OFFICE LEASE

Exhibit 10.5

OFFICE LEASE

BAY CENTER OFFICES

Emeryville, California

BAY CENTER OFFICE, LLC

as

LANDLORD,

and

JAMBA JUICE COMPANY

as

TENANT

TABLE OF CONTENTS

 

OFFICE LEASE

Bay Center Offices

Emeryville, California

BASIC LEASE INFORMATION

 

 

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Exhibits and Addenda:

 

 

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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 in the Basic Lease Information or elsewhere in this Lease.

Alterations : Alterations, additions or other improvements to the Premises made by or on behalf of Tenant (but not including the Tenant Improvements).

Anti-Terrorism Law : Any Requirements relating to terrorism, anti-terrorism, money-laundering or anti-money laundering activities, including without limitation the United Sates 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.

Base Operating Expenses and Base Real Estate Taxes : The Operating Expenses and the Real Estate Taxes allocable to the Base Year, including for purposes of the Real Estate Taxes, any reduction in Real Estate Taxes obtained by Landlord after the date hereof as a result of a commonly called Proposition 8 application.

Base Building : The foundation, floor slabs, ceilings, roof, columns, beams, shafts, stairs, stairwells, escalators, elevators, base building restrooms and all common areas (collectively, the “Building Structure”), and the Base Building mechanical, electrical, life safety, plumbing, sprinkler and HVAC systems installed or furnished by Landlord (collectively, the “Building Systems”).

Building : The office building consisting of a five-story office tower located on the Land, and commonly known as 6475 Christie Avenue, Emeryville, California.

Control or Controlled : Ownership of more than fifty percent (50%) of all of the voting stock of a corporation or more than fifty percent (50%) of all of the legal and equitable interest in any other business entity.

CPI : The Consumer Price Index, All Urban Consumers, for San Francisco-Oakland-San Jose, California for All Items (1982-1984=100) (Series ID Number CUURA422SA0) published by the Bureau of Labor Statistics of the United States Department of Labor. If the base year of the CPI is changed, then all calculations pursuant to this Lease that require use of the CPI shall be made by using the appropriate conversion factor published by the Bureau of Labor Statistics (or successor agency) to correlate to the base year of the CPI herein specified. If no such conversion factor is published, then Landlord shall, if possible, make the necessary calculation to achieve such conversion. If such conversion is not in Landlord’s reasonable judgment possible, or if publication of the CPI is discontinued, or if the basis of

 

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calculating the CPI is materially changed, then the term “CPI” shall mean (a) comparable statistics on the cost of living, as computed by an agency of the United States Government performing a function similar to the Bureau of Labor Statistics, or (b) if none, by a substantial and responsible periodical or publication of recognized authority most closely approximating the result which would have been achieved by the CPI, as may be determined by Landlord in the exercise of its reasonable good faith business judgment.

Encumbrance : Any ground lease or underlying lease, or the lien of any mortgage, deed of trust, or any other security instrument now or hereafter affecting or encumbering the Project, or any part thereof or interest therein.

Encumbrancer : The holder of the beneficial interest under an Encumbrance.

Environmental Laws : All Requirements relating to the environment, health and safety, or the use, generation, handling, emission, release, discharge, storage or disposal of Hazardous Materials.

Escalation Rent : Tenant’s Percentage Share of the total dollar increase, if any, in Operating Expenses and in Real Estate Taxes, allocable to each calendar year, or part thereof, after the Base Year, over the amount of Base Operating Expenses and Base Real Estate Taxes. If the Building or the Project is less than one hundred percent (100%) occupied during any part of any year (including the Base Year), Landlord shall make an appropriate adjustment of the variable components of Operating Expenses and Real Estate Taxes for that year, as reasonably determined by Landlord using sound accounting and management principles, to determine the amount of Operating Expenses and Real Estate Taxes that would have been incurred during such year if the Building (or the Project, as the case may be) had been one hundred percent (100%) occupied during the entire year (and, if applicable, if the Tenant Improvements in the Building had been fully constructed and the Land, the Building, the Project, and all Tenant Improvements in the Building and the Project had been fully assessed for Real Estate Tax purposes). This amount shall be considered to have been the amount of Operating Expenses and Real Estate Taxes for that year. For purposes hereof, “variable components” include only those component expenses that are affected by variations in occupancy levels.

Executive Order No. 13224 : 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.

Force Majeure Event : Any strike, lockout, inability to secure customary materials, supplies or labor through ordinary sources despite commercially reasonable efforts to do so, failure of power, riot, insurrection, act of terrorism, war, fire or other casualty or other reason of a nature beyond the reasonable control of a party to this Lease obligated for performance under this Lease (financial inability excepted).

Hazardous Materials : Petroleum, asbestos, polychlorinated biphenyls, radioactive materials, radon gas, mold, or any chemical, material or substance now or hereafter

 

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defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “pollutants,” “contaminants,” “extremely hazardous waste,” “restricted hazardous waste” or “toxic substances,” or words of similar import, under any Environmental Laws.

Impositions : Taxes, assessments, charges, excises and levies, business taxes, licenses, permits, inspection and other authorization fees, transit development fees, assessments or charges for housing funds, service payments in lieu of taxes and any other fees or charges of any kind at any time levied, assessed, charged or imposed by any federal, state or local entity, (i) upon, measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures or other personal property located in the Premises, or the cost or value of any alterations, additions or other improvements to the Premises made by or on behalf of Tenant during the initial improvement of the Premises pursuant to and governed by the Work Letter and any subsequent Alterations; (ii) upon, or measured by, any Rent payable hereunder, including any gross receipts tax; (iii) upon, with respect to or by reason of the development, possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; (iv) upon this Lease transaction, or any document to which Tenant is a party creating or transferring any interest or estate in the Premises; or (v) to the extent not included in Operating Expenses, costs, fees and other expenses incurred in connection with providing transportation services as provided by the Owner Participation Agreement, as amended, affecting the Project. Impositions do not include Real Estate Taxes, franchise, transfer, inheritance or capital stock taxes, or income taxes measured by the net income of Landlord from all sources, unless any such taxes are levied or assessed against Landlord as a substitute for, in whole or in part, any Imposition.

Land : The parcel of land described on Exhibit B attached to this Lease.

Lease Year : Each consecutive twelve (12) month period during the Term of this Lease, provided that the last Lease Year shall end on the Expiration Date.

Major Alterations : Alterations which (i) may affect the structural portions of the Building, (ii) may affect or interfere with the Building roof, walls, elevators, heating, ventilating, air conditioning, electrical, plumbing, telecommunications, security, life-safety or other Building Systems, (iii) may affect the use and enjoyment by other tenants or occupants of the Building of their premises, (iv) may be visible from outside the Premises, (v) utilize materials or equipment which are inconsistent with Landlord’s standard building materials and equipment for the Building, (vi) result in the imposition on Landlord of any requirement to make any alterations or improvements to any portion of the Building (including handicap access and life safety requirements) in order to comply with Requirements, or (vii) materially increase the cost to clean, maintain or repair, or increase the cost to relet, the Premises.

Minor Alterations : Alterations (i) that are not Major Alterations, (ii) that do not require the issuance of a building or other governmental permit, authorization or approval, (iii) that do not require work to be performed outside the Premises in order to comply with Requirements, and (iv) the cost of which does not exceed Fifty Thousand Dollars ($50,000.00) in any one instance.

 

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Net Worth : 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.

Operating Expenses : All costs of management, ownership, operation, maintenance, repair and replacement of the Project, including, but not limited to, the following: (i) salaries, wages, benefits and other payroll expenses of employees engaged in the operation, maintenance or repair of the Project; (ii) property management fees and expenses; (iii) rent (or rental value) and expenses for Landlord’s and any property manager’s offices in the Project; (iv) electricity, natural gas, water, waste disposal, sewer, heating, lighting, air conditioning and ventilating and other utilities; (v) janitorial, maintenance, security, life safety and other services, such as alarm service, window cleaning and elevator maintenance and uniforms for personnel providing services; (vi) repair and replacement, resurfacing or repaving of paved areas, sidewalks, curbs and gutters (except that any such work which constitutes a capital improvement shall be included in Operating Expenses only in the manner provided in clause (xv) below); (vii) landscaping, ground keeping, management, operation, and maintenance and repair of all public, private and park areas adjacent to the Building; (viii) materials, supplies, tools and rental equipment; (ix) license, permit and inspection fees and costs; (x) insurance premiums and costs (including an imputed commercially reasonable insurance premium if Landlord self-insures, or a proportionate share if Landlord insures under a “blanket” policy), and the deductible portion of any insured loss (not in excess of Fifty Thousand Dollars ($50,000)) under Landlord’s insurance; (xi) sales, use and excise taxes; (xii) legal, accounting and other professional services for the Project, including costs, fees and expenses of contesting the validity or applicability of any Requirement relating to the Building; (xiii) all assessments and other amounts payable to EmeryBay Commercial Association and any similar entity in connection with the use of the Covered Parking Area; (xiv) depreciation on personal property, including exterior window draperies provided by Landlord and floor coverings in the common areas and other public portions of the Project, and/or rental costs of leased furniture, fixtures, and equipment; (xv) the cost of any capital improvements to the Building or to the Project made at any time that are intended in Landlord’s reasonable judgment as cost-saving or labor-saving devices, or to reduce or eliminate other Operating Expenses or to effect other economies in the operation, maintenance, or management of the Building or the Project, or that are necessary or appropriate in Landlord’s reasonable judgment for the health and safety of occupants of the Building or the Project, or that are required under any Requirements which were not applicable to the Building or the Project as of the date of this Lease, all such costs amortized over such period as Landlord shall reasonably determine based upon the reasonably anticipated useful life of the applicable item at an interest rate of ten percent (10%) per annum, or, if applicable, the rate paid by Landlord on funds borrowed for the purpose of constructing or installing such capital improvements; and (xvi) costs, fees and other expenses incurred in connection with providing transportation services as provided by the Owner Participation Agreement, as amended, affecting the Project. Operating Expenses shall not include any of the following : (A) Real Estate Taxes (which are separately defined below); (B) legal fees, brokers’ commissions or other costs incurred in the negotiation, termination, or extension of leases or in proceedings involving a specific tenant; (C) depreciation, except as set forth above; (D) interest, amortization or other payments on loans to Landlord except as a component of amortization as set forth above; and (E) the cost of capital improvements, except as set forth in clause (xv) above; (F) rent or other amounts payable under any ground lease or master lease, or costs, fees, points or other expenses

 

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in connection with any financing or refinancing of all or any part of the Project; (G) costs of correcting any non-compliance of the Project or any part thereof with applicable Requirements in effect as of the Commencement Date; (H) cost for which Landlord is reimbursed, receives a credit or is otherwise compensated (other than tenant reimbursements for Operating Expenses); (I) costs of repair or restoration required due to casualty damage or condemnation (other than commercially reasonable insurance deductible amounts); (J) reserves for anticipated future expenses beyond the current year; (K) advertising, marketing or promotional expenses; (L) interest or penalties incurred as a result of Landlord’s failure to pay any bill as it shall become due unless non-payment is due to Tenant’s default hereunder; (M) costs related to the operation of Landlord as an entity rather than the operation of the Project (including, without limitation, costs of formation of the entity, internal accounting unrelated to operation or management of the Project, legal matters related solely to the maintenance of Landlord as an entity and/or preparation of tax returns) or costs associated with marketing or selling the Project or any interest therein, or converting the Project to a different form of ownership; (N) costs and disbursements, and other expenses incurred in connection with leasing, renovating, or improving space for tenants or other occupants or prospective tenants or occupants of the Project or costs (including, without limitation, permit, license, and inspection fees) incurred in renovating or otherwise improving or decorating, painting or redecorating space for tenants or other occupants or vacant space; (O) costs of any services sold to tenants or other occupants for which Landlord is entitled to be reimbursed by such tenants or other occupants as an additional charge or rental over and above the base rent and escalation rent payable under the lease with such tenant or other occupant; (P) any costs of charitable or political contributions; (Q) costs incurred by Landlord for use of any portion of the Project for special events, such as, by way of example and without limitation, shows, kiosks, filming, private parties or events; (R) costs of entertainment, dining or travel expenses; (S) gifts, flowers or similar items provided to Tenant, other tenants, vendors, prospective tenants, agents or third parties or the cost of tenant relation parties not expressly authorized in writing by Tenant; (T) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in the Building to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis for comparable buildings; or (U) expenses in connection with goods or services provided to other tenants’ premises when, as to the Premises, Tenant is required under this Lease to separately pay for or provide such goods or services, such as, by way of illustration and not in limitation, costs of after-hours HVAC to other tenants’ premises if Tenant is separately charged for after-hours HVAC service to the Premises. In addition, if in any “Comparison Year” (as hereinafter defined) following the Base Year, a new Operating Expense category (such as, by way of example only and without limitation, earthquake insurance or concierge services) is included in Operating Expenses which was not included in the Operating Expenses during the Base Year, then the cost of such new item shall be added to the Operating Expenses for the Base Year for purposes of determining the amounts payable by Tenant as Escalation Rent under this Lease for such Comparison Year, and during each subsequent Comparison Year, the same amount shall continue to be included in the computation of Operating Expenses for the Base Year, resulting in Operating Expenses for each such Comparison Year including (as to such category of Operating Expenses) only the increase in the cost of such new Operating Expense category over the Base Year, as so adjusted. However, if in any Comparison Year thereafter, such new category item is not included in Operating Expenses, then no such addition shall be made to Operating Expenses for the Base Year. Conversely, when

 

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a category of Operating Expenses that was originally included in the Operating Expenses during the Base Year is, in any Comparison Year, no longer included in Operating Expenses, then the cost of such item shall be deleted from the calculation of Operating Expenses during the Base Year for purposes of determining the amounts payable by Tenant for such Comparison Year. The same amount shall continue to be deleted from the calculation of Operating Expenses for the Base Year for each Comparison Year thereafter that the Operating Expense category is so not included. If such category of Operating Expenses is again included in the Operating Expenses for any Comparison Year, then the amount of said Operating Expense category originally included in the Operating Expenses for the Base Year shall again be added back to the Operating Expenses for the Base Year. Subject to the provisions of this definition, the determination of Operating Expenses shall otherwise be made by Landlord in accordance with generally accepted accounting principles and practices consistently applied. The term “Operating Expenses” shall include the following (without duplication): (1) 100% of Operating Expenses, as defined above, paid or incurred with respect to the Building; and (2) the Building’s allocable share of Operating Expenses that pertain to the common areas (including parking areas) of the Project in general. However, the Operating Expenses to which Tenant contributes as a part of Escalation Rent shall in no event include any Operating Expenses paid or incurred with respect to (X) any of the Other Buildings, or (Y) such Other Buildings’ respective allocable share of Operating Expenses that pertain to the common areas (including parking areas) of the Project in general.

Other Buildings : The two other office buildings located on the Land.

Project : The Land, the Building (including, without limitation, the Base Building), the Other Buildings, the surface parking lot behind the Building and the Other Buildings, landscaping, paved walkways, driveways and all other improvements at any time located on the Land, and all appurtenances related thereto, and the ground floor of the enclosed parking facility adjacent to the Land (the “Covered Parking Area”) and all ground level common area associated with the Covered Parking Area, together with ingress thereto and egress therefrom. The Project is sometimes referred to as “Bay Center” or “Bay Center Offices.”

Real Estate Taxes : All taxes, assessments and charges now or hereafter levied or assessed upon, or with respect to, the Building, the Project or any portion thereof, or any personal property of Landlord used in the operation thereof or located therein, or Landlord’s interest in the Building, the Project or such personal property, by any federal, state or local entity, including: (i) all real property taxes and general and special assessments; (ii) charges, fees or assessments for transit, housing, day care, open space, art, police, fire or other governmental services or benefits to the Building or the Project; (iii) service payments in lieu of taxes; (iv) any tax, fee or excise on the use or occupancy of any part of the Building or the Project, or on rent for space in the Building or the Project; (v) any other tax, fee or excise, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes; and (vi) reasonable fees and expenses, including those of consultants or attorneys, incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes. Real Estate Taxes do not include: (A) franchise, inheritance or capital stock taxes, or income taxes measured by the net income of Landlord from all sources, unless any such taxes are levied or assessed against Landlord as a substitute for, in whole or in part, any Real Estate Tax; (B) Impositions and all similar amounts payable by tenants of the Building or the Project under their leases; and (C) penalties, fines, interest or charges due for late

 

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payment of Real Estate Taxes by Landlord. If any Real Estate Taxes are payable, or may at the option of the taxpayer be paid, in installments, such Real Estate Taxes shall, together with any interest that would otherwise be payable with such installment, be deemed to have been paid in installments, amortized over the maximum time period allowed by applicable law. The term “Real Estate Taxes” shall include the following (without duplication): (1) 100% of Real Estate Taxes, as defined above, paid or incurred with respect to the Building; and (2) the Building’s allocable share of Real Estate Taxes that pertain to the common areas (including parking areas) of the Project in general. However, the Real Estate Taxes to which Tenant contributes as a part of Escalation Rent shall in no event include any Real Estate Taxes paid or incurred with respect to (X) any of the Other Buildings, or (Y) such Other Buildings’ respective allocable share of Real Estate Taxes that pertain to the common areas (including parking areas) of the Project in general.

Related Company : (i) An entity which Controls, is Controlled by, or is under common Control with Tenant; or (ii) an entity into or with which Tenant is merged or consolidated or (iii) any entity to which all or substantially all (at least ninety percent (90%)) of Tenant’s stock or other equity interests or Tenant’s assets are transferred.

Rent : Base Rent, Escalation Rent and all other additional charges and amounts payable by Tenant in accordance with this Lease.

Requirements : All laws, including Environmental Laws, ordinances, rules, regulations, orders, decrees, permits, and requirements of courts and governmental authorities now or hereafter in effect, including 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; the provisions of any insurance policy carried by Landlord or Tenant on any portion of the Project, or any property therein; the requirements of any independent board of fire underwriters; any directive or certificate of occupancy issued pursuant to any law by any public officer or officers applicable to the Building; the provisions of all recorded documents affecting any portion of the Building, as any such document may be amended from time to time; and all life safety programs, procedures and rules from time to time or at any time implemented or promulgated by Landlord.

Tenant Improvements : Alterations, additions or other improvements, if any, made by Landlord on behalf of Tenant during the initial improvement of the Premises pursuant to and governed by the provisions of the Work Letter.

Tenant Parties : Tenant, all persons or entities claiming by, through or under Tenant, and their respective employees, agents, contractors, licensees, invitees, representatives, officers, directors, shareholders, partners, and members.

Tenant’s Percentage Share : The percentage figure specified in the Basic Lease Information. Landlord and Tenant acknowledge that Tenant’s Percentage Share has been obtained by dividing the Rentable Area of the Premises, as specified in the Basic Lease Information, by the total Rentable Area of the Building, as specified in the Basic Lease Information, and multiplying the resulting quotient by one hundred (100). In the event Tenant’s Percentage Share is changed during a calendar year by reason of a change in the Rentable Area

 

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of the Premises or a change in the total Rentable Area of the Building, Tenant’s Percentage Share shall thereafter mean the result obtained by dividing the then Rentable Area of the Premises by the then total Rentable Area of the Building and multiplying such quotient by one hundred (100). For the purposes of determining Tenant’s Percentage Share of Escalation Rent, Tenant’s Percentage Share shall be determined on the basis of the number of days during such calendar year at each such Percentage Share.

Term : The period from the Commencement Date to the Expiration Date.

USA Patriot Act : 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.

Wattage Allowance : The product obtained by multiplying the Rentable Area of the Premises by 0.6518 KWH per month, but in no event less than six (6) watts of connected load per square feet of Rentable Area of the Premises for all electrical power exclusive of HVAC (as defined below) and Building standard lighting. “Lighting Wattage Allowance” is the product obtained by multiplying the Rentable Area of the Premises by 0.39 KWH per month.

Work Letter : The agreement attached hereto as Exhibit C , which sets forth the respective responsibilities of Landlord and Tenant regarding the design and construction of alterations, additions and improvements to prepare the Premises for occupancy by Tenant.

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 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.

1.3 Certain Defined Terms . The parties acknowledge that the Rentable Area of the Premises and the Building have been finally determined by the parties as part of this Lease for all purposes, including the calculation of Tenant’s Percentage Share and will not, except as otherwise provided in this Lease, be changed.

2. Lease of Premises . Landlord leases to Tenant and Tenant leases from Landlord the Premises, together with the non-exclusive right to use, in common with others, the lobbies, entrances, stairs, elevators, plazas, pedestrian walkways, restrooms, and other public portions of the Building, and all parking areas (subject to the parking area use rights as specified in this Lease), walkways, driveways and other exterior common areas of the Project, all subject to the terms, covenants and conditions set forth in this Lease. All the windows and exterior walls of the Premises, the terraces adjacent to the Premises, if any, and any space in the Premises used for shafts, columns, projections, stacks, pipes, conduits, ducts, electric utilities, sinks or other Building facilities and any non-public portions of the Building (such as the roof), and the use thereof and access thereto through the Premises for the purposes of management, operation, maintenance and repairs, are reserved to Landlord.

 

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3. Term; Condition and Acceptance of Premises .

3.1 Initial Term and Acceptance of Premises .

3.1.1 Initial Term . This Lease shall be effective as of the Lease Date. Except as hereinafter provided, and unless sooner terminated or extended pursuant to the provisions of this Lease, the Term of this Lease shall commence on the Commencement Date and end on the Expiration Date.

3.1.2 Condition of Premises . Except as provided in this Section 3.1.2 and Sections 7.3 and 7.6.1 and except as described in the Work Letter, Tenant agrees to accept the Premises in their “as-is” condition, without any representations or warranties by Landlord, and with no obligation of Landlord to make any alterations or improvements to the Premises or to provide any tenant improvement allowance. Tenant also acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the suitability of the Premises or the Building for the conduct of Tenant’s business. Landlord shall exercise commercially reasonable efforts (without any obligation to engage overtime labor or commence any litigation) to cause Landlord’s Work as described in the Work Letter to be substantially complete on or before September 28, 2006 (the “Target Completion Date”). “Substantially complete” or “substantial completion” of Landlord’s Work as used in this Section 3.1.2 shall mean that Landlord’s Work has been completed except for items of the type customarily found on an architectural punch list, the correction or completion of which will not materially interfere with the construction of the Tenant Improvements pursuant to the Work Letter.

3.1.3 Delay in Completion of Landlord’s Work .

(a) If Landlord fails to cause the Landlord’s Work to be substantially complete on or before the Target Completion Date (regardless of whether such failure is the result of one or more Force Majeure Events (as defined in Section 35.18 )), then the Commencement Date shall be extended for the number of days completion of the Landlord’s Work is delayed beyond the Target Completion Date.

(b) If Landlord fails to cause the Landlord’s Work to be substantially complete on or before January 1, 2007, which date shall be subject to extension for delay in substantial completion of Landlord’s Work resulting from the occurrence of one or more Force Majeure Events (such date, as it may be so extended, is referred to herein as the “Outside Completion Date”), Tenant shall have the right to deliver a notice to Landlord (a “Termination Notice”) electing to terminate this Lease effective upon the date occurring five (5) business days following receipt by Landlord of the Termination Notice (the “Effective Termination Date”). The Termination Notice must be delivered by Tenant to Landlord, if at all, not earlier than the Outside Completion Date nor later than five (5) business days after the Outside Completion Date.

The extension of the Commencement Date pursuant to Section 3.1.3(a) and Tenant’s right to terminate this Lease pursuant to Section 3.1.3(b) shall be Tenant’s sole and exclusive remedies at law or in equity for the failure of Landlord to cause the Landlord’s Work to be substantially complete by the Outside Completion Date, and Tenant expressly agrees that Landlord shall not

 

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be deemed in default or otherwise liable for any claims, liabilities or damages (including consequential damages) incurred by Tenant by reason of or in connection with such failure. At Landlord’s option, the termination right contained in this Section 3.1.3(b ) shall not be exercisable, or, if exercised, shall not be effective, if on the date of exercise of such right Tenant is in default of any obligations under this Lease beyond any applicable cure period.

3.1.4 Delay in Completion of Tenant Improvements . If the completion of the Tenant Improvements is delayed due to a Force Majeure Event or Landlord Delay, the Commencement Date shall be extended for the number of days completion of the Tenant Improvements is actually delayed as a result of such Force Majeure Event or Landlord Delay. For purposes of this Lease, the term “Landlord Delay” shall mean any actual delay in the completion of the Tenant Improvements to the extent such delay is proximately caused by the failure of Landlord to approve or disapprove of drawings, plans, or other required submissions relating to the design or construction of the Tenant Improvements in accordance with and within the time specified in the Work Letter for such approval or disapproval, except to the extent delay under this Section 3.1.4 is attributable to Tenant Delay or to any Force Majeure Event; and provided that no period of Landlord Delay shall commence until Tenant shall have provided written notice to Landlord specifying the facts and circumstances alleged to constitute such Landlord Delay, and the same shall continue without cure or correction for one (1) business day following such notice. For the purposes of this Lease, the term “Tenant Delay” shall mean any delay in the completion of the Tenant Improvements to the extent such delay is proximately caused by the act, omission, neglect or failure of Tenant, Tenant’s Architect, General Contract or any of their respective agents, employees, contractors or subcontractors.

3.1.5 Commencement Memorandum . In the event that the Commencement Date is extended as permitted pursuant to Section 3.1.4 , Tenant shall execute and deliver to Landlord, within ten (10) days after request, a Confirmation of Term in the form as set forth in Exhibit D attached to this Lease.

3.2 Option to Extend .

3.2.1 Exercise of Option to Extend Term . Tenant shall have one (1) option (the “Extension Option”) to extend the initial Term for an additional period of five (5) years (the “Extended Term”) provided that the following conditions are satisfied: (i) as of the date of delivery of the Election Notice (as defined below), Tenant is not in economic or material default under this Lease, beyond any applicable notice and cure period expressly set forth in this Lease; (ii) as of the end of the initial Term, Tenant is not in economic or material default under this Lease, beyond any applicable notice and cure period expressly set forth in this Lease; and (iii) Tenant has not previously been in economic or material default under this Lease, beyond any applicable notice and cure period expressly set forth in this Lease, more than twice during the one (1) year period immediately preceding the date that Tenant delivers the Election Notice. To exercise Tenant’s option with respect to the Extended Term, Tenant shall give notice to Landlord not more than eighteen (18) months and not less than twelve (12) months prior to the expiration of the initial Term (“Election Notice”).

3.2.2 Fair Market Rent . If Tenant properly and timely exercises Tenant’s Extension Option pursuant to Section 3.2.1 above, the Extended Term shall be upon all

 

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of the same terms, covenants and conditions of this Lease; provided, however, that the Base Rent applicable to the Premises for the Extended Term shall be one hundred percent (100%) of the “Fair Market Rent” for space comparable to the Premises as of the commencement of the Extended Term. “Fair Market Rent” shall mean the annual rental being charged for space comparable to the Premises in buildings comparable to the Building located in Emeryville, Oakland and Berkeley, California, taking into account location, condition, available parking, existing improvements, any improvements to be made, any rental abatement concessions and tenant improvement allowances and the allocation of any brokerage commission costs. Fair Market Rent shall reflect the then prevailing rental structure for comparable space in Emeryville, Oakland and Berkeley, California. For example, if at the time the Fair Market Rent is being determined, the prevailing rent structure for comparable space for comparable lease terms includes periodic rental adjustments or CPI escalations, the Fair Market Rent shall reflect such rental structure. Tenant shall pay all leasing commissions and consulting fees payable in connection with such extensions to the extent arising out of a contractual relationship between Tenant and a broker or consultant and Landlord shall pay all leasing commissions or consulting fees to the extent arising out of a contractual relationship between Landlord and a broker or consultant.

3.2.3 Determination of Rent . Within forty-five (45) days after the date of the Election Notice, Landlord and Tenant shall negotiate in good faith in an attempt to determine Fair Market Rent for the Extended Term. If they are unable to agree within said forty-five (45) day period, then the Fair Market Rent shall be determined as provided in Section 3.2.4 below.

3.2.4 Appraisal . If it becomes necessary to determine the Fair Market Rent for the Premises by appraisal, the real estate appraiser(s) indicated in this Section 3.2.4 , each of whom shall be members of the American Institute of Real Estate Appraisers, shall have at least five (5) years experience appraising office space located in the vicinity of the Premises, and shall be appointed and shall act in accordance with the following procedures:

If the parties are unable to agree on the Fair Market Rent within the allowed time, either party may demand an appraisal by giving written notice to the other party, which demand to be effective must state the name, address and qualifications of an appraiser selected by the party demanding the appraisal (“Notifying Party”). Within fifteen (15) days following the Notifying Party’s appraisal demand, the other party (“Non-Notifying Party”) shall either approve the appraiser selected by the Notifying Party or select a second properly qualified appraiser by giving written notice of the name, address and qualification of said appraiser to the Notifying Party. If the Non-Notifying Party fails to select an appraiser within the fifteen (15) day period, the appraiser selected by the Notifying Party shall be deemed selected by both parties and no other appraiser shall be selected. If two (2) appraisers are selected, they shall select a third appropriately qualified appraiser within fifteen (15) days following selection of the second appraiser. If the two (2) appraisers fail to select a third qualified appraiser, the third appraiser shall be appointed by the then presiding judge of the county where the Premises are located upon application by either party.

If only one appraiser is selected, that appraiser shall notify the parties in simple letter form of its determination of the Fair Market Rent for the Premises within

 

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fifteen (15) days following his or her selection, which appraisal shall be conclusively determinative and binding on the parties as the appraised Fair Market Rent.

If multiple appraisers are selected, the appraisers shall meet not later than fifteen (15) days following the selection of the last appraiser. At such meeting, the appraisers shall attempt to determine the Fair Market Rent for the Premises as of the commencement date of the Extended Term by the agreement of at least two (2) of the appraisers.

If two (2) or more of the appraisers agree on the Fair Market Rent for the Premises at the initial meeting, such agreement shall be determinative and binding upon the parties hereto and the agreeing appraisers shall forthwith notify both Landlord and Tenant of the amount set by such agreement. If multiple appraisers are selected and two (2) appraisers are unable to agree on the Fair Market Rent for the Premises, each appraiser shall submit to Landlord and Tenant his or her respective independent appraisal of the Fair Market Rent for the Premises, in simple letter form, within fifteen (15) days following appointment of the final appraiser. The parties shall then determine the Fair Market Rent for the Premises by averaging the appraisals; provided that any high or low appraisal, differing from the middle appraisal by more than ten percent (10%) of the middle appraisal, shall be disregarded in calculating the average.

If only one (1) appraiser is selected, then each party shall pay one-half (1/2) of the fees and expenses of that appraiser. If three (3) appraisers are selected, each party shall bear the fees and expenses of the appraiser it selects and one-half (1/2) of the fees and expenses of the third appraiser.

3.2.5 Restriction on Assignment . The Extension Option shall be personal to Jamba Juice Company, a California corporation (“Original Tenant”) or its Permitted Transferee (as defined in Section 17.9.1 , below), and shall terminate upon any assignment of this Lease or any sublease of the Premises.

3.2.6 Amendment to Lease . Immediately after the Fair Market Rent has been determined, the parties shall enter into an amendment to this Lease setting forth the Base Rent for the Extended Term and the new expiration date of the Term of the Lease. All other terms and conditions of the Lease shall remain in full force and effect and shall apply during the Extended Term, except that: (i) there shall be no further option to extend the Term beyond a date five (5) years after the expiration of the initial Term, (ii) there shall be no rent concessions, and (iii) there shall be no construction allowance, tenant improvement allowance or similar provisions.

3.3 Early Entry . If Tenant takes possession of or enters into the Premises prior to the Commencement Date for any reason, including for the purposes of preparing the Premises for Tenant’s occupancy pursuant to the Work Letter, such possession or entry 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, but excluding Tenant’s obligation to pay Base Rent, Escalation Rent or charges for use of the parking to which Tenant is entitled pursuant to this Lease.

 

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4. Rent .

4.1 Payments and Adjustments of Base Rent .

4.1.1 Obligation to Pay Base Rent . Tenant shall pay Base Rent to Landlord, in advance, in equal monthly installments, commencing on or before the Commencement Date, and thereafter on or before the first day of each calendar month during the Term. If the Commencement Date is other than the first day of a calendar month, Base Rent for the initial fractional calendar month at the commencement of the Term shall be paid upon the Commencement Date, prorated on the basis of a thirty (30) day month.

4.1.2 CPI Adjustments to Base Rent . The Base Rent payable hereunder shall be subject to increase, effective on the first anniversary of the Commencement Date and annually thereafter during the initial Lease Term (each, a “Rent Adjustment Date”), in accordance with the terms of this Section 4.1.2 . The Base Rent, as adjusted, shall thereafter be payable by Tenant until the next following Rent Adjustment Date. The Base Rent shall be increased, effective as of each Rent Adjustment Date, to equal the Base Rent payable by Tenant during the twelve (12) month period preceding such Rent Adjustment Date multiplied by a fraction, the numerator of which equals the Anniversary Index (as defined below) and the denominator of which equals the Base Index (as defined below); provided, however, in no event shall the Base Rent increase as of any Rent Adjustment Date by more than five percent (5%) per annum, over the Base Rent most recently in effect prior to such Rent Adjustment Date. For purposes hereof, the “Anniversary Index” shall mean the CPI published most recently preceding the applicable Rent Adjustment Date and the “Base Index” shall mean the CPI published for the corresponding calendar month of the previous year (or if no CPI was published for the corresponding calendar month in the previous year, the CPI for the first month thereafter for which a CPI value was published shall be used, and the result annualized). When the Base Rent payable as of each Rent Adjustment Date is determined, Landlord shall promptly give Tenant written notice of such adjusted Base Rent and the manner in which it was computed. If Landlord fails to give such notice prior to any Rent Adjustment Date, such failure shall not constitute a default on the part of Landlord, nor prejudice Landlord’s right to give such notice at a later date. In that event, Tenant shall pay, with the Base Rent payable in the following month, any unpaid increase in Base Rent, as so adjusted, for the period beginning on the Rent Adjustment Date and ending on the last day of the month in which such notice is given.

4.2 Manner of Rent Payment . All Rent shall be paid by Tenant without notice, demand, abatement, deduction or offset (except as permitted under Section 3.1.3(a) , Section 8.4 , and Section 12.1 ), in lawful money of the United States of America, payable to Landlord, at Landlord’s Address as set forth 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.

4.3 Additional Rent . All Rent not characterized as Base Rent or Escalation Rent 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. Landlord shall provide to Tenant supporting documentation of such Additional Rent as reasonably requested by Tenant.

 

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4.4 Late Payment of Rent; Interest . Tenant acknowledges that late payment by Tenant of any Rent will cause Landlord to incur administrative costs not contemplated by this Lease, the exact amount of which are extremely difficult and impracticable to ascertain based on the facts and circumstances pertaining as of the Lease Date. Accordingly, if any Rent is not paid by Tenant within five (5) days after the date when due on more than two (2) occasions in any calendar year during the Term, then Tenant shall pay to Landlord, with such Rent, a late charge equal to five percent (5%) of such Rent. Any Rent, other than late charges, due Landlord under this Lease, if not paid when due, shall also bear interest from the date due until paid, at the rate of the greater of (i) ten percent (10%) per annum, or (ii) four percent (4%) plus the prime rate (or base rate) reported in the Money Rates column or section of The Wall Street Journal as being the base rate on corporate loans at large U.S. money center commercial banks; 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. The parties acknowledge that such late charge and interest represent a fair and reasonable estimate of the administrative costs and loss of use of funds Landlord will incur by reason of a late Rent payment by Tenant, but Landlord’s acceptance of such late charge and/or interest shall not constitute a waiver of Tenant’s default with respect to such Rent or prevent Landlord from exercising any other rights and remedies provided under this Lease, at law or in equity.

5. Calculation and Payments of Escalation Rent . During each full or partial calendar year of the Term subsequent to the Base Year (each such subsequent calendar year, a “Comparison Year”), Tenant shall pay to Landlord Escalation Rent to Landlord in accordance with the following procedures:

5.1 Payment of Estimated Escalation Rent . During the months of November or December of the Base Year and November or December of each subsequent calendar year, or as soon thereafter as practicable, Landlord shall give Tenant notice of its estimate of Escalation Rent due for the next ensuing calendar year. On or before the first day of each month during such next ensuing calendar year commencing at least thirty (30) days following receipt of such estimate notice, Tenant shall pay to Landlord in advance, in addition to Base Rent, one-twelfth (1/12th) of such estimated Escalation Rent. In the event such notice is given after December 1st of any year during the Term, (a) Tenant shall continue to pay Escalation Rent on the basis of the prior calendar year’s estimate until the month commencing at least thirty (30) days after such notice is given, (b) subsequent payments by Tenant shall be based on the estimate of Escalation Rent set forth in Landlord’s notice, and (c) with the first monthly payment of Escalation Rent based on the estimate set forth in Landlord’s notice, Tenant shall also pay the difference, if any, between the amount previously paid for such calendar year and the amount which Tenant would have paid through the month in which such notice is given, based on Landlord’s noticed estimate or, in the alternative, if such amount previously paid by Tenant for such calendar year through the month in which such notice is given exceeds the amount which Tenant would have paid through such month based on Landlord’s noticed estimate, Landlord shall credit such excess amount against the next monthly payments of Escalation Rent due from Tenant. If at any time Landlord reasonably determines that the Escalation Rent for the current calendar year will vary from Landlord’s estimate by more than five percent (5%), Landlord may, by notice to Tenant, revise its estimate for such calendar year commencing at least thirty (30) days thereafter, and subsequent payments by Tenant for such calendar year shall be based upon such revised estimate.

 

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5.2 Escalation Rent Statement and Adjustment . Within one hundred twenty (120) days after the close of each calendar year, or as soon thereafter as practicable (but in no event later than one hundred eighty (180) days after the close of each calendar year unless Landlord is appealing or contesting any Operating Expenses, in which case the date for delivery shall be within 30 days following the completion of such appeal or contest), Landlord shall deliver to Tenant a statement of the actual Escalation Rent for such calendar year, accompanied by a statement prepared by Landlord showing in reasonable detail the Operating Expenses and the Real Estate Taxes comprising the actual Escalation Rent. If Landlord’s statement shows that Tenant owes an amount less than the payments previously made by Tenant for such calendar year, 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 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. If Landlord’s statement shows that Tenant owes an amount 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 statement.

5.3 Inspection of Operating Expenses Records . In the event Tenant disputes the amount of the actual Escalation Rent set forth in the statement delivered by Landlord to Tenant pursuant to Section 5.2 , Tenant shall have the right, at Tenant’s sole cost, after five (5) business days prior written notice to Landlord, to inspect at Landlord’s property management office during normal business hours Landlord’s books and records concerning the Escalation Rent set forth in such statement; provided, however, Tenant shall have no right to conduct such inspection, have an inspection performed by the Accountant as described below, or object to or otherwise dispute the amount of the Operating Expenses and the Real Estate Taxes set forth in any statement, unless Tenant does so within nine (9) months immediately following Landlord’s delivery of the particular statement in question (the “Review Period”); provided, further, that notwithstanding any such timely objection, dispute, and/or inspection, and as a condition precedent to Tenant’s exercise of its right of objection, dispute, and/or inspection as set forth in this Section 5.3 , Tenant shall not be permitted to withhold payment of, and Tenant shall timely pay to Landlord, the full amounts as required by the provisions of this Article 5 in accordance with such statement provided, however, such payment may be made under protest pending the outcome of any inspection which may be performed by the Accountant as described below. If after such inspection, Tenant still disputes the amount of the Escalation Rent set forth in the statement, Tenant shall have the right and within ninety (90) days thereafter, to cause an independent certified public accountant, as selected by Tenant and approved by Landlord (the “Accountant”), which approval shall not be unreasonably withheld, conditioned or delayed, to commence and complete an inspection of Landlord’s books and records to determine the proper amount of the Escalation Rent incurred and amounts payable by Tenant for the calendar year which is the subject of such statement. Such Accountant shall be engaged by Tenant on a non-contingency fee basis. If such inspection reveals that Landlord has over-charged Tenant, then Landlord shall credit against Tenant’s rental obligations next falling due the amount of such over-charge. If the inspection reveals that the Tenant was undercharged, then within thirty (30) days after the results of such inspection are made available to Tenant, Tenant shall reimburse to Landlord the amount of such under-charge. The payment by Tenant of any amounts pursuant to this Article 5 shall not preclude Tenant from questioning the correctness of any statement provided by Landlord at any time during the Review Period, but the failure of Tenant to object in

 

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writing thereto, conduct and complete its inspection and request that Landlord have the Accountant conduct the inspection as described above prior to the expiration of the Review Period shall be conclusively deemed Tenant’s approval of the statement in question and the amount of Escalation Rent shown thereon. The results of any such inspection shall be kept strictly confidential by Tenant and the Accountant, and Tenant and the Accountant must agree in their contract for such services, to such confidentiality restrictions and shall specifically agree that the results shall not be made available to any other tenant of the Project. All costs and expenses of Tenant’s Accountant shall be paid by Tenant unless it is finally determined that Landlord’s statement overstated the actual Operating Expenses and Real Estate Taxes for the applicable calendar year by five percent (5%) or more, in which case Landlord shall pay the reasonable costs of Tenant’s Accountant for the inspection of Landlord’s records, up to a maximum amount of Ten Thousand Dollars ($10,000.00).

5.4 Proration for Partial Year . If the Commencement Date is other than the first day of a calendar year or if this Lease terminates other than on the last day of a calendar year (other than due to an Event of Default), the amount of Escalation Rent for such fractional calendar year shall be prorated on a daily basis. Upon such termination, Landlord may, at its option, calculate the adjustment in Escalation Rent prior to the time specified in Section 5.2 above. Tenant’s obligation to pay Escalation Rent, as set forth in Section 5.2 , above, shall survive the expiration or termination of this Lease.

6. Impositions Payable by Tenant . Tenant shall pay all Impositions prior to delinquency. If billed directly to Tenant, Tenant shall pay such Impositions and concurrently deliver to Landlord evidence of such payments. If any Impositions are billed to Landlord or included in bills to Landlord for Real Estate Taxes or other charges, then Tenant shall pay to Landlord all such amounts within thirty (30) days after delivery 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. Tenant’s obligation to pay Impositions which have accrued and remain unpaid upon the expiration or earlier termination of this Lease shall survive the expiration or earlier termination of this Lease.

7. Use of Premises .

7.1 Permitted Use . The Premises shall be used solely for the Permitted Use and for no other use or purpose.

7.2 No Violation of Requirements . Tenant shall not do or permit to be done, or bring or keep or permit to be brought or kept, in or about the Premises, or any other portion of the Building or the Project, anything which (i) is prohibited by, will in any way conflict with, or would invalidate any Requirements; or (ii) would cause a cancellation of any insurance policy carried by Landlord or Tenant, or give rise to any defense by an insurer to any claim under any such policy of insurance, or increase the existing rate of or adversely affect any insurance policy carried by Landlord, or subject Landlord to any liability or responsibility for injury to any person or property; or (iii) will in any way obstruct or interfere with the rights of other tenants or

 

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occupants of the Project, or injure or annoy them. If Tenant does or permits anything to be done which increases the cost of any of Landlord’s insurance, or which results in the need, in Landlord’s reasonable judgment, for additional insurance by Landlord or Tenant with respect to any portion of the Premises, the Building or the Project, then Tenant shall reimburse Landlord, within thirty (30) days following written demand therefor accompanied by reasonable supporting documentation, for any such additional costs or the costs of such additional insurance, and/or procure such additional insurance at Tenant’s sole cost and expense. Exercise by Landlord of such right to require reimbursement of additional costs (including the costs of procuring of additional insurance) shall not limit or preclude Landlord from prohibiting Tenant’s impermissible use of the Premises or from invoking any other right or remedy available to Landlord under this Lease.

7.3 Compliance with Legal, Insurance and Life Safety Requirements . Tenant, at its cost and expense, shall promptly comply with all Requirements which relate to or arise out of: (i) Tenant’s particular use of or activities in the Premises, as opposed to general office use, (ii) the Tenant Improvements and any Alterations, (iii) the Base Building but only to the extent such obligations are triggered by the Tenant Improvements or any Alterations, or Tenant’s particular use of or activities in the Premises; and (iv) any acts or omissions of Tenant or any other Tenant Parties. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding involving Tenant, whether or not Landlord is party thereto, that Tenant is in non-compliance with any Requirement shall be conclusive of that fact. Notwithstanding the foregoing, Landlord shall be responsible for complying with all Requirements which relate to or arise out of Landlord’s Work and all Requirements which relate to the Base Building, provided that Landlord’s failure to comply with such Requirements would prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Premises, or would otherwise materially adversely affect Tenant’s use of or access to the Premises, and provided further, that nothing contained herein shall be deemed to prohibit Landlord from obtaining a variance or relying upon a grandfathered right in order to achieve such compliance. Any costs or expenses incurred by Landlord under this Section 7.3 (other than those relating to Landlord’s Work) shall be included in Operating Expenses to the extent not excluded from the definition of Operating Expenses; provided, however, that if Landlord’s compliance pursuant to this Section 7.3 shall be required as a result of Tenant’s particular use of or activities in the Premises, the Tenant Improvements or Alterations to the Premises, Tenant shall reimburse Landlord for the cost of such compliance within thirty (30) days after request.

7.4 No Nuisance . Tenant shall not (i) do or permit anything to be done in or about the Premises, or any other portion of the Project, which would injure or annoy, or obstruct or interfere with the rights of, Landlord or other occupants of the Project, or others lawfully in or about the Project; (ii) use or allow the Premises to be used in any manner inappropriate for comparable office buildings in Emeryville, Oakland and Berkeley, California, or for any improper or objectionable purposes (provided that Landlord agrees that the operations of Tenant in accordance with the Permitted Use shall not constitute a violation of this Section); or (iii) cause, maintain or permit any nuisance or waste in, on or about the Premises, or any other portion of the Project.

 

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7.5 Hazardous Materials .

7.5.1 Compliance with Environmental Laws . Without limiting the generality of Section 7.3 above, Tenant and all other Tenant Parties shall at all times comply with all applicable Environmental Laws with respect to the use and occupancy of any portion of the Project pursuant to this Lease. Tenant and all other Tenant Parties shall not generate, store, handle, or otherwise use, or allow, the generation, storage, handling, or use of, Hazardous Materials in the Premises or transport the same through the Project, except for limited quantities of standard office, kitchen, janitorial or other cleaning supplies required for Tenant’s operation in accordance with the Permitted Use, or as otherwise permitted in the Rules and Regulations (such supplies being referred to herein as “Customary Permitted Materials”). Tenant shall use and dispose of such Hazardous Materials in strict compliance with all applicable Requirements, including all Environmental Laws. In the event of a release of any Hazardous Materials caused by, or due to the act or neglect of, Tenant or any other Tenant Parties (other than Customary Permitted Materials), Tenant shall immediately notify Landlord and take such remedial actions as Landlord may direct in Landlord’s sole discretion as necessary or appropriate to abate, remediate and/or clean up the same. If so elected by Landlord by notice to Tenant, Landlord shall take such remedial actions on behalf of Tenant at Tenant’s sole cost and expense. In any event, Landlord shall have the right, without liability or obligation to Tenant, to direct and/or supervise Tenant’s remedial actions and to specify the scope thereof and specifications therefor. Tenant and the other Tenant Parties shall use, handle, store and transport any Hazardous Materials in accordance with applicable Environmental Laws, and shall notify Landlord of any notice of violation of Environmental Laws which it receives from any governmental agency having jurisdiction. 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 California Health & Safety Code Section 25359 . Additional information regarding environmental conditions at the Project is included in Exhibit E to this Lease, which is attached hereto and incorporated by reference herein.

7.6 Special Provisions Relating to The Americans With Disabilities Act of 1990 .

7.6.1 Allocation of Responsibility to Landlord . As between Landlord and Tenant, Landlord shall be responsible that the Landlord’s Work (to the extent applicable to the Landlord’s Work) and the public entrances, stairways, corridors, elevators and elevator lobbies and other public areas in the Building comply with the requirements of Title III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., The Provisions Governing Public Accommodations and Services Operated by Private Entities), and all regulations promulgated thereunder, and all amendments, revisions or modifications thereto now or hereafter adopted or in effect in connection therewith (hereinafter collectively referred to as the “ADA”), and to take such actions and make such alterations and improvements as are necessary for such compliance. All costs incurred by Landlord in discharging its responsibilities under this Section 7.6.1 shall be included in Operating Expenses as provided in Section 1.1 .

7.6.2 Allocation of Responsibility to Tenant . As between Landlord and Tenant, Tenant, at its sole cost and expense, shall be responsible that the Premises, the Tenant Improvements, all Alterations to the Premises, Tenant’s use and occupancy of the Premises, and

 

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Tenant’s performance of its obligations under this Lease, comply with the requirements of the ADA, and to take such actions and make such Alterations as are necessary for such compliance; provided, however, that Tenant shall not make any such Alterations except upon Landlord’s prior written consent pursuant to the terms and conditions of this Lease. Tenant shall protect, defend, indemnify and hold Landlord harmless from and against any claim, demand, cause of action, obligation, liability, loss, cost or expense (including reasonable attorneys’ fees) which may be asserted against or incurred by Landlord as a result of Tenant’s failure in any respect to comply with its obligations set forth in this Section 7.6.2 . Tenant’s indemnity obligations set forth in the immediately preceding sentence shall survive the expiration or earlier termination of this Lease.

7.6.3 General . Notwithstanding anything in this Lease to the contrary, no act or omission of Landlord, including any approval, consent or acceptance by Landlord or Landlord’s agents, employees or other representatives, shall be deemed an agreement, acknowledgment, warranty, or other representation by Landlord that Tenant has complied with the ADA or that any action, alteration or improvement by Tenant complies or will comply with the ADA or constitutes a waiver by Landlord of Tenant’s obligations to comply with the ADA under this Lease or otherwise. Any failure of Landlord to comply with the obligations of the ADA shall not relieve Tenant from any obligations under this Lease or constitute or be construed as a constructive or other eviction of Tenant or disturbance of Tenant’s use and possession of the Premises.

8. Building Services .

8.1 Standard Tenant Services . Landlord shall provide the following services on all days (unless otherwise stated below) during the Term, subject to any limitations imposed by governmental rules, regulations and guidelines applicable thereto:

8.1.1 Landlord shall provide heating, ventilation and air conditioning (“HVAC”) when necessary for normal comfort for normal office use in the Premises from 7:00 A.M. to 6:00 P.M. Monday through Friday (collectively, the “Building Hours”), except for the date of observance of New Year’s Day, Martin Luther King Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, the day immediately following Thanksgiving Day, Christmas Day and, at Landlord’s discretion, other State of California or nationally recognized legal holidays which are observed by other comparable buildings in the area of Emeryville, Oakland and Berkeley, California (collectively, the “Holidays”).

8.1.2 Landlord shall cause to be furnished to Tenant electricity up to the Wattage Allowance for lighting and the operation of electrically-powered office equipment.

8.1.3 Landlord shall bear the cost of replacement of lamps, starters and ballasts for Building standard lighting fixtures within the Premises. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

8.1.4 Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes in the common areas of the Building.

 

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8.1.5 Landlord shall provide janitorial services to the Premises, except the dates of observance of the Holidays, in and about the Premises and window washing services in a manner consistent with other comparable buildings in the vicinity of the Building and not less than the specification attached hereto as Exhibit H .

8.1.6 Landlord shall provide nonexclusive, non-attended automatic passenger elevator service during the Building Hours, shall have at least one elevator available at all other times, including on the Holidays.

8.1.7 Landlord shall provide nonexclusive freight elevator service subject to scheduling by Landlord.

8.1.8 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.

8.2 Overstandard Tenant Use . Tenant shall not, without Landlord’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed, (i) install in the Premises (A) lighting and equipment, the aggregate average daily power usage of which exceeds the Wattage Allowance, or which requires a voltage above capacities of the existing applicable panel for those circuits that are currently being used for Tenant’s Premises, (B) heat-generating equipment (other than normal office equipment) or lighting other than lights standard for the Building, or (C) supplementary air conditioning facilities, or (ii) permit occupancy levels in excess of one person per one hundred fifty (150) square feet of Rentable Area. If, pursuant to this Section 8.2 , heat-generating equipment (other than normal office equipment) or lighting other than Building standard lights are installed or used in the Premises, or occupancy levels are greater than set forth above, or if the Premises or fixtures therein are reconfigured by Alterations, and such equipment, lighting, occupancy levels or Premises reconfiguration affects the temperature otherwise maintained by the Building air conditioning system, or if equipment is installed in the Premises which requires a separate temperature-controlled room, Landlord may, at Landlord’s election after notice to Tenant or upon Tenant’s request, install supplementary air conditioning facilities in the Premises, or otherwise modify the ventilating and air conditioning serving the Premises, in order to maintain the temperature otherwise maintained by the Building air conditioning system or to serve such separate temperature-controlled room. Tenant shall pay the cost of any transformers, additional risers, panel boards and other facilities if, when and to the extent required to furnish power for, and all maintenance and service costs of, any supplementary air conditioning facilities or modified ventilating and air conditioning, or for lighting and/or equipment the power usage of which exceeds the standards set forth in this Section 8.2 . The capital, maintenance and service costs of such facilities and modifications shall be paid by Tenant as Rent. Landlord, at its election, may also install and maintain an electric current meter or water meter (together with all necessary wiring and related equipment) at the Premises to measure the power and/or water usage of such lighting, equipment or ventilation and air conditioning equipment, or may otherwise cause such usage to be measured by reasonable methods, the cost in all instances to be shared equally by Landlord and Tenant. If Tenant desires services in additional amounts than 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. If Tenant desires services at different

 

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times than set forth in Section 8.1 above, Tenant shall notify Landlord and Landlord shall provide such after-hours services provided that Tenant shall pay Landlord’s charges for such services within thirty (30) days after Tenant’s receipt of Landlord’s invoice. Electricity shall be charged at Landlord’s actual cost; the initial charge for HVAC service provided by the Building central system shall be a rate of $39.87 per hour per zone (the “HVAC Additional Rate”), and the parties acknowledge there are two (2) zones in the portion of the Premises located on the second floor and one (1) zone in the portion of the Premises located on the ground floor for HVAC service; the additional charge for lighting services provided by the Building central system shall be at a rate of $6.85 per hour per zone (the “Lighting Additional Rate”) and the parties acknowledge there are three (3) zones in the portion of the Premises located on the second floor and one (1) zone on the portion of the Premises located on the ground floor for lighting service; provided, however, Landlord shall have the right from time to time during the Term, to increase the HVAC Additional Rate and the Lighting Additional Rate to reflect increases in Landlord’s actual cost for providing additional HVAC service and lighting service. However, if Tenant is charged for such after-hours HVAC or lighting usage, then in no event shall Operating Expenses include costs of HVAC service or lighting service for the premises of other Building occupants during after-hours periods.

8.3 Maintenance of Building . Landlord shall maintain the Building and the Project (other than the Premises and the premises of other tenants of the Project) in good order and condition, except for ordinary wear and tear, damage by casualty or condemnation, or damage occasioned by the act or omission of Tenant or other Tenant Parties (to the extent not covered by insurance maintained by Landlord), which damage shall be repaired by Landlord at Tenant’s expense. Landlord’s maintenance of, and provision of services to, the Project shall be performed in a manner consistent with that of comparable office buildings in the Emeryville, Oakland and Berkeley, California area. Landlord shall have the right in connection with its maintenance of the Building and the Project hereunder (i) to change the arrangement and/or location of any amenity, installation or improvement in the public entrances, stairways, corridors, elevators and elevator lobbies, and other public areas in the Building or the Project, and (ii) to utilize portions of the public areas in the Building and the Project from time to time for entertainment, displays, product shows, leasing of kiosks or such other uses that in Landlord’s sole judgment tend to attract the public, so long as such uses do not materially interfere with or impair Tenant’s access to or use or occupancy of the Premises or the parking areas.

8.4 Interruption of Use .

8.4.1 If solely as a result of Landlord’s gross negligence or willful misconduct, Landlord fails to provide an Essential Service (as defined in Section 8.4.2 below) which Landlord is required to provide to the Premises pursuant to the terms of Section 8.1 (an “Abatement Condition”), which prevents Tenant from occupying all or a material portion of the Premises (the “Abatement Space”), then Base Rent and Escalation Rent payable hereunder shall abate, provided the following additional conditions are satisfied in each instance:

8.4.1.1 With respect to the Abatement Condition in question, Tenant shall give notice to Landlord of the occurrence thereof, which notice shall designate the cause or suspected cause of the Abatement Condition, if known to Tenant, and the portion of the

 

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Premises which is not usable by Tenant, and the Abatement Condition in question shall continue after Tenant has given such notice for a period of not less than five (5) consecutive days; and

8.4.1.2 Tenant, solely because of the occurrence of the Abatement Condition, shall actually vacate the Abatement Space for not less than five (5) consecutive days after giving its notice to Landlord of the Abatement Condition.

8.4.2 If, with respect to any Abatement Condition, the conditions contained in Sections 8.4.1.1 and 8.4.1.2 are fulfilled, then Base Rent and Escalation Rent shall abate in the proportion that the rentable square foot area of the Abatement Space actually vacated bears to the rentable square foot area of the Premises, for a period equal to the lesser of (A) the period during which Tenant has actually vacated the Abatement Space, or (B) the period of time between Tenant’s having vacated the Abatement Space and the date Tenant receives notice from Landlord that the Abatement Condition has been cured, provided that such time periods shall not commence to run until the day after Tenant gives Landlord notice of the Abatement Condition as required above. For purposes of this Section 8.4.2, vacation of the Abatement Space shall not require Tenant to remove furniture, fixtures or equipment. Tenant shall be deemed to have vacated the Abatement Space if, due to the Abatement Condition, the Abatement Space is not useable by Tenant, and Tenant does not in fact conduct any business in or use the Abatement Space. Nothing contained herein shall limit Tenant’s right to an abatement of Rent or termination of this Lease in the case of a casualty as provided in Section 12.1 or in the case of a taking as provided in Section 13.1 hereof. In addition, if such failure persists for more than thirty (30) consecutive days during the last six (6) months of the original Term (even if Tenant has negotiated a renewal or extension of this Lease) and such failure has caused Tenant’s business operations to be materially reduced or diminished, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord. For purposes hereof, an “Essential Service” shall mean the standard mechanical, electrical or other systems (e.g., HVAC, life safety or automatic fire extinguisher/sprinkler system) serving the Premises in common with other premises to the extent Landlord is required to provide such services to the Premises pursuant to the terms of this Article 8.

8.4.3 Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent 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, any Force Majeure Event, 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 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 8.

 

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9. Maintenance of Premises . Tenant shall, at all times during the Term, at Tenant’s cost and expense, keep the Premises (other than elements of the Building or Project to be maintained or repaired by Landlord pursuant to this Lease) in good condition and repair, except for ordinary wear and tear and damage by casualty or condemnation. Except as may be specifically set forth in this Lease (including the Work Letter), Landlord has no obligation to alter, remodel, improve, repair, decorate or paint the Premises, or any part thereof, or any obligation respecting the condition, maintenance and repair of the Premises or any other portion of the Building. Tenant hereby waives all rights, including those provided in California Civil Code Sections 1941 and 1942 or any successor statute, 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 or in lieu thereof to vacate the Premises or terminate this Lease.

10. Alterations to Premises . All Alterations shall be made in accordance with the Building-standard procedures, specifications, and details (including the standard for construction and quality of materials in the Project) as then established by Landlord, all applicable Requirements, and the provisions of this Article 10.

10.1 Landlord Consent; Procedure . Tenant shall not make or permit to be made any Alterations without Landlord’s prior written consent, which consent shall not be unreasonably withheld.

10.2 General Requirements .

10.2.1 All Alterations shall be designed and performed by Tenant at Tenant’s cost and expense; provided, however, that if any Alterations require work to be performed outside the Premises, Landlord may elect to perform such work at Tenant’s expense.

10.2.2 All Alterations shall be performed only by contractors, engineers or architects approved by Landlord, and shall be made in accordance with complete and detailed architectural, mechanical and engineering plans and specifications approved in writing by Landlord. Landlord shall not unreasonably withhold, condition or delay its approval of any such contractors, engineers, architects, plans or specifications; provided, however, that Landlord may specify contractors, engineers or architects to perform work affecting the structural portions of the Project or the Building Systems. Tenant shall engage only labor that is harmonious and compatible with other labor working in the Project. In the event of any labor disturbance caused by persons employed by Tenant or Tenant’s contractor, Tenant shall immediately take all actions necessary to eliminate such disturbance.

10.2.3 Prior to commencement of the Alterations, Tenant shall deliver to Landlord any building or other permit required by Requirements in connection with the Alterations. In addition, Tenant shall require its general contractor to carry and maintain the following insurance at no expense to Landlord, and Tenant shall furnish Landlord with satisfactory evidence thereof prior to the commencement of construction of the Alterations: (A) commercial general liability insurance with limits of not less than Two Million Dollars ($2,000,000.00) combined single limit for bodily injury and property damage, including personal injury and death, and products and completed operations coverage in an amount not less than Two Million Dollars ($2,000,000.00) in the aggregate; (B) commercial automobile liability

 

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insurance with a policy limit of not less than Two Million Dollars ($2,000,000.00) each accident for bodily injury and property damage, providing coverage at least as broad as the Insurance Services Office (ISO) Business Auto Coverage form covering Automobile Liability, symbol 1 “any auto” provided that Tenant has owned automobiles, and insuring against all loss in connection with the ownership, maintenance and operation of automotive equipment that is owned, hired or non-owned; (C) worker’s compensation with statutory limits and employer’s liability insurance with a limit of not less than One Million Dollars ($1,000,000.00) per occurrence. All insurance required by this Article 10 shall be issued by solvent companies qualified to do business in the State of California, and with a Best & Company rating of A:VIII or better. All such insurance policies (except workers’ compensation and employer’s liability insurance) shall (i) provide that Landlord, Landlord’s managing agent, any Encumbrancer, and any other person requested by Landlord is designated as an additional insured with respect to liability arising out of work performed by or for Tenant’s general contractor without limitation as to coverage afforded under such policy pursuant to an endorsement providing coverage at least as broad as ISO form CG 20 10 07 04 and CG 20 37 10 01 or their equivalent, provided that such endorsement is commercially available and the premium for such endorsement is commercially reasonable (2) specify that such insurance is primary and that any insurance or self-insurance maintained by Landlord shall not contribute with it, and (3) 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 cause Tenant’s general contractor to notify Landlord within ten (10) days after any material modification of any policy of insurance required under this Article. Upon Landlord’s request, Tenant shall deliver complete certified copies of such policies. Tenant’s general contractor shall furnish Landlord evidence of insurance for its subcontractors as may be reasonably required by Landlord. Tenant acknowledges and agrees that Landlord may require other types of insurance coverage and/or increase the insurance limits set forth above if Landlord determines such increase is required to protect adequately the parties named as insureds or additional insureds under such insurance and if such coverage or increase is customarily required of tenants comparable to Tenant leasing space comparable to the Premises.

10.2.4 Tenant shall promptly commence construction of Alterations, cause such Alterations to be constructed in a good and workmanlike manner and in such a manner and at such times so that any such work shall not disrupt or interfere with the use, occupancy or operations of other tenants or occupants of the Project, and complete the same with due diligence as soon as possible after commencement.

10.2.5 All trash which may accumulate in connection with Tenant’s construction activities shall be removed by Tenant at its own expense from the Premises and the Project.

10.3 Landlord’s Right to Inspect . Landlord or its agents shall have the right (but not the obligation) to inspect the construction of Alterations, and to require corrections of faulty construction or any material deviation from the plans for such Alterations as approved by Landlord; provided, however, that no such inspection shall (i) be deemed to create any liability on the part of Landlord, or (ii) constitute a representation by Landlord that the work so inspected conforms with such plans or complies with any applicable Requirements, or (iii) give rise to a

 

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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. In addition, under no circumstances shall Landlord be liable to Tenant for any damage, loss, cost or expense incurred by Tenant on account of Tenant’s plans and specifications, Tenant’s contractors, mechanics or engineers, design or construction of any Alteration, or delay in completion of any Alteration.

10.4 Tenant’s Obligations Upon Completion . Promptly following completion of any Alterations, Tenant shall (i) furnish to Landlord “as-built” drawings or marked construction drawings showing the Alterations as made and constructed in the Premises, (ii) cause a timely notice of completion to be recorded in the Office of the Recorder of the County of Alameda in accordance with Civil Code Section 3093 or any successor statute, and (iii) if requested by Landlord, deliver to Landlord evidence of full payment and unconditional final waivers of all liens for labor, services, or materials in excess of Ten Thousand Dollars ($10,000.00) in the aggregate.

10.5 Repairs . If any part of the Building Systems shall be damaged during the performance of Alterations, Tenant shall promptly notify Landlord, and Landlord may elect to repair such damage at Tenant’s expense. Alternatively, Landlord may require Tenant to repair such damage at Tenant’s sole expense using contractors approved by Landlord.

10.6 Ownership and Removal of Alterations .

10.6.1 Ownership . All permanently affixed Alterations shall become a part of the Project and immediately belong to Landlord without compensation to Tenant, unless Landlord consents otherwise in writing; provided, however, that equipment and movable furniture shall remain the property of Tenant.

10.6.2 Removal . If required by Landlord, Tenant, prior to the expiration of the Term or termination of this Lease, shall, at Tenant’s sole cost and expense, (i) remove any or all Alterations, (ii) restore the Premises to the condition existing prior to the installation of such Alterations, and (iii) repair all damage to the Premises or Project caused by the removal of such Alterations; provided that Landlord may only so require removal of items which Landlord notified Tenant at the time of Landlord’s approval of the installation thereof (or within ten (10) days after Landlord’s first learning of the installation thereof if not requiring Landlord’s approval for installation) that such items would be subject to such requirement for removal. If removal of Alterations is so required by Landlord, Tenant shall use a contractor reasonably approved by Landlord for such removal and repair. Subject to the foregoing provisions regarding removal, all Alterations shall be Landlord’s property and at the expiration of the Term or termination of this Lease shall remain on the Premises without compensation to Tenant.

10.7 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. Before commencing construction of Minor Alterations, Tenant shall submit to Landlord such documentation as Landlord may reasonably require to determine whether Tenant’s proposed Alterations qualify as Minor Alterations. Except to the extent inconsistent with this Section 10.7 , Minor Alterations shall

 

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otherwise comply with the provisions of this Article 10 . All references in this Lease to “Alterations” shall mean and include Minor Alterations, unless specified to the contrary.

10.8 Landlord’s Expenses . In connection with installing or removing Alterations, Tenant shall pay all reasonable out-of-pocket fees and costs incurred by Landlord for review and approval of Tenant’s plans, specifications and working drawings, and administration by Landlord of the construction, installation or removal of Alterations, and restoration of the Premises to their previous condition. Tenant shall pay the amount of all fees and costs owing pursuant to this Section 10.8 within thirty (30) days after receipt from Landlord of a statement or invoice therefor, accompanied by reasonable supporting documentation.

11. Liens . Tenant shall keep the Premises, the Building and the Project free from any liens arising out of any work performed or obligations incurred by or for, or materials furnished to, Tenant pursuant to this Lease or otherwise. Landlord shall have the right to post and keep posted on the Premises any notices required by law or which Landlord may deem to be proper for the protection of Landlord, the Premises, the Building and the Project from such liens and to take any other action at the expense of Tenant that Landlord deems necessary or appropriate to prevent, remove or discharge such liens. Tenant shall protect, defend, indemnify and hold Landlord harmless from and against any claim, demand, cause of action, obligation, liability, loss, cost or expense (including reasonable attorneys’ fees) which may be asserted against or incurred by Landlord as a result of Tenant’s failure to comply with the foregoing obligation (which indemnity obligation shall survive the expiration or earlier termination of this Lease).

12. Damage or Destruction .

12.1 Obligation to Repair . Except as otherwise provided in this Article 12, if the Premises, or any other portion of the Building or the Project necessary for Tenant’s use and occupancy of the Premises, are damaged or destroyed by fire or other casualty, Landlord shall, as soon as reasonably practicable (but in no event more than sixty (60) days after such event), notify Tenant of the estimated time, in Landlord’s reasonable judgment, required to repair such damage or destruction. If Landlord’s estimate of time is less than two hundred seventy (270) days after the date of damage or destruction, then (i) Landlord shall proceed with all due diligence to repair the Premises, and/or the portion of the Building or the Project necessary for Tenant’s use and occupancy of the Premises, to substantially the condition existing immediately before such damage or destruction, as permitted by and subject to then applicable Requirements; (ii) this Lease shall remain in full force and effect; and (iii) to the extent such damage or destruction either (1) did not result from the negligence or willful misconduct of Tenant or other Tenant Parties, or (2) did result from the negligence or willful misconduct of Tenant or other Tenant Parties but is covered under the rental loss (or comparable) insurance coverage maintained by Landlord, Base Rent and Escalation Rent shall abate for such part of the Premises rendered unusable by Tenant in the conduct of its business during the time such part is so unusable, in the proportion that the Rentable Area contained in the unusable part of the Premises bears to the total Rentable Area of the Premises (provided that Base Rent and Escalation Rent shall be fully abated during such period to the extent that operation for business from the unaffected portions of the Premises is not reasonably practicable).

 

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12.2 Landlord’s Election . If Landlord determines that the necessary repairs cannot be completed within two hundred seventy (270) days after the date of damage or destruction, or if such damage or destruction arises from causes not covered by Landlord’s insurance policy then in force and such uninsured costs to repair exceeds Twenty Five Thousand and 00/100 Dollars ($25,000.00), Landlord may elect, in its notice to Tenant pursuant to Section 12.1 , to (i) terminate this Lease or (ii) repair the Premises or the portion of the Building or the Project necessary for Tenant’s use and occupancy of the Premises pursuant to the applicable provisions of Section 12.1 above. If Landlord terminates this Lease, then this Lease shall terminate as of the date of occurrence of the damage or destruction. Notwithstanding anything to the contrary contained in this Section 12.2 , Landlord may terminate this Lease pursuant to this Section 12.2 only if Landlord shall terminate the leases of all other tenants in the Building similarly affected by the casualty and with respect to which Landlord has a comparable termination right, it being agreed that Landlord shall not be entitled to use its rights under this Section to terminate only “below market” leases. If Landlord elects to terminate the Lease as a result of an uninsured casualty, Tenant shall have the right to nullify such termination by depositing with Landlord within ten (10) days after Landlord’s notice of termination the estimated amount to repair the damage or destruction arising from causes not covered by Landlord’s insurance policy in excess of Twenty Five Thousand and 00/100 Dollars ($25,000.00).

12.3 Tenant’s Election . Landlord shall, as soon as reasonably practicable (but in no event more than sixty (60) days after an event of damage or destruction) notify Tenant if Landlord determines that the necessary repairs cannot be completed within two hundred seventy (270) days after the date of such damage or destruction. Tenant may elect within thirty (30) days after Tenant’s receipt of Landlord’s notice to terminate this Lease by written notice to Landlord effective as of the date specified in Tenant’s notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after the date such termination notice is given by Tenant. Furthermore, if neither Landlord nor Tenant has terminated this Lease, and the repairs are not actually completed for any reason (other than the act, omission, neglect or failure of Tenant) within three hundred thirty (330) days after the date of such damage or destruction, then Tenant shall have the right to terminate this Lease within five (5) business days following the end of such three hundred thirty (330) day period.

12.4 Cost of Repairs . Landlord shall pay the cost for repair of the Building, the Project, the Landlord’s Work, the Tenant Improvements and any Alterations made to the Premises by Tenant. Such restoration shall be to substantially the same condition of the Building, the Project, the Landlord’s Work, the Tenant Improvements and Alterations made to the Premises by Tenant prior to the casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage on the Building or Project. Upon the occurrence of any damage to the Premises, if this Lease is not terminated, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance required under clause (ii) of Section 14.1.3. of this Lease which pertain to work to be performed by Landlord; provided that if as a result of Tenant’s failure to obtain or maintain all of the insurance required of Tenant under this Lease, the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, as assigned by Tenant, then the cost of such repairs shall be paid by Tenant to Landlord in accordance with a reasonable progress payment schedule, or, in the event Tenant is

 

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not the Original Tenant or a Related Company, then prior to Landlord’s commencement of repair of the damage; provided further, however, Tenant shall be obligated to pay to Landlord the deductible amount associated with all insurance proceeds that Tenant assigns to Landlord. To the extent replacement or repair thereof is desired by Tenant, Tenant shall be obligated to replace or repair, at Tenant’s cost and expense, Tenant’s movable office furniture, trade fixtures, office equipment, merchandise, and all other items of Tenant’s property in, on, at, or about the Premises and the Project which Tenant shall be responsible for insuring during the Term of this Lease.

12.5 Damage at End of Term . Notwithstanding anything to the contrary contained in this Article 12, if the Premises, or any other portion thereof or of the Building, are damaged or destroyed by fire or other casualty within the last eighteen (18) months of the Term, then Landlord shall have the right, in its sole discretion, to terminate this Lease by notice to Tenant given within ninety (90) days after the date of such event. Such termination shall be effective on the date specified in Landlord’s notice to Tenant, but in no event later than the end of such ninety (90) day period.

12.6 Waiver of Statutes . The respective rights and obligations of Landlord and Tenant in the event of any damage to or destruction of the Premises, or any other portion of the Building or the Project, are governed exclusively by this Lease. Accordingly, Tenant hereby waives the provisions of any law to the contrary, including California Civil Code Sections 1932(2) and 1933(4) providing for the termination of a lease upon destruction of the leased property.

13. Eminent Domain .

13.1 Effect of Taking . Except as otherwise provided in this Article 13, if all or any part of the Premises is taken as a result of the exercise of the power of eminent domain or condemned for any public or quasi-public purpose, or if any transfer is made in avoidance of such exercise of the power of eminent domain (collectively, “taken” or a “taking”), this Lease shall terminate as to the part of the Premises so taken as of the effective date of such taking. On a taking of a portion of the Premises, Landlord and Tenant shall each have the right to terminate this Lease by notice to the other given within thirty (30) days after the effective date of such taking, if the portion of the Premises taken is of such extent and nature so as to materially impair Tenant’s business use of the balance of the Premises, as reasonably determined by the party giving such notice. Such termination shall be operative as of the effective date of the taking. Landlord may also terminate this Lease on a taking of any other portion of the Building or the Project if Landlord reasonably determines that such taking is of such extent and nature as to render the operation of the remaining Building or the Project economically infeasible or to require a substantial alteration or reconstruction of such remaining portion. Landlord shall elect such termination by notice to Tenant given within thirty (30) days after the effective date of such taking, and such termination shall be operative as of the effective date of such taking. Upon a taking of the Premises which does not result in a termination of this Lease, the Base Rent shall thereafter be reduced as of the effective date of such taking in the proportion that the Rentable Area of the Premises so taken bears to the total Rentable Area of the Premises.

 

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13.2 Condemnation Proceeds . Except as hereinafter provided, in the event of any taking, Landlord shall have the right to all compensation, damages, income, rent or awards made with respect thereto (collectively an “award”), including any award for the value of the leasehold estate created by this Lease. No award to Landlord shall be apportioned and, subject to Tenant’s rights hereinafter specified, Tenant hereby assigns to Landlord any right of Tenant in any award made for any taking. So long as such claim will not reduce any award otherwise payable to Landlord under this Section 13.2 , Tenant may seek to recover, at its cost and expense, as a separate claim, any damages or awards payable on a taking of the Premises to compensate for the unamortized cost paid by Tenant for the alterations, additions or improvements, if any, made by Tenant during the initial improvement of the Premises pursuant to the Work Letter and for any Alterations, or for Tenant’s personal property taken, or for interference with or interruption of Tenant’s business (including goodwill), or for Tenant’s removal and relocation expenses.

13.3 Restoration of Premises . On a taking of the Premises which does not result in a termination of this Lease, Landlord and Tenant shall restore the Premises as nearly as possible to the condition they were in prior to the taking in accordance with the applicable provisions and allocation of responsibility for repair and restoration of the Premises on damage or destruction pursuant to Article 12 above, and both parties shall use any awards received by such party attributable to the Premises for such purpose.

13.4 Taking at End of Term . Notwithstanding anything to the contrary contained in this Article 13, if the Premises, or any other portion thereof or of the Building or the Project, are taken within the last eighteen (18) months of the Term, then Landlord shall have the right, in its sole discretion, to terminate this Lease by notice to Tenant given within ninety (90) days after the date of such taking. Such termination shall be effective on the date specified in Landlord’s notice to Tenant, but in no event later than the end of such ninety (90) day period.

13.5 Tenant Waiver . The rights and obligations of Landlord and Tenant on any taking of the Premises or any other portion of the Building or the Project are governed exclusively by this Lease. Accordingly, Tenant hereby waives the provisions of any law to the contrary, including California Code of Civil Procedure Sections 1265.120 and 1265.130, or any similar successor statute.

14. Insurance .

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

14.1.1 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, personal injury, and advertising injury arising out of or relating (directly or indirectly) 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 Broad Form Commercial General Liability Endorsement, including broad form property damage coverage (which shall include coverage for completed

 

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operations). Tenant’s liability coverage shall further include premises-operations coverage, products-c