EXHIBIT 10.2 SUBLEASE AGREEMENT

EXHIBIT 10.2

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (“Sublease”) is made and entered into by Sublandlord and Subtenant as of August 5, 2003. For valuable consideration, the receipt and adequacy of which are hereby acknowledged, Sublandlord and Subtenant agree as follows:

 

ARTICLE 1 — BASIC SUBLEASE INFORMATION

 

1.1 Definitions . In addition to the terms that are defined elsewhere in this Sublease, the following defined terms are used in this Sublease:

 

(a)

Sublandlord: Vignette Corporation, a Delaware corporation.

 

(b)

Sublandlord’s Address for Notices and Rent Payments:

 

1601 S. MoPac Expressway

 

Austin, TX 78746

 

Attn: Real Estate Manager

 

All Rent and any other amounts owed by Subtenant to Sublandlord under this Sublease shall be sent to the following address:

 

(c)

Subtenant: Salesforce.com, a Delaware corporation.

 

(d)

Subtenant’s Address: Landmark @ One Market

 

One Market Street, 3rd Floor

 

San Francisco, CA 94105-5106

 

(e)

Project: The land and building located at Landmark @ One Market, One Market Street, San Francisco, California. The term “Project expressly excludes the “Annex” (as defined in the Master Lease).

 

(f)

Premises: The premises leased by Sublandlord pursuant to the Master Lease (defined below), containing 74,716 square feet of space on the 7 th and 8 th floors of the Building.

 

(g)

Building: The Building located on the Project.

 

(h)

Subleased Premises. The entire 7 th floor of the Building containing 37,488 rentable square feet, as shown on Exhibit A attached hereto.

 

(i)

Tenant’s Percentage Share: 10.353% (determined by dividing the Rentable Area of the Subleased Premises by the Rentable Area of the Building and multiplying the resulting quotient by 100 and rounding to the 3rd decimal place).

 

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(j)

Security Deposit: $193,688.00. At Subtenant’s option, the Security Deposit may be in the form of an unconditional, clean, irrevocable standby letter of credit, acceptable to Sublandlord in Sublandlord’s reasonable discretion.

 

(k)

Term: Approximately 34-1/2 months, beginning on the Commencement Date and expiring on the Expiration Date.

 

(l)

Delivery Date: the first business day following the later of (i) the effective date of Master Landlord’s written consent to this Sublease, and (ii) Sublandlord’s substantial completion of its obligations (excluding punch-list items) set forth in Section 3.1(a) below.

 

(m)

Commencement Date: the later of (i) August 1, 2003 and (ii) 15 days after the Delivery Date.

 

(n)

Expiration Date: June 13, 2006.

 

(o)

Monthly Rent: $96,844.00 per month ($31.00 per square foot per year), beginning on the date which is 90 days after the Commencement Date and ending on the Expiration Date.

 

(p)

Parking Spaces: Subtenant shall not be entitled to the use of any parking spaces in connection with this Sublease.

 

(q)

Brokers:

 

(1)

Sublandlord’s Broker: Cushman & Wakefield of Colorado, Inc.

 

(2)

Subtenant’s Broker: Jones Lang LaSalle

 

(r)

Master Lease: Office Lease dated April 23, 2001, between TMG\One Market, L.P., a Delaware limited partnership, as Landlord, and Epicentric, Inc., predecessor-in-interest to Sublandlord, as Tenant, a true and correct copy of which is attached hereto as Exhibit B.

 

(s)

Additional Rent: All other amounts due and payable by Subtenant under this Sublease other than Monthly Rent.

 

(t)

Rent: The Monthly Rent and Additional Rent.

 

(u)

Base Year: 2004.

 

If any other provision of this Sublease contradicts any definition of this Article, the other provision will prevail. Any capitalized term which is not defined in this Sublease shall have the meaning for such term set forth in the Master Lease.

 

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1.2 Exhibits . The following exhibits are attached to this Sublease and are made part of this Sublease:

 

EXHIBIT A—The Subleased Premises

EXHIBIT B—Master Lease

EXHIBIT C—Master Sublease

EXHIBIT D—Furniture

 

ARTICLE 2 — AGREEMENT

 

2.1 Agreement . Sublandlord subleases the Subleased Premises to Subtenant, and Subtenant subleases the Subleased Premises from Sublandlord, according to the terms of this Sublease.

 

2.2 Term . The term of this Sublease will begin on the Commencement Date, and will end on the Expiration Date; provided, however, that, except as expressly set forth in this Sublease, this Sublease shall automatically terminate upon a termination for any reason whatsoever of the Master Lease. Notwithstanding the foregoing, from and after the date upon which Sublandlord receives the Master Landlord Consent (as defined in Section 9.4 hereof), Sublandlord shall allow Subtenant limited access to the Subleased Premises prior to the Commencement Date to begin installing equipment, fixtures, cabling and any other improvements desired by Subtenant. Any such use of the Subleased Premises is also subject to, and Subtenant must comply with and observe, all applicable laws, Building rules and all other terms and conditions of this Sublease and the Master Lease. If Subtenant conducts business in the Subleased Premises prior to the Commencement Date, the Commencement Date shall be advanced hereunder such that, notwithstanding anything to the contrary set forth herein, the Commencement Date shall be the first business day Subtenant conducts business in the Subleased Premises.

 

ARTICLE 3 — DELIVERY OF SUBLEASED PREMISES

 

3.1 Delivery of Possession .

 

(a) Sublandlord will deliver possession of the Subleased Premises to Subtenant, and Subtenant will accept the Subleased Premises “AS-IS” in their present condition on the Delivery Date. Within 10 business days after the Delivery Date, Sublandlord shall (i) deliver all furniture and audio visual equipment listed on Exhibit D attached hereto (the “Furniture”) to the Subleased Premises, and (ii) remove from the Subleased Premises the personal property, equipment and trade fixtures of Sublandlord that are not listed on Exhibit D. Notwithstanding the foregoing, in the event that certain parts or panels are not in the current inventory of Sublandlord’s contractor, Sublandlord shall not be in default of this Sublease so long as Sublandlord diligently pursues the installation of such items after they become available.

 

(b) Subtenant acknowledges that neither Sublandlord nor its agents or employees have made any representations or warranties as to the suitability or fitness of the Subleased Premises for the conduct of Subtenant’s business or as to the physical condition or actual dimensions of the Subleased Premises or the Building, nor has Sublandlord or its agents or employees agreed to undertake any alterations or construct any tenant improvements to the Subleased Premises, except as set forth on Exhibit D. Sublandlord shall deliver to Subtenant all existing keys for any keyed doors in the Subleased Premises and for elevator access, if necessary.

 

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(c) On or before the first business day following Sublandlord’s completion of its obligations set forth in Section 3.1(a) above, representatives from both Sublandlord and Subtenant shall conduct a walk through and videotape the Subleased Premises in order to show the physical condition of the Subleased Premises as of such date.

 

3.2 Furniture . Subtenant shall have the right to use the Furniture during the term, and shall return the Furniture to Sublandlord upon expiration or earlier termination of this Sublease in the same condition as when delivered, ordinary wear and tear excepted. Subtenant shall remove all of its personal property which is not Furniture prior to the Delivery Date. At Sublandlord’s option, Subtenant, at its sole cost and expense, shall either be responsible for the replacement of any items that are lost, damaged or show wear and tear other than ordinary wear and tear, or Subtenant shall pay to Sublandlord within 10 days after written demand, (i) 100% of the cost of the item as set forth on Exhibit D attached hereto if the termination of the Lease or a default beyond applicable notice and cure periods occurs in the first twelve months of the Sublease Term, (ii) 66% of the cost of the item as set forth on Exhibit D if the termination of the Lease or a default beyond applicable notice and cure periods occurs in the second twelve months of the Sublease Term, or (iii) 33% of the cost of the item as set forth on Exhibit D if the termination of the Lease or a default beyond applicable notice and cure periods occurs after the 24 ^th month of the Sublease Term. The Furniture shall at all times remain in the Subleased Premises, and Subtenant shall not at any time move the Furniture to any of its other space in the Building. Sublandlord may enter the Subleased Premises at any time to inspect and inventory the Furniture, and determine whether Subtenant has performed all of its obligations with respect thereto. Sublandlord makes no representations or warranties to Subtenant regarding the condition or fitness of the Furniture for Subtenant’s intended use. Subtenant shall indemnify, defend, and hold Sublandlord harmless from any and all injury, cost, loss, liability and expense, including without limitation, reasonable attorneys fees, arising out of or in connection with Subtenant’s use of the Furniture.

 

3.3 Security System . Subtenant shall have the use of Sublandlord’s existing security system infrastructure for the Subleased Premises; provided, however, Subtenant shall not be entitled to use Sublandlord’s security system controller or connect to Sublandlord’s security system on the eighth floor. At Subtenant’s sole cost and expense, Subtenant may disconnect the security system from Sublandlord’s controller, and connect with Subtenant’s security system controller, which is currently located in Subtenant’s leased premises on the third floor of the Building. Sublandlord makes no representation or warranty to Subtenant regarding the condition or fitness of the security system. Subtenant shall indemnify, defend and hold Sublandlord harmless from any and all injury, cost, loss, liability and expense, including without limitation, reasonable attorneys fees, arising out of or in connection with Subtenant’s use of the security system. Upon the expiration or earlier termination of this Sublease, Subtenant, at its sole cost and expense, shall cause the security system to be disconnected from Subtenant’s controller, and if notified in writing prior to the expiration of the Term, Subtenant, at its sole cost and expense, shall cause the security system to be reconnected to Sublandlord’s security system. Subtenant’s obligations under this Section will survive the expiration or other termination of this Sublease.

 

ARTICLE 4 — MONTHLY RENT

 

4.1 Monthly Rent . Subtenant will pay Monthly Rent to Sublandlord as rent for the Subleased Premises, as set forth in Section 1.1 above, without written demand or notice, and without deduction or offset. Rent which is due for any partial calendar month will be prorated on a per diem basis based on the actual number of days in that month. The first installment of

 

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Rent will be due within three business days after Subtenant’s receipt (via facsimile) of a fully-executed copy of this Sublease, together with Subtenant’s Security Deposit as security for the full, faithful and timely performance of every provision of this Sublease to be performed by Subtenant. Thereafter, Rent will be paid to Sublandlord in advance on or before the first day of each month of the term at Sublandlord’s address set forth in Section 1.1 above, or to such other person or place as Sublandlord designates to Subtenant in writing. Sublandlord shall not deposit the first installment of Monthly Rent received from Subtenant until Sublandlord has received Master Landlord’s written consent to this Sublease, at which time Sublandlord shall immediately deposit the amount and apply it towards the first Rent payment due under this Sublease; provided, however, Sublandlord shall, within three business days after receipt of written notice stating that Master Landlord will not consent to this Sublease or the termination of this Sublease pursuant to Section 9.4 hereof, return the first installment of Rent and the Security Deposit to Subtenant.

 

4.2 Taxes and Operating Expenses .

 

(a) Subtenant shall pay to Sublandlord monthly, as Additional Rent, Tenant’s Percentage Share of all Operating Expenses and Real Estates Taxes over and above the Base Year, any Impositions, and any additional costs charged to Sublandlord by Master Landlord as a result of Subtenant’s use or occupancy of the Subleased Premises. The parties acknowledge that Subtenant shall not be obligated to pay any Operating Expenses and Real Estate Taxes until January 1, 2005.

 

(b) Subtenant shall also pay to Sublandlord, in addition to and together with each payment of Rent, any and all excise, transaction privilege, sales, rental, gross receipts, or other taxes (other than net income and/or estate taxes of Sublandlord) now or in the future imposed by any taxing authority upon Master Landlord or Sublandlord and attributable to or measured by the Rent or other charges payable by Subtenant pursuant to this Sublease, whether assessed against Master Landlord or Sublandlord or assessed against Subtenant and collected by Master Landlord or Sublandlord, or both.

 

4.3 Application of Security Deposit . Prior to the Delivery Date, Subtenant shall provide Sublandlord with an irrevocable stand-by letter of credit in the amount of $193,688.00, in a form acceptable to Sublandlord in Sublandlord’s reasonable discretion, and issued by a bank reasonably acceptable to Sublandlord. The letter of credit shall (i) be unconditional, irrevocable, transferable, payable to Sublandlord upon presentment of original to the issuer in person or by courier, in partial or full draws, and (ii) contain an “evergreen” provision which provides that it is automatically renewed on an annual basis (subject to the permitted date of termination set forth below) unless the issuer delivers thirty (30) days’ prior written notice of cancellation to Sublandlord and Subtenant. Any and all fees or costs charged by the issuer in connection with the letter of credit shall be paid by Subtenant. The irrevocable stand-by letter of credit shall remain effective from the Delivery Date through and including the date that is 60 days following the Expiration Date. Notwithstanding the foregoing, and provided that Subtenant is not in default beyond applicable notice and cure periods under this Sublease, as of the 181 ^st day following the Commencement Date, the amount of the Security Deposit required pursuant to this Sublease shall be reduced to $96,844.00. Within 10 days after Sublandlord’s receipt of a replacement letter of credit in the amount of $96,844.00 that is otherwise in the form required by this Section 4.3, Sublandlord shall return the original letter of credit to Subtenant. If Subtenant defaults with respect to any provision of this Sublease beyond applicable notice and cure periods, including but not limited to the provisions relating to the payment of Rent, Sublandlord may draw upon all or any part of Subtenant’s letter of credit. If any portion of the Security

 

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Deposit is so used, applied, or retained, Subtenant will within 15 days after written demand from Sublandlord, provide to Sublandlord an additional irrevocable, stand-by letter of credit, which shall be in form and substance satisfactory to Sublandlord, issued by a bank reasonably acceptable to Sublandlord, in an amount sufficient to restore the Security Deposit to its then required amount pursuant to this Section 4.3. Sublandlord may use, apply or retain all or any part of the Security Deposit for the payment of any Rent, or any other sum in default. In no event shall Sublandlord be required to apply the Security Deposit. Neither the application of the Security Deposit as set forth above nor the restoration by Subtenant of such Security Deposit shall operate to cure such default or to estop Sublandlord from pursuing any remedy to which Sublandlord would otherwise be entitled, unless and until Subtenant has fully compensated Sublandlord for any damage resulting from such default in accordance with this Sublease and Subtenant has restored any Security Deposit and otherwise complied with the terms hereof. Subtenant may not apply the Security Deposit to the payment of Rent or the performance of other obligations. Unless otherwise required by law, Sublandlord will not be required to keep the Security Deposit separate from its general funds and may commingle the Security Deposit with its own funds. Subtenant will not be entitled to interest on the Security Deposit. The Security Deposit will not be deemed a limitation on Sublandlord’s damages or a payment of liquidated damages or a payment of the Rent due for the last month of the term. If Subtenant fully, faithfully and timely performs every provision of this Sublease to be performed by it, the letter of credit will be returned to Subtenant within 30 days after the later of the expiration of the term or Subtenant’s vacation of the Subleased Premises. Notwithstanding the foregoing, Sublandlord shall return the Security Deposit to Sublandlord within three business days after Sublandlord’s receipt of written notice stating that Master Landlord will not consent to this Sublease or the termination of this Sublease pursuant to Section 9.4 hereof.

 

ARTICLE 5 — USE AND ALTERATIONS

 

5.1 Use . Subtenant will use the Subleased Premises for general office use only and for no other purpose. Subtenant will not use or permit the Subleased Premises to be used or occupied for any purpose or in any manner prohibited by any applicable laws or by the Master Lease. Subtenant will not commit waste or suffer or permit waste to be committed in, on, or about the Subleased Premises. Subtenant will use the Subleased Premises in a careful, safe, and proper manner. Subtenant will conduct its business and control its employees, agents, and invitees in such a manner as not to create any nuisance or interfere with, annoy, or disturb Master Landlord in its operation of the Building, Sublandlord, or any other tenant or occupant of the Building.

 

5.2 Alterations . Subtenant shall not make any alterations, additions or other improvements to the Subleased Premises by or on behalf of Subtenant (but not including Subtenant’s moveable trade fixtures or moveable items of personal property) (“Alterations”) without Sublandlord’s prior written consent, which shall not be unreasonably withheld or delayed, and the approval of Master Landlord if required by the terms of the Master Lease. At the time Subtenant requests approval from Sublandlord or Master Landlord, Subtenant must obtain the prior written approval of Master Landlord and Subtenant to any contractors and vendors performing work in the Subleased Premises. Subtenant acknowledges that Master Landlord has a pre-approved list of contractors and vendors from which Subtenant must select its contractor and vendors. Sublandlord shall consent or object to any proposed Alterations within three business days after receipt of all materials required by this Sublease and the Master Lease. If Sublandlord does not consent or object to Subtenant’s proposed Alterations within the three business day period provided above, Sublandlord’s consent will be deemed given. Sublandlord may withhold its approval of any proposed Alterations if Subtenant is in default of

 

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any of its obligations under this Sublease at the time Subtenant requests Sublandlord’s approval; provided, however, if Subtenant cures the default within the applicable notice and cure periods set forth in this Sublease, Sublandlord shall reconsider Subtenant’s request for approval. Any Alterations to which Sublandlord and Master Landlord (if required) consent must be constructed and installed in accordance with (i) all requirements contained in the Master Lease, and (ii) any reasonable requirements imposed by Sublandlord to protect Sublandlord’s interest in the Master Lease and/or in the Subleased Premises. All such alterations, additions and improvements consented to by Sublandlord and Master Landlord (if required) will be made using new, first class materials and in a good and workmanlike manner. Subtenant shall be obligated to diligently pursue the completion of all Alterations to the Subleased Premises. Any work that has not been completed in a timely manner may be completed by Sublandlord or Master Landlord, at the expense of Subtenant. Such expense will be collectible as Additional Rent and will be paid by Subtenant within 10 days after delivery of a statement for such expense. At its sole cost and expense, Subtenant shall coordinate all work with a project manager approved by Sublandlord (and Master Landlord, if required), and Sublandlord shall have the right to review all progress in connection with such work. Sublandlord hereby approves Jones Lang LaSalle as Subtenant’s project manager. Subtenant shall be solely responsible for any and all expenses additional costs charged by Master Landlord (whether billed directly to Sublandlord or Subtenant) arising out of the approval or installation of the Alterations pursuant to the Master Lease, including without limitation legal expenses, architectural and engineering expenses. Where possible, Subtenant shall coordinate payment of all additional costs directly with Master Landlord. Subtenant will indemnify and hold Sublandlord, Master Landlord, the Subleased Premises, the Premises, and the Building free, clear and harmless of and from all mechanics’ liens and claims of liens, and all other liabilities, liens, claims and demands on account of such work by or on behalf of Subtenant. Prior to the commencement of any work (including, but not limited to, any maintenance, repairs, alterations, additions, improvements or installations) in or to the Subleased Premises, by or for Subtenant, Subtenant will give Sublandlord written notice of the proposed work and the names and addresses of persons supplying labor and materials for the proposed work. Sublandlord and/or Master Landlord will have the right to post notices of non-responsibility or similar written notices on the Subleased Premises and the Premises in order to protect the same against any such liens. Upon termination of this Sublease, any Alterations to the Subleased Premises shall remain in the Subleased Premises, and Subtenant shall not have the right to remove such Alteration, unless requested to do so in writing by Sublandlord at such time as Sublandlord’s consent is received, or by Master Landlord to the extent permitted under the Master Lease; provided, however, Sublandlord shall not require Subtenant to remove any Alterations or restore the Subleased Premises unless such restorations or removal is a requirement of Master Landlord. If Subtenant is required to remove any improvements, Subtenant shall, at its sole cost and expense, restore the Subleased Premises to their condition prior to this Sublease, and restore the Subleased Premises in accordance with all terms and conditions in the Master Lease. Subtenant’s obligations under this section shall survive expiration or earlier termination of this Sublease.

 

5.3 Pre-Approved Alterations . Sublandlord hereby approves the removal by Subtenant from the Subleased Premises and the Furniture of all signage of any type, including stickers, which includes the name of Sublandlord or any of its affiliates. Notwithstanding anything in the Master Lease or this Sublease to the contrary, upon the expiration or earlier termination of this Sublease, Subtenant shall not be required to restore any removed signage to the condition in which it existed as of the Delivery Date.

 

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ARTICLE 6 — SERVICES; MAINTENANCE AND REPAIR

 

6.1 Services . The Subleased Premises shall be furnished with those services required to be provided by Master Landlord under the terms of the Master Lease, on the terms and conditions set forth therein. Such services shall be provided subject to the terms of the Master Lease, and Sublandlord will not be obligated to provide any such services should Master Landlord fail to do so. Sublandlord will not be in default under this Sublease or be liable to Subtenant or any other person, for direct, indirect, or consequential damages, or otherwise, for any failure of Master Landlord to provide heat, air conditioning, elevator, cleaning, lighting, or for surges or interruptions of electricity, or other services, if any, to be provided by Master Landlord under the terms of the Master Lease, other than the abatement of Rent as set forth in Section 8.3 of the Master Lease.

 

6.2 Payment for Services . Subtenant shall pay to Sublandlord monthly, the actual cost to Sublandlord for the services provided to the Subleased Premises in accordance with Section 6.1 and which are not reimbursed as Operating Expenses. Subtenant shall additionally pay to Sublandlord as Additional Rent any additional charges payable by Sublandlord as a result of Subtenant’s use of electricity, HVAC, or other services for which Master Landlord may charge Subtenant either outside of Business Hours (as defined in the Master Lease) or in excess of the amounts which Master Landlord has agreed to furnish under the terms of the Master Lease. Sublandlord shall provide Subtenant with a written invoice on a monthly basis detailing such charges. Where possible, Subtenant shall coordinate the payment of all additional costs directly with Master Landlord.

 

6.3 Maintenance and Repair . Subtenant shall maintain the Subleased Premises (including Subtenant’s equipment, personal property and trade fixtures located in the Subleased Premises) in their condition at the time they were delivered to Subtenant, ordinary wear and tear excepted, using contractors and vendors pre-approved by Master Landlord and Sublandlord.

 

6.4 Damage . Subtenant will immediately advise Sublandlord and Master Landlord of any damage to the Subleased Premises or the Building. All damage or injury to the Subleased Premises, or the Building, or the fixtures, appurtenances and equipment in the Subleased Premises or the Building which is caused by Subtenant, its agents, employees, or invitees, and which is not satisfactorily repaired (in Sublandlord’s reasonable discretion) within 10 days after receipt of written notice by Subtenant, may be repaired, restored or replaced by Sublandlord or Master Landlord, at the expense of Subtenant. Such expense will be collectible as Additional Rent and will be paid by Subtenant within 10 days after delivery of a statement for such expense.

 

ARTICLE 7 — INSURANCE

 

7.1 Subtenant’s Insurance . At all times during the term, Subtenant will carry and maintain, at Subtenant’s sole cost and expense, any insurance required to be maintained by Sublandlord with respect to the Subleased Premises under the Master Lease.

 

7.2 Forms of the Policies . Certificates of insurance, together with copies of the endorsements when applicable, shall be delivered to Sublandlord and Master Landlord prior to Subtenant’s occupancy of the Subleased Premises and from time to time at least 10 days prior to the expiration of the term of each such policy. All Commercial General Liability or comparable policies maintained by Subtenant shall name Sublandlord and Master Landlord if required as an additional insured. All policies maintained by Subtenant will provide (i) for

 

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severability of interests or that the acts or omissions of one of the insureds or additional insureds shall not reduce or affect coverage available to any other insured or additional insured, (ii) that the insurer agrees not to cancel or alter the policy without at least 30 days’ prior written notice to all additional insureds, and (iii) that the aggregate liability applies solely to the Subleased Premises and the remainder of the Building. All Commercial General Liability and property policies maintained by Subtenant will be written as primary policies, not contributing with and not supplemental to the coverage that Sublandlord may carry.

 

7.3 Waiver of Subrogation . Sublandlord and Subtenant each waives any and all rights to recover against the other, or against the officers, directors, shareholders, partners, joint venturers, employees, or agents of the other, for any loss or damage to such waiving party arising from any cause covered by any property insurance required to be carried by such party pursuant to this Article 7 or any other property insurance actually carried by such party, to the extent of the limits of such policy. Sublandlord and Subtenant, from time to time, will cause their respective insurers to issue appropriate waiver of subrogation rights endorsements to all property insurance policies carried in connection with the Premises or the Subleased Premises or the contents of the Premises or the Subleased Premises.

 

7.4 Requirements of Insurer . Subtenant, at its sole expense, shall comply with the requirements of any board of fire underwriters or other similar body constituted now or after the date hereof, with any occupancy certificate issued pursuant to any law by any public officer, insofar as they relate to the condition, use or occupancy of the Subleased Premises.

 

ARTICLE 8 — COMPLIANCE WITH LAWS

 

8.1 Subtenant Compliance . Subtenant will promptly comply with all Laws relating to Subtenant’s use or occupancy of the Subleased Premises to the extent Sublandlord is required to do so under the Master Lease.

 

8.2 Hazardous Materials .

 

(a) Subtenant’s Obligations .

 

(1) Subtenant will not cause or permit the storage, treatment or disposal of any Hazardous Substances in, on, or about the Subleased Premises, the Building, or any part of the Project in violation of Environmental Laws by Subtenant, its agents, employees or contractors, Subtenant will not permit the Subleased Premises, the Building, or any portion of the Project to be used or operated in a manner that may cause the Subleased Premises or any part of the Project to be contaminated by any Hazardous Substances in violation of any Environmental Laws, and shall only permit the introduction of Hazardous Materials to the Subleased Premises in compliance with all Environmental Laws.

 

(2) Subtenant will be solely responsible for and will defend, indemnify, and hold Sublandlord, its agents and employees harmless from and against all direct claims, costs, and liabilities, including reasonable attorneys’ fees and costs, arising out of or in connection with Subtenant’s introduction of Hazardous Substances to the Subleased Premises, the Building, or the Project or other breach of its obligations in this Section.

 

(b) Mutual Obligations . Each party will promptly notify the other party of (1) any and all enforcement, cleanup, remedial, removal, or other governmental or enforcement cleanup or other governmental or regulatory actions instituted, completed or threatened pursuant to any

 

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Environmental Laws relating to any Hazardous Substances affecting any part of the Subleased Premises, the Premises or the Project; and (2) all claims made or threatened by any third party against Subtenant, Sublandlord or any part of the Project relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Substances on or about the Subleased Premises, the Premises, the Building, or the Project or any part thereof.

 

(c) Sublandlord’s Obligations .

 

(1) Sublandlord will not cause or permit the storage, treatment or disposal of any Hazardous Substances in, on, or about the Premises, the Building, or any part of the Project in violation of Environmental Laws by Sublandlord, its agents, employees or contractors, and Sublandlord will not permit the Premises, the Building, or any portion of the Project to be used or operated in a manner that may cause the Premises or any part of the Project to be contaminated by any Hazardous Substances in violation of any Environmental Laws, and shall only permit the introduction of Hazardous Substances to the Premises in compliance with all Environmental Laws.

 

(2) Sublandlord will be solely responsible for and will defend, indemnity, and hold Subtenant, its agents and employees harmless from and against all direct claims, costs, and liabilities, including reasonable attorneys’ fees and costs, arising out of or in connection with (i) the introduction of Hazardous Substances by Sublandlord, its agents or employees to the Subleased Premises, the Building, or the Project prior to the Delivery Date or (ii) Sublandlord’s introduction of Hazardous Substances to the Subleased Premises, the Building, or the Project or other breach of its obligations in this Section.

 

(d) Survival . The obligations of this Section shall survive the expiration or other termination of this Sublease.

 

ARTICLE 9 — MASTER LEASE; ASSIGNMENT

 

9.1 The Master Lease . This Sublease is subject and subordinate to all the terms and conditions of the Master Lease, and all rights of Sublandlord thereunder. Subtenant acknowledges that it has received a copy of the Master Lease, and is familiar with the terms and conditions thereof. Except with respect to payment of rent under the Master Lease or as otherwise expressly provided in this Sublease, Subtenant hereby agrees to comply in all respects with Sublandlord’s obligations under the Master Lease insofar as the same are applicable to the Subleased Premises. Neither Subtenant nor Sublandlord will cause or allow to be caused any default under the Master Lease. In the event the Master Lease terminates for any reason prior to the expiration or termination of this Sublease, Subtenant shall not have any claim whatsoever against Sublandlord arising or resulting from such termination of the Master Lease unless caused by the actions or omissions of Sublandlord. In the event the Master Lease terminates for any reason prior to the expiration or termination of this Sublease, Sublandlord shall not have any claim whatsoever against Subtenant arising or resulting from such termination of the Master Lease unless caused by the actions or omissions of Subtenant.

 

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9.2 Sublandlord’s Warranties . Sublandlord hereby makes the following representations and warranties as of the date hereof to Subtenant for the purpose of inducing Subtenant to enter into this Sublease and to consummate the transactions contemplated hereby. All of the following representations and warranties shall survive the execution and delivery of this Sublease by Sublandlord and Subtenant.

 

(a) Sublandlord is a duly organized, validly existing corporation in good standing under the laws of the State of Delaware. Sublandlord has the legal power, rights, and authority to enter into this Sublease and to consummate the transactions contemplated hereby. The individuals executing this Sublease and the instruments referenced herein on behalf on Sublandlord have the power, right, and authority to bind Sublandlord.

 

(b) All requisite action has been taken by Sublandlord and all requisite consents required of Sublandlord have been obtained in connection with this Sublease (other than the Master Landlord Consent), the instruments, and documents referenced herein, and the consummation of the transaction contemplated hereby, and no consent of any other party is required.

 

(c) This Sublease is, and all agreements, instruments and documents to be executed by Sublandlord pursuant to this Sublease shall be, duly executed by Sublandlord and are, or shall be, valid and legally binding upon Sublandlord and enforceable in accordance with their respective terms.

 

(d) Subject to obtaining the prior written consent of Master Landlord to this Sublease, neither the execution of this Sublease nor the consummation of the transactions contemplated hereby shall result in a material breach of or constitute a material default under any agreement, document, instrument, or other obligation to which Sublandlord is a party or by which Sublandlord may be bound, or under any law, statute, ordinance, rule, governmental regulation, writ, injunction, order, or decree of any court or governmental body, as applicable to Sublandlord.

 

(e) There has not been filed by or against Sublandlord a petition in bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the bankruptcy laws of the United States or any state thereof, or any other action brought pursuant to such bankruptcy laws with respect to Sublandlord.

 

(f) Sublandlord is not in default under the Master Lease, nor has any event occurred which, with the giving of notice or the passage of time or both, would constitute a default by Sublandlord thereunder.

 

(g) The copy of the Master Lease attached hereto as Exhibit B is a true and correct copy of the Master Lease. The Master Lease is in full force and effect and has not been amended. To Sublandlord’s actual knowledge, Master Landlord is not in default under the Master Lease, nor has any event occurred which, with the giving of notice or the passage of time or both, would constitute a default thereunder.

 

(h) Sublandlord has paid all rent due to Master Landlord under the Master Lease through and including August 31, 2003.

 

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(i) Sublandlord is currently in possession of the Subleased Premises and except for an assignment of the Master Lease from Epicentric, Inc. to Vignette Corporation, and the Agreement dated April 23, 2001, between Scient Corporation and Epicentric, Inc., predecessor-in-interest to Sublandlord, Sublandlord has not previously sublet, assigned, or encumbered the Subleased Premises or any portion thereof. Sublandlord further represents and warrants to Subtenant that (1) Scient Corporation and its successors-in-interest do not have any rights in and to the Subleased Premises that would affect Subtenant’s occupancy of the Subleased Premises, and (2) Sublandlord has not granted any rights in and to the Subleased Premises to any third party other than Master Landlord that would affect Subtenant’s occupancy of the Subleased Premises pursuant to this Sublease.

 

9.3 Assignment and Subletting . No portion of the Subleased Premises or of Subtenant’s interest in this Sublease may be acquired by any other person or entity, whether by assignment, mortgage, sublease, transfer, operation of law or act of Subtenant, without the prior written consent of Sublandlord, which shall not be unreasonably withheld, conditioned or delayed. Sublandlord shall be deemed to have approved any request for assignment or subletting unless it has notified Subtenant in writing of its decision to reasonably withhold, condition or delay its consent within twenty (20) days of Sublandlord’s receipt of a written request for consent from Subtenant. Notwithstanding anything to the contrary herein, prior to any assignment or subletting, Subtenant must obtain the consent of Master Landlord in accordance with the Master Lease. At Subtenant’s sole cost and expense, Sublandlord will cooperate with Subtenant in obtaining Master Landlord’s consent. Any attempted transfer without the required consent shall be void and shall constitute a non-curable breach of this Sublease; provided, however, if Master Landlord waives its remedies with respect to any attempted transfer in violation of the Master Lease, such attempted transfer shall constitute a curable breach of this Sublease. Subtenant shall be responsible for any and all costs and expenses payable to Master Landlord and/or Sublandlord in connection with the proposed assignment or subletting.

 

9.4 Consent . The effectiveness of this Sublease is conditioned upon obtaining Master Landlord’s consent to this Sublease within 30 days after the date of this Sublease (the “Master Landlord Consent”). The terms and conditions of the Master Landlord Consent shall be mutually acceptable to both Sublandlord and Subtenant in their reasonable discretion. Sublandlord shall use commercially reasonable efforts to obtain the Master Landlord Consent. If Master Landlord fails to respond to the request for its consent within thirty (30) days of the parties’ execution of this Sublease, then until such time as a response is actually received, Subtenant or Sublandlord may elect to terminate this Sublease by delivering written notice to the other; provided, however, that if Master Landlord refuses to grant its consent, then this Sublease shall be deemed terminated as of the date of such refusal. As of the date of the termination of this Sublease pursuant to the immediately preceding sentence, this Sublease shall be deemed terminated and any payments made by Subtenant to Sublandlord shall be returned to Subtenant within ten (10) days of such termination or as otherwise expressly set forth in this Sublease, and the parties hereto shall have no further rights or obligations hereunder, except for those obligations which accrued prior to the date of termination and those obligations which expressly survive termination.

 

9.5 Non-Disturbance . Subtenant may attempt to obtain a non-disturbance agreement from Master Landlord, and Sublandlord shall use commercially reasonable efforts to assist Subtenant in this process; provided, however, this Sublease shall continue in full force and effect whether or not Subtenant is successful in obtaining the non-disturbance agreement from Master Landlord.

 

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9.6 Enforcement of Master Lease . If Master Landlord fails to perform its obligations under the Master Lease, Sublandlord shall use its best efforts (with Subtenant’s assistance) to obtain Master Landlord’s performance thereunder; provided, however, Sublandlord shall not be obligated to make any out-of-pocket expenditures in connection therewith.

 

9.7 Amendment of Master Lease or Sublease . Sublandlord shall not, without the prior written consent of Subtenant, cause or permit any amendment or termination of the Master Lease during the Term that would adversely affect Subtenant’s rights or obligations under this Sublease with respect to the Subleased Premises. Notwithstanding the foregoing, Sublandlord may exercise its right to terminate the Master Lease without Subtenant’s prior written consent pursuant to Section 12.5 of the Master Lease provided that Sublandlord complies with Section 12.2 of this Sublease. This Section 9.7 shall not apply to any amendment affecting any space in the Project (other than the Subleased Premises) now or hereafter leased by Sublandlord. Subtenant shall not unreasonably delay or withhold its consent or disapproval of any proposed amendment of the Master Lease. Sublandlord and Subtenant shall not modify this Sublease without Master Landlord’s prior written consent.

 

ARTICLE 10 — DEFAULT

 

10.1 Events of Default . The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Sublease: (i) the Subleased Premises are left abandoned, (ii) any part of the Rent is not paid within five (5) days of when due, (iii) any failure to perform any obligation, covenant, condition or agreement under this Sublease (other than nonpayment of Rent, the recordation of this Sublease or any memorandum thereof or Subtenant’s abandonment of the Subleased Premises) within five (5) days after Sublandlord’s notice or, if the failure is of a nature requiring more than five days to cure, then an additional thirty (30) days after the expiration of such five-day period, but only if Subtenant commences cure within such five-day period and thereafter diligently pursues such cure to completion within such additional 30-day period; provided that, if Subtenant has failed to perform any such obligation, covenant, condition or agreement more than two (2) times during the Sublease Term and notice of such event of default has been given by Sublandlord in each instance, then no cure period shall apply; or (iv) Subtenant records this Sublease or any memorandum of this Sublease in any public records. Any installment of Rent that is not paid when due shall bear a late charge of 2.5% per month of the delinquent installment, to compensate Sublandlord for its administrative expenses and lost interest relating to such delinquency.

 

10.2 Sublandlord’s Remedies . If any Event of Default occurs, then Sublandlord shall have the right, at its election, to exercise any, some or all of the following remedies:

 

(a) To terminate this Sublease, in which case Subtenant’s right to possession of the Subleased Premises will cease and this Sublease will be terminated as if the expiration of the term fixed in such notice were the end of the term. If this Sublease is terminated, Sublandlord will be entitled to recover from Subtenant (1) the unpaid rent that had been earned at the time of termination; (2) the amount by which the unpaid rent that would have been earned after termination until the time of award exceeds the amount of the rent loss that Subtenant proves could reasonably have been avoided; (3) the amount by which the unpaid rent for the balance of the term of this Sublease after the time of award exceeds the amount of the rent loss that Subtenant proves could reasonably be avoided; and (4) any other amount necessary to compensate Sublandlord for all the damages proximately caused by Subtenant’s failure to perform its obligations under this Sublease or that in the ordinary course of things would be likely to result from that failure. The amount referred to in clauses (1) and (2) is computed by

 

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allowing interest at the highest rate permitted by law. The amount referred to in clause (3) is computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award. As used herein, “time of award” means when a decision is rendered by an arbitrator or court of competent jurisdiction.

 

(b) To reenter and take possession of the Subleased Premises, expel Subtenant and remove the effects of Subtenant, in compliance with applicable laws, without being liable for prosecution, and without prejudice to any remedies for arrears of Monthly Rent or other amounts payable under this Sublease. In such case, Sublandlord may, without being obligated to and without terminating the Sublease, relet the Subleased Premises for the account of Subtenant on such conditions and terms as Sublandlord may determine, in its sole discretion, and Sublandlord may collect and receive the rent. Subtenant will pay to Sublandlord Monthly Rent and other sums as provided in this Sublease that would be payable under this Sublease if such repossession had not occurred, less the net proceeds, if any, of any reletting of the Subleased Premises after deducting all of Sublandlord’s reasonable expenses in connection with such reletting.

 

(c) To cure any Event of Default and to charge Subtenant for the cost of effecting such cure, including without limitation reasonable attorneys’ fees and interest from the date such monies are advanced until paid at the rate of 10% per annum; provided, however, that Sublandlord will have no obligation to cure any such event of default of Subtenant.

 

(d) To exercise any other right or remedy permitted under applicable laws.

 

10.3 Late Payment Interest . In addition to the late charge provided for in Section 10.1, if any payment required by this Sublease is not made within 5 days after payment is due, interest shall accrue on all amounts owing at the rate of 18% per annum or the maximum rate allowed by applicable law, whichever is less, from the date on which such payment was due until the date on which it is paid in full with accrued interest.

 

10.4 Remedies Not Exclusive . Each right and remedy provided for in this Sublease is cumulative and is in addition to every other right or remedy provided for in this Sublease or at law or in equity. If a dispute arises under the terms of this Sublease or if any payment required by this Sublease is not paid when due and the matter is turned over to an attorney by Sublandlord, then Sublandlord will be entitled to receive its reasonable attorneys’ fees in addition to any other damages and costs of enforcement.

 

10.5 Limitation on Damages . Notwithstanding anything in this Sublease to the contrary, in no event shall (i) Sublandlord be liable to Subtenant for any indirect, consequential, special, punitive or exemplary damages including without limitation, lost profits and (ii) Subtenant be liable to Sublandlord for any indirect, consequential, special, punitive or exemplary damages including without limitation, lost profits; provided, however that the foregoing exclusion shall not apply as to damages which may be payable by Subtenant to reimburse Sublandlord for any indirect, consequential, special, punitive or exemplary damages including without limitation, lost profits to the extent payable to Master Landlord as a result of the (a) the use, occupancy, or enjoyment of the Subleased Premises by Subtenant or its agents, employees, or contractors, or any maintenance, repair, work, activity, or other things allowed or permitted by Subtenant to be done or left undone in or about the Subleased Premises, the Building, or the Project; (b) the actions or omissions of Subtenant, Subtenant’s employees, agents, or contractors, or of any other person entering onto the Subleased Premises or the

 

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Building under express or implied invitation of Subtenant; or (c) any breach or default in the performance of any obligation of Subtenant under this Sublease or the Master Lease.

 

10.6 Sublandlord Default . Sublandlord will de deemed to be in default of this Sublease if Sublandlord fails to perform any obligation, covenant, condition or agreement under this Sublease within ten (10) days after receipt of Subtenant’s written notice or, if the failure is of a nature requiring more than 10 days to cure, then an additional sixty (60) days after the expiration of such 10-day period, but only if Sublandlord commences cure within such 10-day period and thereafter diligently pursues such cure to completion within such additional 60-day period; provided that, if Sublandlord has failed to perform any such obligation, covenant, condition or agreement more than two (2) times during the Sublease Term and written notice of such event of default has been given by Subtenant in each instance, then no cure period shall apply.

 

ARTICLE 11 — END OF TERM

 

11.1 End of Term . At the end of this Sublease, Subtenant will promptly quit and surrender the Subleased Premises broom-clean, in good order and repair, ordinary wear and tear excepted. Subtenant will remove all of Subtenant’s personal property and equipment and shall repair any damage to the Subleased Premises as a result of such removal. Subtenant’s obligations under this Section will survive the expiration or other termination of this Sublease.

 

11.2 Holding Over . Subtenant will have no right to remain in possession of all or any part of the Subleased Premises after the expiration of the Term or earlier termination of this Sublease. If Subtenant remains in possession of all or any part of the Subleased Premises after the expiration of the Term: (a) such tenancy will be deemed to be a tenancy at will; (b) such tenancy will not constitute a renewal or extension of this Sublease for any further term; and (c) such tenancy may be terminated by Sublandlord upon prior written notice to Subtenant on the earliest date permitted by law. In such event, Monthly Rent will be increased to an amount equal to 150% of Sublandlord’s monthly rental obligations under the Master Lease payable during the last month of the Term, any other sums due under this Sublease will be payable in the amount and at the times specified in this Sublease, and any other damages or costs incurred by Sublandlord as a result of any violation of the Master Lease caused by Subtenant’s failure to timely surrender the Subleased Premises shall be due and payable from Subtenant to Sublandlord upon demand. Such tenancy will be subject to every other term, condition, and covenant contained in this Sublease.

 

11.3 No Renewal Options . Subtenant acknowledges and agrees that it has no renewal or extension options to continue the term of this Sublease beyond the Expiration Date.

 

ARTICLE 12 — MISCELLANEOUS

 

12.1 Condemnation . In the event that all or any substantial or critical portion of the Subleased Premises are taken, the provisions of the Master Lease shall control with respect to whether this Sublease will be terminated as a result thereof, and with respect to restoration of the Subleased Premises. Subtenant shall have no right to share in any condemnation proceeds. In no event will Sublandlord be in default under this Sublease or be liable to Subtenant or any other person for direct, indirect, or consequential damages, or otherwise, for any termination of the Master Lease pursuant to such provisions, or for any failure of Master Landlord to repair or restore the Subleased Premises or to otherwise perform any of its obligations under such condemnation provisions in the Master Lease.

 

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12.2 Casualty . In the event that the Subleased Premises shall be damaged by fire or other casualty, Sublandlord shall have no responsibility for restoration of the Subleased Premises. The casualty provisions of the Master Lease shall control with respect to termination of this Sublease and restoration of the Subleased Premises. In no event will Sublandlord be in default under this Sublease or be liable to Subtenant or any other person for direct, indirect or consequential damages, or otherwise, for any termination of the Master Lease pursuant to such provisions, or for any failure of Master Landlord to repair or restore the Subleased Premises or to otherwise perform any of its obligations under such casualty provisions in the Master Lease. Notwithstanding the foregoing, in the event of a casualty to the Premises, Sublandlord shall have the right to terminate the Master Lease in accordance with Section 12.5 of the Master Lease if the Sublease continues in full force and effect with respect to the Subleased Premises only.

 

12.3 Signage . Subtenant shall not be permitted to place any temporary or permanent signage, banners, or other displays on the exterior of the Subleased Premises without first obtaining (a) the prior written consent of Master Landlord (if required under the Master Lease), and (b) all necessary permits and approvals therefor. Any approved signage shall be constructed and installed in compliance with all applicable ordinances, codes, regulations and requirements, and entirely at Subtenant’s sole expense. Sublandlord shall provide Subtenant with all of its signage rights with respect to the Subleased Premises only, at the sole cost and expense of Subtenant. Subtenant shall contact Master Landlord directly with regards to Building standard signage.

 

12.4 Right to Enter . Master Landlord, Sublandlord, and their respective contractors and agents may enter the Subleased Premises in accordance with Section 19.1 of the Master Lease. Any entry to the Subleased Premises by Master Landlord or Sublandlord in accordance with this Section will not be construed or deemed to be a forcible or unlawful entry into or a detainer of the Subleased Premises or an eviction, actual or constructive, of Subtenant from the Subleased Premises, or any portion of the Subleased Premises, nor will any such entry entitle Subtenant to damages or an abatement of Monthly Rent, Additional Rent, or other charges which this Sublease requires Subtenant to pay.

 

12.5 Sublandlord’s Name . Subtenant is prohibited from using Sublandlord’s name, logo, mark or any other identifying symbol as a business reference, in advertising or sales promotion, or in any publicity matter without Sublandlord’s prior written consent. Sublandlord is prohibited from using Subtenant’s name, logo, mark or any other identifying symbol as a business reference, in advertising or sales promotion, or in any publicity matter without Subtenant’s prior written consent.

 

12.6 Subtenant Indemnity . Subtenant shall indemnify, defend and hold Sublandlord and its officers, directors, partners, employees, and agents entirely harmless from and against all liabilities, losses, damages, demands, expenses, or claims, including reasonable attorneys’ fees and court costs, for injury to or death of any person or for damages to any property directly or indirectly arising out of or in any manner connected with (a) the use, occupancy, or enjoyment of the Subleased Premises by Subtenant or its agents, employees, or contractors, or any maintenance, repair, work, activity, or other things allowed or permitted by Subtenant to be done or left undone in or about the Subleased Premises, the Premises, the Building, or the Project; (b) the actions or omissions of Subtenant, Subtenant’s employees, agents, or contractors, or of any other person entering onto the Subleased Premises, the Premises, the Building, the Roof Space of the Annex, or any additional space in the Building or Annex that is leased by Sublandlord directly from Master Landlord after the date of this Sublease, under the

 

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express or implied invitation of Subtenant; or (c) any breach or default in the performance of any obligation of Subtenant under this Sublease. Subtenant shall not, however, be required to indemnify Sublandlord to the extent such damages are ultimately determined to be caused by the gross negligence or willful misconduct of Sublandlord, its officers, directors, partners, employees and agents. Subtenant’s obligations under this Section shall survive expiration or earlier termination of this Sublease.

 

12.7 Sublandlord Indemnity . Sublandlord shall indemnify, defend, protect and hold Subtenant, its officers, directors, shareholders, agents and employees harmless of and from any and all loss, liens, liability, claims, causes of action, damage, injury, cost or expense (including reasonable attorneys’ fees and court costs) arising out of or in connection with (i) any breach or default beyond applicable notice and cure periods by Sublandlord in the performance of any of its obligations under this Sublease or the Master Lease, (ii) Sublandlord’s gross negligence or willful misconduct, or (iii) the actions or omissions of Sublandlord, Sublandlord’s employees, agents, contractors, or of any other person under the express or implied invitation of Sublandlord, that occur in or about Subtenant’s leased space on the third and fourth floors of the Building and Annex and any additional space in the Building or Annex that is leased by Subtenant directly from Master Landlord after the date of this Sublease.

 

12.8 Personal Property Taxes . Subtenant will pay promptly when due all taxes payable by Subtenant, the non-payment of which might give rise to a lien on the Subleased Premises or Subtenant’s interest in the Subleased Premises.

 

12.9 Notices . All notices and other communications required under this Sublease shall be in writing and shall be given by (a) United States first class mail, postage prepaid, registered or certified, return receipt requested, (b) deposit with any nationally recognized overnight carrier that routinely issues receipts, or (c) by hand delivery (including by means of a professional messenger service), addressed to Sublandlord at its address set forth in Section 1.1(b), or Subtenant’s address set forth in Section 1.1(d). Any such notice or other communication shall be deemed to be effective when actually received or refused. Either party by similar notice given change the address to which future notices or other communications shall be sent.

 

12.10 Attorneys’ Fees and Costs of Enforcement . In the event that either party hereof commences an action to enforce any of the provisions of this Sublease, the prevailing party in such action shall be entitled to collect all of the costs of such action (including, without limitation, reasonable attorneys’ fees and court costs) from the other party.

 

12.11 Time of the Essence . Time is of the essence of each and every provision of this Sublease.

 

12.12 No Waiver . The waiver by either party of any agreement, condition, or provision contained in this Sublease will not be deemed to be a waiver of any subsequent breach of the same or any other agreement, condition, or provision contained in this Sublease.

 

12.13 Complete Agreement and Amendment . This Sublease sets forth the complete agreement between Sublandlord and Subtenant with respect to the subject matter hereof, and this Sublease may not be terminated, amended or modified in any respect except by agreement in writing executed by both Sublandlord and Subtenant.

 

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12.14 Severability . If any provision of this Sublease proves to be illegal, invalid or unenforceable, the remainder of this Sublease will not be affected by such finding, and in lieu of each provision of this Sublease that is illegal, invalid or unenforceable, a provision will be added as a part of this Sublease as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

12.15 Captions . The captions of the various Articles and Sections of this Sublease are for convenience only and do not necessarily define, limit, describe or construe the contents of such Articles or Sections.

 

12.16 Authority . Subtenant and the party executing this Sublease on behalf of Subtenant represent to Sublandlord that such party is authorized to do so by requisite action of the board of directors, or partners, as the case may be, and agree upon request to deliver to Sublandlord a resolution or similar document to that effect.

 

12.17 Brokers . Sublandlord and Subtenant respectively represent and warrant to each other that neither of them has consulted or negotiated with any broker or finder with regard to the Subleased Premises except the Brokers named in Section 1.1, if any. Each of them will indemnify the other against and hold the other harmless from any claims for fees or commissions from anyone with whom either of them has consulted or negotiated with regard to the Subleased Premises except the Brokers. Sublandlord shall pay any commission due to Sublandlord’s Broker or Subtenant’s Broker in accordance with separate listing or commission agreements with those parties.

 

12.18 Governing Law . This Sublease will be governed by and construed pursuant to the laws of the State of California.

 

12.19 Binding Effect . The covenants, conditions and agreements contained in this Sublease will bind and inure to the benefit of Sublandlord and Subtenant and their respective heirs, distributees, executors, administrators, successors, and, except as otherwise provided in this Sublease, their assigns.

 

12.20 No Recordation . Subtenant shall not record in any public records this Sublease or any memorandum of this Sublease. If Subtenant breaches this Section, Subtenant shall be in default of this Sublease and, in addition to Sublandlord’s remedies set forth in Article 10 above, Subtenant shall indemnify Sublandlord from and against any and all liabilities, costs, damages, or losses including reasonable attorneys’ fees, under the Master Lease that Sublandlord may incur as a result of such breach.

 

12.21 Annex Roof Space . Sublandlord agrees that upon the written request of Subtenant delivered at any time during the Sublease Term, Sublandlord shall sublease to Subtenant the Roof Space of the Annex during the Term for no additional consideration. Subtenant’s use and occupancy of the Roof Space of the Annex, to the extent subsequently subleased by Subtenant, shall at all times be in accordance with the terms and conditions of the Office Sublease, dated April 23, 2001, between TMG\One Market, L.P., a Delaware limited partnership, as Landlord, and Epicentric, Inc., predecessor-in-interest to Sublandlord, as Tenant, a true and correct copy of which is attached hereto as Exhibit C (the “Master Sublease”). Subtenant shall have no right to use, occupy or access the Roof Space of the Annex prior to entering into a sublease agreement with Sublandlord for the Roof Space. The effectiveness of such sublease of the Roof Space shall be conditioned upon obtaining Master Landlord’s and Equity Office Properties’ consent to such sublease within 30 days after the date

 

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thereof (the “Roof Space Consents”). The terms and conditions of the Roof Space Consents shall be mutually acceptable to both Sublandlord and Subtenant in their reasonable discretion. Sublandlord shall use commercially reasonable efforts to obtain the Roof Space Consents if requested by Subtenant. Subtenant shall be responsible for any fees, costs and expenses properly payable to Master Landlord or Equity Office Properties pursuant to Article 17 of the Master Sublease. Sublandlord agrees that during the Term, without Subtenant’s written consent, to be granted or withheld in Subtenant’s sole and absolute discretion, it shall not (i) occupy or use in any manner the Roof Space, (ii) sublease or assign any rights to the Master Sublease or the Roof Space to any party other than Subtenant, or (iii) terminate the Master Sublease. Sublandlord conforms and agrees that, notwithstanding anything to the contrary contained herein, it shall have no right of ingress or egress, or any easement or license of any kind, through the Subleased Premises in order to access the Roof Space, and Sublandlord waives to the fullest extent permitted by law any right to enter the Subleased Premises for the purpose of accessing the Roof Space; provided, however, Sublandlord, its employees, contractors and agents shall have the right of ingress and egress through the Subleased Premises to access the Roof Space to perform (1) any maintenance, improvements, repairs or replacements required by applicable Laws, Master Landlord or Equity Office Properties, (2) inspections of the Roof Space and/or Furniture, and (3) any other obligations required to be performed by Sublandlord under the Master Sublease.

 

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Sublandlord and Subtenant have executed this Sublease as of the date first above written.

 

SUBLANDLORD:   Vignette Corporation, a Delaware corporation						SUBTENANT:   Salesforce.com, a Delaware corporation
By		/s/ Charles Sansbury				By		/s/ David Schellhase
Name		Charles Sansbury				Name		David Schellhase
Its		CFO				Its		VP and General Counsel

 

APPROVED: /s/ Illegible

 

VIGNETTE LEGAL

 

APPROVED AS TO LEGAL FORM by counsel to

Sublandlord:

 

Fisher Sweetbaum & Levin, P.C.
By		/s/ Illegible
Date		8/5/03

 

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EXHIBIT A

 

Subleased Premises

 

A-1

One Market — 7 ^th Floor

[GRAPHIC] 37,358 SF

 

[GRAPHIC]

 

EXHIBIT B

 

Master Lease

 

B-1

OFFICE LEASE

 

THE LANDMARK @ ONE MARKET

San Francisco, California

 

TMG\ONE MARKET, L.P.

 

LANDLORD

 

and

 

EPICENTRIC, INC.

 

TENANT

 

APRIL 23, 2001

 

OFFICE LEASE

 

THE LANDMARK @ ONE Market

San Francisco, California

 

BASIC LEASE INFORMATION

 

 

- i -

 

- ii -

 

The Basic Lease Information is incorporated into and made a part of the Lease. Each reference in the Lease to any Basic Lease Information shall mean the applicable information set forth above. In the event of any conflict between an item in the Basic Lease Information and the Lease, the Lease shall control.

 

- iii -

OFFICE LEASE

 

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

 

1. Definitions .

 

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

 

Alterations : Alterations, additions or other improvements to the Premises made by or on behalf of Tenant (but not including Tenant’s moveable trade fixtures or moveable items of personal property).

 

Annex : The office building consisting of 6-stories located adjacent to the westerly wing of the Building.

 

Annex Lease : That certain sublease dated as of even date with this Lease, between Landlord and Tenant for a portion of the space located in the Annex.

 

Base Operating Expenses and Base Real Estate Taxes : The Operating Expenses and the Real Estate Taxes paid or incurred by Landlord in the Base Year. For purposes of determining Real Estate Taxes for the Base Year, Landlord shall make an appropriate adjustment to the Real Estate Taxes for such year as reasonably determined by Landlord using sound accounting and management principles, to determine the amount of Real Estate Taxes (including the annual installment of any special assessment, including any special assessment first assessed after 2001, but relating to the renovation of the Building or the initial buildout of the Premises) that would have been incurred during such year if the tenant improvements in the Building had been fully constructed and the Land, the Building, and all tenant improvements in the Building had been fully assessed for Real Estate Tax purposes. For purposes of determining Operating Expenses for the Base Year, if Landlord does not obtain earthquake insurance for the Building during the Base Year, Landlord shall make an appropriate adjustment to the amount of Operating Expenses for the Base Year at such time as Landlord elects to obtain earthquake insurance so as to impute the amount of the premium that would have been incurred as an Operating Expense if not self insured (assuming such insurance was competitively bid and included customary coverage and exclusions and commercially reasonable deductibles).

 

Building : The office building consisting of an 11-story building located on the Land, commonly known as The Landmark @ One Market, One Market Street, San Francisco, California, and any additions to such Building.

 

Escalation Rent : Tenant’s Percentage Share of the total dollar increase, if any, in Operating Expenses and in Real Estate Taxes, each as paid or incurred by Landlord in each calendar year, or part thereof, after the Base Year, over the amount of Base Operating Expenses and Base Real Estate Taxes. If the Building is less than ninety-five percent (95%) occupied during any part of any year (including the Base Year), Landlord shall make an appropriate adjustment of the variable components of Operating Expenses and Real Estate Taxes for that year, as reasonably determined by Landlord using sound accounting and management principles, in determine the amount of Operating Expenses and Real Estate Taxes that would have been incurred during such year if the Building had been ninety-five percent (95%) occupied during the entire year. If the management fees for the Building for any year are calculated as a different percentage of gross revenue than in the Base Year, then the percentage used in

 

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the calculation of management fees in any such year shall be adjusted upward or downward to be identical to the percentage used during the Base Year. This amount shall be considered to have been the amount of Operating Expenses and Real Estate Taxes for that year. For purposes hereof, “variable components” include only those component expenses that are affected by variations in occupancy levels.

 

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

 

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

 

Operating Expenses : All costs of management, operation, maintenance and repair of the Building and the Land, including, but not limited to, the following: (i) salaries, wages, benefits and other payroll expenses of employees engaged in the operation, maintenance or repair of the Building; (ii) property management fees and expenses (not to exceed 3.5% of the gross revenue from the Building and the Land); (iii) rent (or rental value) and expenses for Landlord’s and any property manager’s offices in the Building; (iv) electricity, natural gas, water, waste disposal, sewer, heating, lighting, air conditioning and ventilating and other utilities: (v) janitorial, maintenance, security, life safety and other services, such as alarm service, window cleaning and elevator maintenance and uniforms for personnel providing services; (vi) repair and replacement, resurfacing or repaving of paved areas, sidewalks, curbs and gutters (except that any such work which constitutes a capital improvement shall be included in Operating Expenses in the manner provided in clause (xiv) below); (vii) landscaping, ground keeping, management, operation, and maintenance and repair of all public, private and park areas adjacent to the Building; (viii) materials, supplies, tools and rental equipment; (ix) license, permit and inspection fees and costs; (x) insurance premiums and costs (including an imputed insurance premium if Landlord self-insures, or a proportionate share if Landlord insures under a “blanket” policy), and the deductible portion of any insured loss under Landlord’s insurance; (xi) sales, use and excise taxes; (xii) legal, accounting and other professional services for the Building, including costs, fees and expenses of contesting the validity or applicability of any law, ordinance, rule, regulation or order relating to the Building; (xiii) depreciation on personal property, including exterior window draperies provided by Landlord and floor coverings in the common areas and other public portions of the Building, and/or rental costs of leased furniture, fixtures, and equipment; and (xiv) the cost of any capital improvements to the Building made at any time that are intended in Landlord’s judgment as labor saving devices, or to reduce or eliminate other Operating Expenses or to effect other economies in the operation, maintenance, or management of the Building, or that are necessary or appropriate in Landlord’s judgment for the health and safety of occupants of the Building, or that are required under any law, ordinance, rule, regulation or order which was not applicable to the Building as of the date of this Lease, all amortized over such reasonable period as Landlord shall determine at an interest rate of ten percent (10%) per annum, or, if applicable, the rate paid by Landlord on funds borrowed for the purpose of constructing or installing such

 

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capital improvements. Operating Expenses shall not include: (A) Real Estate Taxes; (B) legal fees, brokers’ commissions or other costs incurred in the negotiation, termination, or extension of leases or in proceedings involving a specific tenant; (C) depreciation, except as set forth above; (D) interest, amortization or other payments on loans to Landlord except as a component of amortization as set forth above; (E) the cost of capital improvements, except as set forth above; (F) except as provided in item (xiv) above, costs incurred in connection with the original construction of the Building or in connection with any major change in the Building, such as adding or deleting floors; (G) except as provided in item (xiv) above, costs of alterations or improvements, other than maintenance items to the Premises or the leased premises of other tenants; (H) interest, principal, late charges, default fees, prepayment penalties or premiums on any debt owed by Landlord, including any mortgage debt; (I) costs of correcting defects in or inadequacy of the renovation of the Building; (J) expenses directly resulting from the negligence of the Landlord, its agents, servants or employees; (K) legal fees, space planners’ fees, real estate brokers’ leasing commissions and advertising expenses incurred in connection with the original development or original leasing of the Building or future leasing of the Building; (L) costs for which Landlord is fully reimbursed by any tenant or occupant of the Building or by insurance by its carrier or any tenant’s carrier or by anyone else; (M) any bad debt loss, rent loss, or reserves for bad debts or rent loss; (N) expenses of extraordinary services provided to other tenants in the Building which are made available to Tenant at cost or for which Tenant is separately charged; (O) costs associated with the operation of the business of the partnership which constitutes Landlord, as the same are distinguished from the costs of operation of the Building, including partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be the issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building, costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims, litigation or arbitrations respecting Landlord and/or the Building and/or the site upon which the Building is situated; (P) the wages and benefits of any employee who does not devote substantially all of his or her time to the Building unless such wages and benefits are prorated to reflect time spent on maintaining, securing, repairing, operating or managing the Building vis-a-vis time spent on matters unrelated to such activities; (Q) damages, costs, fees, fines, penalties and interest arising from a default by Landlord under any obligation to a third party; (R) amounts paid as ground rental by Landlord; (S) any costs or expenses incurred in connection with any portion of the ground floor, to the extent devoted to retail operation, unless such square footage is included in the Rentable Area computation for the Building; (T) costs, including permit, license and inspection costs, incurred with respect to the installation of tenant improvements made for new tenants in the Building or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building; (U) costs paid to Landlord or to affiliates of Landlord for services in the Building to the extent the same materially exceed or would materially exceed the costs for such services if rendered by first class unaffiliated third parties on a competitive basis; (V) electric power costs for which any tenant directly contracts with the local public service company; (W) costs arising from Landlord’s political or charitable contributions; (X) costs arising from latent defects in the Building or improvements installed by Landlord; (Y) costs, other than those incurred in ordinary maintenance, for sculpture, paintings or other objects of art; (Z) Landlord’s general corporate overhead; (AA) all costs in connection with the ownership, operation and maintenance of any off-site garage facilities associated with the Building, and all costs in connection with the operation of any parking facilities in the Building except costs of all utilities (heating, ventilating, air cooling, if any, electricity, water, serer, elevators), for repairs and replacements and for steam cleaning; (BB) capital expenditures required solely by Landlord’s failure to comply with laws applicable to the Building, including the Premises, as of the date of this Lease; (CC) income, franchise taxes and dividends; (DD) capital expenditures to common areas on multi-tenant floors to the extent such expenditures are made solely to accommodate the tenants on such floors; and (EE) the cost of removal or remediation of hazardous substances required in order to comply with any Environmental Law (as defined below) (i) applicable to the Building, including the Premises, as of the date of this Lease or (ii) with respect to subsurface removal

 

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or remediation only, not applicable to the Building, including the Premises, as of the date of this Lease, which subsurface removal or remediation is required in connection with the re-construction of the Building following an earthquake or casualty. Subject to the provisions of this definition, the determination of Operating Expenses shall be made by Landlord in accordance with generally accepted accounting principles and practices consistently applied.

 

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

 

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

 

Rentable Area : As to a floor leased entirely by Tenant, the sum of: (i) all areas within exterior permanent Building walls measured to the applicable portion of the glass surface of outer Building walls as specified in ANZI/BOMA 1996 Standards, including restrooms, janitor, telephone and electrical closets, mechanical areas, and columns and projections necessary to the Building, but excluding public stairs, elevator shafts and pipe shafts, plus (ii) Tenant’s pro rata share of building common areas as determined in accordance with ANZI/BOMA 1996 Standards. As to a floor only a portion of which is leased by Tenant, the aggregate of (i) the Leased Area (as defined below) of the portion of the floor occupied by Tenant, plus (ii) the result obtained by multiplying (1) the area of the Common Area (as defined below) on such floor by (2) a fraction whose numerator is the Leased Area of Tenant’s portion of the floor and whose denominator is the Leased Area of all tenant space on such floor, plus (iii) in the event that Landlord must enlarge or alter in any way, shape or fashion the Common Area to accommodate Tenant’s Leased Area, the total additional Common Area space. For purposes of this paragraph, “Leased Area” shall mean all floor area in a tenant space, measured to the inside glass surface of exterior Building walls, to the center of corridors and other permanent partitions, and to the center of partitions that separate tenant space from adjoining tenant spaces, without deduction for columns and projections necessary to the Building; and “Common Area” shall mean the total area on a floor consisting of restrooms, janitor, telephone and electrical closets, mechanical areas and public corridors providing access to tenant space on such floor, but excluding public stairs, elevator shafts and pipe shafts.

 

Tenant’s Percentage Share : The percentage figure specified in the Basic Lease Information. Landlord and Tenant acknowledge that Tenant’s Percentage Share has been obtained by dividing the Rentable Area of the Premises, as specified in the Basic Lease Information by the total

 

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

 

Term : The period from the date of the full execution of this Lease to the Expiration Date.

 

Wattage Allowance : The product obtained by multiplying the Rentable Area of the Premises by 6 watts. “Lighting Wattage Allowance” means thirty-three percent (33%) of the Wattage Allowance.

 

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

 

2. Lease of Premises .

 

2.1. Premises . Landlord leases to Tenant and Tenant leases from Landlord the Premises, together with the non-exclusive right to use, in common with others, the lobbies, entrances, stairs, elevators, plazas, pedestrian walkways, restrooms, and other public portions of the Building, all subject to the terms, covenants and conditions set forth in this Lease. Subject to compliance with applicable law, Tenant shall have the right at its cost to decorate the stair wells within its Premises and to install a card access system to the doors from the stairwells to the Premises (including all cabling required for such system) so as to permit travel by Tenant between the floors of the Premises. The right to use the stairwells however shall remain non-exclusive. All the windows and exterior walls of the Premises, the terraces adjacent to the Premises, if any, and any space in the Premises used for shafts, columns, projections, stacks, pipes, conduits, ducts, electric utilities, sinks or other Building facilities, and the use thereof and access thereto through the Premises for the purposes of management, operation, maintenance and repairs, are reserved to Landlord.

 

2.2. Satellite Dish/Antennae . Subject to Tenant’s compliance (at Tenant’s sole cost and expense) with all applicable laws, rules and ordinances, and subject to Tenant obtaining Landlord’s prior written consent, which shall not be unreasonably withheld, Tenant shall have the right to elect, by delivery of written notice to Landlord, to install, at Tenant’s sole cost and expense, an antenna or satellite dish on the roof of the Building in a location determined by Landlord in its sole discretion (the “Dish”). Tenant shall be solely responsible for the installation, insurance, maintenance and repair of the Dish and the repair of any damage to the roof of the Building caused by Tenant’s use, installation or maintenance of the Dish.. The Dish shall be of reasonable size and design so as not to materially and adversely affect the Building structure, loading, systems or aesthetics. The use and installation of any antenna or satellite dish on the roof of the Building by any other tenant or occupant of the Building shall not interfere with Tenant’s use of the Dish and Tenant’s use and installation of the Dish shall not interfere with the use of antennas or satellite dishes by other tenants of the Building. The Dish may be installed only after the acquisition by Tenant of all appropriate permits, consents and licenses. The provisions of this Lease regarding Alterations shall apply as if the installation of the Dish were a Tenant Alteration.

 

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2.3. Sixth Floor Ceiling . Tenant shall have reasonable access to the space above the 6 ^th floor ceiling of the Building so long as Tenant complies with the following requirements: (i) Tenant shall give not less than two (2) business days prior notice to Landlord and the then current tenant of the 6 ^th Floor of the request for access, unless access is needed sooner due to an emergency, (ii) the date and time requested for access shall be reasonably acceptable to Landlord and the then current tenant of the 6 ^th Floor of the Building, (iii) access will be restricted to evenings and weekends, and (iv) Tenant shall immediately repair any damage caused by its access; provided, however, that Tenant shall have the right during the first ninety (90) days following the date of this Lease to access the space above the 6 ^th floor ceiling of the Building during normal business hours so long as Tenant uses reasonable efforts to minimize its disruption of normal business operations in the Building.

 

3. Term: Condition and Acceptance of Premises .

 

3.1 Initial Term and Acceptance of Premises . Except as hereinafter provided, and unless sooner terminated pursuant to the provisions of this Lease, the Term of this Lease shall commence on the date of the full execution of this Lease and end on the Expiration Date. Tenant hereby acknowledges that Tenant is accepting the Premises in their AS IS condition and that Landlord shall have absolutely no obligation to perform any construction or tenant improvement work in the Premises. Tenant hereby accepts possession of the Premises. Tenant further acknowledges that Tenant is accepting possession of the Premises subject to the temporary continued occupancy of Scient Corporation in a portion of the Premises, subject to the terms of a separate agreement between Tenant and Scient Corporation.

 

3.2 Option to Extend .

 

3.2.1. Exercise of Option to Extend Term . If no “Suspension Condition” (as hereinafter defined) exists at the time of Tenant’s exercise of an option to extend the Term or at the commencement of the Extended Term, as the case may be, Tenant shall have one (1) option (the “Extension Option”) to extend the Initial Term for an additional period that shall expire on December 31, 2010 (the “Extended Term”). To exercise Tenant’s option with respect to the Extended Term, Tenant shall give notice to Landlord not earlier than eighteen (18) months prior and not later than twelve (12) months prior to the expiration of the Initial Term (“Election Notice”). A “Suspension Condition” shall mean the existence of any event or condition of default after the expiration of any applicable grace, notice or cure periods.

 

3.2.2. Fair Market Rent . If Tenant properly and timely exercises Tenant’s Extension Option to Section 3.2.1 above, such Extended Term shall be upon all of the same terms, covenants and conditions of this Lease; provided, however, that the Base Rent applicable to the Premises for the Extended Term shall be the greater of: (a) the Base Rent and Escalation Rent as of the last month of the Initial Term, (b) one hundred percent (100%) of the “Fair Market Rent” for space comparable to the Premises as of the commencement of such Extended Term, or (c) $56.00/square foot of Rentable Area during the first 2 years of the Extended Term and $58.25/square foot of Rentable Area during the remainder of the Extended Term. “Fair Market Rent” shall mean the annual rental being charged for first class space comparable to the Premises in buildings comparable to the Building in the financial district of San Francisco, taking into account location, condition and improvements to the space; provided, however, that Fair Market Rent shall not be discounted to reflect tenant improvement allowances granted to other tenants; provided further, however, that the determination of Fair Market Rent shall take into account the 2001 calendar year Base Year under this Lease. Tenant shall pay all leasing commissions and consulting fees payable in connection with such extensions, unless such leasing commissions or consulting fees arise solely out of a contractual relationship between Landlord and a broker or consultant. All other terms and conditions of the Lease, which may be amended from time to time by the parties in accordance with the provisions of the Lease, shall remain in full force and effect and shall apply during the Extended Term,

 

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except that there shall be no further option to extend the Term beyond December 31, 2010. The Base Year shall remain 2001 during the entire Extended Term.

 

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

 

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

 

(i) If the parties are unable to agree on the Fair Market Rent within the allowed time, either party may demand an appraisal by giving written notice to the other party, which demand to be effective must state the name, address and qualifications of an appraiser selected by the party demanding the appraisal (“Notifying Party”). Within ten (10) days following the Notifying Party’s appraisal demand, the other party (“Non-Notifying Party”) shall either approve the appraiser selected by the Notifying Party or select a second properly qualified appraiser by giving written notice of the name, address and qualification of said appraiser to the Notifying Party. If the Non-Notifying Party fails to select an appraiser within the ten (10) day period, the appraiser selected by the Notifying Party shall be deemed selected by both parties and no other appraiser shall be selected. If two (2) appraisers are selected, they shall select a third appropriately qualified appraiser. If the two (2) appraisers fail to select a third qualified appraiser, the third appraiser shall be appointed by the then presiding judge of the county where the Premises are located upon application by either party.

 

(ii) If only one appraiser is selected, that appraiser shall notify the parties in simple letter form of its determination of the Fair Market Rent for the Premises within fifteen (15) days following his or her selection, which appraisal shall be conclusively determinative and binding on the parties as the appraised Fair Market Rent.

 

(iii) If multiple appraisers are selected, the appraisers shall meet not later than ten (10) days following the selection of the last appraiser. At such meeting, the appraisers shall attempt to determine the Fair Market Rent for the Premises as of the commencement date of the Extended Term in question by the agreement of at least two (2) of the appraisers.

 

(iv) If two (2) or more of the appraisers agree on the Fair Market Rent for the Premises at the initial meeting, such agreement shall be determinative and binding upon the parties hereto and the agreeing appraisers shall forthwith notify both Landlord and Tenant of the amount set by such agreement. If multiple appraisers are selected and two (2) appraisers are unable to agree on the Fair Market Rent for the Premises, each appraiser shall submit to Landlord and Tenant his or her respective independent appraisal of the Fair Market Rent for the Premises, in simple letter form, within twenty (20) days following appointment of the final appraiser. The parties shall then determine the Fair Market Rent for the Premises by averaging the appraisals; provided that any high or low appraisal, differing from the middle appraisal by more than ten percent (10%) of the middle appraisal, shall be disregarded in calculating the average.

 

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

 

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fees and expenses of the appraiser it selects and one-half (1/2) of the fees and expenses of the third appraiser.

 

3.2.5. Amendment to Lease . Immediately after the Fair Market Rent has been determined, the parties shall enter into an amendment to this Lease setting forth the Base Rent for the applicable Extended Term and the new Expiration Date of the Term of the Lease.

 

4. Rent .

 

4.1. Obligation to Pay Base Rent . Tenant shall pay Base Rent to Landlord, in advance, in equal monthly installments, commencing on or before the Commencement Date, and thereafter on or before the first day of each calendar month during the Term. If the Commencement Date and/or Expiration Date is other than the first day of a calendar month, the installment of Base Rent for the first and/or last fractional month of the Term shall be prorated on a daily basis. On the Commencement Date, Tenant shall pay to Landlord the first month’s Base Rent. If the Annex Lease is terminated as a result of a termination of the Annex Master Lease (other than a termination due to Tenant’s actions or omissions), then the Base Rent shall automatically be reduced during the remainder of the Term by an amount equal to $6,226.33/month.

 

4.2. Manner of Rent Payment . All Rent shall be paid by Tenant without notice, demand, abatement, deduction or offset, in lawful money of the United States of America, payable to Landlord, at Landlord’s Address as set forth in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate by notice to Tenant.

 

4.3. Additional Rent . All Rent not characterized as Base Rent or Escalation Rent shall constitute additional rent, and if payable to Landlord shall, unless otherwise specified in this Lease, be due and payable fifteen (15) days after Tenant’s receipt of Landlord’s invoice therefor.

 

4.4. Late Payment of Rent; Interest . Tenant acknowledges that late payment by Tenant of any Rent will cause Landlord to incur administrative costs not contemplated by this Lease, the exact amount of which are extremely difficult and impracticable to ascertain based on the facts and circumstances pertaining as of the Lease Date. Accordingly, if any Rent is not paid by Tenant when due, Tenant shall pay to Landlord, with such Rent, a late charge equal to three percent (3%) of such Rent; provided, however, that the following additional provisions shall apply to such late charge: (i) the first two late payments in any calendar year shall not result in any late charge payment unless such payment of Rent is not received within one (1) business day after telephonic notice by Landlord to each of Tenant’s Vice President of Finance, Controller and Assistant Treasurer (or any person succeeding such person for whom notice has been provided to Landlord), and (ii) if there are more than three (3) late payments of Rent by Tenant in any calendar year, then the late charge for each subsequent late payment in such calendar year shall be five percent (5%). Any Rent, other than late charges, due Landlord under this Lease, if not paid when due, shall also bear interest from the date due until paid, at the rate of ten percent (10%) per annum or, if a higher rate is legally permissible, at the highest rate legally permitted. The parties acknowledge that such late charge and interest represent a fair and reasonable estimate of the administrative costs and loss of use of funds Landlord will incur by reason of a late Rent payment by Tenant, but Landlord’s acceptance of such late charge and/or interest shall not constitute a waiver of Tenant’s default with respect to such Rent or prevent Landlord from exercising any other rights and remedies provided under this Lease, at law or in equity.

 

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5. Calculation and Payments of Escalation Rent . During each full or partial calendar year of the Term subsequent to the Base year, Tenant shall pay to Landlord Escalation Rent in accordance with the following procedures:

 

5.1. Payment of Estimated Escalation Rent . During December of the Base Year and December of each subsequent calendar year, or as soon thereafter as practicable (and Landlord shall use reasonable efforts to provide such information on or before March 1 of each subsequent calendar year), Landlord shall give Tenant notice of its estimate of Escalation Rent due for the next ensuing calendar year. On or before the first day of each month during such next ensuing calendar year, Tenant shall pay to Landlord in advance, in addition to Base Rent, one-twelfth (1/12th) of such estimated Escalation Rent. In the event such notice is given after December 31st of any year during the Term, (i) Tenant shall continue to pay Escalation Rent on the basis of the prior calendar year’s estimate until the month after such notice is given, (ii) subsequent payments by Tenant shall be based of the estimate of Escalation Rent set forth in Landlord’s notice, and (iii) with the first monthly payment of Escalation Rent based on the estimate set forth in Landlord’s notice, Tenant shall also pay the difference, if any, between the amount previously paid for such calendar year and the amount which Tenant would have paid through the month in which such notice is given, based on Landlord’s noticed estimate or, in the alternative, if such amount previously paid by Tenant for such calendar year through the month in which such notice is given exceeds the amount which Tenant would have paid through such month based on Landlord’s noticed estimate, Landlord shall credit such excess amount against the next monthly payments of Escalation Rent due from Tenant. If at any time Landlord reasonably determines that the Escalation Rent for the current calendar year will vary from Landlord’s estimate by more than five percent (5%), Landlord may, by notice to Tenant, revise its estimate for such calendar year, and subsequent payments by Tenant for such calendar year shall be based upon such revised estimate.

 

5.2. Escalation Rent Statement and Adjustment . Within one hundred twenty (120) days after the close of each calendar year, or as soon-thereafter as practicable, Landlord shall deliver to Tenant a statement of the actual Escalation Rent for such calendar year, accompanied by a statement prepared by Landlord showing in reasonable detail the Operating Expenses and the Real Estate Taxes comprising the actual Escalation Rent. If Landlord’s statement shows that Tenant owes an amount less than the payments previously made by Tenant for such calendar year, Landlord shall credit the difference first against any sums then owed by Tenant to Landlord and then against the next payment or payments of Rent due Landlord, except that if a credit amount is due Tenant after termination of this Lease, Landlord shall pay to Tenant any excess remaining after Landlord credits such amount against any sums owed by Tenant to Landlord. If Landlord’s statement shows that Tenant owes an amount more than the payments previously made by Tenant for such calendar year, Tenant shall pay the difference to Landlord within fifteen (15) days after delivery of the statement. Tenant shall have the right to inspect Landlord’s books and records relating to the calculation of Operating Expenses and Real Estate Taxes, subject to the following limitations: (i) such inspection shall be conducted no more than one time per calendar year, (ii) such inspection shall be conducted within two (2) years after Tenant’s receipt of Landlord’s statement of Operating Expenses and Real Estate Taxes; (iii) subject to the following, such inspection may not be conducted by a person or entity whose compensation is in any way calculated based on the results of such audit; provided, however, that if such inspection is conducted by such person or entity, then Tenant shall pay to Landlord on demand all of Landlord’s reasonable costs and expenses incurred in connection with such inspection; and (iv) such information shall be kept in the strictest confidence by Tenant and any other person or entity performing such inspection. If Tenant in good faith disputes the accuracy of any statement on the basis of any such inspection, such dispute must be alleged in reasonable detail in a written notice to Landlord within ninety (90) days following Tenant’s completion of such inspection. If actual Operating Expenses or Real Estate Taxes are ultimately determined to have been overstated by Landlord for any calendar year, then Landlord shall within thirty (30) days thereafter refund to Tenant the applicable overpayment of Escalation Rent.

 

5.3. Proration for Partial Year . If this Lease terminates other than on the last day of a calendar year (other than due to Tenant’s default), the amount of Escalation Rent for such fractional

 

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calendar year shall be prorated on a daily basis. Upon such termination, Landlord may, at its option, calculate the adjustment in Escalation Rent prior to the time specified in Section 5.2 above. Tenant’s obligation to pay Escalation Rent, as set forth in Paragraph 5.2, above, shall survive the expiration or termination of this Lease.

 

6. Impositions Payable by Tenant .Tenant shall pay all Impositions prior to delinquency. If billed directly to Tenant, then, subject to Tenant’s right to contest such Impositions (upon the posting of a bond or other security reasonably satisfactory to Landlord), Tenant shall pay such Impositions and concurrently deliver to Landlord evidence of such payments. If any Impositions are billed to Landlord or included in bills to Landlord for Real Estate Taxes or other charges, then Tenant shall pay to Landlord all such amounts within fifteen (15) days after delivery of Landlord’s invoice therefor. If applicable law prohibits Tenant from reimbursing Landlord for an Imposition, but Landlord may lawfully increase the Base Rent to account for Landlord’s payment of such Imposition, the Base Rent payable to Landlord shall be increased to net to Landlord the same return without reimbursement of such Imposition as would have been received by Landlord with reimbursement of such Imposition. Tenant’s obligation to pay Impositions which have accrued and remain unpaid upon the expiration or earlier termination of this Lease shall survive the expiration or earlier termination of this Lease.

 

7. Use of Premises .

 

7.1. Permitted Use . The Premises shall be used solely for the Permitted Use and for no other use or purpose; provided, however, that Tenant shall also have the right to use the Roof Space of the Annex (as defined in the Annex Lease) for an outside terrace so long as Tenant satisfies the following requirements: (i) Tenant obtains all required permits for such use; (ii) Tenant constructs at its sole cost and expense all improvements to the Roof Space required to be performed by Tenant in order to obtain a certificate of occupancy for such Roof Space; (iii) Tenant’s use of the roof does not violate any terms of existing roof warranties so long as such warranties do not prohibit the use of the roof for an outside terrace, (iv) Tenant pays to Landlord one hundred percent (100%) of any increase in Landlord’s insurance expenses arising out of such use, and (v) Tenant fully complies with all of the terms of the Annex Lease.

 

7.2. No Violation of Legal and Insurance Requirements . Tenant shall not do or permit to be done, or bring or keep or permit to be brought or kept, in or about the Premises, or any other portion of the Building, anything which (i) is prohibited by or will in any way conflict with any law, ordinance, rule or regulation; (ii) would invalidate or be in conflict with the provisions of any insurance policy carried by Landlord or Tenant on any portion of the Building or Premises, or any property therein; or (iii) would cause a cancellation of any such insurance, increase the existing rate of or affect any such Landlord’s insurance, or subject Landlord to any liability or responsibility for injury to any person or property. If Tenant does or permits anything to be done which increases the cost of any of Landlord’s insurance, or which results in the need, in Landlord’s reasonable judgment, for additional insurance by Landlord or Tenant with respect to any portion of the Building or Premises, then Tenant shall reimburse Landlord, upon demand, for any such additional costs or the costs of such additional insurance, and/or procure such additional insurance at Tenant’s sole cost and expense. Exercise by Landlord of such right to require reimbursement of additional costs (including the costs of procuring of additional insurance) shall not limit or preclude Landlord from prohibiting Tenant’s impermissible use of the Premises or from invoking any other right or remedy available to Landlord under this Lease.

 

7.3. Compliance with Legal Insurance and Life Safety Requirements . Except as provided in clauses (i) through (iii) below, Tenant, at its cost and expense, shall promptly comply with all laws, ordinances, rules, regulations, orders and other governmental requirements, the requirements of any board of fire underwriters or other similar body, any directive or occupancy certificate issued pursuant to any law by any public officer or officers, the provisions of all recorded documents affecting any portion

 

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of the Building and all life safety programs, procedures and rules implemented or promulgated by Landlord (“Laws”). Tenant shall not, however, be required to comply with Laws requiring Tenant to make structural changes to the Premises unless necessitated, in whole or in part, by (i) Tenant’s special use or occupancy of, or business conducted in, the Premises, (ii) any acts or omissions of Tenant, its employees, agents, contractors, invitees or licensees, or (iii) Alterations (including any alterations, additions or other improvements to the Premises made by or on behalf of Scient Corporation.)

 

7.4. No Nuisance . Tenant shall not (i) do or permit anything to be done in or about the Premises, or any other portion of the Building, which would injure, or obstruct or interfere with the rights of, Landlord or other occupants of the Building, or others lawfully in or about the Building; (ii) use or allow the Premises to be used in any manner inappropriate for a Class A office building, or for any improper or objectionable purposes; or (iii) cause, maintain or permit any nuisance or waste in, on or about the Premises, or any other portion of the Building.

 

7.5. Hazardous Substances . The term “hazardous substances” as used in the Lease, is defined as follows:

 

Any element, compound, mixture, solution, particle or substance, which presents danger or potential danger of damage or injury to health, welfare or to the environment including, but not limited to: (i) those substances which are inherently or potentially radioactive, explosive, ignitable, corrosive, reactive, carcinogenic or toxic and (ii) those substances which have been recognized as dangerous or potentially dangerous to health, welfare or to the environment by any federal, municipal, state, county or other governmental or quasi-governmental authority and/or any department or agency thereof.

 

Tenant represents and warrants to Landlord and agrees that at all times during the term of this Lease and any extensions or renewals thereof, Tenant shall:

 

(i) promptly comply at Tenant’s sole cost and expense, with all laws, orders, rules, regulations, certificates of occupancy, or other requirements, as the same now exist or may hereafter be enacted, amended or promulgated, of any federal, municipal, state, county or other governmental or quasi-governmental authorities and/or any department or agency thereof relating to the manufacturing, processing, distributing, using, producing, treating, storing (above or below ground level), disposing or allowing to be present (the “Environmental Activity”) of hazardous substances in or about the Premises (each, an “Environmental Law”, and all of them, “Environmental Laws”), to the extent Tenant is responsible for the presence of such hazardous substances.

 

(ii) indemnify and hold Landlord, its agents and employees, harmless from any and all demands, claims, causes of action, penalties, liabilities, judgments, damages (including consequential damages) and expenses including, without limitation, court costs and reasonable attorneys’ fees incurred by Landlord as a result of (a) Tenant’s failure or delay in properly complying with any Environmental Law as required by item (i) above, or (b) any adverse effect which results from the Environmental Activity, whether Tenant or Tenant’s subtenants or any of their respective agents, employees, contractors or invitees, with or without Tenant’s consent has caused, either intentionally or unintentionally, such Environmental Activity. If any action or proceeding is brought against Landlord, its agents or employees by reason of any such claim, Tenant, upon notice from Landlord, will defend such claim at Tenant’s expense with counsel reasonably satisfactory to Landlord. This indemnity obligation by Tenant of Landlord will survive the expiration or earlier termination of this Lease.

 

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(iii) promptly disclose to Landlord by delivering, in the manner prescribed for delivery of notice in this Lease, a copy of any forms, submissions, notices, reports, or other written documentation (each, a “Communication”) relating to any Environmental Activity, whether any such Communication is delivered to Tenant or any of its subtenants or is requested of Tenant or any of its subtenants by any federal, municipal, state, county or other government or quasi-governmental authority and/or any department or agency thereof.

 

(iv) in the event there is a release of any hazardous substance as a result of or in connection with any Environmental Activity by Tenant or any of Tenant’s subtenants or any of their respective agents, employees, contractors or invitees, which must be remediated under any Environmental Law, Landlord shall perform the necessary remediation; and Tenant shall reimburse Landlord for all costs thereby incurred within fifteen (15) days after delivery of a written demand therefor from Landlord (which shall be accompanied by reasonable substantiation of such costs). In the alternative, Landlord shall have the right to require Tenant, at its sole cost and expense, to perform the necessary remediation in accordance with a detailed plan of remediation which shall have been approved in advance in writing by Landlord. Landlord shall give notice to Tenant within thirty (30) days after Landlord receives notice or obtains knowledge of the required remediation. The rights and obligations of Landlord and Tenant set forth in this subparagraph (iv) shall survive the expiration or earlier termination of this Lease.

 

(v) notwithstanding any other provisions of this Lease, allow Landlord, and any authorized representative of Landlord, access and the right to enter and inspect the Premises for Environmental Activity, at any time deemed reasonable by Landlord, without prior notice to Tenant.

 

Compliance by Tenant with any provision of this Section 7.5 shall not be deemed a waiver of any other provision of this Lease. Without limiting the foregoing, Landlord’s consent to any Environmental Activity shall not relieve Tenant of its indemnity obligations under the terms hereof.

 

Landlord represents and warrants to Tenant that as of the date of this Lease Landlord has no actual knowledge of the presence of any hazardous substance in the Building in violation of any applicable Environmental Law, rules or ordinances, except as described in the Phase I and Phase II hazardous materials reports prepared by Geomatrix and delivered by Landlord to Tenant before the execution of this Lease. Landlord shall promptly disclose to Tenant by delivering, in the manner prescribed for delivery of notice in this Lease, a copy of any material Communication relating to any Environmental Activity from any federal, municipal, state, county or other government or quasi-govornmental authority and/or any department or agency thereof to the extent such notice is required by Environmental Laws. Landlord shall comply with all Environmental Laws applicable to the Building to the extent such compliance is required of Landlord as owner of the Building.

 

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

 

7.6.1. Allocation of Responsibility to Landlord . Subject to the provisions of the second sentence of Section 10.2 of this Lease, as between Landlord and Tenant, Landlord shall be responsible that the public entrances, stairways, corridors, restrooms, elevators and elevator lobbies and other public areas in the Building comply with the requirements of Title III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., The Provisions Governing Public Accommodations and Services Operated by Private Entities), and all regulations promulgated thereunder, and all amendments, revisions or modifications thereto now or hereafter adopted or in effect in connection therewith (hereinafter collectively referred to as the “ADA”), and to take such actions and make such alterations and improvements as are necessary for such compliance. As of the Commencement Date,

 

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Landlord shall cause such portions of the Building to so comply with ADA, as interpreted by the local building officials. All costs incurred by Landlord in discharging its responsibilities under this Section 7.6.1 shall be included in Operating Expenses as provided in Section 1.1 , except to the extent such costs relate to violations of ADA laws which occurred before the Commencement Date.

 

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

 

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

 

8. Building Services .

 

8.1. Maintenance of Building . Landlord shall maintain the Building (other than the Premises and the premises of other tenants of the Building) in good order and condition, except for ordinary wear and tear, damage by casualty or condemnation, or damage occasioned by the act or omission of Tenant or Tenant’s employees, agents, contractors, licensees or invitees, which damage shall be repaired by Landlord at Tenant’s expense. Landlord’s maintenance of, and provision of services to, the Building shall be performed in a manner consistent with that of comparable Class A office buildings in the San Francisco, California area. Landlord shall have the right in connection with its maintenance of the Building hereunder (i) to change the arrangement and/or location of any amenity, installation or improvement in the public entrances, stairways. corridors, elevators and elevator lobbies, and other public areas in the Building, and (ii) to utilize portions of the public areas in the Building from time to time for entertainment, displays, product shows, leasing of kiosks or such other uses that in Landlord’s reasonable judgment tend to attract the public, so long as such uses do not materially interfere with or impair Tenant’s access to or use or occupancy of the Premises. Landlord shall not be in default under this Lease or liable for any damages directly or indirectly resulting from or incidental to, nor shall the rental reserved in this Lease be abated by reason of, Landlord’s failure to make any repair or to perform any maintenance required to be made or performed by Landlord under this Section 8.1 , unless such failure shall persist for an unreasonable time after written notice of the need for such repair or maintenance is given to Landlord by Tenant; provided, however, that Landlord shall be liable to Tenant for actual, out of pocket, costs or expenses incurred by Tenant as a direct result of Landlord’s failure to cause the ground floor lobby, shared lobbies on Floors occupied by Tenant or elevators of the Building to comply with laws which are

 

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immediately applicable to, and enforceable against, the Building (subject to Landlord’s reasonable right of contest of such laws).

 

8.2. Building Standard Services . Landlord shall cause to be furnished to Tenant: (i) tepid and cold water to those points of supply and in volumes provided for general use of tenants in the Building; (ii) electricity up to the Wattage Allowance for lighting and the operation of electrically powered office equipment; (iii) heat, ventilation and air conditioning to the extent reasonably required for the comfortable occupancy by Tenant of the Premises during the period from 8:00 a.m to 6:00 p.m. on weekdays (except Building holidays determined by Landlord), or such shorter period as may be prescribed by any applicable policies, regulations or guidelines adopted by any federal, state or local governmental or quasi-governmental entities or utility suppliers; (iv) passenger elevator service; (v) freight elevator service subject to then applicable Building standard procedures and scheduling; (vi) lighting replacement for Building standard lights; (vii) restroom supplies; (viii) window washing as determined by Landlord (which shall not be less than 2 times per year for the exterior portions of Building windows, and 2 times per year for the interior portions of Building windows); (ix) janitor service on a five (5) day per week basis (excluding Building holidays), except for portions of the Premises used for preparing or consuming food or beverages (such janitorial services to include the services described on Exhibit F attached to this Lease); (x) security if and to the extent deemed appropriate by Landlord for the Building (but not less than as set forth on Exhibit F-2 attached to this Lease) (but not individually for Tenant or the Premises – provided that Tenant shall have the right to install its own security service in the Premises), except that Landlord shall not be liable in any manner for acts of others, criminal or otherwise, or for any direct, consequential or other loss, damage, death or injury related to any interruption, discontinuance, malfunction, circumvention or failure of such security service and (xi) access to the Building 24 hours/day seven days/week. Landlord may establish in the Premises or other portions of the Building such measures as are required by laws, ordinances, rules or regulations or as it deems necessary or appropriate to conserve energy, including automatic switching of lights and/or more efficient forms of lighting. Security personnel shall be on-duty, on-site 24 hours/day seven days/week during the Term. The initial Building holidays are described on Exhibit F-1 attached to this Lease.

 

8.3. Interruption or Unavailability of Services . Rent shall not abate, no consecutive or other eviction shall be constructive to have occurred, Tenant shall not be relieved from any of its obligations under this Lease, and Landlord shall not be in default hereunder or liable for any damages directly or indirectly resulting from, the failure of Landlord to furnish, or delay in furnishing, any maintenance or services under this Article 8 as a result of repairs, alterations, improvements or any circumstances beyond Landlord’s reasonable control. Landlord shall use reasonable diligence to remedy any failure or interruption in the furnishing of such maintenance or services. Notwithstanding anything set forth in this Lease to the contrary, if such interruption or unavailability of services continues for more than thirty (30) consecutive days and such interruption or unavailability prevents Tenant from using the Premises, then commencing upon the expiration of such thirty (30) day period, Rent shall abate until beneficial use of the Premises is restored.

 

8.4. Tenant’s Use of Excess Electricity and Water . Tenant shall not, without Landlord’s prior consent, given or withheld in Landlord’s sole discretion, (i) install in the Promises (A) lighting, the aggregate average daily power usage of which exceeds the Lighting Wattage Allowance, or lighting and equipment, the aggregate average daily power usage of which exceeds the Wattage Allowance, or which requires a voltage other than 110/208 volts single-phase, (B) heat generating equipment or lighting other than lights deemed standard for the Building, or (C) supplementary air conditioning facilities, or (ii) permit average permanent occupancy levels in excess of one person per two hundred (200) feet of Rentable Area. If, pursuant to this Section 8.4 , heat-generating equipment or lighting other than Building standard lights are installed or used in the Premises, or occupancy levels are greater than set forth above, or if the Premises or fixtures therein are reconfigured by Alterations, and such equipment, lighting,

 

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occupancy levels or Premises reconfiguration affects the temperature otherwise maintained by the Building air conditioning system, or if equipment is installed in the Premises which requires one or two separate temperature-controlled rooms, Landlord may, at Landlord’s election after notice to Tenant or upon Tenant’s request, install supplementary air conditioning facilities in the Premises, or otherwise modify the ventilating and air conditioning serving the Premises, in order to maintain the temperature otherwise maintained by the Building air conditioning system or to serve such separate temperature-controlled room(s). Tenant shall pay the cost of any transformers, additional risers, panel boards and other facilities if, when and to the extent required to furnish power for, and all maintenance and service costs of, any supplementary air conditioning facilities or modified ventilating and air conditioning, or for lighting and/or equipment the power usage of which exceeds the standards set forth in this Section 8.4 . Notwithstanding the foregoing, Landlord acknowledges that Tenant intends to construct a temperature-controlled computer equipment room in the Premises which will require supplementary air conditioning facilities and Landlord will permit Tenant to install such facilities subject to Landlord’s approval of the plans therefor. The capital, maintenance and service costs of such facilities and modifications shall be paid by Tenant as Rent. Landlord, at its election and at Tenant’s expense, may also install and maintain an electric current meter or water meter (together with all necessary wiring and related equipment) at the Premises to measure the power and/or water usage of such lighting, equipment or ventilation and air conditioning equipment, or may otherwise cause such usage to be measured by reasonable methods.

 

8.5. Provision of Additional Services . If Tenant desires services in additional amounts or at different times than set forth in Section 8.2 above, or any other services that are not provided for in this Lease, Tenant shall make a request for such services to Landlord with such advance notice as Landlord may reasonably require. If Landlord provides such services to Tenant, Tenant shall pay Landlord’s charges for such services within fifteen (15) days after Tenant’s receipt of Landlord’s invoice; provided, however, that Landlord hereby agrees that upon Tenant’s written request Landlord shall provide HVAC service to the Premises 24 hours per day during the Term so long as Tenant pays Landlord’s actual costs for such services, plus an administrative fee not to exceed 15% of the cost of such services, which costs may be based on a reasonable allocation of Landlord’s actual costs.

 

9. Maintenance of Premises . Tenant shall, at all times during the Term, at Tenant’s cost and expense, keep the Premises in good condition and repair, except for ordinary wear and tear and damage by casualty or condemnation. Except as may be specifically set forth in this Lease, Landlord has no obligation to alter, remodel, improve, repair, decorate or paint the Premises, or any part thereof, or any obligation respecting the condition, maintenance and repair of the Premises or any other portion of the Building. Tenant hereby waives all rights, including those provided in California Civil Code Section 1941 or any successor statute, to make repairs which are Landlord’s obligation under this Lease at the expense of Landlord or to receive any setoff or abatement of Rent or in lieu thereof to vacate the Premises or terminate this Lease.

 

10. Alterations to Premises .

 

10.1. Landlord Consent; Procedure . Tenant shall not make or permit to be made any Alterations without Landlord’s prior consent, which consent may be granted or withheld in Landlord’s reasonable discretion; no consent shall be required for non-structural Alterations to any single floor within the Premises which do not require a building permit and which, in the aggregate, cost less than $50,000.00 to construct. Any Alterations to which Landlord has consented shall be made in accordance with procedures as then established by Landlord and the provisions of this Article10 . Tenant shall provide Landlord with written notice of the commencement of all Alterations, within five (5) days before the commencement of such Alterations.

 

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10.2. General Requirements . All Alterations shall be made at Tenant’s cost and expense. Tenant shall be solely responsible for compliance with applicable laws, ordinances, rules and regulations in connection with all Alterations. Without limiting the foregoing or any other provisions of this Lease, if any applicable law, ordinance, rule or regulation provides that any Alteration by Tenant will result in the requirement of the performance of any other work, repair, capital improvement or other expenditure with respect to any portion of the Building (including in the premises of other tenants), then Tenant shall be solely responsible, at Tenant’s sole cost and expense, to perform such work, repair or capital improvement, or to pay such expenditure. Tenant shall be responsible for the cost of any additional alterations required by applicable laws, ordinances, rules and regulations to be made by Landlord to any portion of the Building as a result of Alterations. Tenant shall promptly commence or cause the commencement of construction of all Alterations and complete or cause completion of the same with due diligence as soon as possible after commencement in order to cause the least disruption to Building operations and occupants and to continue Tenant’s business in the Premises. In connection with installing or removing Alterations, Tenant shall pay to Landlord on demand Landlord’s reasonable actual costs incurred in connection with the administration by Landlord (or its agent) of the construction, installation or removal of Alterations, and restoration of the Premises to their previous condition.

 

10.3. Removal of Alterations . If Landlord has not consented to an Alteration (for which such consent is required), Tenant shall, prior to the expiration of the Term or termination of this Lease, remove such Alteration and Tenant’s trade fixtures and personal property at Tenant’s cost and expense and restore the Premises to the condition existing prior to the installation of such Alteration. If Tenant fails so to do, then Landlord may remove such Alteration, trade fixtures and personal property and perform such restoration and Tenant shall reimburse Landlord for Landlord’s cost and expense incurred to perform such removal and restoration (which obligation of Tenant shall survive the expiration or earlier termination of this Lease). Tenant shall repair at its cost and expense all damage to the Premises or the Building caused by the removal of any Alteration. Subject to the foregoing provisions regarding removal, all Alterations (including any above Building standard improvements to the Premises) shall be Landlord’s property and from and after the expiration or earlier termination of this Lease shall remain on the Premises without compensation to Tenant; Tenant’s trade fixtures and personal property shall remain Tenant’s property, subject to applicable California laws regarding abandoned property.

 

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

 

12. Damage or Destruction .

 

12.1. Obligation to Repair . Except as otherwise provided in this Article 12 , if the Premises, or any other portion of the Building necessary for Tenant’s use and occupancy of the Premises, are damaged or destroyed by fire or other casualty, Landlord shall, within thirty (30) days after such event, notify Tenant of the estimated time, in Landlord’s reasonable judgment, required to repair such damage or destruction. If Landlord’s estimate of time is less than one hundred eighty (180) days after the date that Landlord obtains the required building permits for the repair of such damage or destruction, then (i) Landlord shall proceed with all due diligence to repair the Premises, and/or the portion of the Building

 

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necessary for Tenant’s use and occupancy of the Premises, to substantially the condition existing immediately before such damage or destruction, as permitted by and subject to then applicable laws, ordinances, rules and regulations; (ii) this Lease shall remain in full force and effect; and (iii) Base Rent and Escalation Rent shall abate for such part of the Premises rendered unusable by Tenant, in Tenant’s reasonable, good faith judgment, in the conduct of its business during the time such part is so unusable, in the proportion that the Rentable Area contained in the unusable part of the Premises bears to the total Rentable Area of the Premises.

 

12.2. Landlord’s Election . If Landlord determines that the necessary repairs cannot be completed within one hundred eighty (180) days after the date that Landlord obtains the required building permits for the repair of such damage or destruction, or if such damage or destruction arises from causes not covered by Landlord’s insurance policy then in force, and would cost in the aggregate more than $2,000,000 to repair, Landlord may elect, in its notice to Tenant pursuant to Section 12.1 , to (i) terminate this Lease or (ii) repair the Premises or the portion of the Building necessary for Tenant’s use and occupancy of the Premises pursuant to the applicable provisions of Section 12.1 above. If Landlord terminates this Lease, then this Lease shall terminate as of the date of occurrence of the damage or destruction.

 

12.3. Cost of Repairs . Landlord shall pay the cost for repair of the Building and all improvements in the Premises, other than any Alterations. Tenant shall pay the costs to repair all Alterations (but Landlord shall make available to Tenant for such purpose any insurance proceeds received by Landlord for such purpose under Landlord’s insurance policy then in force). Tenant shall also replace or repair, at Tenant’s cost and expense, Tenant’s movable furniture, equipment, trade fixtures and other personal property in the Premises which Tenant shall be responsible for insuring during the Term of this Lease.

 

12.4. Damage at End of Term . Notwithstanding anything to the contrary contained in this Article 12 , if the Premises, or any other portion thereof or of the Building, are materially damaged or destroyed by fire or other casualty within the last twelve (12) months of the Term, then Landlord shall have the right, in its sole discretion, to terminate this Lease by notice to Tenant given within ninety (90) days after the date of such event. Such termination shall be effective on the date specified in Landlord’s notice, but in no event later than the end of such 90-day period. For purposes hereof, the Premises or other portion of the Building shall be deemed to be materially damaged if such damage costs more than $2,000,000 to repair. Notwithstanding the foregoing, if Landlord seeks to terminate the Least in circumstances where the Premises were not affected by any such damage or destruction. Landlord may do so only if Landlord is terminating all other office leases in the Building on account thereof.

 

12.5. Tenant’s Right to Terminate . Notwithstanding anything to the contrary contained in this Article 12 , if the Premises are materially damaged or destroyed by fire or other casualty and the date by which Landlord determines that the necessary repairs could be completed would occur in the last twelve (12) months of the Term, then Tenant shall have the right, in its sole discretion, to terminate this Lease by notice to Landlord given within ninety (90) days after the date of such casualty. Landlord shall, within thirty (30) days after such casualty, notify Tenant of the estimated time, in Landlord’s reasonable judgment, required to repair such damage or destruction. Such termination shall be effective on the date specified in Tenant’s notice, but in no event later than the end of such 90-day period.

 

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

 

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13. Eminent Domain .

 

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

 

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

 

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

 

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

 

14. Insurance .

 

14.1. Liability Insurance . Landlord, with respect to the Building, and Tenant, at its cost and expense with respect to the Premises, shall each maintain or cause to be maintained, from the Lease Date and throughout the Term, a policy or policies of Commercial General Liability insurance with limits of liability not less than Five Million Dollars ($5,000,000.00) per occurrence and in the aggregate. Each

 

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policy shall contain coverage for blanket contractual liability, personal injury liability, and premises operations, coverage deleting liquor liability exclusions and, as to Tenant’s insurance, fire legal liability. Tenant’s policy shall be subject to deductible amounts as Tenant may reasonably elect based on prudent risk management practices for business comparable to Tenant’s business and for Tenant’s financial condition.

 

14.2. Form of Policies . All insurance required by this Article 14 shall be issued on an occurrence basis by solvent companies qualified to do business in the State of California. Any insurance required under this Article 14 may be maintained under a “blanket policy” or an “umbrella policy”, insuring other parties and other locations, so long as the amount and coverage required to be provided hereunder is not thereby diminished. Tenant shall provide Landlord a copy of each policy of insurance or a certificate thereof certifying that the policies contain the provisions required hereunder. Tenant shall deliver such policies or certificates to Landlord as of the date of this Lease or such earlier date as Tenant or Tenant’s contractors, agents, licensees, invitees or employees first enter the Premises and, upon renewal, not less than thirty (30) days prior to the expiration of such coverage. All evidence of insurance provided to Landlord shall provide (i) that Landlord, Landlord’s managing agent and any other person requested by Landlord who has an insurable interest, is designated as an additional insured without limitation as to coverage afforded under such policy, (ii) for severability of interests or that the acts or omissions of one of the insureds or additional insureds shall not reduce or affect coverage available to any other insured or additional insured; (iii) that the insurer agrees not to cancel or alter the policy without at least thirty (30) days prior written notice to all additional insureds; (iv) that the aggregate liability applies solely to the Premises and the remainder of the Building; and (v) that Tenant’s insurance is primary and noncontributing with any insurance carried by Landlord.

 

14.3. Workers’ Compensation Insurance . Tenant, at its sole cost and expense, shall maintain Workers’ Compensation insurance as required by law and employer’s liability insurance in an amount of not less than Five Hundred Thousand Dollars ($500,000).

 

14.4. Additional Tenant Insurance . Tenant, at its sole cost and expense, shall maintain such other insurance as Landlord may reasonably require from time to time, but in no event may Landlord require any other insurance which is (i) not then being required of comparable tenants leasing comparable amounts of space in comparable buildings in the vicinity of the Building or (ii) not then available at commercially reasonable rates.

 

14.5. Landlord’s Casualty Insurance . Landlord shall, during the Term of this Lease, procure and maintain in full force and effect, at a minimum, a policy or policies of fire insurance covering the Building and the permanent tenant improvements in the Premises, with standard extended coverage, vandalism, malicious mischief and sprinkler leakage endorsements. The amount and scope of coverage of Landlord’s insurance hereunder shall be determined by Landlord from time to time in its reasonable discretion based on prudent risk management practices for buildings comparable to the Building (but shall not be less than 90% of full replacement value of the Building and Tenant’s permanent tenant improvements in the Premises, and shall be subject to such deductible amounts as Landlord may reasonably elect based on prudent risk management practices for buildings comparable to the Building. Landlord shall have the right to reduce or terminate any insurance or coverage called for by this Section 14.5 to the extent that any such coverage is not reasonably available in the commercial insurance industry from recognized carriers or not available at a cost which is in Landlord’s judgment commercially reasonable under the circumstances. Landlord shall at Tenant’s request provide a description of Landlord’s coverage then maintained by Landlord pursuant to this Section 14.5 .

 

15. Waiver of Subrogation Rights . Notwithstanding anything to the contrary contained in this lease, Landlord and SPE, on the one hand, and Tenant, on the other hand, for themselves and their

 

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respective insurers, agree to and do hereby release each other of and from any and all claims, demands, actions and causes of action that each may have or claim to have against the other for loss or damage to property, both real and personal, notwithstanding that any such loss or damage may be due to or result from the negligence of either of the parties hereto or their respective employees or agents. Each party shall, to the extent such insurance endorsement is lawfully available at commercially reasonable rates, obtain or cause to be obtained, for the benefit of the other party, a waiver of any right of subrogation which the insurer of such party may acquire against the other party by virtue of the payment of any such loss covered by such insurance.

 

16. Tenant’s Waiver of Liability and Indemnification .

 

16.1. Waiver and Release . Except to the extent due to the gross negligence or willful misconduct of Landlord, Landlord shall not be liable to Tenant or Tenant’s employees, agents, contractors, licenses or invitees for, and Tenant waives and releases Landlord and Landlord’s managing agent from, all claims for loss or damage to any property or injury, illness or death of any person in, upon or about the Premises (including claims caused in whole or in part by the act, omission, or neglect of other tenants, contractors, licensees, invitees or other occupants of the Building or their agents or employees). The waiver and release contained in this Section 16.1 , extends to the officers, directors, shareholders, partners, employees, agents and representatives of Landlord.

 

16.2. Indemnification of Landlord . Except to the extent due to Landlord’s gross negligence or willful misconduct, Tenant shall indemnify, defend, protect and hold Landlord harmless of and from any and all loss, liens, liability, claims, causes of action, damage, injury, cost or expense arising out of or in connection with (i) the making of any alterations, additions or other improvements made by or on behalf of Tenant to the Promises or any Alterations, or (ii) injury to or death of persons or damage to property occurring or resulting directly or indirectly from: (A) the use or occupancy of, or the conduct of business in, the Premises by Tenant or its subtenants or any of their respective officers, directors, employees, agents, contractors, invitees or licensees; (B) any other occurrence or condition in or on the Premises; and (C) acts, neglect or omissions of Tenant, or its subtenants or any of their respective officers, directors, employees, agents, contractors, invitees or licensees, in or about any portion of the Building. Tenant’s indemnity obligation includes reasonable attorneys’ fees and costs, investigation costs and other reasonable costs and expenses incurred by Landlord. If Landlord reasonably disapproves the legal counsel proposed by Tenant for the defense of any claim indemnified against hereunder, Landlord shall have the right to appoint its own legal counsel, the reasonable fees, costs and expenses of which shall be included as part of Tenant’s indemnity obligation hereunder. The indemnification contained in this Section 16.2 shall extend to the officers, directors, shareholders, partners, employees, agents and representatives of Landlord.

 

16.3. Indemnification of Tenant . Landlord shall indemnify, defend, protect and hold Tenant harmless of and from any and all loss, liens, liability, claims, causes of action, damage, injury, cost or expense arising out of or in connection with (i) any breach or default by Landlord in the performance of any of its obligations under this Lease, or (ii) Landlord’s gross negligence or willful misconduct, or (iii) any loss or damage to property or injury to person occurring in the public entrances, stairways, corridors, elevators and elevator lobbies, and other public areas in the Building or the other public areas in the Building (except for such loss, damage or injury for which Tenant is obligated to indemnify Landlord under Section 16.2 ). Landlord’s indemnity obligation includes reasonable attorneys’ fees and costs, investigation costs and other reasonable costs and expenses incurred by Tenant. The indemnification contained in this Section 16.3 shall extend to the officers, directors, shareholders, partners, employees, agents and representatives of Tenant.

 

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17. Assignment and Subletting

 

17.1. Compliance Required . Tenant shall not, directly or indirectly, voluntary or by operation of law, sell, assign or otherwise transfer this Lease, or any interest herein (collectively, “assign” or “assignment”), or sublet the Premises, or any part thereof, or permit the occupancy of the Premises by any person other than Tenant (collectively, “sublease” or “subletting”, the assignee or sublessee under an assignment or sublease being referred to as a “transferee”), without Landlord’s prior consent given or withheld in accordance with the express standards and conditions of this Article 17 and compliance with the other provisions of this Article 17 . Any assignment or subletting made in violation of this Article 17 shall be void. As used herein, an “assignment” includes any sale or other transfer (such as by consolidation, merger or reorganization) of a majority of the voting stock of Tenant, if Tenant is a corporation (other than a corporation publicly traded on The New York Stock Exchange or NASDAQ or similar exchange), or any sale or other transfer of a majority of the beneficial interest in Tenant, if Tenant is any other form of entity. Tenant acknowledges and agrees that the limitations on Tenant’s right to sublet or assign which are set forth in this Article 17 are reasonable and, in particular, that the express standards and conditions upon Tenant’s right to assign or sublet which are set forth in this Article 17 are reasonable as of the Lease Date.

 

17.2. Request by Tenant; Landlord Response . If Tenant desires to effect an assignment or sublease, Tenant shall submit to Landlord a request for consent together with the identity of the parties to the transaction, the nature of the transferee’s proposed business use for the Premises, the proposed documentation for and terms of the transaction, and all other information reasonably requested by Landlord concerning the proposed transaction and the parties involved therein, including certified financial information, credit reports, the business background and references regarding the transferee, and an opportunity to meet and interview the transferee. Within twenty (20) days after the later of such interview or the receipt of all such information required by Landlord, or within thirty (30) days after the date of Tenant’s request to Landlord if Landlord does not request additional information or an interview, Landlord shall have the right, by notice to Tenant, to: (i) consent to the assignment or sublease, subject to the terms of this Article 17; (ii) decline to consent to the assignment or sublease; (iii) in the case of a subletting of at least one full floor of the Premises for a term in excess of six (6) months, to sublet from Tenant the portion of the Premises proposed to be sublet on the terms and conditions set forth in Tenant’s request to Landlord; or (iv) in the case of an assignment, to terminate this Lease as of the date specified by Tenant as the effective date of the proposed assignment, in which event Tenant will be relieved of all unaccrued obligations hereunder as of such date, other than those obligations which survive termination of this Lease. If Landlord elects so to terminate, Tenant shall have the right, by notice to Landlord within five (5) days after Landlord’s exercise of such right, to rescind its request for the proposed assignment, in which event this Lease shall not terminate and shall remain in full force and effect.

 

17.3. Conditions for Landlord Approval . In the event Landlord elects not to sublet from Tenant or terminate this Lease (in whole or in part) as provided in clauses (iii) and (iv) of Section 17.2 , Landlord shall not unreasonably withhold its consent to a proposed subletting or assignment by Tenant. Without limiting the grounds on which it may be reasonable for Landlord to withhold its consent to an assignment or sublease, Tenant agrees that Landlord would be acting reasonably in withholding its consent in the following instances: (i) if Tenant is in default under Lease; (ii) if the transferee is a governmental or quasi-governmental agency, foreign or domestic, (iii) if the transferee is an existing tenant in the Building; (iv) if, in Landlord’s sole judgment, the transferee’s business, use and/or occupancy of the Premises would (A) violate any of the terms of this Lease or the lease of any other tenant in the

 

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Landlord from any other person shall not be deemed a waiver by Landlord of any provision of this Article 17 . On a default by any assignee of Tenant in the performance of any of the terms, covenants or conditions of this Lease, Landlord may proceed directly against Tenant without the necessity of commencing or exhausting remedies against such assignee. No consent by Landlord to any further assignments or sublettings of this Lease, or any modification, amendment or termination of this Lease, or extension, waiver or modification of payment or any other obligations under this Lease, or any other action by Landlord with respect to any assignee or sublessee, or the insolvency, or bankruptcy or default of any such assignee or sublessee, shall affect the continuing liability of Tenant for its obligations under this Lease and Tenant waives any defense arising out of or based thereon, including any suretyship defense of exoneration. Landlord shall have no obligation to notify Tenant or obtain Tenant’s consent with respect to any of the foregoing matters.

 

17.8. No Encumbrance . Notwithstanding anything to the contrary contained in this Article 17 . Tenant shall have no right to encumber, pledge, hypothecate or otherwise transfer this Lease, or any of Tenant’s interest or rights hereunder, as security for any obligation or liability of Tenant.

 

17.9 Assignment or Sublease to Related Entity . As long as no Suspension Condition then exists, Tenant shall have the right, subject to the terms and conditions set forth in this Section 17.9 , without the consent of Landlord, but without in any way releasing Epicentric, Inc. from any of its obligations under this Lease, to (a) assign its interest in this Lease to (i) any corporation which is a successor to Tenant either by merger or consolidation, or (ii) a purchaser of all or substantially all of Tenant’s assets (provided such purchaser shall have also assumed substantially all of Tenant’s liabilities), or (iii) to a corporation or other entity which shall control, be under the control of, or be under common control with Epicentric, Inc. (the term “control” as used herein shall be deemed to mean ownership of more than fifty percent (50%) of the outstanding voting stock of a corporation, or other majority equity and control interest if Tenant is not a corporation) (any such entity being a “Related Entity”), or (b) sublease all or any portion of the Premises to a Related Entity, so long as such sublease does not result in the demising of any space in the Premises. Any assignment or sublease to a Related Entity pursuant to this Section 17.9 shall be subject to the following conditions: (i) the principal purpose of such assignment or sublease is not the acquisition of Tenant’s interest in this Lease (except if such assignment or sublease is made to a Related Entity and is made for a valid intra-corporate business purpose and is not made to circumvent the provisions of this Article 17 ), (ii) any such assignee shall have a net worth and annual income and cash flow, determined in accordance with generally accepted accounting principles, consistently applied, after giving effect to such assignment, in amounts necessary to perform its duties, obligations and liabilities under such assignment, as reasonably determined by Landlord, (iii) such assignment or sublease shall be subject to the terms of this Lease, including the provisions of Sections 17.6 and 17.7 , and (iv) such Related Entity shall have executed all documents reasonably requested by Landlord to memorialize the foregoing. Tenant shall, within ten (10) business days after execution thereof, deliver to Landlord (A) a duplicate original instrument of assignment in form and substance reasonably satisfactory to Landlord, duly executed by Tenant, (B) if applicable, evidence reasonably satisfactory to Landlord establishing compliance by the assignee with the net worth, income and cash flow requirements of clause (b)(ii) above, (C) an instrument in form and substance reasonably satisfactory to Landlord, duly executed by the assignee, in which such assignee shall assume observance and performance of, and agree to be personally bound by, all of the terms, covenants and conditions of this Lease on Tenant’s part to be observed and performed or (D) a duplicate original sublease in form and substance reasonably satisfactory to Landlord, duly executed by Tenant and subtenant.

 

18. Rules and Regulations . Tenant shall observe and comply, and shall cause its sublessees, employees, agents, contractors, licensees and invitees to observe and ^. comply, with the Rules and Regulations of the Building, a copy of which are attached to this Lease as Exhibit D , and, after notice thereof, with all reasonable modifications and additions thereto from time to time promulgated in writing

 

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by Landlord. Landlord shall not be responsible to Tenant, or Tenant’s sublessees, employees, agents, contractors, licensees or invitees, for noncompliance with any Rules and Regulations of the Building by any other tenant, sublessee, employee, agent, contractor, licensee, invitee or other occupant of the Building. Such Rules and Regulations shall be enforced by Landlord in a non-discriminatory manner.

 

19. Entry of Premises by Landlord .

 

19.1. Right to Enter . Upon 24 hours advance notice to Tenant (except in emergencies or in order to provide regularly scheduled or other routine Building standard services or additional services requested by Tenant, or post notices of nonresponsibility or other notices permitted or required by law when no such notice shall be required), Landlord and its authorized agents, employees, and contractors may enter the Premises at reasonable hours to: (i) inspect the same; (ii) determine Tenant’s compliance with its obligations hereunder, (iii) exhibit the same to prospective purchasers, lenders or tenants; (iv) supply any services to be provided by Landlord hereunder, (v) post notices of nonresponsibility or other notices permitted or required by law; (vi) make repairs, improvements or alterations, or perform maintenance in or to, the Premises or any other portion of the Building, including Building systems; and (vii) perform such other functions as Landlord deems reasonably necessary or desirable. Landlord may also grant access to the Premises to government or utility representatives and bring and use on or about the Premises such equipment as reasonably necessary to accomplish the purposes of Landlord’s entry. Landlord shall use reasonable good faith efforts to effect all entries and perform all work hereunder in such manner as to minimize interference with Tenant’s use and occupancy of the Premises. Landlord shall have and retain keys with which to unlock all of the doors in or to the Premises (excluding Tenant’s vaults, safes and similar secure areas designated in writing by Tenant in advance), and Landlord shall have the right to use any and all means which Landlord may deem proper in an emergency in order to obtain entry to the Premises, including secure areas.

 

19.2. Tenant Waiver of Claims . Except for damages to persons or property caused by the negligence or willful misconduct of Landlord or its employees, Tenant waives any claim for damages for any inconvenience to or interference with Tenant’s business, or any loss of occupancy or quiet enjoyment of the Premises, or any other loss, occasioned by any entry effected or work performed under this Article 19 and Tenant shall not be entitled to any abatement of Rent by reason of the exercise of any such right of entry or performance of such work. No entry to the Premises by Landlord or anyone acting under Landlord shall constitute a forcible or unlawful entry into, or a detainer of, the Premises or an eviction, actual or constructive, of Tenant from the Premises, or any portion thereof.

 

20. Default and Remedies .

 

20.1. Events of Default . The occurrence of any of the following events shall constitute a default by Tenant under this Lease:

 

a. Nonpayment of Rent . Failure to pay any Rent when due.

 

b. Unpermitted Assignment . An assignment or sublease made in contravention of any of the provisions of Article 17 above.

 

c. Abandonment . Abandonment of the Premises for a continuous period in excess of five (5) business days. For purposes hereof, “abandonment” shall have the meaning provided under California law.

 

d. Other Obligations . Failure to perform or fulfill any other obligation, covenant, condition or agreement under this Lease.

 

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e. Bankruptcy and Insolvency . A general assignment by Tenant for the benefit of creditors, any action or proceeding commenced by Tenant under any insolvency or bankruptcy act or under any other statute or regulation for protection from creditors, or any such action commenced against Tenant and not discharged within sixty (60) days after the date of commencement; the employment or appointment of a receiver or trustee to take possession of all or substantially all of Tenant’s assets or the Premises; the attachment, execution or other judicial seizure of all or substantially all of Tenant’s assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of ten (10) days after the levy thereof; the admission by Tenant in writing of its inability to pay its debts as they become due; or the filing by Tenant of a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulati