OFFICE LEASE AGREEMENT

EXHIBIT 10.21

OFFICE LEASE AGREEMENT

BETWEEN

LOCON SAN MATEO, LLC, a Delaware limited liability company

(“LANDLORD”)

AND

AKAMAI TECHNOLOGIES, INC., a Delaware corporation

(“TENANT”)

TABLE OF CONTENTS

 

 

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OFFICE LEASE AGREEMENT

THIS OFFICE LEASE AGREEMENT (the “Lease”) is made and entered into as of the 31 ^st day of March, 2008, by and between LOCON SAN MATEO, LLC, a Delaware limited liability company (“Landlord”) and AKAMAI TECHNOLOGIES, INC., a Delaware corporation (“Tenant”).

1. Basic Lease Information.

A. “Building” shall mean the building located at 3125 Clearview Way, San Mateo, California, commonly known as Building B of the Clearview office park.

B. “Premises” shall mean the approximately 50,000 rentable square feet of space shown on Exhibit A to this Lease. The Premises are located on a portion of the first floor and the entire second and third floors of the Building and known as suite number(s) 200. If the Premises include one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises.

C. “Base Rent”:

 

D. “Tenant’s Share”: 76.98% of the Building and 19.14% of the Project (based upon approximately 261,251 rentable square feet).

“Tenant’s Monthly Expense and Tax Payment”: $51,541.67, which is Tenant’s Share of the monthly estimated Expenses and monthly estimated Taxes (as more fully described in, and subject to adjustment as described in, Section 4 below).

E. “Term”: A period of eighty-five (85) months. The Term shall commence on the date (the “Commencement Date”) that is the earlier of October 1, 2008 or the date that Tenant substantially completes the Initial Alterations (as defined in Exhibit D attached hereto) and, unless terminated early or extended in accordance with this Lease, end on the last day of the 85 ^th month of the Term (the “Termination Date”), which Termination Date is estimated to be October 31, 2015. Promptly after the Commencement Date, Landlord and Tenant shall enter into a commencement letter agreement in the form attached hereto as Exhibit C .

F. “Rent Commencement Date”: October 1, 2008, subject to adjustment as provided in Section 3 below.

 

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G. Tenant allowances: $2,500,000.00 (a sum equal to $50.00 per rentable square foot of the Premises) for construction of the Initial Alterations and $7,500.00 (a sum equal to $0.15 per rentable square foot of the Premises) for preparation of the initial space plan, as more particularly described in Exhibit D attached hereto.

H. “Security Deposit”: $75,000.00.

I. “Guarantor(s)”: As of the date of this Lease, there are no guarantors.

J. “Broker(s)”: NAI BT Commercial representing Landlord and Jones Lang LaSalle representing Tenant.

K. “Permitted Use”: General office use.

L. “Notice Addresses”:

Tenant:

On and after the Commencement Date, notices shall be sent to Tenant at the Premises with a copy to:

Akamai Technologies, Inc.

8 Cambridge Center

Cambridge, MA 02142

Attention: Mr. Skip Hartwell

Phone: (617) 444-3971

Fax: (617) 444-3908

If any additional person listed above fails to receive the copy of the notice of Tenant default, the validity of the notice served on Tenant shall not be affected thereby.

Prior to the Commencement Date, notices shall be sent to Tenant at the following address:

Akamai Technologies, Inc.

8 Cambridge Center

Cambridge, MA 02142

Attention: Mr. Skip Hartwell

Phone: (617) 444-3971

Fax: (617) 444-3908

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M. “Business Day(s)” are Monday through Friday of each week, exclusive of New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day (“Holidays”). Landlord may designate additional Holidays, provided that the additional Holidays are commonly recognized by other office buildings in the area where the Building is located.

N. “Landlord Work” means the work that Landlord is obligated to perform in the Premises pursuant to the separate work letter agreement (the “Work Letter”) attached as Exhibit D .

O. “Law(s)” means all applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity.

P. “Normal Business Hours” for the Building are 8:00 A . M . to 6:00 P . M . on Business Days.

Q. “Property” means the Building and the parcel(s) of land on which it is located and, at Landlord’s discretion, the landscaping, the parking facilities and all other improvements owned by Landlord and serving the Building and the tenants thereof and the parcel(s) of land on which they are located.

R. “Project” means the Clearview office project, containing six (6) buildings totaling approximately 261,251 rentable square feet of Class A office buildings located on an approximately 21.86 acre hill-top campus on Clearview Way, San Mateo, California.

S. “Exterior Common Areas” mean those areas of the Project and/or the Property which are not located within the Building or any other building and which are provided and maintained for the use and benefit of Landlord and tenants of the Building and/or the Project generally and the employees, invitees and licensees of Landlord and such tenants, including, without limitation, any parking garage, artificial lakes, walkways, plaza, roads, driveways, sidewalks, surface parking and landscapes, if any.

 

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2. Lease Grant.

Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, together with the right in common with others to use any portions of the Property that are designated by Landlord for the common use of tenants and others, such as sidewalks, unreserved parking areas, common corridors, elevator foyers, restrooms, vending areas and lobby areas (the “Common Areas”). The Exterior Common Areas, as of the date of this Lease, are as shown on the site plan attached hereto as Exhibit A-1. Landlord also has the right to make changes to the Common Areas as Landlord deems reasonably appropriate, provided the changes do not materially affect Tenant’s ability to access the Premises or to use the Premises for the Permitted Use. Notwithstanding anything to the contrary contained herein, Landlord shall not make any permanent changes to the parking areas at the Property that reduces the number of parking spaces available for Tenant’s use pursuant to the terms of this Lease or otherwise materially adversely affect Tenant’s parking rights hereunder. However, the foregoing shall not be deemed to prohibit Landlord from constructing a parking garage at the Property during the Term. If Landlord constructs a parking garage at the Property, Tenant may use such parking garage, free of monthly parking charge, provided that the foregoing shall not be deemed to increase the total number of parking spaces available to Tenant pursuant to the terms of this Lease and the Parking Agreement. If Landlord makes temporary changes to the parking areas at the Property that affect Tenant’s parking rights hereunder, Landlord shall provide reasonable alternate parking in the vicinity of the Building, which may include valet parking, and Tenant’s alternate parking spaces (if valet services are not used) shall at all times be located at or adjacent to the Property within reasonable walking distance of the Building (i.e., without the need for parking shuttles or other transportation to and from such parking spaces). Landlord shall use reasonable efforts to minimize the time periods during which such alternate parking arrangements will be required in connection with any temporary changes or other work with respect to the parking areas.

3. Adjustment of Commencement Date; Possession.

A. The Landlord Work shall be deemed to be “Substantially Complete” on the later of (i) the date that all Landlord Work (or applicable portion thereof) has been performed, other than any minor details of construction, mechanical adjustment or any other similar matter, the noncompletion of which does not materially interfere with Tenant’s use of the Premises, and (ii) the date Landlord receives from the appropriate governmental authorities, with respect to the Landlord Work performed by Landlord or its contractors in the Premises, all approvals necessary for the conduct of Tenant’s work at (including, without limitation, the Initial Alterations) and Tenant’s occupancy of the Premises (which may include a certificate of temporary occupancy or substantially equivalent approval). However, if Landlord is delayed in the performance of the Landlord Work as a result of any Tenant Delay(s) (defined below), the Landlord Work shall be deemed to be Substantially Complete on the date that Landlord could reasonably have been expected to Substantially Complete the Landlord Work absent any Tenant Delay. “Tenant Delay” means any act or omission of Tenant or any Tenant’s Parties to the extent that the same actually delays the substantial completion of the Landlord Work, including, without limitation: (1) Tenant’s failure to furnish information or approvals within any time period specified in this Lease, including the failure to prepare or approve preliminary or final plans by any applicable due date; (2) Tenant’s selection of equipment or materials that have long lead times after first being informed in writing by Landlord that the selection may result in a delay; (3) changes requested or made by Tenant to previously approved plans and specifications; (4) performance of work in the Premises by Tenant or Tenant’s contractor(s) during the performance of the Landlord Work, which interferes with the performance of the Landlord Work; or (5) if the performance of any portion of the Landlord Work depends on the prior or simultaneous performance of work by Tenant, a delay by Tenant or Tenant’s contractor(s) in the completion of such work. Landlord shall notify Tenant in writing of any circumstances of which Landlord is aware that have caused or may cause a Tenant Delay, so that Tenant may take whatever action is appropriate to minimize or prevent such Tenant Delay. For purposes of the foregoing sentence, correspondence via e-mail, facsimile or as included in any construction meeting minutes delivered to Tenant’s construction project manager, with a copy to Skip Hartwell at hartwell@akamai.com, shall constitute written notice of such Tenant Delay. No Tenant Delay shall be deemed to accrue unless and until Landlord has provided written notice to Tenant specifying that a delay has occurred

 

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because of actions, inaction or circumstances specified in the notice in reasonable detail. If such actions, inaction or circumstances qualify as a Tenant Delay, then a Tenant Delay shall be deemed to have occurred commencing as of the date Tenant received such notice from Landlord.

B. Subject to Landlord’s obligation, if any, to perform the Landlord Work and Landlord’s obligations under Section 9.B., and except as expressly provided in this Lease, the Premises are accepted by Tenant in “as is” condition and configuration. By taking possession of the Premises, except as provided below in this Section 3.B, Tenant agrees that the Premises are in good order and satisfactory condition, and that there are no representations or warranties by Landlord regarding the condition of the Premises, the Building or the Project. However, notwithstanding the foregoing, Landlord covenants that the base Building electrical, heating, ventilation and air conditioning and plumbing systems located in the Premises shall be in good working order as of the date Landlord delivers possession of the Premises to Tenant with the Initial Landlord Alterations (as defined in Exhibit D attached hereto) Substantially Complete (the “Delivery Date”). Except to the extent caused by the acts or omissions of Tenant or any Tenant Entities or by any alterations or improvements performed by or on behalf of Tenant (except for the Landlord Work), if such systems are not in good working order as of the date that Landlord Substantially Completes the Second Phase Landlord Alterations (as defined in Exhibit D attached hereto) and Tenant provides Landlord with notice of the same within thirty (30) days following the such date, Landlord shall be responsible for repairing or restoring the same. Tenant and Landlord acknowledge and agree that the only portion of the Landlord Work required to be completed by Landlord by the Delivery Date (prior to the Commencement Date) shall be the Initial Landlord Alterations. Landlord shall use good faith efforts to give Tenant at least thirty (30) days’ prior written notice of the anticipated Delivery Date. Tenant’s acceptance of the Premises shall be subject to Landlord’s obligation to correct portions of the Initial Landlord Alterations as set forth on a construction punch list prepared by Landlord and Tenant in accordance with the terms hereof. Within fifteen (15) days after the Initial Landlord Alterations are Substantially Complete, Landlord and Tenant shall together conduct an inspection of the Premises and prepare a “punch list” setting forth any portions of the Initial Landlord Alterations that are not in conformity with the Initial Landlord Alterations as required by the terms of this Lease. Notwithstanding the foregoing, at the request of Landlord, such construction punch list shall be mutually prepared by Landlord and Tenant prior to the date on which Tenant first begins to move its furniture, equipment or other personal property into the Premises. Landlord, as part of the Initial Landlord Alterations, shall use good faith efforts to correct all such items within a reasonable time following the completion of the punch list. Landlord and Tenant shall coordinate in good faith so as to minimize interference with each other during Landlord’s completion of any punch list items and Tenant’s performance of the Initial Alterations.

If the Delivery Date has not occurred on or before the Outside Completion Date (defined below) due to Landlord’s failure to timely complete the Initial Landlord Alterations for any reason (including an event of Force Majeure, but subject to Tenant Delay as provided below), Tenant shall be entitled to a rent abatement following the Rent Commencement Date in an amount equal to the per diem holdover rent, if any, that Tenant is required to pay (and actually pays) under the Existing Lease (defined below) for every day in the period beginning on the Outside Completion Date and ending on the Delivery Date (not to exceed an amount equal to $112,969.17 per month, which abatement shall be credited toward rent hereunder next due and payable). Tenant shall provide Landlord written notice and satisfactory evidence of the exact amount of such payments made within 30 days after any such payment to its landlord under the Existing Lease. For purposes hereof, the “per diem holdover rent” shall mean that portion of rent (calculated on a per diem basis) that Tenant pays under the Existing Lease that is in excess of and in addition to the rent that Tenant was required to pay for the last month of the lease term under the Existing Lease (calculated on a per diem basis). For example, if Tenant’s rent for the last month of the lease term of the Existing Lease is $400.00 per day and, as a result of a holdover by Tenant under the Existing Lease, such rent increases to $600.00 per day, the abatement of Base Rent Tenant is entitled to receive hereunder shall equal $200.00 per day. The “Outside Completion Date” shall mean May 31, 2008. Landlord and Tenant acknowledge and agree that the determination of the Delivery Date shall take into consideration the effect of any Tenant Delays by Tenant. As used herein, the “Existing Lease” shall mean that certain Office Lease dated as of September 23, 1999, as same may have been amended, by and between Tenant, as tenant, and 1400 Fashion Island LLC (as successor in interest to Cornerstone Suburban Office, L.P.), as landlord, relating to certain

 

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premises in the building commonly known as Century Centre II located at 1400 Fashion Island Blvd., San Mateo, California. Tenant represents and warrants that Tenant has previously delivered the true and correct copy of the Existing Lease to Landlord.

In addition, if the Delivery Date has not occurred on or before the Outside Completion Date due to Landlord’s failure to complete the Initial Landlord Alterations for any reason (including an event of Force Majeure, but subject to any Tenant Delays), the Rent Commencement Date shall be delayed by one day for each day beginning on the Outside Completion Date and ending on the Delivery Date (and the Termination Date shall be similarly extended).

If the Delivery Date has not occurred on or before December 1, 2008 (the “Delivery Deadline”), Tenant, as its sole remedy, may terminate this Lease by giving Landlord written notice of termination on or before the earlier to occur of: (i) December 15, 2008; and (ii) the Delivery Date. In such event, this Lease shall be deemed null and void and of no further force and effect and Landlord shall promptly refund any prepaid rent and Security Deposit previously advanced by Tenant under this Lease except to the extent required to cure any then uncured default by Tenant and, so long as there is no uncured default(s) under the Work Letter, the parties hereto shall have no further responsibilities or obligations to each other with respect to this Lease. Landlord and Tenant acknowledge and agree that the determination of the Delivery Deadline shall take into consideration the effect of any Tenant Delays.

C. Notwithstanding the foregoing, provided that this Lease has been fully executed by all parties and Tenant has delivered all prepaid rental, the Security Deposit and the insurance certificates required hereunder, Tenant, at Tenant’s sole risk, shall be permitted to access the Premises prior to the Delivery Date solely for purposes of planning or designing the Initial Alterations pursuant to Exhibit D . Tenant shall also have the right to access the Premises after the Delivery Date for purposes of performing the Tenant Work and to use and occupy the Premises for purposes of conducting its business therein. Such possession prior to the Commencement Date shall be subject to all of the terms and conditions of this Lease, except that Tenant shall not be required to pay Base Rent or Tenant’s Share of Expenses and Taxes with respect to the period of time prior to the Rent Commencement Date during which Tenant occupies the Premises for design, construction or business purposes. Landlord may withdraw such permission to enter the Premises prior to the Commencement Date at any time that Landlord reasonably determines that such entry by Tenant is causing a dangerous situation for Landlord, Tenant or their respective contractors or employees, or if Landlord reasonably determines that such entry by Tenant is unreasonably hampering or otherwise preventing Landlord from proceeding with the timely completion of the Landlord Work described in Exhibit D .

4. Rent.

A. Payments. As consideration for this Lease, Tenant shall pay Landlord, without any notice, setoff or deduction (except as otherwise expressly set forth herein), the total amount of Base Rent and Additional Rent due for the Term. “Additional Rent” means all sums (exclusive of Base Rent) that Tenant is required to pay Landlord under this Lease. Additional Rent and Base Rent are sometimes collectively referred herein to as “Rent”. Tenant shall pay and be liable for all rental, sales and use taxes (but excluding income taxes), if any, imposed upon or measured by Rent under applicable Law. Base Rent and recurring monthly charges of Additional Rent shall be due and payable in advance commencing on the Rent Commencement Date and continuing on the first day of each calendar month thereafter without notice or demand, provided that the installment of Base Rent and Tenant’s Monthly Expense and Tax Payment (defined in Section 1.D. above) for the first full calendar month of the Term shall be payable upon the Commencement Date (it being agreed that if the Commencement Date occurs prior to the Rent Commencement Date, Tenant shall deliver the first month’s Base Rent and Tenant’s Monthly Expense and Tax Payment simultaneously with Tenant’s written notice to Landlord that the Initial Alterations are substantially complete). All other items of Rent shall be due and payable by Tenant on or before twenty-one (21) days after billing by Landlord. All payments of Rent shall be by good and sufficient check or by other means (such as automatic debit or electronic transfer) acceptable to Landlord. If

 

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Tenant fails to pay any item or installment of Rent when due, Tenant shall pay Landlord an administration fee equal to 5% of the past due Rent; provided, however, that the foregoing late charge shall not apply to the first two (2) such late payments in any twelve (12) month period of the Term of this Lease or any extension thereto. If the Rent Commencement Date occurs on a day other than the first day of a calendar month or the Term terminates on a day other than the last day of a calendar month, the monthly Base Rent and Tenant’s Share of Expenses (defined in Exhibit E ) and Taxes (defined in Exhibit E ) for the month shall be prorated based on the number of days in such calendar month. Landlord’s acceptance of less than the correct amount of Rent shall be considered a payment on account of the earliest Rent due. No endorsement or statement on a check or letter accompanying a check or payment shall be considered an accord and satisfaction, and either party may accept the check or payment without prejudice to that party’s right to recover the balance or pursue other available remedies. Tenant’s covenant to pay Rent is independent of every other covenant in this Lease, except as otherwise expressly provided herein.

B. Payment of Tenant’s Share of Expenses and Taxes. Tenant shall pay Tenant’s Share of the total amount of Expenses and Taxes for each calendar year during the Term in accordance with Exhibit E hereto.

C. Abatement. Notwithstanding anything in this Lease to the contrary, so long as Tenant is not then in default beyond any applicable notice and cure periods under this Lease, Tenant shall be entitled to an abatement of monthly Base Rent and Tenant’s Share of Expenses and Taxes with respect to the Premises, as originally described in this Lease, with respect to the 4 ^th , 8 ^th , 12 ^th and 85 ^th full calendar months of the Term (collectively, the “Abated Rent”). Only Base Rent and Tenant’s Share of Expenses and Taxes shall be abated pursuant to this Section, as more particularly described herein, and all other rent and other costs and charges specified in this Lease shall remain as due and payable pursuant to the provisions of this Lease.

5. Compliance with Laws; Use.

The Premises shall be used only for the Permitted Use and for no other use whatsoever. Tenant shall not use or permit the use of the Premises for any purpose which is illegal, dangerous to persons or property or which, in Landlord’s reasonable opinion, unreasonably disturbs any other tenants of the Building or the Project or interferes with the operation of the Building or the Project. Tenant shall comply with all Laws, including the Americans with Disabilities Act, regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises. In addition, Tenant shall, at its sole cost and expense, promptly comply with any Laws that relate to the “Base Building” (defined below), but only to the extent such obligations are triggered by Tenant’s use of the Premises, other than for general office use, or Alterations or improvements in the Premises performed or requested by Tenant. Except to the extent that (i) Tenant is responsible for complying with Laws that relate to the Base Building as provided above, or (ii) changes to the Base Building are required due to the negligent or willful acts or omissions of Tenant, its agents, employees or contractors (other than the mere discovery of the violation), Landlord shall be responsible for correcting violations of any Laws existing as of the date of this Lease and Laws that first come into effect after the date of this Lease with respect to the Base Building located in the Building, provided that the cost of such compliance incurred after the Commencement Date shall be included in Expenses to the extent permitted in Exhibit E attached hereto. Tenant shall promptly provide Landlord with copies of any notices it receives regarding an alleged violation of Law; provided, however, if Tenant receives any notice of violation of Laws with respect to the Base Building, Tenant shall, within five (5) business days after receipt thereof, provide Landlord with copies of any such notices it receives with respect to such violation. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Law. Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment. “Base Building” shall include the structural portions of the Building, the public restrooms and the Building mechanical, electrical and plumbing systems and equipment located in the internal core of the Building on the floor or floors on which the Premises are located. Tenant, within ten (10) days after receipt, shall

 

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provide Landlord with copies of any notices it receives regarding a violation or alleged violation of any Laws. Tenant shall comply with the rules and regulations of the Building attached as Exhibit B and such other reasonable rules and regulations adopted by Landlord from time to time and provided to Tenant in writing. Tenant shall also cause its agents, contractors, subcontractors, employees, customers, invitees and subtenants (each a “Tenant Entity” and collectively, the “Tenant Entities”) to comply with all rules and regulations. Landlord shall not discriminate against Tenant in Landlord’s adoption and enforcement of the rules and regulations.

Tenant shall not be liable for any cost or expense related to removal, cleaning, abatement or remediation of Hazardous Materials (as hereafter defined) existing in, on, under or above the Premises Property or Building prior to the date Landlord tenders possession of the Premises to Tenant, including, without limitation, Hazardous Materials in the ground water or soil, except to the extent that any of the foregoing results directly or indirectly from any act or omission by Tenant or any Tenant Entity, or if Tenant has actual knowledge of any existing Hazardous Material, any Hazardous Materials disturbed, distributed or exacerbated (as opposed to the mere discovery of an existing Hazardous Material) by Tenant or any Tenant Entity. To the extent that Tenant or any Tenant Entity discover or exacerbates an existing Hazardous Material, Tenant shall provide prompt written notice of such exacerbation to Landlord. As used herein, “Hazardous Materials” means any flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation by or under any federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of environmentally hazardous materials, substances, or wastes, presently in effect or hereafter adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of such laws or ordinances (“Environmental Laws”).

As of the date hereof, Landlord represents and warrants that it has not received written notice from any governmental agencies that the Building is in violation of any Environmental Laws. Further, to Landlord’s actual knowledge, there are no Hazardous Materials in, at, under or about the Building or Property other than small quantities of Hazardous Materials to the extent customary in similar office buildings and necessary for the normal use, operating and maintenance of the Building and except to the extent set forth in that certain Phase I Environmental Site Assessment, dated May 4, 2005, prepared by LFR Levine-Fricke (the “Phase I Report”). For purposes of this Section, “Landlord’s actual knowledge” shall be deemed to mean and limited to the current actual knowledge of Mike L. Sanford, and not any implied, imputed, or constructive knowledge of said individual or of Landlord or any parties related to or comprising Landlord and without any independent investigation or inquiry having been made or any implied duty to investigate or make any inquiries (other than review of the Phase I Report); it being understood and agreed that such individual shall have no personal liability in any manner whatsoever hereunder or otherwise related to the transactions contemplated hereby. Landlord represents that Mike L. Sanford is the person employed by Landlord with the best knowledge with respect to the foregoing representation.

To the extent Landlord removes asbestos containing materials in connection with performing the Landlord Work, Landlord shall, at Landlord’s sole cost and expense, comply with all applicable Laws, in effect and as applied as of the date Landlord performs such Landlord Work, with respect to such removal (the “Required ACM Remediation”). Landlord shall have the right to contest any alleged Required ACM Remediation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Law. Landlord shall deliver a copy of the O&M Plan for the Building to Tenant on or before May 15, 2008. The O&M Plan shall identify the location of any known asbestos containing materials remaining in the Building and shall set forth any required procedures with respect to work in the affected areas.

Landlord, at its sole cost and expense, shall be responsible for correcting any violations of Laws with respect to the Landlord Work. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or

 

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deferment of compliance, the right to assert any and all defenses allowed by law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by law. Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment. Notwithstanding the foregoing, Tenant, not Landlord, shall be responsible for the correction of any violations that arise out of or in connection with any claims brought under any provision of the Americans With Disabilities Act other than Title III thereof, the specific nature of Tenant’s business in the Premises (other than general office use), the acts or omissions of Tenant or any Tenant Entities, Tenant’s arrangement of any furniture, equipment or other property in the Premises, any repairs, alterations, additions or improvements performed by or on behalf of Tenant (other than the Landlord Work) and any design or configuration of the Premises specifically requested by Tenant after being informed in writing that such design or configuration may not be in strict compliance with Laws.

6. Security Deposit.

The Security Deposit, in the amount set forth in Section 1.H. above, shall be delivered to Landlord upon the execution of this Lease by Tenant and shall be held by Landlord without liability for interest (unless required by Law) as security for the performance of Tenant’s obligations. The Security Deposit is not an advance payment of Rent or a measure of Tenant’s liability for damages. Landlord may, from time to time, without prejudice to any other remedy, use all or a portion of the Security Deposit to satisfy Rent which remains unpaid after notice and the expiration of any applicable cure period or to cure any other default by Tenant which remains uncured after notice and the expiration of any applicable cure period. If Landlord uses the Security Deposit, Tenant shall on demand restore the Security Deposit to its original amount. If Tenant is not in default at the termination of this Lease, Landlord shall return any unapplied balance of the Security Deposit to Tenant within thirty (30) days after Tenant surrenders the Premises to Landlord in accordance with this Lease. In addition to any other deductions Landlord is entitled to make pursuant to the terms hereof, Landlord shall have the right to make a good faith estimate of any unreconciled Expenses and/or Taxes as of the Termination Date and to deduct any anticipated shortfall from the Security Deposit. Such estimate shall be final and binding upon Tenant. If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, or any similar or successor Laws now or hereinafter in effect.

7. Services to be Furnished by Landlord.

A. Landlord agrees to furnish Tenant with the following services: (1) water service for use in the lavatories on each floor on which the Premises are located, twenty-four (24) hours per day, seven (7) days per week, subject to Force Majeure; (2) heat and air conditioning in season during Normal Business Hours, at such temperatures and in such amounts that satisfy the HVAC Operating Criteria (as defined below); provided that (i) Tenant, upon such advance notice as is reasonably required by Landlord (but not to exceed twenty-four (24) hours), shall have the right to receive HVAC service during hours other than Normal Business Hours and (ii) Tenant shall pay Landlord the standard charge for the additional service as reasonably determined by Landlord from time to time, which standard charge shall reflect Landlord’s actual cost (including depreciation) without markup; (3) maintenance and repair of the Property as described in Section 9.B.; (4) janitor service on Business Days. If Tenant’s use, floor covering or other improvements require special services in excess of the standard services for the Building, Tenant shall pay the additional cost attributable to the special services; (5) elevator service; (6) electricity to the Premises for general office use, in accordance with and subject to the terms and conditions in Section 10; and (7) such other services as Landlord reasonably determines are necessary or appropriate for the Building, the Property or the Project. The “HVAC Operating Criteria” shall be not less than the following: (i) cooling season indoor temperatures are not in excess of 73°F-79°F when outdoor temperatures are 91°F ambient, and (ii) heating season indoor temperatures are between 68°F-75°F when outdoor temperatures are at 50°F ambient.

 

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B. Landlord’s failure to furnish, or any interruption or termination of, services due to the application of Laws, the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any event or cause beyond the reasonable control of Landlord (a “Service Failure”) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement. However, notwithstanding the foregoing, if the Premises, or a material portion of the Premises, are made untenantable for a period in excess of five (5) consecutive business days due to a Service Failure, then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period beginning on the sixth (6 ^th ) consecutive business day of the Service Failure and ending on the day the interrupted service has been restored. If the entire Premises have not been rendered untenantable by the Service Failure, the amount of abatement shall be equitably prorated. In no event shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenant’s Property (defined in Section 15), arising out of or in connection with the failure of any security services, personnel or equipment, except to the extent of any loss or damage arising due to any gross negligence or willful misconduct of Landlord or its agents, employees or contractors.

8. Premises Improvements.

All improvements to the Premises (collectively, “Premises Improvements”) shall be owned by Landlord and shall remain upon the Premises without compensation to Tenant; provided, however, that Tenant shall retain title to all furniture, equipment and other moveable personal property (including the personal property listed on Exhibit I attached hereto) brought onto the Premises by or on behalf of Tenant and shall have the right to remove the same from the Premises during the Term (subject to Tenant’s obligation to repair any damage required by such removal). However, Landlord, by written notice to Tenant within forty-five (45) days prior to the Termination Date, may require Tenant to remove, at Tenant’s expense: (1) Cable (defined in Section 9.A) installed by or for the exclusive benefit of Tenant and located in the Premises or other portions of the Building; and (2) subject to the terms of this Section, any Premises Improvements that are performed by or for the benefit of Tenant that Tenant is required to remove pursuant to notice given by Landlord to Tenant at least ten (10) days prior to expiration of the Term (collectively referred to as “Required Removables”). Without limitation, it is agreed that Required Removables include internal stairways, raised floors, personal baths and showers, vaults, rolling file systems and structural alterations and modifications of any type, except as otherwise approved in writing by Landlord. The Required Removables designated by Landlord shall be removed by Tenant before the Termination Date. Tenant shall repair damage caused by the installation or removal of Required Removables. If Tenant fails to remove any Required Removables or perform related repairs in a timely manner, Landlord, at Tenant’s expense, may remove and dispose of the Required Removables and perform the required repairs. Tenant, within ten (10) days after receipt of an invoice, shall reimburse Landlord for the reasonable costs incurred by Landlord. Tenant, at the time it requests approval for a proposed Alteration, including any Initial Alterations, as such term is defined in the Work Letter attached as Exhibit D , may request in writing (as more particularly described below) that Landlord advise Tenant whether the Alteration, including any Initial Alterations, or any portion thereof, is a Required Removable. So long as Tenant’s written request for consent for a proposed alteration or improvements contains the following statement (or a substantially similar statement) in large, bold and capped font (or is otherwise reasonably conspicuous to the reader) “ PURSUANT TO SECTION 8 OF THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT ALTERATION, LANDLORD SHALL NOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL REQUIRE SUCH ALTERATION TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE LEASE. LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN TEN (10) DAYS SHALL BE DEEMED LANDLORD’ ”, at the time Landlord gives its consent for any Alterations, then, Tenant shall also be notified whether or not such Alteration is a Required Removable. Landlord shall respond to Tenant’s request within ten (10) days after receipt of Tenant’s request. If Tenant’s written notice complies with the foregoing and if Landlord fails to so notify Tenant whether Tenant shall be required to remove the subject Alterations at the expiration or earlier termination of this Lease, it shall be deemed that Landlord shall not require the removal of the subject Alterations. Landlord hereby agrees that Tenant shall not be required to remove any portion of the

 

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Initial Alterations to the extent such Initial Alterations or portions thereof constitute standard and customary Class A general office improvements (“Standard Office Improvements”); provided, however that Tenant hereby acknowledges and agrees that (i) Tenant shall be required to remove all Cable, and (ii) any Alterations, including, without limitation, any of the Initial Alterations, that are not, in Landlord’s reasonable discretion, Standard Office Improvements, may be designated by Landlord to be a Required Removable in accordance with the procedure set forth in this paragraph.

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9. Repairs and Alterations.

A. Tenant’s Repair Obligations . Tenant shall, at its sole cost and expense, promptly perform all maintenance and repairs to the Premises that are not Landlord’s express responsibility under this Lease, and shall keep the Premises in good condition and repair, reasonable wear and tear and damage by fire or other casualty excepted. Tenant’s repair obligations include, without limitation, repairs to: (1) floor covering; (2) interior partitions; (3) doors; (4) the interior side of demising walls; (5) electronic, phone and data cabling and related equipment (collectively, “Cable”) that is installed by or for the exclusive benefit of Tenant and located in the Premises or other portions of the Building; (6) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing, and similar facilities located exclusively within the Premises and/or serving Tenant exclusively; and (7) Alterations performed by contractors retained by Tenant, including any related HVAC balancing. All work shall be performed in accordance with the rules and procedures described in Section 9.C. below. If Tenant fails to make any repairs to the Premises for more than ten (10) days after written notice from Landlord (although notice shall not be required if there is an emergency), Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs to Landlord within ten (10) days after receipt of an invoice and reasonable supporting documentation, together with an administrative charge in an amount equal to 10% of the cost of the repairs.

B. Landlord’s Repair Obligations. Landlord shall keep and maintain in good repair and working order and make repairs to and perform maintenance upon: (1) structural elements of the Building (including, without limitation, foundations); (2) mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building; (3) Common Areas (including, without limitation, all driveways, parking areas and landscape areas of the Project); (4) the roof of the Building; (5) exterior areas and windows of the Building; and (6) elevators serving the Building. Landlord shall promptly make repairs (considering the nature and urgency of the repair) for which Landlord is responsible. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932, and Sections 1941 and 1942 of the California Civil Code, or any similar or successor Laws now or hereinafter in effect.

C. Alterations. Tenant shall not make alterations, additions or improvements to the Premises or install any Cable in the Premises or other portions of the Building or the Project (collectively referred to as “Alterations”) without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonable withheld, conditioned or delayed. Notwithstanding anything herein to the contrary, Tenant shall not be required to obtain Landlord’s prior written consent to any Alteration that satisfies all of the following criteria (a “Cosmetic Alteration”): (1) is not visible from the exterior of the Premises or Building; (2) will not affect the systems or structure of the Building or the Project; and (3) costs less than $50,000.00 per floor during the Term of this Lease or $500,000.00 in the aggregate during the Term of this Lease. However, even though consent is not required, (a) the performance of Cosmetic Alterations shall be subject to all the other provisions of this Section 9.C, and (b) if the Cosmetic Alteration involves the relocation of walls or otherwise changes the layout or configuration of the Premises, Tenant shall provide prior written notice to Landlord of such Cosmetic Alterations and shall provide as-built drawings to Landlord within thirty (30) days following completion of such work. Prior to starting work (other than Cosmetic Alterations), Tenant shall furnish Landlord with plans and specifications reasonably acceptable to Landlord; names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Building systems); copies of contracts; necessary permits and approvals; evidence of contractor’s and subcontractor’s insurance in amounts reasonably required by Landlord; and any security for performance that is reasonably required by Landlord. Changes to the plans and

 

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specifications (other than Cosmetic Alterations) must also be submitted to Landlord for its approval, which approval shall not be unreasonably withheld, conditioned or delayed. Alterations shall be constructed in a good and workmanlike manner using materials of a quality that is at least equal to the quality reasonably designated by Landlord as the minimum standard for the Building (provided that, except to the extent required by applicable Laws, such standard shall not exceed the standard for Initial Alterations as approved by Landlord in accordance with the terms hereof). Landlord may designate reasonable rules, regulations and procedures for the performance of work in the Building and the Project which are not inconsistent with the foregoing provisions of this Section 9.C, and, to the extent reasonably necessary to avoid disruption to the occupants of the Building and the Project, shall have the right to reasonably designate the time when Alterations may be performed. Tenant shall reimburse Landlord within ten (10) days after receipt of an invoice accompanied by reasonable supporting documentation for actual reasonable out-of-pocket sums paid by Landlord for third party examination of Tenant’s plans for any Alterations. In addition, within ten (10) days after receipt of an invoice from Landlord, Tenant shall pay Landlord a fee for Landlord’s oversight and coordination of any non-Cosmetic Alterations equal to 2.5% of the cost of the Alterations. For purposes of calculating the foregoing fee, the “cost of the Alterations” shall exclude the cost of purchasing any specialized equipment (i.e., above standard office equipment) to be installed in the Premises, unless such equipment will affect the Building’s systems or structure (in which case, the cost of such equipment shall be included for purposes of calculating Landlord’s construction supervision fee). Upon completion, Tenant shall furnish “as-built” plans (except for Cosmetic Alterations), completion affidavits, full and final waivers of lien in recordable form, and receipted bills covering all labor and materials. Tenant shall assure that the Alterations comply with all insurance requirements and Laws. Landlord’s approval of an Alteration shall not be a representation by Landlord that the Alteration complies with applicable Laws or will be adequate for Tenant’s use.

10. Use of Electrical Services by Tenant.

A. Electricity used by Tenant in the Premises shall, at Landlord’s option, be paid for by Tenant either: (1) through inclusion in Expenses (except as provided in Section 10.B. for excess usage); (2) by a separate charge payable by Tenant to Landlord within thirty (30) days after billing by Landlord accompanied by reasonable supporting documentation; or (3) by separate charge billed by the applicable utility company and payable directly by Tenant. Electrical service to the Premises may be furnished by one or more companies providing electrical generation, transmission and distribution services, and the cost of electricity may consist of several different components or separate charges for such services, such as generation, distribution and stranded cost charges.

B. Tenant’s use of electrical service shall not exceed, either in voltage, rated capacity, use beyond Normal Business Hours or overall load, that which Landlord deems to be standard for the Building. If Tenant requests permission to consume excess electrical service, Landlord may refuse to consent or may condition consent upon conditions that Landlord reasonably elects (including, without limitation, the installation of utility service upgrades, meters, submeters, air handlers or cooling units), and the additional usage (to the extent permitted by Law), installation and maintenance costs shall be paid by Tenant. If Landlord reasonably believes that Tenant’s use of electrical service is above Building standard, Landlord shall have the right to separately meter electrical usage for the Premises, at Tenant’s sole cost and expense, and to measure electrical usage by survey or other commonly accepted methods.

11. Entry by Landlord.

Landlord, its agents, contractors and representatives may enter the Premises to inspect or show the Premises, to clean and make repairs, alterations or additions to the Premises, and to conduct or facilitate repairs, alterations or additions to any portion of the Building or the Project, including other tenants’ premises; provided, however, that Landlord shall not enter the Premises to show the Premises to perspective tenants except during the last six (6) months of the Term or after the occurrence and during the continuation of any default. Notwithstanding the foregoing, except (i) to the extent requested by Tenant, (ii) in connection with scheduled

 

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maintenance programs, and/or (iii) in the event of an emergency, Landlord shall provide to Tenant at least 24 hours’ prior written notice (it being agreed that, for purposes of the foregoing, e-mail and facsimile transmission shall constitute written notice) before Landlord enters the Premises. Except in emergencies or to provide janitorial or security services, such entry shall be during Normal Business Hours. Except in emergencies, Tenant shall be entitled (and Landlord shall reasonably coordinate with Tenant) to have any third parties (such as prospective lenders, purchasers or tenants) so entering the Premises execute Tenant’s standard confidentiality agreement in the form attached hereto as Exhibit G prior to entering the Premises (other than the reception area thereof), provided Tenant makes such employee and confidentiality agreement available at the time Landlord or such other party desires to enter the Premises as set forth in such prior notice to Tenant, and further provided that such confidentiality agreement is in a standard form that Tenant requires all non-employee entrants to the Premises to execute prior to entry to the Premises and is on commercially reasonable terms. The provisions of Section 39 below shall apply to any Confidential Information to which Landlord or Landlord’s employees may have access during any entry to the Premises hereunder. If Tenant requests maintenance, repairs or any special services in the Premises (or if Landlord requires access to the Premises for maintenance or repairs by a third party contractor or third party agent of Landlord), Tenant may request in writing concurrently with its request (or in the event of Landlord’s proposed access for repairs and maintenance, within 12 hours of Landlord’s notice to Tenant) that any third party contractor or third party agent of Landlord that enters the Premises in connection with such maintenance, repairs or services sign Tenant’s standard confidentiality agreement as provided above. Upon such a Tenant request, or in connection with janitorial or other scheduled maintenance at the Premises, Landlord shall provide Tenant with contact information for the applicable agent or contractor so that Tenant may pursue such an agreement, and in all events except in emergencies, Landlord shall not allow such third party access to the Premises until Tenant confirms to Landlord that it has obtained such agreement or waived the requirement for such agreement. If Tenant requires a confidentiality agreement from any such third party, Landlord shall not be responsible for any delays that occur as a result of such requirement in Landlord’s response to Tenant’s request for repairs or services. Nothing in the foregoing shall prohibit Landlord from accessing the Premises with a third party contractor or third party agent without such an agreement in an event of emergency or, following a reasonable period in which Landlord allows Tenant to seek such an agreement, to the extent reasonably necessary to perform maintenance and repairs to the Premises and the Building.

If reasonably necessary for the protection and safety of Tenant and its employees, Landlord shall have the right to temporarily close all or a portion of the Premises to perform repairs, alterations and additions. Entry by Landlord shall not constitute constructive eviction or entitle Tenant to an abatement or reduction of Rent. Except in emergency situations, as determined by Landlord, Landlord shall exercise reasonable efforts to perform any entry into the Premises in a manner that is reasonably designed to minimize interference with the operation of Tenant’s business in the Premises.

Notwithstanding the foregoing, Tenant, at its own expense, may designate the data closets located in the Premises as a “Secured Area” and provide its own locks to such area (“Secured Area”). Tenant need not furnish Landlord with a key, but upon the Termination Date or earlier expiration or termination of Tenant’s right to possession, Tenant shall surrender all such keys to Landlord. If Landlord must gain access to a Secured Area in a non-emergency situation (i.e., to perform Landlord’s maintenance and repair obligations within the Premises), Landlord shall contact Tenant in writing or orally, and Landlord and Tenant shall arrange a mutually agreed upon time for Landlord to have such access, no less than twenty-four (24) hours thereafter. Landlord shall comply with all reasonable security measures pertaining to the Secured Area. If Landlord determines in its sole discretion that an emergency in the Building or the Premises, including, without limitation, a suspected fire or flood, requires Landlord to gain access to the Secured Area, Tenant hereby authorizes Landlord to forcibly enter the Secured Area. In such event, Landlord shall have no liability whatsoever to Tenant, and Tenant shall pay all reasonable expenses (including any deductible) incurred by Landlord in repairing or reconstructing any entrance, corridor, door or other portions of the Premises damaged as a result of a forcible entry by Landlord; provided, however, that Landlord shall apply any insurance proceeds Landlord actually receives toward the cost of such repair and reconstruction. Landlord shall have no obligation to provide any maintenance or janitorial service in the Secured Area.

 

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12. Assignment and Subletting.

A. Tenant shall not assign, sublease, transfer or encumber any interest in this Lease or allow any third party to use any portion of the Premises (collectively or individually, a “Transfer”) without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed if Landlord does not elect to exercise its termination rights under Section 12.B below. Without limitation, it is agreed that Landlord’s consent shall not be considered unreasonably withheld if: (1) upon giving appropriate weight, if applicable, to the fact that Tenant will nevertheless remain liable under this Lease (to the extent permitted by applicable Law), the proposed assignee or subtenant does not possess adequate financial capability to assure the performance of the Tenant obligations as and when due or required; (2) the proposed transferee’s business is not suitable for the Building or the Project, or would result in a violation of any other tenant’s exclusive rights, provided that Landlord has delivered written notice to Tenant of such rights (not to exceed seven (7) competitor names); (3) the proposed transferee is a governmental agency or the proposed transferee is an occupant of the Building, the Property or the Project (provided, however, that Landlord will not withhold its consent solely because the proposed subtenant or assignee is an occupant of the Building if Landlord does not have space available for lease in the Building that is comparable to the space Tenant desires to sublet or assign. Landlord shall be deemed to have comparable space if it has, or will have, space available on any floor of the Building that is approximately the same size as the space Tenant desires to sublet or assign within 6 months of the proposed commencement of the proposed sublease or assignment); (4) Tenant is in default after the expiration of the notice and cure periods in this Lease; or (5) any portion of the Premises, the Building or the Project would likely become subject to additional or different Laws as a consequence of the proposed Transfer and the proposed transferee or Tenant is unwilling to pay all costs of complying with such Law(s). Tenant shall not be entitled to receive any consequential, special or indirect damages based upon a claim that Landlord unreasonably withheld its consent to a proposed Transfer. Instead, any such claim of Tenant shall be limited to the foreseeable, direct and actual damages incurred by Tenant. Tenant hereby waives the provisions of Section 1995.310 of the California Civil Code, or any similar or successor Laws, now or hereinafter in effect, and all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all applicable Laws, on behalf of the proposed transferee. Any attempted Transfer in violation of this Section shall, at Landlord’s option, be void. Consent by Landlord to one or more Transfer(s) shall not operate as a waiver of Landlord’s rights to approve any subsequent Transfers. In no event shall any Transfer or Permitted Transfer (as defined below) release or relieve Tenant from any obligation under this Lease.

B. As part of its request for Landlord’s consent to a Transfer, Tenant shall provide Landlord with financial statements for the proposed transferee, a complete copy of the proposed assignment, sublease and other contractual documents and such other information as Landlord may reasonably request. Landlord shall, by written notice to Tenant within twenty-one (21) days of its receipt of the required information and documentation, either: (1) consent to the Transfer by the execution of a consent agreement in a form reasonably designated by Landlord or reasonably refuse to consent to the Transfer in writing; or (2) exercise its right to terminate this Lease, if Tenant is proposing to assign the Lease, or with respect to the portion of the Premises that Tenant is proposing to sublet if the proposed sublease (if approved) would result in 50% or more of the Tenant’s Premises being subject to sublease or if the proposed sublease term, with or without renewal options relating thereto, is for more than 50% of the then remaining Term of this Lease. Any such termination shall be effective on the proposed effective date of the Transfer for which Tenant requested consent. Tenant shall reimburse Landlord for Landlord’s actual, reasonable, out-of-pocket costs and expenses (including reasonable attorney’s fees) (the “Review Reimbursement”).

C. Tenant shall pay Landlord 50% of all rent and other consideration which Tenant receives as a result of a Transfer that is in excess of the Rent payable to Landlord for the portion of the Premises and Term covered by the Transfer. Tenant shall pay Landlord for Landlord’s share of any excess within twenty-one (21) days after Tenant’s receipt of such excess consideration. Tenant may deduct from the excess the following reasonable and customary expenses directly incurred by Tenant attributable to the Transfer (other than Landlord’s review fee):

 

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brokerage fees, legal fees and construction costs directly incurred by Tenant attributable to the Transfer, amortized on a straight-line basis, over the entire period for which Tenant is to receive excess Rent. If Tenant is in default (defined in Section 19.A. below) beyond applicable notice and cure periods, Landlord may require that all sublease payments be made directly to Landlord.

D. If Tenant is a corporation, limited liability company, partnership, or similar entity, and if the entity which owns or controls a majority of the voting shares/rights at any time changes for any reason (including but not limited to a merger, consolidation or reorganization), such change of ownership or control shall constitute a Transfer. The foregoing shall not apply so long as Tenant is an entity whose outstanding stock is listed on a recognized security exchange, or if at least 80% of its voting stock is owned by another entity, the voting stock of which is so listed.

E. So long as Tenant is not entering into the Permitted Transfer for the purpose of avoiding or otherwise circumventing the remaining terms of this Section 12, Tenant may assign its entire interest under this Lease, without the consent of Landlord, to (a) an affiliate, subsidiary, or parent of Tenant, or a corporation, partnership or other legal entity wholly owned by Tenant (collectively, an “Affiliated Party”), or (b) a successor to Tenant by purchase, merger, consolidation or reorganization, provided that all of the following conditions are satisfied (each such transfer a “Permitted Transfer” and any such assignee or sublessee of a Permitted Transfer, a “Permitted Transferee”): (i) Tenant is not in default under this Lease; (ii) the Permitted Use does not allow the Premises to be used for retail purposes; (iii) Tenant shall give Landlord written notice at least twenty-one (21) days prior to the effective date of the proposed Permitted Transfer (provided, however, that if Tenant is prohibited by applicable Laws or by contract from disclosing the proposed Permitted Transfer and/or the proposed Permitted Transferee prior to the effective date of the Permitted Transfer, Tenant shall provide written notice of such Permitted Transfer to Landlord within thirty (30) days following the effective date of such Permitted Transfer); (iv) with respect to a proposed Permitted Transfer to an Affiliated Party, Tenant continues to have a net worth equal to or greater than Tenant’s net worth as of the day immediately prior to the proposed Transfer; and (v) with respect to a purchase, merger, consolidation or reorganization or any Permitted Transfer which results in Tenant ceasing to exist as a separate legal entity, (A) Tenant’s successor shall own all or substantially all of the assets of Tenant, and (B) Tenant’s successor shall have a net worth which is at least equal to the greater of Tenant’s net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization. Tenant’s notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, Tenant’s successor shall sign a commercially reasonable form of assumption agreement. As used herein, (1) “parent” shall mean a company which owns a majority of Tenant’s voting equity; (2) “subsidiary” shall mean an entity wholly owned by Tenant or at least 51% of whose voting equity is owned by Tenant; and (3) “affiliate” shall mean an entity controlled, controlling or under common control with Tenant.

13. Liens.

Tenant shall not permit mechanic’s or other liens to be placed upon the Premises, Building, Property, Project or Tenant’s leasehold interest in connection with any work or service done or purportedly done by or for benefit of Tenant. If a lien is so placed, Tenant shall, within twenty (20) days the filing of the lien, fully discharge the lien by settling the claim which resulted in the lien or by bonding or insuring over the lien in the manner prescribed by the applicable lien Law. If Tenant fails to discharge, bond or insure over the lien within such twenty (20) day period, then, in addition to any other right or remedy of Landlord, Landlord may bond or insure over the lien or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to bond or insure over the lien or discharge the lien, including, without limitation, reasonable, out-of-pocket attorneys’ fees (if and to the extent permitted by Law) within ten (10) days after receipt of an invoice from Landlord, accompanied by reasonable supporting documentation.

 

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14. Indemnity and Waiver of Claims.

A. Tenant shall indemnify and defend Landlord and save it harmless from and against any and all claims, suits, actions, proceedings, liability, damages, costs or expenses, including attorneys’ and experts’ fees and court costs, arising (i) from any act, omission, or negligence of Tenant or its officers, contractors, licensees, agents, employees, guests, invitees, or visitors in or about the Premises, (ii) from Tenant’s use or occupancy of the Premises or the business conducted by Tenant therein, (iii) from any breach or default under this Lease by Tenant, (iv) from or relating to the enforcement by Landlord of the provision of this Lease as against Tenant, (v) from any accident, injury, or damage, howsoever and by whomsoever caused, to any person or property, occurring in the Premises, or (vi) from any injury or damage to any person or property occurring outside of the Premises in the Building or the Property caused by Tenant or any Tenant Entity. This provision shall not be construed to make Tenant responsible for loss, damage, liability or expense resulting from the injuries to third parties caused solely and directly by the negligence or willful misconduct of Landlord or trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined in Section 26) and agents (“Landlord Parties”). The provisions of this Section shall survive the expiration or termination of this Lease.

B. Landlord shall protect, indemnify and hold Tenant harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any damage to any property (including but not limited to property of Tenant) or any injury (including but not limited to death) to any person occurring in, on or about the common areas of the Building to the extent that such injury or damage shall be caused by or arise from the active negligence or willful misconduct of Landlord or any of Landlord’s agents or employees.

C. Landlord and the Landlord Parties shall not be liable for, and Tenant waives, all claims for loss or damage to Tenant’s business or loss, theft or damage to Tenant’s Property or the property of any person claiming by, through or under Tenant resulting from: (1) wind or weather; (2) the failure of any sprinkler, heating or air-conditioning equipment, any electric wiring or any gas, water or steam pipes; (3) the backing up of any sewer pipe or downspout; (4) the bursting, leaking or running of any tank, water closet, drain or other pipe; (5) water, snow or ice upon or coming through the roof, skylight, stairs, doorways, windows, walks or any other place upon or near the Building or the Project; (6) any act or omission of any party other than Landlord or Landlord Parties; and (7) any causes not reasonably within the control of Landlord.

15. Insurance. Tenant shall maintain in full force and effect during the entire term of this Lease, at its own cost and expense, the following policies of insurance:

A. Commercial General Liability Insurance and Umbrella Liability Insurance. Tenant shall carry Commercial General Liability insurance and Umbrella Liability insurance in an amount equal to that currently maintained by Tenant, but not less than $ 2,000,000 each occurrence. If such CGL insurance contains a general aggregate limit, it shall apply separately to this location. Said policy shall provide coverage for bodily injury, property damage and advertising/personal injury arising from premises, operations, independent contractors, products-completed operations, and liability assumed under an insured contract. Not more frequently than once each three (3) years, if, in the opinion of Landlord the amount of Commercial General Liability insurance coverage at that time is not adequate, Tenant shall increase the insurance coverage as reasonably required by Landlord not more than the amount customarily required by landlords for comparable buildings.

B. Commercial Automobile Insurance and Umbrella Liability Insurance. Tenant shall carry Commercial Automobile insurance and Umbrella Liability insurance in an amount equal to that currently maintained by Tenant, but not less than $1,000,000 each accident. Such insurance shall cover liability arising out of any auto (including owned, hired and non-owned autos).

 

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C. Workers’ Compensation Insurance and Employers’ Liability Insurance. Tenant shall carry Worker’s Compensation insurance as required by law and Employer’s Liability insurance in an amount equal to that currently maintained by Tenant, but not less than the following:

1. Bodily Injury by Accident: $1,000,000 each accident;

2. Bodily Injury by Disease: $1,000,000 policy limit; and

3. Bodily Injury by Disease: $1,000,000 each employee.

D. Commercial Property Insurance. Tenant shall carry Commercial Property insurance covering the Premises including fixtures, inventory, equipment, furniture and other personal property (collectively, “Tenant’s Property”), Premises Improvements, Alterations and betterments and all other content of the Premises and (if any, such as installed by or for Tenant) all mechanical, plumbing, heating, ventilating, air conditioning, electrical. The policy shall, at minimum, cover the perils insured under the ISO Special Causes of Loss Form (CP 10 30), but must include coverage for the following: vandalism, malicious mischief, sprinkler leakage. Such insurance shall be in an amount equal to 100% of the full replacement cost. Any coinsurance requirement in the policy shall be eliminated through the attachment of an agreed amount endorsement, or as is otherwise appropriate under the particular policy form. The proceeds of such insurance, so long as this Lease remains in effect, shall be used to repair and/or replace the Premises, and the Leasehold Improvements, fixtures, glass, equipment, mechanical, plumbing, heating, ventilating, air conditioning, electrical, telecommunication and other equipment, systems and facilities so insured. Because this Property is located in a zone known for the hazard of Earthquakes, Tenant shall also purchase Earthquake coverage with a limit equal to the full replacement cost of the property described in this Section 15.D.

E. Business Interruption or Rental Loss Insurance . Tenant shall carry Business Interruption or Rental Loss insurance sufficient to cover, for a period of not less than one (1) year, all rental, expense and other payment obligations of Tenant under this Lease, including, without limitation, Base Rent and adjustments thereto and Taxes, Expenses and all other costs, fees, charges and payments which would be borne by or due from Tenant under this Lease if the Premises and Tenant’s business were fully open and operating.

F. Tenant shall also carry any other forms of insurance Landlord may reasonably require from time to time, in form and amounts and for insurance risks against which a prudent Tenant of comparable size in a comparable business would protect itself.

G. Form of Insurance. All insurance required to be carried by Tenant hereunder:

1. shall be issued by insurance carriers authorized to conduct business in the state in which the Premises are located and with an A.M. Best’s guide rating of no less than A- VII;

2. shall be written as primary insurance over any insurance purchased by Landlord;

3. shall contain a provision whereby each insurer agrees to give Landlord at least ten (10) days’ prior written notice of any cancellation;

4. may provide for a deductible so long as the deductible does not exceed $25,000 per occurrence. Notwithstanding the foregoing, Landlord hereby agrees that Tenant’s insurance policies may provide for an earthquake deductible equal to 10% of the claim with a $50,000.00 minimum, a Personal & Advertising Injury deductible equal to $500,000.00 and a workers’ compensation deductible in an amount equal to $150,000.00 per loss and $1,000,000.00 aggregate. Any increase in such deductibles shall be subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed;

 

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5. shall be written on an “occurrence” basis (except for Tenant’s Personal & Advertising Injury Policy, which may be on a “claims made” basis). Except as expressly provided with respect to Tenant’s Personal & Advertising Injury Policy, any policies underwritten as “claims made” will not satisfy the insurance requirements outlined in this Section;

6. shall not be modified to reduce the extent of coverage or limits required herein without the prior written consent of Landlord;

7. with respect to the Commercial General Liability, Commercial Automobile Liability policies, Tenant shall ensure that the following are added by endorsement under the ISO (CG 20 11) or comparable form (it being agreed that a “Designated Insured” endorsement shall be sufficient as to the Commercial Automobile Liability policies) as additional insureds to the policies: Landlord, its parent companies, subsidiaries, affiliate companies and partnerships and all of its directors, officers, agents, representatives and employees; and

8. with respect to Commercial Property insurance shall be provided under the form ACORD 24, and certificates of all other insurance and appropriate endorsements shall be provided under the form ACORD 25, said certificates shall be provided to Landlord five (5) days prior to occupancy and evidence of renewal shall be provided to Landlord concurrent with the expiry of each policy.

H. Failure to Maintain. If Tenant shall fail to acquire and maintain the insurance required pursuant to this Section, Landlord may, in addition to any other rights and remedies available to Landlord, but shall not be obligated to, acquire such insurance and pay the premiums therefor, which premiums shall be payable by Tenant to Landlord immediately upon demand.

I. Blanket Insurance. Tenant may, at its option, satisfy its insurance obligations hereunder by policies of so-called blanket insurance carried by Tenant provided that the same shall, in all respects, comply with the provision hereof. In such event, Tenant shall not be deemed to have complied with its obligation hereunder until Tenant shall have obtained and delivered to Landlord a certificate of insurance with appropriate endorsements, or upon Landlord’s reasonable request, a copy of said policy with endorsements.

J. Insurance Maintained by Landlord . Landlord shall obtain and keep in force during the Term Commercial General Liability insurance, Commercial Property insurance and Boiler & Machinery insurance covering the Building, Property and permanent Tenant improvements provided by Landlord, with coverages and in amounts deemed prudent by Landlord from time to time. Tenant shall pay to Landlord as Additional Rent Tenant’s Share of the cost of the premiums for all such insurance and the reasonable cost of Landlord’s insurance consultants. Notwithstanding any contribution by Tenant to the cost of insurance premiums as provided herein, Tenant acknowledges that Tenant has no right to receive any proceeds from any insurance policies carried by Landlord.

16. Subrogation.

Landlord and Tenant hereby waive any recovery of damages against each other (including their employees, officers, directors, agents, or representatives) for loss or damage to the building, Tenant improvements and betterments, fixtures, equipment, and any other personal property to the extent covered by commercial property insurance or boiler and machinery insurance required above. If the commercial property insurance and boiler and machinery insurance purchased by Tenant or Landlord as required above do not expressly allow the insured to waive rights of subrogation prior to loss, Tenant and Landlord shall cause the policies to be endorsed with a waiver of subrogation to the extent described in this Section 16. The cost of the endorsement, if any, shall be borne exclusively by Tenant and Landlord respectively.

 

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17. Casualty Damage.

A. If all or any part of the Premises is damaged by fire or other casualty, Tenant shall notify Landlord in writing as promptly as reasonably practicable. During any period of time that all or a material portion of the Premises is rendered untenantable as a result of a fire or other casualty, the Rent shall abate for the portion of the Premises that is untenantable and not used by Tenant. Landlord shall have the right to terminate this Lease if: (1) the Building shall be damaged by fire or casualty and such fire or casualty damage cannot, in the ordinary course, reasonably be expected to be repaired within two hundred ten (210) days from the time that repair work would commence; (2) Landlord is not permitted by Law to rebuild the Building or the Project in substantially the same form as existed before the fire or casualty; (3) the Premises have been materially damaged and there is less than eighteen (18) months of the Term remaining on the date of the casualty; (4) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt; or (5) a material uninsured loss to the Building or the Project occurs. Landlord may exercise its right to terminate this Lease by notifying Tenant in writing within ninety (90) days after the date of the casualty. If Landlord does not terminate this Lease, Landlord shall commence and proceed with reasonable diligence to repair and restore the Building and the Premises Improvements (excluding any Alterations that were performed by Tenant in violation of this Lease). However, in no event shall Landlord be required to spend more than the insurance proceeds received by Landlord; provided, however, that if Landlord elects not to fully restore the Premises, Landlord shall notify Tenant in writing as promptly as reasonably practicable. Landlord shall not be liable for any loss or damage to Tenant’s Property or to the business of Tenant resulting in any way from the fire or other casualty or from the repair and restoration of the damage. Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Section, and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease. Tenant shall have the right to terminate this Lease if: (a) a substantial portion of the Premises has been damaged by fire or other casualty and such damage cannot reasonably be repaired (as reasonably determined by Landlord) within 60 days after Landlord’s receipt of all required permits to restore the Premises; (b) there is less than eighteen (18) months of the Term remaining on the date of such casualty; and (c) Tenant provides Landlord with written notice of its intent to terminate within thirty (30) days after the date of the fire or other casualty. In addition, if (A) Landlord has not exercised its termination right pursuant to this Section 17.A, (B) all or a material portion of the Premises is untenantable and not used by Tenant, and (C) Landlord delivers written notice to Tenant that Landlord elects not to rebuild or fully restore the Premises, Tenant shall have the right to terminate this Lease by delivering written notice thereof to Landlord within ten (10) business days following Tenant’s receipt of Landlord’s notice that Landlord will not rebuild or fully restore the Premises.

B. If all or any portion of the Premises shall be made untenantable by fire or other casualty, Landlord shall, with reasonable promptness, cause an architect or general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of the amount of time required to substantially complete the repair and restoration of the Premises and make the Premises tenantable again, using standard working methods (“Completion Estimate”). If the Completion Estimate indicates that the Premises cannot be made tenantable within two hundred ten (210) days from the date the repair and restoration is started, then regardless of anything in Section 17.A above to the contrary, either party shall have the right to terminate this Lease by giving written notice to the other of such election within ten (10) days after receipt of the Completion Estimate. Notwithstanding the foregoing, if Tenant was entitled to but elected not to exercise its right to terminate the Lease and Landlord does not substantially complete the repair and restoration of the Premises within two (2) months after the expiration of the estimated period of time set forth in the Completion Estimate, which period shall be extended to the extent of any Reconstruction Delays, then Tenant may terminate this Lease by written notice to Landlord within fifteen (15) days after the expiration of such period, as the same may be extended. For purposes of this Lease, the term “Reconstruction Delays” shall mean: (i) any delays caused by the insurance adjustment process; (ii) any delays caused by Tenant; and (iii) any delays caused by events of Force Majeure.

C. The provisions of this Lease, including this Section 17, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the

 

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Building, the Property or the Project, and any Laws, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any similar or successor Laws now or hereinafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building, the Property or the Project.

18. Condemnation.

Either party may terminate this Lease if the whole or any material part of the Premises shall be taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building, Property or Project which would leave the remainder of the Building or the Project unsuitable for use as an office building or an office project in a manner comparable to the use of the Building or the Project prior to the Taking. In order to exercise its right to terminate the Lease, Landlord or Tenant, as the case may be, must provide written notice of termination to the other within forty-five (45) days after the terminating party first receives notice of the Taking. Any such termination shall be effective as of the date the physical taking of the Premises or the portion of the Building, Property or Project occurs. If this Lease is not terminated, the rentable square footage of the Building, the rentable square footage of the Premises, the Building’s allocable percentage of the Project and Tenant’s Share shall, if applicable, be appropriately adjusted. In addition, Rent for any portion of the Premises taken or condemned shall be abated during the unexpired Term of this Lease effective when the physical taking of the portion of the Premises occurs. All compensation awarded for a Taking, or sale proceeds, shall be the property of Landlord, any right to receive compensation or proceeds being expressly waived by Tenant. However, Tenant may file a separate claim at its sole cost and expense for Tenant’s Property and Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the award which would otherwise be receivable by Landlord. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure, or any similar or successor Laws.

Should any part of the Premises be so taken or condemned during the Term hereof, and should this Lease not be terminated in accordance with the foregoing provisions, and the holder of any mortgage which includes the Premises as part of the mortgaged premises or any ground lessor of any ground lease which includes the Project as part of the demised premises allows the net condemnation proceeds to be applied to the restoration of the Building, Landlord agrees that after the determination of the net amount of condemnation proceeds available to Landlord, Landlord shall use due diligence to put what may remain of the Premises into proper condition for use and occupation as nearly like the condition of the Premises prior to such taking as shall be practicable (excluding Tenant’s Property). If such net condemnation proceeds are not allowed by such mortgagee or ground lessor to be applied to, or are otherwise insufficient for, the restoration of the Building (and/or the Project) and if Landlord does not otherwise elect to spend the additional funds necessary to fully restore the Building (and/or the Project), then Landlord shall give notice (“Landlord’s Insufficient Condemnation Proceeds Notice”) to Tenant that Landlord does not elect to fund the amount of the insufficiency and Tenant shall thereafter have the right to terminate this Lease by providing Landlord with a notice of termination within thirty (30) days after Tenant’s receipt of Landlord’s Insufficient Condemnation Proceeds Notice (the effective date of which termination shall not be less than sixty (60) days after the date of such notice of such termination).

In the event of a taking of the Premises or any part thereof for temporary use, (a) this Lease shall be and remain unaffected thereby except that Rent shall proportionately abate, and (b) Landlord shall be entitled to receive for itself such portion or portions of any award made for such use with respect to the period of the taking. For purpose of this paragraph, a temporary taking shall be defined as a taking for a period of three hundred sixty-five (365) days or less.

 

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19. Events of Default.

Tenant shall be considered to be in default of this Lease upon the occurrence of any of the following “Events of Default”:

A. Tenant’s failure to pay when due all or any portion of the Rent when due (“Monetary Default”) and such failure shall continue for a period of five (5) days after written notice that such payment was not made when due. However, if Landlord provides Tenant with notice of Tenant’s failure to timely pay Rent on two (2) occasions during any twelve (12) month period, Tenant’s subsequent failure to pay Rent when due shall be an Event of Default without notice.

B. Tenant’s failure (other than a Monetary Default) to comply with any term, provision or covenant of this Lease, if the failure is not cured within thirty (30) days after written notice to Tenant. However, if Tenant’s failure to comply cannot reasonably be cured within thirty (30) days, Tenant shall be allowed additional time (not to exceed ninety (90) days, subject to a day for day extension for events of Force Majeure, provided that Tenant is diligently prosecuting the cure to completion) as is reasonably necessary to cure the failure so long as: (1) Tenant commences to cure the failure within thirty (30) days, and (2) Tenant diligently pursues a course of action that will cure the failure and bring Tenant back into compliance with the Lease. However, if Tenant’s failure to comply creates a hazardous condition, the failure must be cured as quickly as reasonably possible, given the nature of the hazardous condition, following notice to Tenant. In addition, if Landlord provides Tenant with notice of Tenant’s failure to comply with any particular term, provision or covenant of the Lease on three (3) occasions during any twelve (12) month period, Tenant’s subsequent violation of such term, provision or covenant shall, at Landlord’s option, be an incurable Event of Default by Tenant.

C. Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due.

D. The leasehold estate is taken by process or operation of Law.

E. Tenant has failed to provide an estoppel certificate within the time periods provided in Section 26 below.

F. Tenant is in default beyond applicable notice and cure periods under the Parking Agreement attached hereto as Exhibit F.

20. Remedies.

A. Upon the occurrence of any Event or Events of Default under this Lease, whether enumerated in Section 19 or not, Landlord shall have the option to pursue any one or more of the following remedies without any notice (except as expressly prescribed herein) or demand whatsoever (and without limiting the generality of the foregoing, Tenant hereby specifically waives notice and demand for payment of Rent or other obligation, except for those notices specifically required pursuant to the terms of Section 19 or this Section 20, and waives any and all other notices or demand requirements imposed by applicable law):

1. Terminate this Lease and Tenant’s right to possession of the Premises and recover from Tenant an award of damages equal to the sum of the following:

(a) The Worth at the Time of Award of the unpaid Rent which had been earned at the time of termination;

 

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(b) The Worth at the Time of Award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such Rent loss that Tenant affirmatively proves could have been reasonably avoided;

(c) The Worth at the Time of Award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that Tenant affirmatively proves could be reasonably avoided;

(d) Any other amount necessary to compensate Landlord for all the detriment either proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and

(e) All such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time under applicable law.

The “Worth at the Time of Award” of the amounts referred to in parts (a) and (b) above, shall be computed by allowing interest at the lesser of a per annum rate equal to: (i) the greatest per annum rate of interest permitted from time to time under applicable law, or (ii) the Prime Rate plus 5%. For purposes hereof, the “Prime Rate” shall be the per annum interest rate publicly announced as its prime or base rate by a federally insured bank selected by Landlord in the State of California. The “Worth a