’s sole and absolute discretion. In no event shall the Existing Supplemental Units be permitted to interfere with Landlord’s operation of the Building.

6.5 Lobby Attendant and Access Control Services . Tenant shall provide, at Tenant’s sole cost and expense, a lobby attendant for the Building from 8:00 A.M. to 5:00 P.M. Monday through Friday, except for designated Tenant holidays and Tenant’s customary holiday shut-down period (which shall not exceed two (2) weeks), in a manner consistent with comparable office buildings in the vicinity of the Building; provided, however, the lobby attendant provider, as well as their scope of services (which shall not include security services), shall be subject to Landlord’s reasonable approval. On or before the Lease Commencement Date, Tenant shall transfer to Landlord the access key card system for the Building, including all of Tenant’s right, title and interest in such system. Landlord shall maintain and operate such key card system and shall provide access cards to the officers and employees of the tenants of the Building. In addition, Landlord shall replace, or upgrade, the video monitoring system currently in use at the Building. Tenant hereby acknowledges that such video monitoring system shall be a “record only” system and Landlord shall have no obligation to have a person monitor the “live” video. In addition, notwithstanding anything set forth in this Lease to the contrary, each party hereby acknowledges that the other party shall have no obligation to provide guard service or other security measures for the benefit of the Premises, the Building or the Project. Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties, including keeping doors locked and other means of entry to the Premises closed. In addition, neither Landlord not Tenant shall be liable to the other for personal injury or property damage for any error with regard to the admission to or exclusion from the Building of any person.

6.6 Lobby Monitor . Landlord hereby grants to Tenant the exclusive use of, and control of the content for, the video monitor located in the main lobby of the Building (the “ Video Monitor ”); provided, however, Tenant shall ensure that the Video Monitor is operated in such a manner so as not to detract from the first-class nature of the Project and so as not to reasonably offend any other tenants or occupants of the Building, the general public at large, or the landlords of comparable first class office buildings located in the vicinity of the Building. In addition, (i) in no event shall the programming content include any profanity, nudity or pornographic material, and (ii) the operation of the Video Monitor shall be subject to the CC&Rs and all Applicable Laws. The costs of maintaining and operating the Video Monitor shall be the sole responsibility of Tenant. Should the Video Monitor require repairs and/or maintenance, as determined in Landlord’s reasonable judgment, Landlord shall have the right to provide notice thereof to Tenant and Tenant shall cause such repairs and/or maintenance to be commenced within five (5) days after receipt of such notice from Landlord, at Tenant’s sole cost and expense. Should Tenant fail to commence such repairs and/or maintenance within the period described in the immediately preceding sentence, and thereafter diligently prosecute such repairs and/or maintenance to completion, Landlord shall, upon the delivery of an additional five (5) days’ prior written notice, have the right to cause such work to be performed and to charge Tenant as Additional Rent for the cost of such work. In the event Tenant fails to provide video programming to the Video Monitor for five (5) or more consecutive business days, then Landlord shall have the right to provide notice thereof to Tenant and Tenant shall cause such video programming to be restored to the Video Monitor within five (5) days after receipt of such notice from Landlord, at Tenant’s sole cost and expense. Should Tenant fail to restore such programming within the periods described in the immediately preceding sentence, Landlord may, upon the delivery of an additional five (5) days’ prior written notice, have the right to remove the Video Monitor from the Video and Tenant shall thereafter have no further rights with respect to such Video Monitor. The rights contained in this Section 6.6 shall be personal to the Original Tenant and any Non-Transferee Assignee, and may only be exercised by the Original Tenant or a any Non-Transferee Assignee (and not any other assignee, sublessee or Transferee of the Original Tenant’s interest in this Lease) if the Original Tenant or Non-Transferee Assignee, as the case may be, is in direct occupancy (as opposed to subleasing) of at least three (3) floors of the Building.

ARTICLE 7

REPAIRS

7.1 Tenant’s Obligations . Tenant shall, at Tenant’s own expense, keep the Premises, including all improvements, fixtures, furnishings, and systems and equipment therein (including, without limitation, plumbing fixtures and equipment such as dishwashers, garbage disposals, and insta-hot dispensers), and the floor or floors of the Building

 

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on which the Premises are located, in good order, repair and condition at all times during the Lease Term. In addition, Tenant shall, at Tenant’s own expense, but under the supervision and subject to the prior approval of Landlord, and within any reasonable period of time specified by Landlord, promptly and adequately repair all damage to the Premises and replace or repair all damaged, broken, or worn fixtures and appurtenances, except for damage caused by ordinary wear and tear or beyond the reasonable control of Tenant; provided however, that, at Landlord’s option, or if Tenant fails to make such repairs, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including a percentage of the cost thereof (to be uniformly established for the Building and/or the Project) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord’s involvement with such repairs and replacements forthwith upon being billed for same.

7.2 Landlord’s Obligations . Notwithstanding the foregoing, Landlord shall be responsible for keeping the exterior walls, foundation and roof (structure and membrane) of the Building, the structural portions of the floors of the Building, and the base building systems and equipment of the Building, including without limitation the Base Building HVAC, electrical and plumbing systems (but not the distribution of such systems within the Premises) in good order, repair and condition at all times during the Lease Term; provided, however, that if such repairs are due to the negligence or willful misconduct of Tenant, Landlord shall make such repairs at Tenant’s expense, or, if covered by Landlord’s insurance, Tenant shall only be obligated to pay any deductible in connection therewith. Landlord may, but shall not be required to, enter the Premises at all reasonable times to make such repairs, alterations, improvements or additions to the Premises or to the Project or to any equipment located in the Project as Landlord shall desire or deem necessary or as Landlord may be required to do by governmental or quasi-governmental authority or court order or decree. Tenant hereby waives and releases any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code or under any similar law, statute, or ordinance now or hereafter in effect.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations . Tenant may not make any improvements, alterations, additions or changes to the Premises or any mechanical, plumbing or HVAC facilities or systems pertaining to the Premises (collectively, the “ Alterations ”) without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than ten (10) business days prior to the commencement thereof, and which consent shall not be unreasonably withheld by Landlord, provided it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which adversely affects the structural portions or the systems or equipment of the Building or is visible from the exterior of the Building. Notwithstanding the foregoing, Tenant shall be permitted to make Alterations following ten (10) business days notice to Landlord, but without Landlord’s prior consent, to the extent that such Alterations (i) do not, in the aggregate, exceed a cost of $100,000.00 per Alteration, (ii) do not affect the Base Building, (iii) do not affect the exterior appearance of the Premises or the Building, (iv) do not interfere with any other tenant or occupant of the Building, (v) do not affect the certificate of occupancy for the Building or any portion of the Building, and (vi) do not require the issuance of any permits, approvals or other documents by any governmental agency (the “ Cosmetic Alterations ”). The construction of the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter and not the terms of this Article 8 .

8.2 Manner of Construction . Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, such commercially reasonable requirements as Landlord may deem desirable, including, but not limited to, the requirement that Tenant utilize for such purposes only contractors, subcontractors, materials, mechanics and materialmen selected by Tenant and reasonably approved by Landlord, the requirement that upon Landlord’s request, Tenant shall, at Tenant’s expense, remove such Alterations upon the expiration or any early termination of the Lease Term. Tenant shall construct such Alterations and perform such repairs in a good and workmanlike manner, in conformance with any and all applicable federal, state, county or municipal laws, rules and regulations and pursuant to a valid building permit, issued by the city in which the Building is located (or other applicable governmental authority), all in conformance with Landlord’s construction rules and regulations; provided, however, that prior to commencing to construct any Alteration, Tenant shall meet with Landlord to discuss Landlord’s design parameters and code compliance issues. In the event Tenant performs any Alterations in the Premises which require or give rise to governmentally required changes to the “Base Building,” as that term is defined below, then

 

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Landlord shall, at Tenant’s expense, make such changes to the Base Building. The “ Base Building ” shall include the structural portions of the Building, and the public restrooms, elevators, exit stairwells and the systems and equipment located in the internal core of the Building on the floor or floors on which the Premises are located. In performing the work of any such Alterations, Tenant shall have the work performed in such manner so as not to obstruct access to the Project or any portion thereof, by any other tenant of the Project, and so as not to obstruct the business of Landlord or other tenants in the Project. Tenant shall not use (and upon notice from Landlord shall cease using) contractors, services, workmen, labor, materials or equipment that, in Landlord’s reasonable judgment, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Building or the Common Areas. In addition to Tenant’s obligations under Article 9 of this Lease, upon completion of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the office of the Recorder of the County in which the Building is located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and Tenant shall deliver to the Project construction manager a reproducible copy of the “as built” drawings of the Alterations as well as all permits, approvals and other documents issued by any governmental agency in connection with the Alterations.

8.3 Payment for Improvements . If payment is made by Tenant directly to contractors, Tenant shall (i) comply with Landlord’s reasonable requirements in connection with Tenant’s payment for work to contractors, and (ii) sign Landlord’s reasonable contractor’s rules and regulations. If Tenant orders any work directly from Landlord, Tenant shall pay to Landlord an amount equal to five percent (5%) of the hard cost of such work to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord’s involvement with such work. If Tenant does not order any work directly from Landlord, Tenant shall reimburse Landlord for Landlord’s reasonable, actual, out-of-pocket costs and expenses actually incurred in connection with Landlord’s review of such work. In connection with any Alteration for which Landlord does not require Tenant to obtain a lien and completion bond pursuant to the terms of Section 8.4 , below, at Landlord’s option, prior to the commencement of construction of any Alteration, Tenant shall provide Landlord with the reasonably anticipated cost thereof, which Landlord shall disburse during construction pursuant to Landlord’s standard, commercially reasonable disbursement procedure; provided, however, Landlord shall not require Tenant to provide Landlord with the reasonably anticipated cost of such Alteration if Tenant provided Landlord with reasonable evidence of Tenant’s financial wherewithal to timely pay the anticipated cost of such Alteration.

8.4 Construction Insurance . In addition to the requirements of Article 10 of this Lease, in the event that Tenant makes any Alterations, prior to the commencement of such Alterations, Tenant shall provide Landlord with evidence that Tenant carries “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof. In addition, Tenant’s contractors and subcontractors shall be required to carry Commercial General Liability insurance in an amount approved by Landlord and otherwise in accordance with the requirements of Article 10 of this Lease. In connection with any Alteration reasonably expected to cost in excess of two (2) months Base Rent, Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of such Alterations and naming Landlord as a co-obligee. For purposes of determining the cost of an Alteration, work done in phases or stages shall be considered part of the same Alteration, and any Alteration shall be deemed to include all trades and materials involved in accomplishing a particular result.

8.5 Landlord’s Property . All Alterations, improvements, fixtures, equipment and/or appurtenances which may be installed or placed in or about the Premises, from time to time, shall be at the sole cost of Tenant and shall be and become the property of Landlord, except that Tenant may remove any Alterations, improvements, fixtures and/or equipment which Tenant can substantiate to Landlord have not been paid for with any Tenant improvement allowance funds provided to Tenant by Landlord, provided Tenant repairs any damage to the Premises and Building caused by such removal and returns the affected portion of the Premises to a building standard tenant improved condition as reasonably determined by Landlord. Furthermore, Landlord may, by written notice to Tenant prior to the end of the Lease Term, or given following any earlier termination of this Lease, require Tenant, at Tenant’s expense, to remove any Alterations and/or improvements and/or systems and equipment within the Premises and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a building standard tenant improved condition as reasonably determined by Landlord; provided; however, that notwithstanding the foregoing, upon request by

 

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Tenant at the time of Tenant’s request for Landlord’s consent to any Alteration or improvement, Landlord shall notify Tenant whether the applicable Alteration or improvement will be required to be removed pursuant to the terms of this Section 8.5 . Notwithstanding the foregoing, except for any server racks located outside of the server room, Tenant shall not be required to remove any improvements and/or systems and equipment that were (i) located within the Premises as of the date of this Lease, or (ii) installed by Landlord (unless installed on Tenant’s behalf). If Tenant fails to complete any required removal and/or to repair any damage caused by the removal of any Alterations and/or improvements and/or systems and equipment in the Premises and return the affected portion of the Premises to a building standard tenant improved condition as reasonably determined by Landlord, Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds Landlord harmless from any liability, cost, obligation, expense or claim of lien in any manner relating to the installation, placement, removal or financing of any such Alterations, improvements, fixtures and/or equipment in, on or about the Premises, which obligations of Tenant shall survive the expiration or earlier termination of this Lease.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant shall keep the Project and Premises free from any liens or encumbrances arising out of the work performed, materials furnished or obligations incurred by or on behalf of Tenant, and shall protect, defend, indemnify and hold Landlord harmless from and against any claims, liabilities, judgments or costs (including, without limitation, reasonable attorneys’ fees and costs) arising out of same or in connection therewith. Tenant shall give Landlord notice at least ten (10) business days prior to the commencement of any such work