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8-K - FORM 8-K - SALESFORCE COM INCd277012d8k.htm

EXHIBIT 10.1

OFFICE LEASE

by and between

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA,

for the benefit of its Real Estate Account

(“Landlord”)

and

salesforce.com, inc.,

a Delaware corporation

(“Tenant”)

Dated as of

January 5, 2012


LEASE OF PREMISES

     1   

BASIC LEASE PROVISIONS

     1   

STANDARD LEASE PROVISIONS

     9   

1.

    

TERM

     9   

2.

    

BASE RENT AND SECURITY DEPOSIT

     19   

3.

    

ADDITIONAL RENT

     21   

4.

    

IMPROVEMENTS AND ALTERATIONS

     29   

5.

    

REPAIRS

     31   

6.

    

USE OF PREMISES

     33   

7.

    

UTILITIES AND SERVICES

     35   

8.

    

NON-LIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE

     39   

9.

    

FIRE OR CASUALTY

     43   

10.

    

EMINENT DOMAIN

     46   

11.

    

ASSIGNMENT AND SUBLETTING

     47   

12.

    

DEFAULT

     50   

13.

    

ACCESS; CONSTRUCTION

     52   

14.

    

BANKRUPTCY – Intentionally Deleted

     53   

15.

    

SUBSTITUTION OF PREMISES – Intentionally Deleted

     53   

16.

    

SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES

     53   

17.

    

SALE BY LANDLORD; TENANT’S REMEDIES; NONRECOURSE LIABILITY

     56   

18.

    

PARKING; COMMON AREAS

     59   

19.

    

MISCELLANEOUS

     60   

 

 

LIST OF EXHIBITS

 

Schedule 1

     Aggregate Base Rent Schedule

Exhibit A-1

     Floor Plan(s)

Exhibit A-2

     Legal Description of the Project

Exhibit A-3

     Expansion Floor Plans

Exhibit B-1

     Phase I Premises Work Letter

Exhibit B-2

     Phase II Premises Work Letter

Exhibit B-3

     Phase III Premises Work Letter

Exhibit B-4

     Landlord’s Contractor Insurance Requirements

Exhibit C

     Building Rules and Regulations

Exhibit D

     Form Tenant Estoppel Certificate

Exhibit E

     Tenant’s Commencement Letter

Exhibit F

     Form of Letter of Credit

Exhibit G

     Examples of Improvements

Exhibit H

     Current Renovation Plans

Exhibit I

     Form of Purchase and Sale Agreement

Exhibit J

     Title Exceptions

Exhibit K

     Memorandum of Lease

Exhibit L

     Excluded Space

Exhibit M

     Current Security Program

Exhibit N

     List of Approved Subcontractors

Exhibit O

     Restricted Party Exclusions

 

i


Addendum One

     Two Renewal Options for Phase I Premises (Baseball Arbitration)

Addendum Two

     Two Renewal Options for Phase II Premises (Baseball Arbitration)

Addendum Three

     Two Renewal Options for Phase III Premises (Baseball Arbitration)

Addendum Four

     Expansion Option

Addendum Five

     Contraction Option

Addendum Six

     Right of First Offer to Lease Additional Space

Addendum Seven

     Right of First Offer to Purchase Project

Addendum Eight

     Purchase Option

Addendum Nine

     Signage Rights

Schedule 1 to Addendum 9

     Signage Drawings

Schedule 2 to Addendum 9

     Interior Wall Signage Details

 

ii


OFFICE LEASE

THIS OFFICE LEASE (this “Lease”) is made between TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account (“Landlord”), and the Tenant described in Item 1 of the Basic Lease Provisions.

LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject to all of the terms and conditions set forth herein, those certain premises (the “Premises”) described in Item 3 of the Basic Lease Provisions and as shown in the drawing attached hereto as Exhibit A-1. The Premises are located in the Building described in Item 2 of the Basic Lease Provisions. The Building is located on that certain land (the “Land”) more particularly described on Exhibit A-2 attached hereto, which is also improved with landscaping, parking facilities and other improvements, fixtures and common areas and appurtenances now or hereafter placed, constructed or erected on the Land (sometimes referred to herein as the “Project”).

BASIC LEASE PROVISIONS

 

1.

  

Tenant:

  

salesforce.com, inc.,

a Delaware corporation (“Tenant”)

2.

  

Building:

  

50 Fremont Street

San Francisco, California 94105

3.

  

Description of Premises:

  

The Premises shall collectively mean the Phase I Premises, Phase II Premises and Phase III Premises consisting of a total of 401,786 square feet of Rentable Area.

 

Phase I Premises” shall mean the entirety of Floors 28 – 35, inclusive, of the Building consisting of an aggregate total of 156,456 square feet of Rentable Area. The respective Floors of the Building comprising the Phase I Premises contain the following square feet of Rentable Area:

 

(a)     Floor 28: 19,250 square feet of Rentable Area

 

(b)     Floor 29: 18,614 square feet of Rentable Area

 

(c)     Floor 30: 19,897 square feet of Rentable Area

 

(d)     Floor 31: 19,767 square feet of Rentable Area

 

(e)     Floor 32: 19,767 square feet of Rentable Area

 

(f)      Floor 33: 19,767 square feet of Rentable Area

 

(g)     Floor 34: 19,767 square feet of Rentable Area

 

(h)     Floor 35: 19,627 square feet of Rentable Area

 

Phase II Premises” shall mean the entirety of Floors 25, 26, 27, 36, 37 and 40 of the Building consisting of a total of 120,868 square feet of Rentable Area. The respective Floors of the Building comprising the Phase II Premises contain the following square feet of Rentable Area:

 

(a)     Floor 25: 20,620 square feet of Rentable Area

 

(b)     Floor 26: 20,620 square feet of Rentable Area

 

(c)     Floor 27: 20,744 square feet of Rentable Area

 

1


     

(d)     Floor 36: 19,628 square feet of Rentable Area

 

(e)     Floor 37: 19,628 square feet of Rentable Area

 

(f)      Floor 40: 19,628 square feet of Rentable Area

 

Phase III Premises” shall mean a portion of Floor 2 of the Building and the entirety of Floors 3 – 8, inclusive, of the Building consisting of a total of 124,462 square feet of Rentable Area. The respective Floors of the Building comprising the Phase III Premises contain the following square feet of Rentable Area:

 

(a)      That certain portion of Floor 2 containing 3,317 square feet of Rentable Area as depicted as Suite 220 on Exhibit A-1 attached hereto and incorporated herein for all purposes

 

(b)     Floor 3: 20,192 square feet of Rentable Area

 

(c)     Floor 4: 20,192 square feet of Rentable Area

 

(d)     Floor 5: 20,192 square feet of Rentable Area

 

(e)     Floor 6: 20,192 square feet of Rentable Area

 

(f)      Floor 7: 20,186 square feet of Rentable Area

 

(g)     Floor 8: 20,191 square feet of Rentable Area

  

Building Size:

  

Office Area: 787,389 square feet of Rentable Area

 

Retail Area: 26,034 square feet of Rentable Area

 

Storage Area: 3,989 square feet of Rentable Area

 

Project Total: 817,412 square feet of Rentable Area

(subject to Paragraph 18)

4.

  

Tenant’s Proportionate Share:

  

Tenant’s Proportionate Share” shall mean a percentage based on a ratio of the number of square feet of Rentable Area then being leased by Tenant divided by the total number of square feet of Rentable Area in the Office Area. For example, upon all of the Phase I Premises being leased and prior to any of the Phase II Premises being leased, Tenant’s Proportionate Share would be 19.8702% (156,456 rsf / 787,389 rsf), which is derived by dividing the total number of square feet of Rentable Area in the Phase I Premises by the total number of square feet of Rentable Area in the Office Area. By way of further example, during the time period when all of the Phase I Premises, Phase II Premises and Phase III Premises are being leased, Tenant’s Proportionate Share would be 51.0276% (401,786 rsf / 787,389 rsf), which is derived by dividing the total number of square feet of Rentable Area in the Phase I Premises, Phase II Premises and Phase III Premises by the total number of square feet of Rentable Area in the Office Area.

 

2


5.

  

Base Rent:

  

Phase I Premises:

 

Phase I

Time

   Floor(s)    RSF    Base Rent
psf/yr
     Monthly Rent  

12/01/2012 – 03/31/2013

   28, 29, 30, 31, 32    97,295    $ 0.00         Abated   

04/01/2013 – 07/31/2013

   28, 29, 30, 31, 32    97,295    $ 34.00       $ 275,669.17   

08/01/2013 – 10/31/2013

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 34.00       $ 443,292.00   

11/01/2013 – 10/31/2014

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 35.00       $ 456,330.00   

11/01/2014 – 10/31/2015

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 36.00       $ 469,368.00   

11/01/2015 – 10/31/2016

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 37.00       $ 482,406.00   

11/01/2016 – 10/31/2017

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 38.00       $ 495,444.00   

11/01/2017 – 10/31/2018

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 39.00       $ 508,482.00   

11/01/2018 – 10/31/2019

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 40.00       $ 521,520.00   

11/01/2019 – 10/31/2020

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 41.00       $ 534,558.00   

11/01/2020 – 10/31/2021

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 42.00       $ 547,596.00   

11/01/2021 – 10/31/2022

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 43.00       $ 560,634.00   

11/01/2022 – 10/31/2023

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 44.00       $ 573,672.00   

11/01/2023 – 10/31/2024

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 45.00       $ 586,710.00   

11/01/2024 – 01/31/2025

   28, 29, 30, 31, 32, 33, 34, 35    156,456    $ 46.00       $ 599,748.00   

Phase II Premises:

 

Phase II

Time

   Floor(s)    RSF   

Base Rent

psf/yr

    Monthly Rent  

06/01/2013 – 09/30/2013

   36, 37    39,256    $ 0.00 (abated   $ 0.00 (abated

10/01/2013 – 11/30/2013

   36, 37    39,256    $ 35.00      $ 114,496.67   

12/01/2013 – 12/31/2013

   26, 27, 36, 37    80,620    $ 35.00      $ 235,141.67   

01/01/2014 – 08/30/2014

   25, 26, 27, 36, 37, 40    120,868    $ 35.00      $ 352,531.67   

09/01/2014 – 08/31/2015

   25, 26, 27, 36, 37, 40    120,868    $ 36.00      $ 362,604.00   

09/01/2015 – 08/31/2016

   25, 26, 27, 36, 37, 40    120,868    $ 37.00      $ 372,676.33   

09/01/2016 – 08/31/2017

   25, 26, 27, 36, 37, 40    120,868    $ 38.00      $ 382,748.67   

09/01/2017 – 08/31/2018

   25, 26, 27, 36, 37, 40    120,868    $ 39.00      $ 392,821.00   

09/01/2018 – 08/31/2019

   25, 26, 27, 36, 37, 40    120,868    $ 40.00      $ 402,893.33   

09/01/2019 – 08/31/2020

   25, 26, 27, 36, 37, 40    120,868    $ 41.00      $ 412,965.67   

09/01/2020 – 08/31/2021

   25, 26, 27, 36, 37, 40    120,868    $ 42.00      $ 423,038.00   

09/01/2021 – 08/31/2022

   25, 26, 27, 36, 37, 40    120,868    $ 43.00      $ 433,110.33   

09/01/2022 – 08/31/2023

   25, 26, 27, 36, 37, 40    120,868    $ 44.00      $ 443,182.67   

09/01/2023 – 08/31/2024

   25, 26, 27, 36, 37, 40    120,868    $ 45.00      $ 453,255.00   

09/01/2024 – 08/31/2025

   25, 26, 27, 36, 37, 40    120,868    $ 46.00      $ 463,327.33   

09/01/2025 – 08/31/2026

   25, 26, 27, 36, 37, 40    120,868    $ 47.00      $ 473,399.67   

09/01/2026 – 08/31/2027

   25, 26, 27, 36, 37, 40    120,868    $ 48.00      $ 483,472.00   

09/01/2027 – 10/31/2027

   25, 26, 27, 36, 37, 40    120,868    $ 49.00      $ 493,544.33   

 

3


Phase III Premises:

 

Phase III

Time

   Floor(s)    RSF    Base Rent
psf/yr
     Monthly Rent  

11/01/2013 – 02/28/2014

   Partial 2, 3, 4, 5, 6    84,085    $ 0.00         Abated   

03/01/2014 – 05/31/2014

   Partial 2, 3, 4, 5, 6    84,085    $ 25.00       $ 175,177.08   

06/01/2014 – 10/31/2014

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 25.00       $ 259,295.83   

11/01/2014 – 10/31/2015

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 26.00       $ 269,667.67   

11/01/2015 – 10/31/2016

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 27.00       $ 280,039.50   

11/01/2016 – 10/31/2017

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 28.00       $ 290,411.33   

11/01/2017 – 10/31/2018

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 29.00       $ 300,783.17   

11/01/2018 – 10/31/2019

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 30.00       $ 311,155.00   

11/01/2019 – 10/31/2020

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 31.00       $ 321,526.83   

11/01/2020 – 10/31/2021

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 32.00       $ 331,898.67   

11/01/2021 – 10/31/2022

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 33.00       $ 342,270.50   

11/01/2022 – 10/31/2023

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 34.00       $ 352,642.33   

11/01/2023 – 10/31/2024

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 35.00       $ 363,014.17   

11/01/2024 – 10/31/2025

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 36.00       $ 373,386.00   

11/01/2025 – 10/31/2026

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 37.00       $ 383,757.83   

11/01/2026 – 10/31/2027

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 38.00       $ 394,129.67   

11/01/2027 – 10/31/2028

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 39.00       $ 404,501.50   

11/01/2028 – 10/31/2029

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 40.00       $ 414,873.33   

11/01/2029 – 04/30/2030

   Partial 2, 3, 4, 5, 6, 7, 8    124,462    $ 41.00       $ 425,245.17   

Schedule 1 shows the aggregate Base Rent due for the Premises throughout the Initial Term.

 

6.

  

Installment Payable Upon Execution:

  

$0.00

7.

  

Security Deposit:

  

$6,000,000.00 in the form of a letter of credit to be adjusted as set forth in Paragraph 2(c)

 

4


8.

   Current Estimate of 2012 Operating Expenses for the Project:   

Seventeen and 90/100 Dollars ($17.90) per square foot of Rentable Area per annum, subject to periodic adjustments from time to time (See Paragraph 3)

9.

  

Initial Term:

  

Phase I Premises:

The Initial Term for the Phase I Premises (“Phase I Premises Term”) shall commence in various stages on the applicable Phase I Delivery Date as set forth in the following table (“Phase I Premises Table”) and shall expire on January 31, 2025 (“Phase I Premises Termination Date”):

 

Floors    Rentable
Area
     Phase I
Delivery
Datea
     Phase I
Premises
Commencement
Date
     Phase I
Premises
Termination
Date
 

28, 29, 30, 31, 32

     97,295         04/01/2012         12/01/2012         01/31/2025   

33, 34, 35

     59,161         08/01/2012         04/01/2013         01/31/2025   

 

a 

The “Delivery Date” shall be the date upon which the designated portion of the Premises shall be delivered to Tenant vacant, in broom clean condition and with all data cabling and movable furniture removed in order for Tenant to construct the Phase I Premises Improvements in accordance with Exhibit B-1 attached hereto.

Phase II Premises:

The Initial Term for the Phase II Premises (“Phase II Premises Term”) shall commence in various stages on the applicable Phase II Delivery Date as set forth in the following table (“Phase II Premises Table”) and shall expire on October 31, 2027 (“Phase II Premises Termination Date”):

 

Floors    Rentable
Area
     Phase II
Delivery
Datea
     Phase II
Premises
Commencement
Date
     Phase II
Premises
Termination
Date
 

36, 37

     39,256         11/01/2012         06/01/2013         10/31/2027   

26, 27

     41,364         01/01/2013         08/01/2013         10/31/2027   

25, 40

     40,248         02/01/2013         09/01/2013         10/31/2027   

 

a 

The “Delivery Date” shall be the date upon which the designated portion of the Premises shall be delivered to Tenant vacant, in broom clean condition and with all data cabling and movable furniture removed in order for Tenant to construct the Phase II Premises Improvements in accordance with Exhibit B-2 attached hereto.

Phase III Premises:

The Initial Term for the Phase III Premises (“Phase III Premises Term”) shall commence in various stages on the applicable Phase III Delivery Date as set forth in the following table (“Phase III Premises Table”) and shall expire on April 30, 2030 (“Phase III Premises Termination Date”):

 

Floors    Rentable
Area
     Phase III
Delivery
Datea
     Phase III
Premises
Commencement
Date
     Phase III
Premises
Termination
Date
 

A portion of Floor 2, and entirety of 3, 4, 5, 6

     84,085         05/01/2013         11/01/2013         04/30/2030   

7, 8

     40,377         08/01/2013         02/01/2014         04/30/2030   

 

a 

The “Delivery Date” shall be the date upon which the designated portion of the Premises shall be delivered to Tenant vacant, in broom clean condition and with all data cabling and movable furniture removed in order for Tenant to construct the Phase III Premises Improvements in accordance with Exhibit B-3 attached hereto.

 

5


10.

 

Intentionally Deleted

  

11.

 

Intentionally Deleted

  

12.

 

Broker(s) (See Paragraph 19(k)):

  
 

Landlord’s Broker:

  

The CAC Group, Inc.

255 California Street, Suite 200

San Francisco, California 94111

 

Tenant’s Broker:

  

Cushman & Wakefield

One Maritime Plaza, Suite 900

San Francisco, California 94111

13.

 

Number of Parking Spaces:

  

Tenant shall have the right from time to time (but subject to availability with respect to any Unused Spaces (as defined below)), during the Lease Term to lease up to one (1) unreserved stall in the Project’s garage (“Parking Garage”) per four thousand (4,000) square feet of Rentable Area (the “Parking Ratio”) then being leased by Tenant at the then prevailing market rate, currently $425 per stall per month, and may contract directly with the parking garage vendor for additional stalls, all pursuant to the provisions of Paragraph 18(a) below. No later than each respective Commencement Date set forth in Item 9 of the Basic Lease Provisions Tenant shall provide written notice to Landlord of its election of the number of parking spaces attributable to the portion of the Premises (based on the Parking Ratio) subject to the Commencement Date that Tenant has elected to use. In the event Tenant fails to provide a written notice to Landlord it shall be deemed that Tenant has elected to use all of the parking spaces allocated to the portion of the Premises that is commencing. Tenant shall have the right to reduce the number of parking spaces it leases at any time. To the extent Tenant elects to not utilize all of the parking spaces attributable to any portion of the Premises, then, Tenant may lease such unused parking spaces (“Unused Spaces”) upon thirty (30) days prior written request to Landlord but only to the extent such Unused Spaces are then available. Tenant shall be required to pay a deposit in the amount of $50.00 (“Transponder Deposit”) for each parking stall provided to Tenant. There will be an additional charge for each access card to provide access to garage outside of garage opening hours.

14.

 

Addresses for Notices:

  
 

To:        TENANT:

  

To:        LANDLORD:

 

salesforce.com, inc.

The Landmark@One Market, 3rd Floor

San Francisco, CA 94105

Attention: General Counsel

  

Project Management Office:

 

c/o Hines GS Properties, Inc.

50 Fremont, Suite 100

San Francisco, California 94105

 

6


  

With a copy to:

 

salesforce.com, inc.

The Landmark@One Market, Third Floor

San Francisco, CA 94105

Attention: Vice President of Real Estate

  
  

With a copy to:

 

Paul Hastings LLP

55 2nd Street, 24th Floor

San Francisco, CA 94105

Attention: Stephen I. Berkman

  

With a copy to:

 

TIAA-CREF Global Real Estate

730 3rd Avenue, 7th Floor

New York, New York 10017

Attn: TIAA Real Estate Account – Portfolio Management

 

With a copy to:

 

TIAA-CREF Global Real Estate

4675 MacArthur Boulevard, Suite 1100

Newport Beach, California 92660

Attn: Erik Sobek and John Cornuke

15.

  

Address for Payment of Rent:

  

All payments payable under this Lease shall be sent to Landlord at:

 

c/o Hines GS Properties, Inc.

50 Fremont Street

San Francisco, California 94105

 

or to such other address as Landlord may designate in writing.

16.

  

Guarantor:

  

None

17.

  

Effective Date:

  

January     , 2012

18.

  

Tenant Improvement Allowances:

  
  

(a)    Phase I Premises Allowance:

  

$11,734,200.00 (which is equal to $75.00 per square foot of Rentable Area in the Phase I Premises) (See Exhibit B-1)

  

(b)    Phase II Premises Allowance:

  

$9,065,100.00 (which is equal to $75.00 per square foot of Rentable Area in the Phase II Premises) (See Exhibit B-2)

  

(c)    Phase III Premises Allowance:

  

$9,334,650.00 (which is equal to $75.00 per square foot of Rentable Area in the Phase III Premises) (See Exhibit B-3)

19.

  

The “State” is the State of California.

  

This Lease consists of the foregoing introductory paragraphs and Basic Lease Provisions, the provisions of the Standard Lease Provisions (the “Standard Lease Provisions”) (consisting of Paragraph 1 through Paragraph 19 which follow) and the Exhibits and Addenda listed below are incorporated herein by this reference.

 

7


Schedule 1

     Aggregate Base Rent Schedule

Exhibit A-1

     Floor Plan(s)

Exhibit A-2

     Legal Description of the Project

Exhibit A-3

     Expansion Space Floor Plan(s)

Exhibit B-1

     Phase I Premises Work Letter

Exhibit B-2

     Phase II Premises Work Letter

Exhibit B-3

     Phase III Premises Work Letter

Exhibit B-4

     Landlord’s Contractor Insurance Requirements

Exhibit C

     Building Rules and Regulations

Exhibit D

     Form Tenant Estoppel Certificate

Exhibit E

     Tenant’s Commencement Letter

Exhibit F

     Form of Letter of Credit

Exhibit G

     Examples of Improvements

Exhibit H

     Current Renovation Plans

Exhibit I

     Form of Purchase and Sale Agreement

Exhibit J

     Title Exceptions

Exhibit K

     Memorandum of Lease

Exhibit L

     Excluded Space

Exhibit M

     Current Security Program

Exhibit N

     List of Approved Subcontractors

Exhibit O

     Restricted Party Exclusions

Addendum One

     Two Renewal Options for Phase I Premises (Baseball Arbitration)

Addendum Two

     Two Renewal Options for Phase II Premises (Baseball Arbitration)

Addendum Three

     Two Renewal Options for Phase III Premises (Baseball Arbitration)

Addendum Four

     Expansion Option

Addendum Five

     Contraction Option

Addendum Six

     Right of First Offer to Lease Additional Space

Addendum Seven

     Right of First Offer to Purchase Project

Addendum Eight

     Purchase Option

Addendum Nine

     Signage Rights

Schedule 1 to Addendum Nine

     Signage Drawings

Schedule 2 to Addendum Nine

     Interior Wall Signage Details

 

8


STANDARD LEASE PROVISIONS

 

1.

TERM

(a) The Initial Term of this Lease and the Rent (defined below) for the Phase I Premises, Phase II Premises and Phase III Premises shall commence in accordance with the tables set forth in Item 9 of the Basic Lease Provisions. Unless earlier terminated in accordance with the provisions hereof, the Initial Term of this Lease with respect to each respective phase shall be the period shown in Item 9 of the Basic Lease Provisions. As used herein, “Phase I Premises Term” shall mean the Initial Term referred to in Item 9 of the Basic Lease Provisions with respect to the Phase I Premises, subject to any extension of the Initial Term for the Phase I Premises exercised in accordance with the terms and conditions expressly set forth herein. As used herein, “Phase II Premises Term” shall mean the Initial Term referred to in Item 9 of the Basic Lease Provisions with respect to the Phase II Premises, subject to any extension of the Initial Term for the Phase II Premises exercised in accordance with the terms and conditions expressly set forth herein. As used herein, “Phase III Premises Term” shall mean the Initial Term referred to in Item 9 of the Basic Lease Provisions with respect to the Phase III Premises, subject to any extension of the Initial Term for the Phase III Premises exercised in accordance with the terms and conditions expressly set forth herein. The Phase I Premises Term, Phase II Premises Term and Phase III Premises Term shall collectively be referred to herein as the “Lease Term.” Unless Landlord is terminating this Lease prior to the respective termination dates set forth in Item 9 of the Basic Lease Provisions, Landlord shall not be required to provide notice to Tenant of the respective termination dates. This Lease shall be a binding contractual obligation effective upon execution hereof by Landlord and Tenant, notwithstanding the later commencement of the Initial Term of this Lease for the Phase I Premises, Phase II Premises and Phase III Premises. “Tenant Improvements,” as used herein, shall collectively mean and refer to the “Phase I Premises Improvements” (as defined in Exhibit B-1 attached hereto), the “Phase II Premises Improvements” (as defined in Exhibit B-2 attached hereto), and the “Phase III Premises Improvements” (as defined in Exhibit B-3 attached hereto).

(b) The Premises shall be delivered by Landlord to Tenant in various phases in accordance with the respective “Delivery Dates” set forth in the tables in Item 9 of the Basic Lease Provisions. Landlord represents and warrants that (i) the Phase I Premises and Phase II Premises are vacant and unoccupied by any tenant as of the Effective Date, and (ii) that no party other than Landlord has any right to possession of such portions of the Phase I Premises or the Phase II Premises whether as of Effective Date or subsequent thereto. Subject to Paragraph 1(e) below, if any Phase I Delivery Date is delayed or otherwise does not occur on the date set forth in Phase I Premises Table as set forth in Item 9 of the Basic Lease Provisions, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. Subject to Paragraph 1(e) below, if any Phase II Delivery Date is delayed or otherwise does not occur on the date set forth in Phase II Premises Table as set forth in Item 9 of the Basic Lease Provisions, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. Subject to Paragraph 1(e) below, if any Phase III Delivery Date is delayed or otherwise does not occur on the date set forth in Phase III Premises Table as set forth in Item 9 of the Basic Lease Provisions, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. Commencing with each respective Phase I Delivery Date and continuing through each respective Phase I Premises Commencement Date as set forth in the Phase I Premises Table set forth in Item 9 of the Basic Lease Provisions (such time periods between the respective Phase I Delivery Date and Phase I Premises Commencement Date being referred to herein as a “Phase I Pre-Term Access Period”), Tenant shall have the right to enter the respective portions of the Phase I Premises for the sole purpose of preparing such portions of the Phase I Premises for occupancy by Tenant, including, but not limited to, the installation of computer equipment, telephone equipment and other routine network connections and the construction of the respective tenant improvements being constructed pursuant to Exhibits B-1. Commencing with each respective Phase II Delivery Date and continuing through each respective Phase II Premises Commencement Date as set forth in the Phase II Premises Table set forth in Item 9 of the Basic Lease Provisions (such time periods between the respective Phase II Delivery Date and Phase II Premises Commencement Date being referred to herein as a “Phase II Pre-Term Access Period”), Tenant shall have the right to enter the respective portions of the Phase II Premises for the sole purpose of preparing such portions of the Phase II Premises for occupancy by Tenant, including, but not limited to, the installation of computer equipment, telephone equipment and other routine network connections and the construction of the respective tenant improvements being constructed pursuant to Exhibits B-2. Commencing with each respective Phase III Delivery Date and continuing through each respective Phase III Premises Commencement Date as set forth in the Phase III Premises Table set forth in Item 9 of the Basic Lease Provisions (such time periods between the respective Phase III

 

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Delivery Date and Phase III Premises Commencement Date being referred to herein as a “Phase III Pre-Term Access Period”), Tenant shall have the right to enter the respective portions of the Phase III Premises for the sole purpose of preparing such portions of the Phase III Premises for occupancy by Tenant, including, but not limited to, the installation of computer equipment, telephone equipment and other routine network connections and the construction of the respective tenant improvements being constructed pursuant to Exhibits B-3. Except for the payment of Base Rent and Additional Rent and as otherwise set forth in Exhibits B-1, B-2 and B-3, all of the terms and provisions of the Lease shall apply during Tenant’s Phase I Pre-Term Access Period, Phase II Pre-Term Access Period, and Phase III Pre-Term Access Period. Tenant shall be permitted to conduct business (i) in the Phase I Premises during the Phase I Pre-Term Access Period, (ii) in the Phase II Premises during the Phase II Pre-Term Access Period, and (iii) in the Phase III Premises during the Phase III Pre-Term Access Period, in each case without payment of Base Rent and Additional Rent until the applicable Commencement Date set forth in Item 5 of the Basic Lease Provisions. Occupancy in any portion of the Premises shall be subject to Tenant providing to Landlord satisfactory evidence of insurance for personal injury and property damage related to such applicable Phase I Pre-Term Access Period, Phase II Pre-Term Access Period, and/or Phase III Pre-Term Access Period.

(c) Notwithstanding anything in this Lease to the contrary, with regard to the applicable Delivery Dates with regard to the Phase III Premises, both Landlord and Tenant acknowledge and agree that Pillsbury Winthrop Shaw Pittman (“Pillsbury”) is currently leasing Floors 3, 4, 5, 6, 7, and 8, inclusive (“Pillsbury Space”) until December 31, 2012. If Pillsbury does not timely vacate all of the Pillsbury Space in accordance with the terms and provisions of its lease, then Landlord shall promptly take all available legal actions to remove Pillsbury from the Pillsbury Space.

(d) Periodically as the various portions of the Premises are delivered to Tenant Landlord shall prepare and deliver to Tenant commencement letters in the form of Exhibit E attached hereto (the “Commencement Letter”) which Tenant shall acknowledge by executing a copy and returning it to Landlord. If Tenant fails to sign and return a particular Commencement Letter to Landlord within thirty (30) days of its receipt from Landlord, the Commencement Letter as sent by Landlord shall be deemed to have correctly set forth the matters addressed in it. If a Commencement Letter has not been received by Tenant within sixty (60) days following any Delivery Date, Tenant shall be permitted to prepare and send to Landlord a Commencement Letter for such Delivery Date. If Landlord fails to sign and return a particular Commencement Letter to Tenant within thirty (30) days of its receipt from Tenant, the Commencement Letter as sent by Tenant shall be deemed to have correctly set forth the matters addressed in it. Failure of Landlord or Tenant to send a Commencement Letter shall have no effect on the respective commencement dates set forth in Item 9 of the Basic Lease Provisions.

(e) Late Delivery of Premises.

(i) Delivery of Phase I-A Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase I-A Premises” shall mean the entirety of Floors 28, 29, 30, 31 and 32 of the Phase I Premises.

(ii) “Phase I-A Delivery Date” shall mean the date upon which the Phase I-A Delivery Date Conditions have been fully completed.

(iii) “Phase I-A Delivery Date Conditions” shall mean delivery of physical possession of the Phase I-A Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase I-A Premises Outside Delivery Date” shall mean that date which is four (4) months following the Target Phase I-A Delivery Date.

 

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(v) “Target Phase I-A Delivery Date” shall mean the Delivery Date for the Phase I-A Premises set forth in Item 9 of the Basic Lease Provisions.

(B) Landlord shall use commercially reasonable efforts to complete the Phase I-A Delivery Date Conditions prior to the Target Phase I-A Delivery Date.

(C) If the Phase I-A Delivery Date Conditions have not been completed by the Target Phase I-A Delivery Date, subject to extension by virtue of Force Majeure, then Tenant shall be entitled to a day-for-day abatement of Base Rent attributable to Phase I-A Premises for each day following the Target Phase I-A Delivery Date until the earlier to occur of: (i) the date upon which the Phase I-A Delivery Date Conditions have been completed, and (ii) the thirtieth (30th) day following the Target Phase I-A Delivery Date. If the Phase I-A Delivery Date Conditions have not been completed by the thirtieth (30th) day following the Target Phase I-A Delivery Date (such day being the “Phase I-A Premises Late Delivery Date-A”), subject to extension related to Force Majeure, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to Phase I-A Premises for each day following the Phase I-A Premises Late Delivery Date-A until the date upon which the Phase I-A Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase I-A Premises are referred to herein, collectively, as the “Phase I-A Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase I-A Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase I-A Delivery Date Conditions have not been completed by the Phase I-A Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate this Lease in its entirety or solely as it relates to the Phase I Premises in which event, (x) if Tenant terminates this Lease in its entirety, Landlord shall return any prepaid rent and the Letter of Credit forthwith to Tenant and within thirty (30) days after such termination, Landlord shall make a cash payment to Tenant equal to all Phase I-A Premises Late Delivery Date Abatements accumulated as of the date of such termination, and (y) if Tenant does not terminate this Lease in its entirety, then any Phase I-A Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent. Should the Phase I-A Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase I-A Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase I-A Premises Late Delivery Date Abatements).

(ii) Delivery of Phase I-B Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase I-B Premises” shall mean the entirety of Floors 33, 34 and 35 of the Phase I Premises.

(ii) “Phase I-B Delivery Date” shall mean the date upon which the Phase I-B Delivery Date Conditions have been fully completed.

(iii) “Phase I-B Delivery Date Conditions” shall mean delivery of physical possession of the Phase I-B Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase I-B Premises Outside Delivery Date” shall mean that date which is four (4) months following the Target Phase I-B Delivery Date.

(v) “Target Phase I-B Delivery Date” shall mean the Delivery Date for the Phase I-B Premises set forth in Item 9 of the Basic Lease Provisions.

 

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(B) Landlord shall use commercially reasonable efforts to complete the Phase I-B Delivery Date Conditions prior to the Target Phase I-B Delivery Date.

(C) If the Phase I-B Delivery Date Conditions have not been completed by the Target Phase I-B Delivery Date, subject to extension by virtue of Force Majeure, then Tenant shall be entitled to a day-for-day abatement of Base Rent attributable to Phase I-B Premises for each day following the Target Phase I-B Delivery Date until the earlier to occur of: (i) the date upon which the Phase I-B Delivery Date Conditions have been completed, and (ii) the thirtieth (30th) day following the Target Phase I-B Delivery Date. If the Phase I-B Delivery Date Conditions have not been completed by the thirtieth (30th) day following the Target Phase I-B Delivery Date (such day being the “Phase I-B Premises Late Delivery Date-A”), subject to extension related to Force Majeure, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to Phase I-B Premises for each day following the Phase I-B Premises Late Delivery Date-A until the date upon which the Phase I-B Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase I-B Premises are referred to herein, collectively, as the “Phase I-B Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase I-B Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase I-B Delivery Date Conditions have not been completed by the Phase I-B Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate this Lease in its entirety or solely as it relates to Phase I Premises, in which event, (x) if Tenant terminates this Lease in its entirety, Landlord shall return any prepaid rent and the Letter of Credit forthwith to Tenant and within thirty (30) days after such termination, Landlord shall make a cash payment to Tenant equal to all Phase I-B Premises Late Delivery Date Abatements accumulated as of the date of such termination, (y) if Tenant does not terminate this Lease in its entirety, then any Phase I-B Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent, and (z) if Tenant terminates this Lease in its entirety, Tenant may continue to occupy any portion of the Premises previously delivered for up to one hundred eighty (180) days thereafter on the terms and conditions of this Lease; provided, that, Tenant shall have no obligation to pay Base Rent or Operating Expenses during such one hundred eighty (180) period. Should the Phase I-B Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase I-B Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase I-B Premises Late Delivery Date Abatements).

(iii) Delivery of Phase II-A Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase II-A Premises” shall mean the entirety of Floor 36 and Floor 37 of the Phase II Premises.

(ii) “Phase II-A Delivery Date” shall mean the date upon which the Phase II-A Delivery Date Conditions have been fully completed.

(iii) “Phase II-A Delivery Date Conditions” shall mean delivery of physical possession of the Phase II-A Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase II-A Premises Outside Delivery Date” shall mean that date which is four (4) months following the Target Phase II-A Delivery Date.

(v) “Target Phase II-A Delivery Date” shall mean the Delivery Date for the Phase II-A Premises set forth in Item 9 of the Basic Lease Provisions.

 

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(B) Landlord shall use commercially reasonable efforts to complete the Phase II-A Delivery Date Conditions prior to the Target Phase II-A Delivery Date.

(C) If the Phase II-A Delivery Date Conditions have not been completed by the Target Phase II-A Delivery Date, subject to extension by virtue of Force Majeure, then Tenant shall be entitled to a day-for-day abatement of Base Rent attributable to Phase II-A Premises for each day following the Target Phase II-A Delivery Date until the earlier to occur of: (i) the date upon which the Phase II-A Delivery Date Conditions have been completed, and (ii) the thirtieth (30th) day following the Target Phase II-A Delivery Date. If the Phase II-A Delivery Date Conditions have not been completed by the thirtieth (30th) day following the Target Phase II-A Delivery Date (such day being the “Phase II-A Premises Late Delivery Date-A”), subject to extension related to Force Majeure, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to Phase II-A Premises for each day following the Phase II-A Premises Late Delivery Date-A until date upon which the Phase II-A Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase II-A Premises are referred to herein, collectively, as the “Phase II-A Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase II-A Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase II-A Delivery Date Conditions have not been completed by the Phase II-A Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate this Lease in its entirety or solely as it relates to Phase II Premises, in which event, (x) if Tenant terminates this Lease in its entirety, Landlord shall return any prepaid rent and the Letter of Credit forthwith to Tenant and within thirty (30) days after such termination, Landlord shall make a cash payment to Tenant equal to all Phase II-A Premises Late Delivery Date Abatements accumulated as of the date of such termination, (y) if Tenant does not terminate this Lease in its entirety, then any Phase II-A Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent, and (z) if Tenant terminates this Lease in its entirety, Tenant may continue to occupy Phase I Premises for up to one hundred eighty (180) days thereafter on the terms and conditions of this Lease; provided, that, Tenant shall have no obligation to pay Base Rent or Operating Expenses during such one hundred eighty (180) period. Should the Phase II-A Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase II-A Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase II-A Premises Late Delivery Date Abatements).

(iv) Delivery of Phase II-B Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase II-B Premises” shall mean the entirety of Floors 26 and 27 of the Phase II Premises.

(ii) “Phase II-B Delivery Date” shall mean the date upon which the Phase II-B Delivery Date Conditions have been fully completed.

(iii) “Phase II-B Delivery Date Conditions” shall mean delivery of physical possession of the Phase II-B Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase II-B Premises Outside Delivery Date” shall mean that date which is four (4) months following the Target Phase II-B Delivery Date.

(v) “Target Phase II-B Delivery Date” shall mean the Delivery Date for the Phase II-B Premises set forth in Item 9 of the Basic Lease Provisions.

 

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(B) Landlord shall use commercially reasonable efforts to complete the Phase II-B Delivery Date Conditions prior to the Target Phase II-B Delivery Date.

(C) If the Phase II-B Delivery Date Conditions have not been completed by the Target Phase II-B Delivery Date, subject to extension by virtue of Force Majeure, then Tenant shall be entitled to a day-for-day abatement of Base Rent attributable to Phase II-B Premises for each day following Target Phase II-B Delivery Date until the earlier to occur of: (i) the date upon which the Phase II-B Delivery Date Conditions have been completed, and (ii) the thirtieth (30th) day following the Target Phase II-B Delivery Date. If the Phase II-B Delivery Date Conditions have not been completed by the thirtieth (30th) day following the Target Phase II-B Delivery Date (such day being the “Phase II-B Premises Late Delivery Date-A”), subject to extension related to Force Majeure, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to Phase II-B Premises for each day following the Phase II-B Premises Late Delivery Date-A until the date upon which the Phase II-B Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase II-B Premises are referred to herein, collectively, as the “Phase II-B Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase II-B Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase II-B Delivery Date Conditions have not been completed by the Phase II-B Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate this Lease in its entirety or solely as it relates to Phase II Premises, in which event, (x) if Tenant terminates this Lease in its entirety, Landlord shall return any prepaid rent and the Letter of Credit forthwith to Tenant and within thirty (30) days after such termination, Landlord shall make a cash payment to Tenant equal to all Phase II-B Premises Late Delivery Date Abatements accumulated as of the date of such termination, (y) if Tenant does not terminate this Lease in its entirety, then any Phase II-B Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent, and (z) if Tenant terminates this Lease in its entirety, Tenant may continue to occupy any portion of the Premises previously delivered for up to one hundred eighty (180) days thereafter on the terms and conditions of this Lease; provided, that, Tenant shall have no obligation to pay Base Rent or Operating Expenses during such one hundred eighty (180) period. Should the Phase II-B Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase II-B Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase II-B Premises Late Delivery Date Abatements).

(v) Delivery of Phase II-C Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase II-C Premises” shall mean the entirety of Floor 25 and Floor 40 of the Phase II Premises.

(ii) “Phase II-C Delivery Date” shall mean the date upon which the Phase II-C Delivery Date Conditions have been fully completed.

(iii) “Phase II-C Delivery Date Conditions” shall mean delivery of physical possession of the Phase II-C Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase II-C Premises Outside Delivery Date” shall mean that date which is four (4) months following the Target Phase II-C Delivery Date.

(v) “Target Phase II-C Delivery Date” shall mean the Delivery Date for the Phase II-C Premises set forth in Item 9 of the Basic Lease Provisions.

 

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(B) Landlord shall use commercially reasonable efforts to complete the Phase II-C Delivery Date Conditions prior to the Target Phase II-C Delivery Date.

(C) If the Phase II-C Delivery Date Conditions have not been completed by the Target Phase II-C Delivery Date, subject to extension by virtue of Force Majeure, then Tenant shall be entitled to a day-for-day abatement of Base Rent attributable to Phase II-C Premises for each day following the Target Phase II-C Delivery Date until the earlier to occur of: (i) the date upon which the Phase II-C Delivery Date Conditions have been completed, and (ii) the thirtieth (30th) day following the Target Phase II-C Delivery Date. If the Phase II-C Delivery Date Conditions have not been completed by the thirtieth (30th) day following the Target Phase II-C Delivery Date (such day being the “Phase II-C Premises Late Delivery Date-A”), subject to extension related to Force Majeure, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to Phase II-C Premises for each day following the Phase II-C Premises Late Delivery Date-A until the date upon which the Phase II-C Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase II-C Premises are referred to herein, collectively, as the “Phase II-C Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase II-C Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase II-C Delivery Date Conditions have not been completed by the Phase II-C Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate this Lease in its entirety or solely as it relates to Phase II Premises, in which event, (x) if Tenant terminates this Lease in its entirety, Landlord shall return any prepaid rent and the Letter of Credit forthwith to Tenant and within thirty (30) days after such termination, Landlord shall make a cash payment to Tenant equal to all Phase II-C Premises Late Delivery Date Abatements accumulated as of the date of such termination, (y) if Tenant does not terminate this Lease in its entirety, then any Phase II-C Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent, and (z) if Tenant terminates this Lease in its entirety, Tenant may continue to occupy any portion of the Premises previously delivered for up to one hundred eighty (180) days thereafter on the terms and conditions of this Lease; provided, that, Tenant shall have no obligation to pay Base Rent or Operating Expenses during such one hundred eighty (180) period. Should the Phase II-C Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase II-C Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase II-C Premises Late Delivery Date Abatements).

(vi) Delivery of Phase III-A Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase III-A Premises” shall mean a portion of Floor 2 and the entirety of Floors 3, 4, 5 and 6 of the Phase III Premises.

(ii) “Phase III-A Delivery Date” shall mean the date upon which the Phase III-A Delivery Date Conditions have been fully completed.

(iii) “Phase III-A Delivery Date Conditions” shall mean delivery of physical possession of the Phase III-A Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase III-A Premises Outside Delivery Date” shall mean December 31, 2013.

(v) “Target Phase III-A Delivery Date” shall mean the Delivery Date for the Phase III-A Premises set forth in Item 9 of the Basic Lease Provisions.

 

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(B) Landlord shall use commercially reasonable efforts to complete the Phase III-A Delivery Date Conditions prior to the Target Phase III-A Delivery Date.

(C) If the Phase III-A Delivery Date Conditions have not been completed by the date that is sixty (60) days following the Target Phase III-A Delivery Date, subject to extension by virtue of Force Majeure, then for that portion of the Phase III-A Premises which is not timely delivered to Tenant with the Phase III-A Delivery Date Conditions completed, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent for each day following the date which is sixty (60) days following the Target Phase III-A Delivery Date until the date upon which the Phase III-A Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase III-A Premises are referred to herein, collectively, as the “Phase III-A Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase III-A Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase III-A Delivery Date Conditions have not been completed by the Phase III-A Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate the Lease solely as it relates to any portion of the Phase III-A Premises which have not been delivered, in which event, any Phase III-A Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent. Should the Phase III-A Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase III-A Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase III-A Premises Late Delivery Date Abatements). For purposes of clarification, in the event only Floors 5 and 6 are delivered prior to the Phase III-A Premises Outside Delivery Date, then the termination right in this paragraph shall only apply to the remaining portion of the Phase III-A Premises (i.e., being a portion of Floor 2 and the entirety of Floors 3 and 4).

(vii) Delivery of Phase III-B Premises.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Phase III-B Premises” shall mean the entirety of Floor 7 and Floor 8 of the Phase III Premises.

(ii) “Phase III-B Delivery Date” shall mean the date upon which the Phase III-B Delivery Date Conditions have been fully completed.

(iii) “Phase III-B Delivery Date Conditions” shall mean delivery of physical possession of the Phase III-B Premises in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Phase III-B Premises Outside Delivery Date” shall mean December 31, 2013.

(v) “Target Phase III-B Delivery Date” shall mean the Delivery Date for the Phase III-B Premises set forth in Item 9 of the Basic Lease Provisions.

(B) Landlord shall use commercially reasonable efforts to complete the Phase III-B Delivery Date Conditions prior to the Target Phase III-B Delivery Date.

(C) If the Phase III-B Delivery Date Conditions have not been completed by the Target Phase III-B Delivery Date, subject to extension by virtue of Force Majeure, then for that portion of the Phase III-B Premises which is not timely delivered to Tenant with the Phase III-B Delivery Date Conditions completed, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem

 

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Base Rent for each day following the Phase III-B Premises Late Delivery Date until the date upon which the Phase III-B Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Phase III-B Premises are referred to herein, collectively, as the “Phase III-B Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Phase III-B Premises Late Delivery Date Abatements against payments of Rent as they become due.

(D) Further, if the Phase III-B Delivery Date Conditions have not been completed by the Phase III-B Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate the Lease solely as it relates to any portion of the Phase III-B Premises which have not been delivered, in which event, any Phase III-B Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent. Should the Phase III-B Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Phase III-B Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Phase III-B Premises Late Delivery Date Abatements). For purposes of clarification, in the event only Floor 7 is delivered prior to the Phase III-B Premises Outside Delivery Date, then the termination right in this paragraph shall only apply to the remaining portion of the Phase III-B Premises (i.e., being the entirety of Floor 8).

(viii) Delivery of Expansion Space-A.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Expansion Space-A” shall mean the entirety of Floor 9 and Floor 10 of the Expansion Space.

(ii) “Expansion Space-A Delivery Date” shall mean the date upon which the Expansion Space-A Delivery Date Conditions have been fully completed.

(iii) “Expansion Space-A Delivery Date Conditions” shall mean delivery of physical possession of Expansion Space-A in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Expansion Space-A Premises Outside Delivery Date” shall mean December 31, 2013.

(v) “Target Expansion Space-A Delivery Date” shall mean the Delivery Date for Expansion Space-A set forth in Addendum 4.

(B) Provided that Tenant timely exercises the Expansion Option set forth in Addendum 4 of this Lease, Landlord shall use commercially reasonable efforts to complete the Expansion Space-A Delivery Date Conditions prior to the Target Expansion Space-A Delivery Date.

(C) If the Expansion Space-A Delivery Date Conditions have not been completed by the date following the Target Expansion Space-A Delivery Date, subject to extension by virtue of Force Majeure, then for that portion of the Expansion Space-A Premises which is not timely delivered to Tenant with the Expansion Space-A Delivery Date Conditions completed, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent for each day following the Expansion Space-A Premises Late Delivery Date until the date upon which the Expansion Space-A Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Expansion Space-A Premises are referred to herein, collectively, as the “Expansion Space-A Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Expansion Space-A Premises Late Delivery Date Abatements against payments of Rent as they become due.

 

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(D) Further, if the Expansion Space-A Delivery Date Conditions have not been completed by the Expansion Space-A Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate the Lease solely as it relates to any portion of the Expansion Space-A Premises which have not been delivered, in which event, any Expansion Space-A Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent. Should the Expansion Space-A Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Expansion Space-A Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Expansion Space-A Premises Late Delivery Date Abatements). For purposes of clarification, in the event only Floor 9 is delivered prior to the Expansion Space-A Premises Outside Delivery Date, then the termination right in this paragraph shall only apply to the remaining portion of the Expansion Space-A Premises (i.e., being the entirety of Floor 10).

(ix) Delivery of Expansion Space-B.

(A) For purposes of this Lease, the following terms shall have the following meanings:

(i) “Expansion Space-B” shall mean the entirety of Floors 11, 12, and 14 of the Expansion Space.

(ii) “Expansion Space-B Delivery Date” shall mean the date upon which the Expansion Space-B Delivery Date Conditions have been fully completed.

(iii) “Expansion Space-B Delivery Date Conditions” shall mean delivery of physical possession of the Expansion Space-B in broom clean condition and with all data cabling and movable furniture removed therefrom.

(iv) “Expansion Space-B Premises Outside Delivery Date” shall mean February 1, 2014.

(v) “Target Expansion Space-B Delivery Date” shall mean the Delivery Date for Expansion Space-B set forth in Addendum 4.

(B) Provided that Tenant timely exercises the Expansion Option set forth in Addendum 4 of this Lease, Landlord shall use commercially reasonable efforts to complete the Expansion Space-B Delivery Date Conditions prior to the Target Expansion Space-B Delivery Date.

(C) If the Expansion Space-B Delivery Date Conditions have not been completed by the date following the Target Expansion Space-B Delivery Date, subject to extension by virtue of Force Majeure, then for that portion of the Expansion Space-B Premises which is not timely delivered to Tenant with the Expansion Space-B Delivery Date Conditions completed, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent for each day following the Expansion Space-B Premises Late Delivery Date until the date upon which the Expansion Space-B Delivery Date Conditions have been completed (the Base Rent abatements described herein with regard to Expansion Space-B Premises are referred to herein, collectively, as the “Expansion Space-B Premises Late Delivery Date Abatements”). Tenant shall immediately apply any accrued Expansion Space-B Premises Late Delivery Date Abatements against payments of Rent as they become due

(D) Further, if the Expansion Space-B Delivery Date Conditions have not been completed by the Expansion Space-B Premises Outside Delivery Date, subject to extension related to Force Majeure, Tenant shall have the right to terminate the Lease solely as it relates to any portion of the Expansion Space-B Premises which have not been delivered, in which event, any Expansion Space-B Premises Late Delivery Date Abatements shall survive and may be applied against Base Rent. Should the Expansion Space-B Delivery Date Conditions be completed prior to Tenant’s exercise of the foregoing

 

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termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such completion of the Expansion Space-B Delivery Date Conditions (provided that Tenant shall be entitled to receive all of the Expansion Space-B Premises Late Delivery Date Abatements). For purposes of clarification, in the event only Floor 11 is delivered prior to the Expansion Space-B Premises Outside Delivery Date, then the termination right in this paragraph shall only apply to the remaining portion of the Expansion Space-B Premises (i.e., being the entirety of Floors 12 and 14).

(f) With regard to the delivery of the Phase I-A Premises, Phase I-B Premises, Phase II-A Premises, Phase II-B Premises, Phase II-C Premises, Phase III-A Premises, Phase III-B Premises, Expansion Space–A, and Expansion Space-B, Landlord shall only be permitted to deliver such Premises in full floor increments (other than with respect to Floor 2).

 

2.

BASE RENT AND SECURITY DEPOSIT

(a) Tenant agrees to pay during each month of the Lease Term as Base Rent (“Base Rent”) for the Premises the sums shown for such periods in Item 5 of the Basic Lease Provisions.

(b) Except as otherwise expressly provided in this Lease to the contrary, Base Rent shall be payable in consecutive monthly installments, in advance, without demand, deduction or offset, commencing on the respective commencement dates and continuing on the first day of each calendar month thereafter until the expiration of the respective Lease Terms. The installment payable upon execution (as set forth in Item 6 of the Basic Lease Provisions) shall be payable following the execution of this Lease by Tenant and such sum shall be applied towards the first installment of Base rent due hereunder until such time as the installment payable upon execution has been exhausted. The obligation of Tenant to pay Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. If there are any partial months during any respective Lease Term, then the Rent for such partial month shall be calculated on a per diem basis.

(c) Simultaneously with Tenant’s execution and delivery of this Lease, Tenant shall deliver to Landlord or Landlord’s attorney a Letter of Credit (the “Letter of Credit”), in form and substance as set forth in Exhibit F attached hereto, or otherwise satisfactory to Landlord in its reasonable discretion, issued from a bank that is listed on Landlord’s approved list of banks, as the same may change from time to time (an “Approved Issuing Bank”), in the initial amount of Six Million Dollars ($6,000,000.00). Landlord’s approved list of banks shall in no event contain less than ten (10) financial institutions with offices in New York, New York or San Francisco, California. The Letter of Credit shall be held by Landlord as security for the performance of the provisions of this Lease by Tenant. At a minimum the Letter of Credit shall provide for the following:

(i) It shall terminate no sooner than sixty (60) days following the later to occur of the expiration date of the Phase I Premises Term, Phase II Premises Term, or Phase III Premises Term. If the Letter of Credit is for a shorter period of time, then the Letter of Credit shall automatically renew or be replaced annually unless Landlord (the beneficiary thereof) is notified in writing by the issuer at least sixty (60) days prior to the expiry date that the Letter of Credit will not be renewed or replaced; and if Landlord is so notified of such non-renewal/non-replacement, Landlord (the beneficiary thereof) shall have the right to draw the full amount of such Letter of Credit prior to such earlier expiry date.

(ii) It shall be irrevocable.

(iii) It shall be transferable to any successor to Landlord’s interest under this Lease.

If at any time during the Lease Term the bank or financial institution that issues the Letter of Credit is declared insolvent, or is placed into receivership by the Federal Deposit Insurance Corporation or any other governmental or quasi-governmental institution, or if there is a material adverse change, as reasonably determined by Landlord, in the financial or business condition of the bank or financial institution that issued the Letter of Credit as compared to the issuance of the Letter of Credit, or following its initial one (1) year term the date of its renewal, then following written notice from Landlord, Tenant shall have ten (10) Business Days to replace the Letter of Credit with a new letter of credit from a bank or financial institution on Landlord’s then-current list of approved banks. If Tenant does

 

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not replace the Letter of Credit with a new letter of credit, which shall be issued from an Approved Issuing Bank, within such ten (10) Business Day period, then notwithstanding anything in the Lease to the contrary, Landlord shall have the right to draw upon the Letter of Credit for the full amount of the Letter of Credit and apply the proceeds in accordance with the terms of this Paragraph 2(c). Notwithstanding the foregoing, if Landlord approves the form of Letter of Credit, then any discrepancies between the terms of this Paragraph 2(c) and the form of Letter of Credit approved by Landlord shall be governed by the provisions of the Landlord approved Letter of Credit accepted and retained by Landlord.

Within ten (10) Business Days following the Phase II-A Delivery Date, the Letter of Credit shall be increased by the sum of Three Million Dollars ($3,000,000) so that the Letter of Credit deposited with Landlord thereafter shall be in the sum of Nine Million Dollars ($9,000,000). Tenant shall deliver to Landlord a new Letter of Credit (or amendment to the existing Letter of Credit) in such increased amount. Within ten (10) Business Days following the Phase III-A Delivery Date, the Letter of Credit shall be increased by the sum of Three Million Dollars ($3,000,000) so that the Letter of Credit deposited with Landlord thereafter shall be in the sum of Twelve Million Dollars ($12,000,000). Tenant shall deliver to Landlord a new Letter of Credit (or amendment to the existing Letter of Credit) in such increased amount. Provided no Material Default (defined in Paragraph 12 of this Lease) by the Tenant has occurred and is continuing, then the amount of the Letter of Credit may be reduced on September 1, 2016 (or such later date as the Material Default has been cured) by the sum of Six Million Dollars ($6,000,000) so that the Letter of Credit deposited with Landlord thereafter shall be in the sum of Six Million Dollars ($6,000,000). Provided no Material Default by the Tenant has occurred and is continuing, then the amount of the Letter of Credit may be reduced on November 1, 2018 (or such later date as the Material Default has been cured) by the sum of Three Million Dollars ($3,000,000) so that the Letter of Credit deposited with Landlord thereafter shall be in the sum of Three Million Dollars ($3,000,000). Provided no Material Default by the Tenant has occurred and is continuing, then the amount of the Letter of Credit may be reduced as of April 30, 2030 (or such later date as the Material Default has been cured) by the sum of Three Million Dollars ($3,000,000) so that the Letter of Credit deposited with Landlord thereafter shall be in the sum of Zero ($0). Landlord agrees to authorize such reduction in writing to the issuer of the Letter of Credit. With respect to the increases and decreases to the Letter of Credit amount as set forth herein, Landlord shall return the original Letter of Credit deposited hereunder to Tenant within five (5) Business Days following Tenant’s delivery of the new Letter of Credit. The Letter of Credit shall be held by Landlord as security for the performance of the provisions of this Lease by Tenant.

If Tenant is in Material Default under this Lease, Landlord may draw down the Letter of Credit and use, apply or retain such portion of the proceeds from the Letter of Credit as may be necessary (i) for the payment of any Rent or any other sum in default, (ii) for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant’s Material Default hereunder to the extent permitted by this Lease, or (iii) to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s Material Default hereunder to the extent permitted by this Lease, including, without limitation, costs and reasonable attorneys’ fees incurred by Landlord to recover possession of any portion of the Premises following a Material Default by Tenant hereunder. The use or application of the proceeds from the Letter of Credit or any portion thereof shall not prevent Landlord from exercising any other right or remedy provided hereunder or under any law and shall not be construed as liquidated damages. In the event Landlord draws down the Letter of Credit pursuant to the terms of this Lease, Landlord shall not be required to keep the proceeds of the Letter of Credit separate from its general funds and Tenant shall not be entitled to interest thereon. If Landlord is notified that the Letter of Credit will not be renewed or replaced as set forth in Paragraph 2(c)(i) above, Landlord shall have the right to draw the full amount of such Letter of Credit commencing thirty (30) days prior to such earlier expiry date and the amounts so drawn shall be held by Landlord as a Security Deposit, and applied and disbursed in accordance with the terms of this Paragraph 2(c).

If any portion of the Letter of Credit is used or applied by Landlord in accordance with this Paragraph 2(c), Tenant shall, within ten (10) Business Days after demand therefor, deposit cash or an amended, substituted or replacement Letter of Credit with Landlord in an amount sufficient to restore the Security Deposit to the appropriate amount, as determined hereunder. At any time that Landlord is holding proceeds of the Letter of Credit (and has not applied such proceeds as permitted herein) and provided that Tenant is not in Material Default or has filed for bankruptcy or had an involuntary bankruptcy filed against it, Tenant may deposit a Letter of Credit that complies with all requirements of this Paragraph 2(c), in which event Landlord shall return the cash to Tenant within ten (10) days after receipt of the Letter of Credit. If Tenant shall fully perform every provision of this Lease to be performed

 

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by it, the Letter of Credit (or proceeds thereof, to the extent the Landlord has drawn against the Letter of Credit) shall be returned to Tenant within ten (10) Business Days following the expiration or sooner termination of this Lease. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code.

(d) The parties agree that for all purposes hereunder the Premises (including the Expansion Space) and the Project shall be stipulated to contain the number of square feet of Rentable Area described in Item 3 of the Basic Lease Provisions. Landlord calculated the Rentable Area described in Item 3 of the Basic Lease Provisions using the “Standard Method for Measuring Floor Area in Office Buildings,” approved as of June 7, 1996 by the American National Standards Institute, Inc. (ANSI/BOMA Z65.1-1996; the “BOMA Standard”).

(e) Except as otherwise expressly provided in this Lease, the provisions for payment of Operating Expenses by means of periodic payment of Tenant’s Proportionate Share of estimated Operating Expenses and the year end adjustment of such payments are intended to pass on to Tenant and reimburse Landlord for Tenant’s Proportionate Share of all costs and expenses of the nature described in Paragraph 3 of this Lease.

 

3.

ADDITIONAL RENT

(a) Tenant shall pay to Landlord each month as additional rent (“Additional Rent”) an amount equal to Tenant’s Proportionate Share (defined below) of Operating Expenses (defined below).

(b) Subject to the provisions of Paragraph 18, “Tenant’s Proportionate Share” shall mean a fraction, the numerator of which is the Rentable Area of the Premises then being leased by Tenant, and the denominator of which is the total Rentable Area of the Office Area. If changes are made to the Premises or Building, changing the number of Rentable Area contained in the Premises or Office Area (as the case may be) from that set forth in Item 3 of the Basic Lease Provisions, Landlord shall make an appropriate adjustment to Tenant’s Proportionate Share (i.e., based upon the formula used in calculating Tenant’s Proportionate Share as described in the preceding sentence). Upon each respective commencement date set forth in the tables in Item 9 of the Basic Lease Provisions, “Tenant’s Proportionate Share” shall be increased in order to account for the additional portion of the Premises being leased by Tenant.

(c) “Operating Expenses” means all reasonable and customary costs, expenses and obligations incurred by Landlord in connection with the operation, ownership, management, repair or maintenance of the Building and the Project during or allocable to the Lease Term, including without limitation, the following:

(i) Any form of assessment, license fee, license tax, business license fee, commercial rental tax, levy, charge, improvement bond, tax, water and sewer rents and charges, utilities and communications taxes and charges or similar or dissimilar imposition imposed by any authority having the direct power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement or special assessment district thereof, or any other governmental charge, general and special, ordinary and extraordinary, foreseen and unforeseen, which may be assessed against any legal or equitable interest of Landlord in the Premises, Building, Common Areas or Project (collectively, (“Taxes”). Taxes shall also include, without limitation:

(A) any tax on Landlord’s “right” to rent or “right” to other income from the Premises or as against Landlord’s business of leasing the Premises;

(B) any assessment, tax, fee, levy or charge in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June, 1978 election and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants. It is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees, levies and charges be included within the definition of “Taxes” for the purposes of this Lease;

 

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(C) any assessment, tax, fee, levy or charge allocable to or measured by the area of the Premises or other premises in the Building or the rent payable by Tenant hereunder or other tenants of the Project, including, without limitation, any gross receipts tax or excise tax levied by state, city or federal government, or any political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof but not on Landlord’s other operations;

(D) any assessment, tax, fee, levy or charge upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises;

(E) any assessment, tax, fee, levy or charge by any governmental agency related to any transportation plan, fund or system (including assessment districts) instituted within the geographic area of which the Project is a part; and/or

(F) any reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in attempting to protest, reduce or minimize Taxes.

Taxes do not include all excess profits taxes, franchise taxes, gift taxes, inheritance and succession taxes, estate taxes, documentary transfer taxes, federal or state income, corporate, capital stock or capital gains taxes, penalties incurred as a result of Landlord’s failure to pay taxes or to file any tax or informational returns and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts or income attributable to operations at the Project), unless such income, franchise, transfer, gift, inheritance, succession, estate, corporate, capital stock, capital gains or profit taxes are in substitution for any Taxes payable hereunder. In addition to the foregoing, Taxes shall exclude the value of improvements in other tenants’ premises as allocated to such other tenants on the assessment and assessed for real property tax purposes at a valuation higher than the valuation at which tenant improvements conforming to Landlord’s “Building Standard” in other space in the Building are assessed. If, for any tax fiscal year, the Project is not separately assessed, but is assessed jointly with other property, then Landlord shall equitably apportion such Taxes for such tax fiscal year based upon allocable tax basis among the properties jointly assessed. Notwithstanding anything else herein to the contrary, if any assessment included in Taxes can be paid by Landlord in installments, such assessment shall be paid (or, at Landlord’s option, shall be included in Taxes on an amortized basis as if it were paid) in the maximum number of installments permitted by Law.

If, by law, any Taxes may be paid in installments (whether or not interest accrues on the unpaid balance), then, for any calendar year, Landlord shall include in the calculation of such Taxes only the amount of the installments (with any interest) due and payable during such year had Landlord selected the longest permissible period of payment.

(ii) The cost of services and utilities (including taxes and other charges incurred in connection therewith) provided to the Premises, the Building or the Project, including, without limitation, water, power, gas, sewer, waste disposal, telephone and cable television facilities, fuel, supplies, equipment, tools, materials, service contracts, janitorial services, waste and refuse disposal, window cleaning, maintenance and repair of sidewalks and Building exterior and services areas, gardening and landscaping; all maintenance, janitorial and service agreements for the Project and the equipment therein, including, but not limited to, alarm service, window cleaning, elevator maintenance, and maintenance and repair of sidewalks, landscaping, Building exterior and service areas; insurance permitted to be carried by Landlord pursuant to Paragraph 8(d)(iv) (and any additional insurance Landlord determines to carry shall not be an Operating Expense hereunder) and the commercially reasonable deductible portion of any insured loss otherwise covered by such insurance; the cost of compensation, including employment, welfare and social security taxes, paid vacation days, disability, pension, medical and other fringe benefits of all persons (including independent contractors) who perform services connected with the operation, maintenance, repair or replacement of the Project; any association assessments, costs, dues and/or expenses relating to the Project, personal property taxes on and maintenance and repair of equipment and other personal property used in connection with the operation, maintenance or repair of the Project; repair and replacement of window coverings provided by Landlord in the premises of tenants in the Project; such reasonable auditors’ fees and legal fees as are incurred in connection with the operation, maintenance or repair of the Project; a property management fee (which fee may be imputed if Landlord has internalized

 

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management or otherwise acts as its own property manager); the maintenance of any easements or ground leases benefiting the Project, whether by Landlord or by an independent contractor; license, permit and inspection fees; all costs and expenses required by any governmental or quasi-governmental authority or by applicable law, for any reason, including capital improvements, whether capitalized or not, and the cost of any capital improvements made to the Project by Landlord that improve life-safety systems or reduce operating expenses and the costs to replace items which Landlord would be obligated to maintain under the Lease (such costs to be amortized over its useful life as Landlord shall reasonably determine together with interest thereon at the rate of seven percent (7%) per annum); the cost of air conditioning, heating, ventilating, plumbing, elevator maintenance and repair (to include the replacement of components) and other mechanical and electrical systems repair and maintenance; sign maintenance; Common Area (defined below) repair, resurfacing, operation and maintenance; costs of the property management office and office operation; all supplies, materials and rental equipment used in the operation and maintenance of the Project, including, without limitation, temporary lobby displays and events, the cost of erecting, maintaining and dismantling art work and similar decorative displays commensurate with operation of a first-class office building; the reasonable cost for temporary lobby displays and events commensurate with the operation of a similar class building; and the cost of providing security services, if any, deemed appropriate by Landlord.

The following items shall be excluded from Operating Expenses:

(A) Leasing commissions, attorneys’ fees, advertising costs, costs and disbursements and other expenses incurred in connection with leasing, renovating or improving vacant space in the Project for tenants or prospective tenants of the Project;

(B) Costs (including permit, license and inspection fees) incurred in renovating or otherwise improving or decorating, painting or redecorating space for tenants, Tenant or vacant space or space in the Project which would normally be occupied by tenants and costs incurred in removing property improvements of former tenants or other occupants of the Project;

(C) Landlord’s costs of any services sold to tenants or Tenant for which Landlord is entitled to be reimbursed by such tenants as an additional charge or rental over and above the Base Rent payable under the lease with such tenant or Tenant or other occupant;

(D) Any depreciation or amortization of the Project except as expressly permitted herein;

(E) Costs, fines, penalties, or interest incurred due to a violation of Laws or the terms and conditions of any lease by Landlord or any other tenant in the Project;

(F) Debt service, rental under any ground or underlying lease, or interest, principal, points and fees on any encumbrance, mortgage or other debt instrument encumbering the Project;

(G) All items and services for which Tenant or other tenants reimburse Landlord outside of Operating Expenses;

(H) Costs of repairs or other work occasioned by fire, windstorm, or other casualty of an insurable nature, whether or not Landlord carries such insurance (except for any insurance deductible provided for herein which such deductibles shall be included in the definition of Operating Expenses);

(I) Costs incurred by Landlord for alterations, additions, and replacements which are considered capital expenditures under generally accepted accounting principles, consistently applied, except to the extent (i) that they are acquired to cause, in Landlord’s good faith judgment, an immediate (i.e., commencing within the first year after completion of such repairs or improvements or installation of such equipment) reduction in other Operating Expenses, amortized over the useful life of such improvements at an annual rate reasonably calculated to equal the amount of Operating Expenses to be

 

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saved in each calendar year throughout the Lease Term (as determined at the time Landlord elected to proceed with the capital improvement or acquisition of the capital equipment to reduce Operating Expenses), or (ii) that they are incurred due to any new Laws first enacted or made applicable to the Project after the Effective Date of this Lease, or (iii) improving life-safety systems but not to exceed an amortized amount of $150,000 per calendar year for the entire Project for such life safety system improvements (such items (i) – (iii) being included in the definition of Operating Expenses);

(J) To the extent the Project is not in compliance with Laws as of the Effective Date of this Lease, then costs of bringing the Common Areas of the Project into compliance with building codes, laws, rules, regulations, ordinances, or any other governmental rules or requirements, including, without limitation, the Americans With Disabilities Act of 1990 and Title 24 of the California Code of Regulations (or its successor);

(K) Repairs or other work under Paragraph 10 of this Lease paid for through condemnation proceeds;

(L) Repairs resulting from any defect in the original design or construction of any improvements to the Project following the Effective Date hereof the cost of which is not included in Operating Expenses (i.e. the Renovation Work (as defined in Paragraph 19(dd) below));

(M) Leasing commissions, accountants’ fees (except with respect to accountants’ fees incurred in connection with preparing and furnishing Landlord’s statement of Operating Expenses pursuant to Paragraph 3(e) below shall be included in Operating Expenses or any protest of Taxes), and attorneys’ fees and costs incurred in connection with negotiations or disputes with tenants of the Project;

(N) Landlord’s costs of electricity and other services sold or provided to tenants in the Project and for which Landlord is reimbursed by such tenants or Tenant as a separate additional charge and above the base rent or additional rent payments payable under the lease with such tenant or Tenant;

(O) All items and services for which Tenant or any other tenant reimburses Landlord for or with respect to which Landlord provides without reimbursement selectively to one or more tenants or occupants of the Project other than Tenant as a separate additional charge and above the base rent or additional rent payments payable under the lease with such tenant or occupants;

(P) Costs incurred by Landlord due to violation by Landlord or any other tenant or occupant of the Building of applicable laws, rules or regulations, the terms and conditions of any lease, ground lease, mortgage or deed of trust, or other covenants, conditions or restrictions encumbering the Building or the Land;

(Q) Payment of principal, fees, points, and/or interest on debt or amortization payments of any mortgage or mortgages executed by Landlord covering the Project (or any portion thereof), and rental payments under any ground or underlying lease or leases;

(R) Landlord’s general corporate overhead and all general administrative overhead expenses for services not specifically performed for the Project;

(S) Penalties and interest due to a violation of Laws by Landlord relating to the Project (but this provision does not relieve Tenant of liability for penalties or interest incurred due to violations of Laws by Tenant);

(T) Salaries wages, bonuses, and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare, and other fringe benefits, and vacation, holidays, and other paid absence benefits) relating to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord;

 

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(U) Overhead and profit increments paid to subsidiaries or affiliates of Landlord or to any other party for goods or services on or to the Project (or any portion thereof), to the extent such overhead and profit increments exceed that which would have been earned by or paid to an independent, third-party provider of the same or similar goods or services on an arms length basis;

(V) Costs incurred in the operation of any concession serving the Project, including, without limitation, parking facilities;

(W) Compensation paid to clerks, attendants, and other persons in any concessions operated by Landlord;

(X) Brokerage commissions, attorneys’ and accountants’ fees related thereto, loan brokerage fees, closing costs, interest charges and other similar costs incurred in connection with the sale, refinancing, mortgaging, or selling, or change of ownership of the Project;

(Y) All costs incurred by Landlord in connection with any dispute relating to the Landlord’s title to or ownership of the Project or any portion thereof;

(Z) Contributions to political or charitable organizations;

(AA) Expenses and costs relating in any way whatsoever to the identification, testing, monitoring and control, encapsulation, removal, replacement, repair, or abatement of any Hazardous Materials or mold within the Building or Project;

(BB) Costs of correcting defects in the Building, and the Common Areas of the Project, or the equipment used therein and the replacement of defective equipment to the extent such costs are covered by warranties of manufacturers, suppliers or contractors, or are otherwise borne by parties other than Landlord, except that conditions resulting from ordinary wear and tear will not be deemed defects for the purpose of this category;

(CC) Interest and penalties due to late payments of taxes and utility bills or any other obligations;

(DD) Expenses incurred in connection with the design, approval or installation of tenant improvements made for tenants or other occupants of the Building or incurred in renovating, improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building;

(EE) Rentals incurred in leasing HVAC systems, elevators or other equipment that if purchased rather than rented would constitute a capital item that is excluded, except for (i) rental costs incurred in making repairs or in keeping Building Systems in operation while repairs are being made, and (ii) rental costs of equipment not affixed to the Building that is used in providing janitorial or similar services;

(FF) Any damage and repairs covered under any insurance policy carried by, or required to be carried by Landlord;

(GG) Costs incurred in connection with the operation of the business of the entity constituting Landlord, as distinguished from costs of operating the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building;

(HH) Costs to provide any tenant of the Project with any Extra Services (as defined herein);

 

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(II) The cost of any “tenant relations” parties, events or promotions that are in excess of $60,000 per calendar year for the entire Project;

(JJ) Costs attributable to an increase in the size of the Project management office to the extent it is increased to greater than 3,500 square feet of Rentable Area;

(KK) Rent attributable to the Project management office to the extent such rent is greater than fair market rent for such space or rent attributable to any portion of the Project management office in excess of 3,500 square feet of Rentable Area;

(LL) Relocation costs of the Project management office;

(MM) Property management fees in excess of three percent (3%) of gross revenues from the Project (“Management Fee Percentage”) (which Management Fee Percentage shall in no event be greater than the percentage for management fees charged by Landlord to any other tenant or occupant of Office Area in the Building (“Other Tenant”) under a new lease entered into by Landlord after the Effective Date hereof (“New Lease”), and if Landlord agrees to charge a lesser percentage for management fees to any Other Tenant under a New Lease, then the Management Fee Percentage to be paid by Tenant under this Lease shall be reduced for Tenant to the lower percentage for management fees payable by such Other Tenant under the New Lease during the term of such Other Tenant’s New Lease);

(NN) Any reserves for bad debts, rent loss, capital items, future Operating Expenses or any other purpose;

(OO) Costs of acquiring or purchasing any artwork;

(PP) Costs and expenses of providing HVAC service to other tenant spaces in the Building outside of Business Hours;

(QQ) Costs and expenses to provide janitorial service, water, gas, fuel, steam, lights, sewer service and other utilities to other tenants or occupants of the Building materially in excess of amounts typically used in connection with ordinary office use;

(RR) Costs relating to the repair of structural portions of the foundations, floors and exterior walls and all structural seismic upgrading costs but only to the extent the amortized portion of such costs exceeds $250,000 in a given calendar year for the entire Project (i.e., the initial amortized amount of $250,000 in any given calendar year for the entire Project shall be included in Operating Expenses);

(SS) The cost of labor and employees with respect to personnel not located at the Building on a full-time basis unless such costs are appropriately allocated between the Building and the other responsibilities of such personnel;

(TT) Costs for janitorial services for any Rentable Area in the Project to the extent Tenant provides such services to the Premises at its own cost;

(UU) Expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged directly but which are provided to another tenant or occupant of the Building;

(VV) The cost of repairs or other work resulting from a casualty or occurrence with regard to which either Landlord or Tenant elects to terminate this Lease;

(WW) The cost of operation, repair, maintenance and other expenses relating to the portions of the Project used for retail and restaurant use; and

 

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(XX) Costs and expenses of providing electricity to areas of the Building outside of the Common Areas.

(d) Operating Expenses for any calendar year during which actual occupancy of the Project is less than ninety-five percent (95%) of the Rentable Area of the Office Area shall be adjusted to the amount of Operating Expenses that would have been incurred if more than ninety-five percent (95%) of the Rentable Area of the Office Area had been occupied. In no event shall any adjustments to Operating Expenses in any calendar year result in Landlord receiving from Tenant and other tenants more than one hundred percent (100%) of the cost of the actual Operating Expenses paid by Landlord in any such calendar year. In determining Operating Expenses, if any services or utilities are separately charged to tenants of the Project or others, Operating Expenses shall be adjusted by Landlord to reflect the amount of expense which would have been incurred for such services or utilities on a full time basis for normal Project operating hours. In the event (i) any respective commencement date for a portion of the Premises shall be a date other than January 1, (ii) the date fixed for the expiration of any portion of the Premises shall be a date other than December 31, (iii) of any early termination of this Lease, or (iv) of any increase or decrease in the size of the Premises, then in each such event, an appropriate adjustment in the application of this Paragraph 3 shall, subject to the provisions of this Lease, be made to reflect such event on a basis determined by Landlord to be consistent with the principles underlying the provisions of this Paragraph 3. In addition, Landlord shall have the right, from time to time, to equitably allocate and prorate some or all of the Operating Expenses among different tenants and/or different buildings of the Project and/or on a building-by-building basis (the “Cost Pools”), adjusting Tenant’s Proportionate Share as to each of the separately allocated costs based on the ratio of the Rentable Area of the Premises to the Rentable Area of all of the premises to which such costs are allocated. Such Cost Pools may include, without limitation, the office space tenants and retail space tenants of the buildings in the Project.

(e) Landlord’s current estimate of Operating Expenses for the calendar year 2012 is the amount shown in Item 8 of the Basic Lease Provisions. Prior to the commencement of each calendar year of the Lease Term, Landlord shall give to Tenant a written good faith reasonable estimate of Tenant’s Proportionate Share of the Operating Expenses for the Project for the ensuing year. Tenant shall pay such reasonably and in good faith estimated amount to Landlord in equal monthly installments, in advance on the first day of each month. On or before May 1 of each calendar year, Landlord shall furnish Tenant a statement indicating in reasonable detail the Operating Expenses for the past calendar year, and the parties shall, within thirty (30) days thereafter, make any payment or allowance necessary to adjust Tenant’s estimated payments to Tenant’s actual share of such Operating Expenses as indicated by such annual statement. Any payment due Landlord shall be payable by Tenant within thirty (30) days of demand from Landlord. Any amount due Tenant shall be credited against Rent next becoming due or refunded to Tenant, if requested by Tenant.

(f) Landlord shall maintain for a period of at least two (2) years following the end of the calendar year to which they pertain complete and accurate books and records of all Operating Expenses.

(g) Tenant shall be liable for payment of all taxes and assessments (i) levied against any personal property or trade fixtures of Tenant in or about the Premises, (ii) based upon this Lease or any document to which Tenant is a party creating or transferring an interest in this Lease or an estate in all or any portion of the Premises, and (iii) levied for any business, professional, or occupational license fees. If any such taxes or assessments are levied against Landlord or Landlord’s property or if the assessed value of the Project is increased by the inclusion therein of a value placed upon such personal property or trade fixtures, Tenant shall within thirty (30) days following demand reimburse Landlord for the taxes and assessments so levied against Landlord, or such taxes, levies and assessments resulting from such increase in assessed value. To the extent that any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to Tenant by Landlord. In the event that the Project is owned by an entity the property of which is exempt from taxation pursuant to the California Revenue and Taxation Code, Tenant’s possessory interest may be subject to property taxation pursuant to Section 107.6 of the California Revenue and Taxation Code and to the payment of property taxes levied on that interest. The full cash value, as defined in Sections 110 and 110.1 of the California Revenue and Taxation Code, of the possessory interest, upon which property taxes will be based, shall equal the greater of (A) the full cash value of the possessory interest or (B) if Tenant has leased less than all of the Project, Tenant’s allocable share of the full cash value of the Project that would have been enrolled if the Project had been subject to property tax upon acquisition by Landlord. The full cash value as provided for pursuant to either (A) or (B) of the preceding sentence

 

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shall reflect the anticipated term of possession if, on the lien date described in Section 2192 of the California Revenue and Taxation Code, that term is expected to terminate prior to the end of the next succeeding fiscal year. Tenant’s allocable share shall, subject to the preceding sentence, be the Rentable Area of the Premises divided by the Rentable Area of the Project.

(h) Any delay or failure of Landlord in either (i) delivering any estimate or statement described in this Paragraph 3, or (ii) computing or billing Tenant’s Proportionate Share of Operating Expenses, shall not constitute a waiver of its right to require an increase in Rent, or in any way impair the continuing obligations of Tenant under this Paragraph 3; provided that, Landlord’s failure to deliver a statement within nine (9) months following the end of any calendar year shall be deemed Landlord’s waiver of any right to collect any short fall of Tenant’s Proportionate Share of Operating Expenses for such calendar year. In the event of any dispute as to any Additional Rent due under this Paragraph 3, Tenant, an officer of Tenant or an independent certified public accountant (but (a) in no event shall Tenant hire or employ an accounting firm or any other person to audit Landlord as set forth under this Paragraph 3(h) who is compensated or paid for such audit on a contingency basis and (b) in the event Tenant hires or employs an independent party to perform such audit, Tenant shall provide Landlord with a copy of the engagement letter) shall have the right after reasonable notice and at reasonable times to inspect at Landlord’s property manager’s office Landlord’s books and records (including, without limitation, applicable invoices) as shall be necessary for Tenant to verify, at Tenant’s cost and expense, actual Operating Expenses for the then most recent two (2) calendar years of the Lease Term (an “Audit”). If, within thirty (30) days following delivery of such Audit, Landlord fails to reject in writing Tenant’s Audit report, then Tenant’s Audit report shall be deemed approved by Landlord. If Landlord timely disputes such Additional Rent as set forth in the Audit, upon Tenant’s written request therefor, a certification as to the proper amount of Operating Expenses and the amount due to or payable by Tenant shall be made by an independent certified public accountant mutually agreed to by Landlord and Tenant each acting in good faith; provided, however, if Landlord and Tenant are unable to agree on such auditor, then Landlord shall select either (i) Price Waterhouse Coopers, (ii) Ernst & Young, (iii) Grant Thornton, or (iv) Deloitte to be such auditor; provided that Landlord cannot select the firm who prepared Landlord’s original statement to which Tenant objected. If the Certification reflects that Tenant has overpaid Tenant’s Proportionate Share of Operating Expenses for the period in question, then Landlord shall credit such excess to Tenant’s next payment of Base Rent and Operating Expenses or, at the request of Tenant, promptly refund such excess to Tenant and Landlord shall pay the cost of the Certification and the Audit (to the extent set forth below). Conversely, if Tenant has underpaid Tenant’s Proportionate Share of Operating Expenses, then Tenant shall promptly pay such additional Operating Expenses to Landlord within thirty (30) days after demand therefor by Landlord and the cost of the Certification and Audit shall be paid by Tenant. If any Audit shows, or if the Certification process confirms that, the aggregate amount of Operating Expenses paid by Tenant in the applicable period was overstated by Landlord pursuant to the reports described above by more than three percent (3%), Landlord shall reimburse Tenant, up to a maximum amount of Twenty Thousand Dollars ($20,000.00), for the reasonable, out-of-pocket costs and expenses incurred by Tenant in connection with such Audit. Notwithstanding the foregoing, Tenant shall maintain strict confidentiality of all of Landlord’s accounting records and shall not disclose the same to any other person or entity except for Tenant’s professional advisory representatives (such as Tenant’s employees, accountants, advisors, attorneys and consultants) with a need to know such accounting information, who agree to similarly maintain the confidentiality of such financial information.

(i) Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Proportionate Share of Operating Expenses for the year in which this Lease terminates (subject to Tenant’s Audit rights), Tenant shall immediately pay any increase due over the estimated Operating Expenses paid, and conversely, any overpayment made by Tenant shall be promptly refunded to Tenant by Landlord.

(j) At any time within one hundred twenty (120) days prior to the final date in which an appeal to a particular property tax for the Project must be filed, Tenant may provide a written inquiry to Landlord in order to determine if Landlord intends to file an appeal for the tax bill in question. Landlord shall have twenty (20) days from its receipt of Tenant’s inquiry in order to advise Tenant if it elects to file an appeal. If Landlord fails to respond within such twenty (20) day period, then Tenant may send a second notice to Landlord, which such second notice shall state in capital letters at the top of such notice: “LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE IN TEN (10) DAYS SHALL BE DEEMED THAT LANDLORD HAS ELECTED TO NOT FILE AN APPEAL TO THE HEREIN REFERENCED TAX BILL, IN WHICH CASE TENANT MAY ELECT TO FILE AN

 

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APPEAL OF SUCH TAX BILL PURSUANT TO PARAGRAPH 3(j) OF THE LEASE.” If Landlord fails to respond to Tenant’s second notice within ten (10) days after its receipt, then Landlord shall be deemed to have elected to not appeal the tax bill in question. If Landlord elects (or is deemed to have elected) not to appeal property taxes for the Project which relate to any portion of the Lease Term, then Landlord agrees to cooperate with Tenant should Tenant desire to appeal such property taxes for the Project. If Tenant elects to exercise the option to appeal pursuant to this Paragraph 3(j), then Tenant is required to provide Landlord with written notice (“Appeals Notice”) at least sixty (60) days prior to the final date in which the appeal must be filed. Upon receipt of the Appeals Notice, Landlord shall retain a third party reasonably approved by Tenant in order to file and prosecute such appeal and thereafter Landlord shall diligently prosecute such appeal. Tenant may at any time in its sole discretion direct Landlord to terminate an appeal it previously elected pursuant to an Appeals Notice. In the event Tenant provides an Appeals Notice to Landlord and the resulting appeal reduces the property taxes for the calendar year in question as compared to the original bill received for such calendar year, then the costs for such appeal shall be included as an Operating Expense and passed through to the tenants of the Building. In turn, if the appeal is not successful, then Tenant shall reimburse Landlord, within thirty (30) days after written demand, for any and all costs reasonably incurred by Landlord in connection with such appeal. Tenant’s failure to timely deliver an Appeals Notice shall waive Tenant’s rights to request an appeal of such tax increase or assessment for such calendar year. In no event shall Tenant be permitted to exercise its rights under this Paragraph 3(j), at any time when there is a continuing Material Default under this Lease. In addition, Tenant’s obligations to reimburse Landlord for the costs of the appeal pursuant to this Paragraph 3(j), and Tenant’s right to benefit from any reduction in the Taxes, shall survive the expiration or earlier termination of this Lease in the event the appeal is not concluded until after the expiration or earlier termination of the Lease. If there are any appeals pending during any time in which Tenant exercises either its Right of First Offer to Purchase the Project pursuant to Addendum Seven or Purchase Option pursuant to Addendum Eight, then the purchase price paid by Tenant shall be increased by any costs incurred by Landlord prior to the closing of the sale for any appeals that are pending which were brought by Landlord at the request of Tenant. Upon Tenant’s written request, Landlord agrees to keep Tenant apprised of all tax protest filings and proceedings undertaken by Landlord to obtain a reduction or refund of Taxes.

(k) The Base Rent, Additional Rent, late fees, and other amounts required to be paid by Tenant to Landlord hereunder are sometimes collectively referred to as, and shall constitute, “Rent”.

 

4.

IMPROVEMENTS AND ALTERATIONS

(a) Subject to those express representations and warranties by Landlord expressly set forth herein, Landlord shall deliver the Premises to Tenant, and Tenant agrees to accept the Premises from Landlord in its existing “AS-IS”, “WHERE-IS” and “WITH ALL FAULTS” condition, and Landlord shall have no obligation to refurbish or otherwise improve the Premises throughout the Lease Term; provided, however, and notwithstanding the foregoing to the contrary, Landlord agrees (i) to perform the Renovation Work, (ii) to deliver the Premises vacant, in broom clean condition and with all data cabling and movable furniture removed therefrom, and (iii) to provide the Tenant Improvement Allowances set forth in Item 18 of the Basic Lease Provisions which shall be disbursed in accordance with the terms and conditions of Exhibits B-1, B-2, and B-3.

(b) Tenant shall make no alterations, changes or additions in or to the Premises (collectively, “Alterations”) without Landlord’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Alterations, Landlord shall respond, in writing, stating the grounds for such disapproval, within ten (10) Business Days after receipt of Tenant’s request for approval of the proposed Alterations, provided that, if Landlord fails to respond, Landlord shall be deemed to have approved the proposed Alterations. Notwithstanding the foregoing, Tenant may perform non-structural improvements to the interior of the Premises (such as painting, carpeting and wall covering) without Landlord’s prior consent but with prior notice to Landlord, provided that: (i) the improvements do not impact or affect the structural integrity, the roof of the Building, the building systems (including, without limitation, the HVAC, electric, mechanical, plumbing, fire, or life safety systems) (the “Building Systems”) or the operation of the Building; (ii) such improvements do not cost in excess of $50,000 per floor or $500,000 in the aggregate in any one (1) calendar year; and (iii) Tenant shall, prior to the commencement of the work, deliver to Landlord proofs of contractor insurance, in form reasonably acceptable to Landlord, from all contractors performing such work and plans indicating the nature of the proposed improvements. In installing or constructing any Alterations, Tenant shall

 

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only use contractors reasonably approved by Landlord in writing. Without limiting the other grounds upon which Landlord may refuse to approve any contractor or subcontractor, Landlord may take into account the desirability of maintaining harmonious labor relations at the Project in approving such contractors. For any Alterations that require Landlord’s approval, Tenant shall submit to Landlord fully detailed and dimensioned plans and specifications pertaining to the Alterations in question, to be prepared and submitted by Tenant at its sole cost and expense. Tenant shall at its sole cost and expense obtain all necessary approvals and permits pertaining to any Alterations approved by Landlord. Tenant hereby indemnifies, defends and agrees to hold Landlord free and harmless from all liens and claims of lien, and all other liability, claims and demands arising out of any work done or material supplied to the Premises by or at the request of Tenant in connection with any Alterations, unless any such liability, claim or demand is the result of the negligence or willful misconduct of Landlord or its agent, employee or contractor. Following the (i) Phase I Premises Delivery Dates as set forth in the tables located in Item 9 of the Basic Lease Provisions for the Phase I Premises, (ii) Phase II Premises Delivery Dates as set forth in the tables located in Item 9 of the Basic Lease Provisions for the Phase II Premises, and (iii) Phase III Premises Delivery Dates as set forth in the tables located in Item 9 of the Basic Lease Provisions for the Phase III Premises, any and all costs attributable to or related to the applicable building codes of the city in which the Project is located (or any other authority having jurisdiction over the Project) arising from Tenant’s plans, specifications, improvements, alterations or otherwise shall be paid by Tenant at its sole cost and expense.

(c) With regard to repairs, Alterations or any other work arising from or related to this Paragraph 4, Landlord shall be entitled to receive an administrative/supervision fee equal to (i) One Hundred Fifty Dollars ($150) per hour for every hour reasonably and actually spent by Landlord’s construction management and/or property management personnel supervising or overseeing the Alterations, plus (ii) the actual cost of any materials expended by such construction management and/or property management personnel. Landlord shall provide reasonable documentation of the calculation of its administration/supervision fee as part of its submission to Tenant. After the initial five (5) years of the Lease Term, the foregoing hourly fee shall be reasonably adjusted based on market conditions. Landlord’s right to review plans and specifications and to monitor construction of Alterations shall be solely for its own benefit, and Landlord shall have no duty to see that such plans and specifications or construction comply with applicable laws, codes, rules and regulations. The construction of initial improvements to the Premises shall be governed by the terms of the Phase I Premises Work Letter, Phase II Premises Work Letter, and Phase III Premises Work Letter (each, a “Work Letter”) and not the terms of this Paragraph 4.

(d) Notwithstanding anything in this Paragraph 4 to the contrary, (i) concurrently with Landlord’s approval of any Alterations and/or improvements installed by Tenant, Landlord shall notify Tenant in writing which, if any, of such Alterations and/or improvements need to be removed by Tenant from the Premises upon the expiration or earlier termination of the Lease (“Alterations Removal Notice”), and (ii) Tenant shall not have any obligation to remove any Alteration and/or improvement (x) for which Landlord’s approval was requested and Landlord did not give Tenant such notice or (y) which is not a Specialty Improvement. Unless otherwise set forth in the Alterations Removal notice, Tenant shall remove all Specialty Improvements from the Premises upon the expiration or earlier termination of the Lease Term and Tenant shall repair any damage to the Premises (as expressly stated herein) caused by such removal. As used in this Lease “Specialty Improvements” means any of the following: any server racks, security system, card access systems, key pad door hardware, heat pumps, high density filing systems, data centers, classrooms, courtrooms, cafeteria, fitness center (including showers and other amenities for the fitness center), internal stairwells, raised floors, voice, data and other cabling, libraries, any areas requiring floor reinforcement or enhanced systems requirements, supplemental HVAC equipment or systems or components thereof, and supplemental systems and equipment used on connection therewith. In addition, notwithstanding anything in this Paragraph 4 to the contrary, Tenant shall not be required to remove any of the Alterations and/or improvements which exist in the Premises at the time that Landlord delivers the Premises to Tenant or any of the Tenant Improvements. Landlord shall not unreasonably withhold or delay its approval with respect to what improvements or Alterations Landlord may require Tenant to remove at the expiration of the Lease.

(e) Tenant shall cause, at its sole cost and expense, all Alterations to comply in all material respects with Laws and shall construct, at its sole cost and expense, any alteration or modification to the Premises required by Laws as a result of any Alterations. All Alterations shall be constructed at Tenant’s sole cost and expense, in a first class and good and workmanlike manner by contractors reasonably acceptable to Landlord and only good grades of materials shall be used. Landlord may monitor construction of the Alterations and Tenant shall reimburse Landlord for all reasonable and actual third-party costs reasonably incurred by Landlord in reviewing Tenant’s plans

 

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for such construction. Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to see that such plans and specifications or construction comply with applicable laws, codes, rules and regulations. Without limiting the other grounds upon which Landlord may refuse to approve any contractor or subcontractor, Landlord may take into account the desirability of maintaining harmonious labor relations at the Project. Landlord may also require that all life safety related work and all mechanical, electrical, plumbing and roof related work be performed by contractors reasonably designated by Landlord within five (5) Business Days following written request of Tenant. Any Alterations remaining in the Premises following the expiration of the Lease Term or following the surrender of the Premises from Tenant to Landlord, which are not required to be removed by Tenant as set forth above, shall become the property of Landlord unless Landlord notifies Tenant otherwise. Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law. Tenant shall assure payment for the completion of all work free and clear of liens and shall provide certificates of insurance for worker’s compensation and other coverage in amounts and from an insurance company satisfying the requirements of Paragraph 8(d)(i) protecting Landlord against liability for bodily injury or property damage during construction. Additionally, upon completion of any Alteration, Tenant shall provide Landlord, at Tenant’s expense, with a complete set of plans in reproducible form and specifications reflecting the actual conditions of the Alterations, together with a copy of such plans on diskette in the AutoCAD format or such other format as may then be in common use for computer assisted design purposes. Tenant shall pay to Landlord, as additional rent, the reasonable costs of Landlord’s third party engineers and other third party consultants (but not Landlord’s on-site management personnel) which are reasonably required to be engaged by Landlord for review of all plans, specifications and working drawings for the Alterations and for the incorporation of such Alterations in the Landlord’s master Building drawings, within thirty (30) days after Tenant’s receipt of invoices from Landlord.

(f) Tenant shall keep the Premises, the Building and the Project free from any and all liens arising out of any Alterations, work performed, materials furnished, or obligations incurred by or for Tenant. In the event that Tenant shall not, within thirty (30) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a bond in a form and issued by a surety acceptable to Landlord, Landlord shall have the right, but not the obligation, to cause such lien to be released by such means as it shall deem proper (including payment of or defense against the claim giving rise to such lien); in such case, Tenant shall reimburse Landlord for all amounts so paid by Landlord in connection therewith, together with all of Landlord’s costs and expenses, with interest thereon at the Default Rate (defined in Paragraph 12(f) below) and Tenant shall indemnify and defend each and all of the Landlord Indemnitees (defined in Paragraph 8(b) below) against any damages, losses or costs arising out of any such claim. Tenant’s indemnification of Landlord contained in this Paragraph shall survive the expiration or earlier termination of this Lease. Such rights of Landlord shall be in addition to all other remedies provided herein or by law.

(g) NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT, OR TO ANYONE HOLDING THE PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS’ OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN THE PREMISES.

 

5.

REPAIRS

(a) Landlord’s obligation with respect to repair shall be limited to keeping and maintaining (i) the structural portions of the Building, (ii) the exterior walls of the Building, including, without limitation, glass and glazing, (iii) the roof, (iv) mechanical, electrical, plumbing and life safety systems except for that portion of any kitchen facilities located within the Premises that serve Tenant exclusively and any supplemental heating and air conditioning systems (including all plumbing connected to said facilities or systems located within the Premises ), (v) the restrooms (even those restrooms located within the Premises) and (vi) Common Areas in first-class condition commensurate with first-class office buildings located in the Financial District of San Francisco, California and in a clean and neat condition (collectively the “Landlord Repairs”). Landlord shall not be deemed to have breached any obligation with respect to the condition of any part of the Project unless Tenant has given to Landlord written notice of any required repair and Landlord has not made such repair within thirty (30) days following the receipt by Landlord of such notice. The foregoing notwithstanding the obligations of Landlord pertaining to damage or destruction by casualty shall be governed by the provisions of Paragraph 9. Landlord shall have the right but not the

 

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obligation to undertake repair work that Tenant is required to perform under this Lease and that Tenant fails or refuses to perform in a timely and efficient manner after expiration of all applicable notice and cure periods. All costs reasonably incurred by Landlord in performing any such repair for the account of Tenant shall be repaid by Tenant to Landlord upon demand, together with an administration fee equal to five (5%) of such costs. Except as expressly provided in Paragraph 9 of this Lease and subject to compliance with the following sentence, there shall be no abatement of Rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Premises, the Building or the Project. Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s business in making any repairs or replacements to the Building or the Premises. Excluding Tenant’s self-help rights expressly set forth in this Lease, Tenant waives the right to make repairs at Landlord’s expense under any law, statute or ordinance now or hereafter in effect (including the provisions of California Civil Code Section 1942 and any successive sections or statutes of a similar nature).

(b) Tenant, at its expense, (i) shall keep the Premises and all fixtures contained therein in a safe, clean and neat condition, and (ii) shall bear the cost of maintenance and repair, by contractors reasonably selected by Tenant, of all facilities which are not expressly required to be maintained or repaired by Landlord and which are located in the Premises, including, without limitation, kitchen facilities, and supplemental heating and air conditioning systems (including all plumbing connected to said facilities or systems installed by or on behalf of Tenant or existing in the Premises at the time of Landlord’s delivery of the Premises to Tenant). Tenant shall make all repairs to the Premises not required to be made by Landlord under subparagraph (a) above with replacements of any materials to be made by use of materials of equal or better quality. Tenant shall do all decorating, remodeling, alteration and painting required by Tenant during the Lease Term. If Tenant fails to make such repairs or replacements within thirty (30) days after written notice from Landlord, Landlord may at its option make such repairs or replacements, and Tenant shall upon demand pay Landlord for the reasonable cost thereof, together with an administration fee equal to five percent (5%) of such costs.

(c) Notwithstanding anything in this Lease to the contrary, except for the removal of (i) Submetering Equipment (which shall be governed by the terms and provisions of Paragraph 7(h)), (ii) Supplemental HVAC Units (which shall be governed by the terms and provisions of Paragraph 7(h)), (iii) Tenant’s Security Equipment (which shall be governed by the terms and provisions of Paragraph 19(d)), (iv) Rooftop Equipment (which shall be governed by the terms and provisions of Paragraph 19(ll)), and (v) Alterations and Specialty Improvements (which shall be governed by the terms and provisions of Paragraph 4(d)), upon the expiration or earlier termination of any of the respective Lease Terms, Tenant shall surrender the portion of the Premises which is subject to the expiring or terminating Lease Term in the condition in which it was received on the applicable Delivery Date, ordinary wear and tear and damage thereto by fire or other casualty excepted. Except as otherwise set forth in Paragraph 4(d) of this Lease, Tenant shall remove from the Premises (i) all Alterations or improvements required to be removed pursuant to Paragraph 4, (ii) trade fixtures, furnishings and other personal property of Tenant and (iii) all computer and phone cabling and wiring installed by or on behalf of Tenant, and shall repair all damage caused by the removal of items (i) – (iii). In addition to all other rights Landlord may have, in the event Tenant does not so remove any such fixtures, furnishings or personal property, Tenant shall be deemed to have abandoned the same, in which case Landlord may store or dispose of the same at Tenant’s expense, appropriate the same for itself, and/or sell the same in its discretion.

(d) Notwithstanding anything herein to the contrary, within thirty (30) days following the date that the Premises no longer include both Floor 27 and Floor 28, Landlord shall be required, at its sole cost and expense and not as an Operating Expense, to (i) remove and demolish the internal stair case currently existing on Floor 27, which connects Floor 27 to Floor 28, to the extent Floor 27 remains within the Premises, and replace the slab, including the structural components of the slab, or (ii) replace the slab, including the structural components of the slab on Floor 28, at the point that the internal stair projects into Floor 28, such that the internal stairway to Floor 28 is no longer accessible, to the extent Floor 28 remains within the Premises (the “Internal Stairway Restoration Work”). Landlord shall be responsible for removal of all debris, and shall use commercially reasonable efforts to minimize the disruption to Tenant’s business within the impacted Floor of the Premises.

 

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6.

USE OF PREMISES

(a) Tenant shall use the Premises only for general office uses; provided, however, Tenant may use up to a maximum of one (1) floor for food service or the operation of a cafeteria and up to a maximum of one (1) full floor for a fitness center. Tenant hereby covenants that to the extent it operates a cafeteria and/or fitness center in the Premises, such cafeteria and/or fitness center shall not be available for use by the general public. Notwithstanding the foregoing, Tenant shall not use the Premises for any Prohibited Uses (as defined in Paragraph 6(e) below). As a condition precedent to Tenant’s use of any portion of the Premises as a fitness center, any such fitness center shall only be permitted on a floor in which Tenant leases the entirety of the floor immediately below (i.e., Tenant would only be permitted to install a fitness center on Floor 6 of the Building if at all times that such fitness center exists Tenant also leased the entirety of Floor 5, being the floor immediately below the floor in which the fitness center is situated). In addition, notwithstanding anything to the contrary herein, Tenant shall not be permitted to (and shall hereby waive) any right to either contract or surrender any portion of the floor situated immediately below any floor in which Tenant continues to operate or use a fitness center. Tenant further acknowledges that if the Lease Term expires with respect to the floor situated immediately below the floor in which the fitness center is situated, then Tenant shall immediately cease using the fitness center and shall remove and restore the floor in which the fitness center is located since Tenant shall at no time operate a fitness center in the Premises unless Tenant also is leasing the entirety of the floor immediately below such fitness center. Landlord shall have the right to deny its consent to any change in the permitted use of the Premises which is not in compliance with Law in its reasonable discretion. Tenant shall have access to the Premises and the Parking Garage twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year, provided that such access shall: (i) be in accordance with all reasonable security measures as may be imposed by Landlord from time to time and as are generally applicable to tenants of the Building and their invitees; and, (ii) be subject to restrictions on access recommended or imposed as a result of an emergency.

(b) Tenant shall not at any time use or occupy the Premises, or permit any act or omission in or about the Premises in violation of any law, statute, ordinance or any governmental rule, regulation or order (collectively, “Law” or “Laws”) and Tenant shall, upon written notice from Landlord, discontinue any use of the Premises which is declared by any governmental authority to be a violation of Law. If any Law shall, by reason of the specific nature of Tenant’s use or occupancy of the Premises (as opposed to general office use), impose any duty upon Tenant or Landlord with respect to (i) modification or other maintenance of the Premises, the Building or the Project, or (ii) the use, Alteration or occupancy thereof, Tenant shall comply with such Law at Tenant’s sole cost and expense. Notwithstanding the foregoing provisions of this Paragraph 6(b) to the contrary, Tenant need not comply with any Laws if Tenant is contesting the validity thereof or the applicability thereof in accordance with the remainder of this Paragraph 6(b). Tenant, at its expense, after notice to Landlord, may contest by appropriate proceedings prosecuted diligently and in good faith, the validity or applicability of any Laws with which Tenant is responsible for compliance hereunder, provided that (i) the condition which is the subject of such contest does not pose a danger to persons or property, (ii) the certificate of occupancy or other occupancy permit for the Premises or any other space in the Project is neither subject to being suspended nor threatened to be suspended by reason of non-compliance or otherwise by reason of such contest, (iii) Landlord is not subject to any criminal or civil penalty or to prosecution for a crime by reason of Tenant’s non-compliance or otherwise by reason of such contest, and (iv) Tenant indemnifies and holds Landlord harmless from any and all claims, damages, costs and/or expenses incurred by Landlord due to Tenant’s failure to comply such Laws.

(c) Tenant shall not at any time use or occupy the Premises in violation of the certificates of occupancy issued for or restrictive covenants pertaining to the Building identified on Exhibit J attached hereto, and in the event that any department of the state or the city or county in which the Project is located shall at any time contend or declare that the Premises are used or occupied in violation of such certificate or certificates of occupancy or restrictive covenants, Tenant shall, upon ten (10) Business Days’ notice from Landlord or any such governmental agency, immediately discontinue such use of the Premises (and otherwise remedy such violation). Any statement in this Lease of the nature of the business to be conducted by Tenant in the Premises shall not be deemed or construed to constitute a representation or guaranty by Landlord that such business is or will continue to be lawful or permissible under any certificate of occupancy issued for the Building or the Premises, or otherwise permitted by Law.

(d) Tenant shall not do or permit to be done anything which may invalidate or materially increase the cost of any fire, All Risk, Causes of Loss - Special Form or other insurance policy covering the Building, the Project and/or property located therein and shall comply with all rules, orders, regulations and requirements of the

 

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appropriate fire codes and ordinances. In addition to all other remedies of Landlord, Landlord may require Tenant, promptly upon demand, but following written notice of the applicable use that results in the increase along with a period to modify such use, to reimburse Landlord for the full amount of any additional premiums charged for such policy or policies by reason of Tenant’s failure to comply with the provisions of this Paragraph 6. Landlord acknowledges that Tenant may improve the Premises with a kitchen or cafeteria, or develop a child care facility as described in Paragraph 19(ii) and that this Paragraph 6(d) shall in no way prohibit or limit such permitted uses.

(e) Tenant shall not in any way materially interfere with the rights or quiet enjoyment of other tenants or occupants of the Building or the Project. Tenant shall not cause, maintain, or permit any nuisance in, on or about the Premises, the Building or the Project. Tenant shall not place weight upon any portion of the Premises exceeding the structural floor load (per square foot of area) which such area was designated (and is permitted by Law) to carry or otherwise use any Building system in any manner which damages such system or the Building. Tenant shall not create within the Premises a working environment with a density of greater than the lesser of (i) seven (7) persons per 1,000 square feet of Rentable Area, or (ii) the maximum permitted by applicable Law;. Notwithstanding anything herein to the contrary, in no event shall Tenant permit any portion of the Premises to be used for any of the following uses (collectively being the “Prohibited Uses”): governmental agencies, collection agencies, personnel agencies, credit union, medical and healthcare uses, and/or call center uses. Landlord acknowledges and agrees that Tenant’s current business operations are not a violation of the Prohibited Uses.

(f) Tenant shall be responsible for and shall take all reasonable steps necessary to adequately secure the Premises from unlawful intrusion, theft, fire and other hazards, and shall keep and maintain any and all security devices in or on the Premises in good working order, including, but not limited to, exterior door locks for the Premises and smoke detectors and burglar alarms located within the Premises and shall cooperate with Landlord and other tenants in the Project with respect to access control and other safety matters.

(g) As used herein, the term “Hazardous Material” means any (a) oil or any other petroleum-based substance, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other wastes, materials or pollutants which (i) pose a hazard to the Project or to persons on or about the Project or (ii) cause the Project to be in violation of any Laws; (b) asbestos in any form, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, or radon gas; (c) chemical, material or substance defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, or “toxic substances” or words of similar import under any applicable local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901, et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. §300, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. §2601, et seq.; the Federal Hazardous Substances Control Act, as amended, 15 U.S.C. §1261, et seq.; and the Occupational Safety and Health Act, as amended, 29 U.S.C. §651, et seq.; Sections 25115, 25117, 25122.7, 25140, 25249.8, 25281, 25316, 25501, and 25316 of the California Health and Safety Code; and (d) other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. The term “Permitted Hazardous Materials” shall mean Hazardous Materials which are of a type and in quantities typically used in the ordinary course of business within executive offices of similar size in the comparable office buildings, but only if and to the extent that such supplies are transported, stored and used in full compliance with all applicable Laws. Hazardous Materials which are contained in ordinary office supplies but which are transported, stored and used in a manner which is not in full compliance with all applicable laws, ordinances, orders, rules and regulations or which is not in any respect safe and prudent shall not be deemed to be “Permitted Hazardous Materials” for the purposes of this Lease.

(i) Tenant, its assignees, subtenants, and their respective agents, servants, employees, representatives and contractors (collectively referred to herein as “Tenant Affiliates”) shall not cause or permit any Hazardous Material to be brought upon, kept or used in or about the Premises by Tenant or by Tenant Affiliates without the prior written consent of Landlord (which may be granted, conditioned or withheld in the reasonable discretion of Landlord), save and except only for Permitted Hazardous Materials, which Tenant or Tenant Affiliates may bring, store and use in reasonable quantities for their

 

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intended use in the Premises, but only in full compliance with all applicable Laws. On or before the expiration or earlier termination of this Lease, Tenant shall remove from the Premises all Hazardous Materials (including, without limitation, Permitted Hazardous Materials), regardless of whether such Hazardous Materials are present in concentrations which require removal under applicable Laws, except to the extent that such Hazardous Materials were present in the (i) Phase I Premises as of the applicable Phase I Delivery Date, (ii) Phase II Premises as of the applicable Phase II Delivery Date, and (iii) Phase III Premises as of the applicable Phase III Delivery Date or were not brought onto the Premises by Tenant or any Tenant Affiliates.

(ii) Tenant agrees to indemnify, defend and hold Landlord and its Affiliates (defined in Paragraph 8(a) below) harmless for, from and against any and all claims, actions, administrative proceedings (including informal proceedings), judgments, damages, punitive damages, penalties, fines, costs, liabilities, interest or losses, including reasonable attorneys’ fees and expenses, court costs, reasonable consultant fees, and reasonable expert fees, together with all other reasonable costs and expenses related thereto that arise during or after the Lease Term directly or indirectly from or in connection with the presence, suspected presence, or release of any Hazardous Material in or into the air, soil, surface water or groundwater at, on, about, under or within the Premises, Building or Project or any portion thereof caused by Tenant or any Tenant Affiliates during the Lease Term.

(iii) In the event any investigation or monitoring of site conditions or any clean-up, containment, restoration, removal or other remedial work (collectively, the “Remedial Work”) is required under any applicable federal, state or local Law, by any judicial order, or by any governmental entity as the result of operations or activities upon, or any use or occupancy of any portion of the Premises by Tenant or Tenant Affiliates, Landlord shall perform or cause to be performed the Remedial Work in compliance with such Law or order at Tenant’s sole cost and expense. All Remedial Work shall be performed by one or more contractors, selected and approved by Landlord, and under the supervision of a consulting engineer, selected by Tenant and approved in advance in writing by Landlord. All costs and expenses of such Remedial Work shall be paid by Tenant, including, without limitation, the charges of such contractor(s), the consulting engineer, and Landlord’s reasonable attorneys’ fees and costs incurred in connection with monitoring or review of such Remedial Work.

(iv) Subject to all matters disclosed in that certain Phase I Environmental Reports dated November 9, 2004 and March 19, 2008, as each were prepared by Tetra Tech EM Inc., as of the Effective Date, Landlord has not received written notice of any violation of environmental Laws pertaining to the Premises and the Project, and to Landlord’s knowledge, there is no violation of environmental Laws pertaining to the Premises and the Project. The term “to Landlord’s knowledge” as set forth in this paragraph shall mean the current actual knowledge of John Cornuke and Erik Sobek, the asset managers for Landlord’s managing agent that are the persons primarily responsible for overseeing the management and operation of the Project, without any duty of inquiry or investigation other than an examination of the files that are in their possession or control.

(v) Each of the covenants and agreements of Tenant set forth in this Paragraph 6(g) shall survive the expiration or earlier termination of this Lease.

 

7.

UTILITIES AND SERVICES

(a) Landlord shall furnish, or cause to be furnished to the Premises, the utilities and services described in this Paragraph 7(a) (collectively the “Basic Services”):

(i) Tepid water in the restrooms existing as of the Effective Date (“Water Service”);

(ii) Central heating and air conditioning in season on business days during Business Hours, and at temperatures and in amounts as are considered by Landlord to be standard for Class “A” office buildings in downtown San Francisco, California (“HVAC Service”);

 

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(iii) Routine maintenance, repairs, structural and exterior maintenance (including, without limitation, exterior glass and glazing), painting and electric lighting service for all Common Areas of the Project in the manner and to the extent deemed by Landlord to be standard, subject to the limitation contained in Paragraph 5(a) above;

(iv) Janitorial service on a five (5) day week basis, excluding union holidays;

(v) Landlord shall furnish electricity to each floor of the Premises for the operation of Tenant’s electrical systems as follows: (i) for plug load at a demand load on a monthly basis of not less than 3.8 watts per usable square foot per floor of the Premises. The foregoing demand load requirement shall exclude electrical wiring and facilities for connection to Tenant’s lighting fixtures; and (ii) for the operation of Tenant’s lighting at a demand load on a monthly basis of not less than 1.2 watts per usable square foot per floor of the Premises. The foregoing electrical amounts set forth in clauses (i) and (ii) above, as expressly stated (and not “not less than”), shall be referred to herein in the aggregate for the entire Premises as the “Premises Electrical Consumption Amounts”. Tenant’s Premises Electrical Consumption Amounts shall include any electricity furnished to any Supplemental Equipment, for which no additional charge shall be payable by Tenant provided Tenant does not exceed Tenant’s Premises Electrical Consumption Amounts;

(vi) Public elevator service twenty four (24) hours per day and a freight elevator serving the floors on which the Premises are situated, during hours designated by Landlord; and

(vii) Gas service is currently available in the main meter vault in the Project; provided, however, in the event Tenant seeks any gas service to any portion of the Premises, Tenant, at its sole cost and expense, shall be required to arrange with the applicable utility company in order to provide for conduits and pipes running from the main meter vault to the portion of the Premises in which gas is desired. Any such work shall be subject to Landlord’s prior written approval, which such approval shall not be unreasonably withheld. Prior to commencing any such work Tenant shall provide Landlord with plans and specifications identifying the proposed conduits and pipes and any other information that Landlord may reasonably request. Tenant shall be responsible for all costs associated with providing gas service to the Premises, including, without limitation, the cost of installing and maintaining separate meters.

(b) Landlord shall provide to Tenant at Tenant’s sole cost and expense (and subject to the limitations hereinafter set forth) following written request of Tenant the following extra services (collectively the “Extra Services”):

(i) Such extra cleaning and janitorial services requested by Tenant, and agreed to by Landlord, for special improvements or Alterations;

(ii) Subject to Paragraph 7(d) below, additional air conditioning and ventilating capacity required by reason of any electrical, data processing or other equipment or facilities or services required to support the same, in excess of that typically provided by the Building;

(iii) Maintaining and replacing lamps, bulbs, and ballasts;

(iv) Heating, ventilation, air conditioning service provided by Landlord to Tenant (i) during hours other than Business Hours, (ii) on Saturdays (after Business Hours), Sundays, or Holidays, said heating, ventilation and air conditioning to be furnished solely upon the prior written request of Tenant given with twenty-four (24) hours advance written notice to Landlord and Tenant shall pay to Landlord an additional charge of $185 per hour per floor (as such additional charge may be modified based on the prevailing rate charged by landlord’s of comparable buildings) for overtime HVAC on an hourly basis (two hour minimum) and $11.00 per hour per floor for fan service (as such additional charge may be modified based on the prevailing rate charged by landlords of comparable buildings); and

 

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(v) Any Basic Service in amounts determined by Landlord to exceed the amounts required to be provided above, but only if Landlord elects to provide such additional or excess service. Tenant shall pay Landlord the cost of providing such additional services (or an amount equal to Landlord’s reasonable estimate of such cost, if the actual cost is not readily ascertainable) together with an administration fee equal to five percent (5%) of such cost, within thirty (30) days following presentation of an invoice therefore by Landlord to Tenant. The cost chargeable to Tenant for all extra services shall constitute Additional Rent.

(c) Landlord shall not be liable to Tenant for the failure of any other tenant, or its assignees, subtenants, employees, or their respective invitees, licensees, agents or other representatives to comply with such regulations and requirements. The term “Business Hours” shall be deemed to be Monday through Friday from 8:00 A.M. to 6:00 P.M. and Saturday from 9:00 A.M. to 1:00 P.M., excepting Holidays. The term “Holidays” shall be deemed to mean and include New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

(d) If Tenant requires utilities or any Basic Service in quantities greater than or at times other than that generally furnished by Landlord as set forth above, Tenant shall pay to Landlord, upon receipt of a written statement therefore, Landlord’s charge for such use. In the event that Tenant shall require additional electric current, water or gas for use in the Premises and if, in Landlord’s judgment, such excess requirements cannot be furnished unless additional risers, conduits, feeders, switchboards and/or appurtenances are installed in the Building, subject to the conditions stated below, Landlord shall proceed to install the same at the sole cost of Tenant, payable upon demand in advance. The installation of such facilities shall be conditioned upon Landlord’s consent, and a determination that the installation and use thereof (i) shall be permitted by applicable Law, (ii) shall not cause permanent damage or injury to the Building or adversely affect the value of the Building or the Project, and (iii) shall not cause or create a dangerous or hazardous condition or materially interfere with another tenant in the Building. Subject to the foregoing, Landlord shall, upon reasonable prior notice by Tenant, furnish to the Premises additional elevator, heating, air conditioning and/or cleaning services upon such reasonable terms and conditions as shall be determined by Landlord, including payment of Landlord’s charge therefore. In the case of any additional utilities to be provided hereunder, Landlord may require a switch and metering system to be installed so as to measure the amount of such additional utilities. The cost of installation, maintenance and repair thereof shall be paid by Tenant upon demand. Notwithstanding the foregoing, Landlord shall have the right to contract with any utility provider it deems appropriate to provide utilities to the Project.

(e) Except as otherwise set forth in Paragraph 7(f) below, Landlord shall not be liable for, and Tenant shall not be entitled to, any damages, abatement or reduction of Rent, or other liability by reason of any failure to furnish any services (including Basic Services) or utilities described herein for any reason (other than Landlord’s sole negligence, gross negligence or willful misconduct), including, without limitation, when caused by accident, breakage, water leakage, flooding, repairs, Alterations or other improvements to the Project, strikes, lockouts or other labor disturbances or labor disputes of any character, governmental regulation, moratorium or other governmental action, inability to obtain electricity, water or fuel, or any other cause beyond Landlord’s control. The foregoing waiver shall not apply to those repair and janitorial Basic Services described in Paragraph 7(a)(iii) and Paragraph 7(a)(iv). Landlord shall be entitled to cooperate with the energy conservation efforts of governmental agencies or utility suppliers. No such failure, stoppage or interruption of any such utility or service shall be construed as an eviction of Tenant, nor, except as otherwise set forth in Paragraph 7(f) below shall the same relieve Tenant from any obligation to perform any covenant or agreement under this Lease. In the event of any failure, stoppage or interruption thereof, Landlord shall use commercially reasonable efforts to restore all services promptly. No representation is made by Landlord with respect to the adequacy or fitness of the Building’s ventilating, air conditioning or other systems to maintain temperatures as may be required for the operation of any computer, data processing or other special equipment of Tenant. Tenant hereby waives the provisions of California Civil Code Section 1932(1) or any other applicable existing or future law, ordinance or governmental regulation permitting the termination of this Lease due to an interruption, failure or inability to provide any services.

(f) The term “Essential Services” shall mean: (a) Water Service, (b) HVAC Service, (c) Electrical Service, (d) at least one method of access at all times to the Premises by Tenant’s employees, (e) Gas, and (f) at least one (1) functional elevator that provides access to the floors on which the Premises are located. If: (i) Landlord ceases to furnish any Essential Service in the Building for a period in excess of five (5) consecutive days after

 

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Tenant notifies Landlord or Landlord otherwise becomes aware of such cessation (the “Interruption Notice”); (ii) such cessation of an Essential Service is caused by an event in Landlord’s reasonable control and not the result of any breach of this Lease by Tenant or other negligent or otherwise wrongful act or omission of Tenant; (iii) such cessation of an Essential Service is not caused by a fire or other casualty (in which case Paragraph 9 shall control); and (iv) as a result of such cessation of an Essential Service, the Premises, or a material portion thereof, is rendered Untenantable (as defined in Paragraph 9(l)), then Tenant shall be entitled to receive an abatement of Base Rent and Operating Expenses payable hereunder during the period beginning on the day such cessation commenced and ending on the day when the Essential Service in question has been restored; provided that in the event the entire Premises has not been rendered Untenantable by the cessation in Essential Service, the amount of abatement that Tenant is entitled to receive shall be prorated based upon the percentage of the Premises (which shall be based on a ratio of the square feet of Rentable Area rendered Untenantable to all of the Rentable Area leased by Tenant) so rendered Untenantable. Notwithstanding the foregoing, in the event there is a disruption of Essential Services to the Premises, Landlord agrees to promptly use commercially reasonable efforts to resolve such failure of an Essential Service(s).

(g) Landlord reserves the right from time to time to make reasonable and nondiscriminatory modifications to the above standards for Extra Services.

(h) Tenant acknowledges that in addition to Base Rent and Operating Expenses, and other charges payable under this Lease, commencing on the Commencement Date, Tenant is responsible for paying for all electricity supplied to the Premises during the Lease Term. Prior to each respective Commencement Date for each floor of the Premises leased by Tenant, Tenant, at Tenant’s expense, shall submeter electricity provided to such floor in a manner reasonably satisfactory to Landlord (the “Submetering Equipment”). Tenant shall operate, maintain and repair the Submetering Equipment throughout the term of this Lease. The data from all Submetering Equipment readings documenting Tenant’s energy use shall be shared on a monthly basis with Tenant. Tenant shall pay Landlord for all electricity supplied to the Premises, as rent, on a monthly basis, within thirty (30) days after Landlord’s delivery of an invoice and reasonable supporting documentation to Tenant. Tenant shall also have the right to install, at its own expense, separate sub-metering or measurement systems for its natural gas, water and waste, if so desired. If Tenant installs such sub-metering or measurement systems, then (i) Tenant shall pay Landlord for any such submetered or measured utilities or services supplied to the Premises, as rent, on a monthly basis, within thirty (30) days after Landlord’s delivery of an invoice and reasonable supporting documentation to Tenant, and (ii) the costs and expenses of supplying any such submetered or measured utilities or services to the Building (excluding the Common Areas) shall be excluded from Operating Expenses. Upon the earlier termination of this Lease or expiration of the respective Phase I Premises Term, Phase II Premises Term and Phase III Premises Term, Landlord may elect to require Tenant to remove the Submetering Equipment from the respective portion of the Premises that is being surrendered by Tenant and, if Landlord so elects, Tenant shall remove such Submetering Equipment and restore the Premises to the condition existing prior to their installation. Landlord shall not impose any administrative fee or other similar mark up on costs of electricity or any other utilities or services.

(i) Notwithstanding anything to the contrary contained in this Lease, at any time during the Lease Term, and subject to Landlord’s prior written approval, such approval not to be unreasonably withheld, delayed or conditioned, Tenant shall have the right but not the obligation to install in the Premises, at Tenant’s sole cost and expense (but Tenant may use the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance, as applicable for such cost), one (1) or more Supplemental HVAC Units (defined below) in order to provide Tenant’s computer rooms, NOC, data center and/or other area(s) in the Premises with additional heating and cooling capacity. As used herein, the term “Supplemental HVAC Unit” shall mean a self-enclosed electric heating and cooling unit of the size and tonnage, and having the specifications, approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall have access to and use of the Building’s condenser water for such facilities and any usage in excess of eighteen (18) gallons per minute per floor as measured in the aggregate for the entire Premises shall be subject to an additional charge of $0.285 per ton of condenser water used, as such charge may increase based on the prevailing market rate charged for such condenser water use. Tenant shall reimburse Landlord for Landlord’s charges for Tenant’s usage of such condenser water within thirty (30) days after Tenant’s receipt of Landlord’s invoice. Landlord shall have the right to install, at Tenant’s sole cost and expense, meters to measure Tenant’s usage hereunder for purposes of calculating the charges payable by Tenant for such condenser water. Notwithstanding anything to the contrary set forth herein, at the end of each respective Lease Terms or upon the earlier termination of this Lease, at Landlord’s option, Tenant shall either: (1) remove, at

 

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Tenant’s sole cost and expense, any Supplemental HVAC Unit and restore all portions of the Premises and the Building affected by such removal to their condition immediately prior to the installation of such equipment, ordinary wear and tear excepted; or (2) leave any such Supplemental HVAC Unit in place, in which event the Supplemental HVAC Unit shall be the property of Landlord.

(j) Tenant, any Tenant Affiliate and/or Tenant’s telecommunications provider shall, at no additional cost to Tenant, be permitted access to the Building’s riser closets or alternative space in the Building (which alternative space shall be reasonably acceptable to Tenant and its telecommunications provider) for the installation of telecommunications cabling and other equipment, and in order to install, maintain, operate and remove telecommunications cabling or other equipment to the Premises. Tenant may install, maintain, replace, remove or use any communications or computer wires, cables and related devices (collectively the “Lines”) at the Building in or serving the Premises, provided: (i) Tenant shall obtain Landlord’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, and use an experienced and qualified contractor, (ii) any such installation, maintenance, replacement, removal or use shall comply with all Laws, and (iii) Tenant shall pay all costs in connection with such access. Notwithstanding anything in this Paragraph 7(j) to the contrary, Tenant shall be required to coordinate any access to the Building’s riser closet with Landlord’s riser management company.

(k) Landlord shall use commercially reasonable efforts to maintain throughout the Lease Term multiple independent fiber providers at the Building available to Tenant. Upon written request by Tenant, Landlord shall grant upon commercially reasonable terms, a license coterminous with the Lease Term to one or more reputable telecommunications utility provider(s) designated by Tenant (any such utility, an “Approved Fiber Provider”), to permit any such Approved Fiber Provider: (a) to bring such Approved Fiber Provider’s conduit and fiber into the Building from locations outside the Building, (b) to provide connectivity from the Building’s Main Point of Entry (“MPOE”) to the Premises, and (c) to permit any such Approved Fiber Provider to maintain and operate such conduit and fiber in the Premises and Building. Landlord shall not charge any new Approved Fiber Provider any rent or fees in connection with any such license granted pursuant to this Paragraph 7(j); provided, however, nothing herein shall preclude Landlord from charging rent or fees to any Approved Fiber Provider that is currently providing service to any portion of the Project. Tenant shall be granted a license coterminous with the Lease Term to locate telecommunications equipment in the MPOE. Tenant shall have access to the MPOE twenty-four (24) hours per day, seven (7) days per week, subject to Landlord’s reasonable access control procedures.

 

8.

NON-LIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE

(a) To the greatest extent permitted by Law, and except to the extent caused by Landlord’s negligence or willful misconduct, Landlord shall not be liable for any injury, loss or damage suffered by Tenant or to any person or property occurring or incurred in or about the Premises from any cause. Without limiting the foregoing, neither Landlord nor any of its partners, officers, trustees, affiliates, directors, employees, contractors, agents or representatives (collectively, “Affiliates”) shall be liable for and there shall be no abatement of Rent (except in the event of a casualty loss or a condemnation as set forth in Paragraph 9 and Paragraph 10 of this Lease) for (i) any damage to Tenant’s property stored with or entrusted to Affiliates of Landlord, (ii) loss of or damage to any property by theft or any other wrongful or illegal act, (iii) any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Building or the Project or from the pipes, appliances, appurtenances or plumbing works therein or from the roof, street or sub-surface or from any other place or resulting from dampness or any other cause whatsoever, or (iv) any diminution or shutting off of light, air or view by any structure which may be erected on lands adjacent to the Building, whether within or outside of the Project. Tenant shall endeavor to give prompt notice to Landlord in the event of (i) the occurrence of a fire or accident in the Premises or in the Building, or (ii) the discovery of a defect therein or in the fixtures or equipment thereof. This Paragraph 8(a) shall survive the expiration or earlier termination of this Lease.

(b) Tenant shall indemnify, protect and hold Landlord and its officers, directors, partners, employees, agents, shareholders and affiliates (“Landlord Indemnitees”) harmless from and against any and all liabilities, claims and/or losses arising, directly or indirectly, entirely or in part, out of any (i) injury to or damage to a third party, and/or (ii) injury or damage to the property of any third party, either (i) or (ii) occurring (x) within the Premises regardless of the cause, except to the extent caused by the negligence or intentional misconduct of Landlord, Landlord’s agents, employees or contractors, or (y) within the Common Areas to the extent caused by the negligence or intentional misconduct of Tenant, Tenant’s agents, employees or contractors. It is expressly understood that

 

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Tenant shall indemnify Landlord Indemnitees for any bodily injury or personal injury claim brought against Landlord Indemnitees by any of Tenant’s employees, agents or representatives for injury within the Premises even if the claim has evoked coverage under Tenant’s workers’ compensation insurance, except to the extent it is determined by a court of competent jurisdiction that the claim was caused by the negligence or intentional misconduct of the Landlord Indemnitee against whom the claim is brought. Tenant, at Tenant’s expense, shall assume on behalf of each and every Landlord Indemnitee and conduct with due diligence and in good faith the defense thereof with counsel reasonably satisfactory to Landlord; provided, however, that any Landlord Indemnitee shall have the right, at its option, to be represented therein by advisory counsel of its own selection and at its own expense. In the event of a failure by Tenant to fully perform in accordance with this paragraph following thirty (30) days written notice, Landlord, at its option, and without relieving Tenant of its obligations hereunder, may so perform such obligations, but all reasonable costs and expenses so incurred by Landlord in that event shall be reimbursed by Tenant to Landlord, together with interest on the same from the date any such expense was paid by Landlord and billed to Tenant until reimbursed by Tenant, at the default rate of interest provided to be paid on judgments, by law of the jurisdiction to which the interpretation of this Lease is subject. This indemnification shall not be limited to damages, compensation or benefits payable under insurance policies, workers’ compensation acts, disability benefit acts or other employee’s benefit acts. Notwithstanding anything in this Lease to the contrary, the foregoing covenants under this Paragraph 8(b) shall be deemed continuing covenants for the benefit of Landlord and shall survive the expiration of this Lease.

(c) Landlord shall indemnify, protect and hold Tenant and its officers, directors, employees, agents, shareholders and affiliates (“Tenant Indemnitees”) harmless from and against any and all liabilities, claims and/or losses of any kind arising, directly or indirectly, entirely or in part, out of any (i) injury to or damage to a third party, and/or (ii) injury or damage to the property of any third party, either (i) or (ii) occurring (x) within the Common Areas regardless of the cause, except to the extent such injury or damage is caused by the negligence or intentional misconduct of Tenant or its agents, employees or contractors, or (z) within the Premises to the extent caused by the negligence or intentional misconduct of Landlord, Landlord’s agents, employees or contractors. Landlord, at Landlord’s expense, shall assume on behalf of each and every Tenant Indemnitee and conduct with due diligence and in good faith the defense thereof with counsel reasonably satisfactory to Tenant; provided, however, that any Tenant Indemnitee shall have the right, at its option, to be represented therein by advisory counsel of its own selection and at its own expense. In the event of failure by Landlord to fully perform in accordance with this paragraph following thirty (30) days written notice, Tenant, at its option, and without relieving Landlord of its obligations hereunder, may so perform such obligations, but all reasonable costs and expenses so incurred by Tenant in that event shall be reimbursed by Landlord to Tenant, together with interest on the same from the date any such expense was paid by Tenant until reimbursed by Landlord, at the rate of interest provided to be paid on judgments, by law of the jurisdiction to which the interpretation of this Lease is subject. This indemnification shall not be limited to damages, compensation or benefits payable under insurance policies, workers’ compensation acts, disability benefit acts or other employees benefit acts. Notwithstanding anything in this Lease to the contrary, the foregoing covenants under this Paragraph 8(c) shall be deemed continuing covenants for the benefit of Tenant and shall survive the expiration of the Lease.

(d) Insurance.

(i) Tenant at all times during the Lease Term shall, at its own expense, keep in full force and effect (A) commercial general liability insurance providing coverage against bodily injury and disease, including death resulting therefrom and property damage to a combined single limit of $5,000,000 to one or more than one person as the result of any one accident or occurrence, with an Excess Limits (Umbrella) Policy in the amount of $10,000,000, (B) worker’s compensation insurance to the statutory limit, if any, and employer’s liability insurance to the limit of $1,000,000 per occurrence, and (C) All Risk or Causes of Loss - Special Form property insurance, including fire and extended coverage, sprinkler leakage (including earthquake, sprinkler leakage), vandalism, malicious mischief, wind and/or hurricane coverage, covering full replacement value of all of Tenant’s personal property, trade fixtures and improvements in the Premises. In the event Tenant elects to open a child care facility in accordance with Paragraph 19(jj), the commercial general liability insurance policy shall have no exclusions for corporal punishment, child molestation and/or sexual abuse. Landlord and its designated property management firm shall be named loss payee on the property, and an additional insured on the liability policies (excluding the worker’s compensation policy) and said policies shall be issued by an insurance company or companies authorized to

 

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do business in the State and which have policyholder ratings not lower than “A-” and financial ratings not lower than “VII” in Best’s Insurance Guide (latest edition in effect as of the Effective Date and subsequently in effect as of the date of renewal of the required policies). Tenant hereby waives its right of recovery against any Landlord Indemnitee of any amounts paid by Tenant or on Tenant’s behalf to satisfy applicable worker’s compensation laws. Duly executed certificates showing the material terms for the same shall be deposited with Landlord on the date Tenant first occupies the Premises and upon renewals of such policies upon written request.

(ii) It is expressly understood and agreed that the coverages required represent Landlord’s minimum requirements and such are not to be construed to void or limit Tenant’s obligations contained in this Lease, including without limitation Tenant’s indemnity obligations hereunder. Neither shall (A) the insolvency, bankruptcy or failure of any insurance company carrying Tenant, (B) the failure of any insurance company to pay claims occurring, nor (C) any exclusion from or insufficiency of coverage be held to affect, negate or waive any of Tenant’s indemnity obligations under this Paragraph 8 and Paragraph 6(g)(ii) or any other provision of this Lease. With respect to insurance coverages, except worker’s compensation, maintained hereunder by Tenant and insurance coverages separately obtained by Landlord, all insurance coverages afforded by policies of insurance maintained by Tenant shall be primary insurance as such coverages apply to Landlord, and such insurance coverages separately maintained by Landlord shall be excess, and Tenant shall have its insurance policies so endorsed. The amount of liability insurance under insurance policies maintained by Tenant shall not be reduced by the existence of insurance coverage under policies separately maintained by Landlord. Tenant shall be solely responsible for any premiums, assessments, penalties, deductible assumptions, retentions, audits, retrospective adjustments or any other kind of payment due under its policies. Tenant shall increase the amounts of insurance or the insurance coverages as Landlord may reasonably request from time to time but no more often than every five (5) years beginning on the fifth (5th) anniversary of the Commencement Date, but not in excess of the requirements of prudent landlords or lenders for similar tenants occupying similar premises in the San Francisco metropolitan area.

(iii) Tenant’s occupancy of the Premises without delivering the certificates of insurance shall not constitute a waiver of Tenant’s obligations to provide the required coverages. If Tenant provides to Landlord a certificate that does not evidence the coverages required herein, or that is faulty in any respect, such shall not constitute a waiver of Tenant’s obligations to provide the proper insurance

(iv) Throughout the Lease Term, Landlord agrees to maintain (i) fire and extended coverage insurance, and, at Landlord’s option, earthquake damage coverage, terrorism coverage, wind, tornado, flood and hurricane coverage, and such additional property insurance coverage as Landlord deems appropriate and is customarily carried by other prudent landlords who own similar buildings to the Building in the Financial District in the Financial District of San Francisco, on the insurable portions of Building and the remainder of the Project in an amount not less than the fair replacement value thereof, subject to reasonable deductibles, (ii) boiler and machinery insurance amounts and with deductibles that would be considered standard for similar buildings to the Building in the Financial District of San Francisco, (iii) commercial general liability insurance with a combined single limit coverage of at least $3,000,000.00 per occurrence, and (iv) such other additional types of insurance (not set forth above) that Landlord reasonably deems appropriate and is customarily carried by other prudent institutional landlords who own similar buildings to the Building in the Financial District of San Francisco. All such insurance shall be obtained from insurers which meet the requirements of Paragraph 8(d)(i). Duly executed certificates showing the material terms for the same, shall be deposited with Tenant on the date Tenant first occupies the Premises and upon renewals of such policies upon written request. The premiums for any such insurance permitted to be carried by Landlord pursuant to this Paragraph (d)(iv) shall be a part of Operating Expenses.

(e) Mutual Waivers of Recovery. Landlord, Tenant, and all parties claiming under them, each mutually release and discharge each other from responsibility for that portion of any loss or damage paid or reimbursed by an insurer of Landlord or Tenant under any fire, extended coverage or other property insurance policy maintained by Tenant with respect to its Premises or by Landlord with respect to the Building or the Project (or which would have been paid had the insurance required to be maintained hereunder been in full force and effect), no

 

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matter how caused, including negligence, and, notwithstanding anything in this Lease to the contrary, each waives any right of recovery from the other including, but not limited to, claims for contribution or indemnity, which might otherwise exist on account thereof. Any fire, extended coverage or property insurance policy maintained by Tenant with respect to the Premises, or Landlord with respect to the Building or the Project, shall contain, in the case of Tenant’s policies, a waiver of subrogation provision or endorsement in favor of Landlord, and in the case of Landlord’s policies, a waiver of subrogation provision or endorsement in favor of Tenant, or, in the event that such insurers cannot or shall not include or attach such waiver of subrogation provision or endorsement, Tenant and Landlord shall obtain the approval and consent of their respective insurers, in writing, to the terms of this Lease. Tenant agrees to indemnify, protect, defend and hold harmless each and all of the Landlord Indemnitees from and against any claim, suit or cause of action asserted or brought by Tenant’s insurers for, on behalf of, or in the name of Tenant, including, but not limited to, claims for contribution, indemnity or subrogation, brought in contravention of this paragraph. Landlord agrees to indemnify, protect, defend and hold harmless each and all of the Tenant Indemnitees from and against any claim, suit or cause of action asserted or brought by Landlord’s insurers for, on behalf of, or in the name of Landlord, including, but not limited to, claims for contribution, indemnity or subrogation, brought in contravention of this paragraph. The mutual releases, discharges and waivers contained in this provision shall apply EVEN IF THE LOSS OR DAMAGE TO WHICH THIS PROVISION APPLIES IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD OR TENANT.

(f) Business Interruption. Notwithstanding anything in this Lease to the contrary (except for the following sentence), Landlord shall not be responsible for, and Tenant releases and discharges Landlord from, and Tenant further waives any right of recovery from Landlord for, any loss for or from business interruption or loss of use of the Premises suffered by Tenant in connection with Tenant’s use or occupancy of the Premises, EVEN IF SUCH LOSS IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD. Any Rent abatement rights that Tenant has been expressly granted in this Lease shall not be invalidated by this Paragraph 8(f).

(g) Adjustment of Claims. Each party shall cooperate with the other and such party’s insurers in the adjustment of any insurance claim pertaining to the Building or the Project or Landlord’s or Tenant’s use thereof.

(h) Intentionally Deleted.

(i) Landlord’s Failure to Maintain Insurance. Any failure of Landlord to obtain and maintain the insurance policies and coverages required hereunder or failure by Landlord to meet any of the insurance requirements of this Lease beyond applicable notice and cure periods shall constitute a material default hereunder, and such failure shall entitle Tenant to pursue, exercise or obtain any of the remedies provided for in Paragraph 17(b), and Landlord shall be solely responsible for any loss suffered by Tenant as a result of such failure. In the event of failure by Landlord to maintain the insurance policies and coverages required by this Lease or to meet any of the insurance requirements of this Lease, Tenant, at its option, and without relieving Landlord of its obligations hereunder, may obtain said insurance policies and coverages or perform any other insurance obligation of Landlord, but all costs and expenses incurred by Tenant in obtaining such insurance or performing Landlord’s insurance obligations shall be reimbursed by Landlord to Tenant, together with interest on same from the date any such cost or expense was paid by Tenant until reimbursed by Landlord, at the rate of interest provided to be paid on judgments, by the law of the jurisdiction to which the interpretation of this Lease is subject.

(j) Tenant’s Failure to Maintain Insurance. Any failure of Tenant to obtain and maintain the insurance policies and coverages required hereunder or failure by Tenant to meet any of the insurance requirements of this Lease beyond the applicable notice and cure period provided for in Paragraph 12(a)(ii) shall constitute a Material Default hereunder, and such failure shall entitle Landlord to pursue, exercise or obtain any of the remedies provided for in Paragraph 12(b), and Tenant shall be solely responsible for any loss suffered by Landlord as a result of such failure. In the event of failure by Tenant to maintain the insurance policies and coverages required by this Lease or to meet any of the insurance requirements of this Lease, Landlord, at its option, and without relieving Tenant of its obligations hereunder, may obtain said insurance policies and coverages or perform any other insurance obligation of Tenant, but all costs and expenses incurred by Landlord in obtaining such insurance or performing Tenant’s insurance obligations shall be reimbursed by Tenant to Landlord, together with interest on same from the date any such cost or expense was paid by Landlord until reimbursed by Tenant, at the rate of interest provided to be paid on judgments, by the law of the jurisdiction to which the interpretation of this Lease is subject.

 

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9.

FIRE OR CASUALTY

(a) If any portion of the Project (including the Premises) shall be damaged by fire, flood, earthquake or other casualty, Landlord shall (subject to the terms and provisions of this Paragraph 9) repair and restore the same (“Landlord’s Restoration Work”) with reasonable promptness to substantially the condition existing prior to the casualty, except for modifications required by zoning and building codes and other Laws then in effect, and except as otherwise provided below. If Tenant is prevented from using, and does not use the Parking Garage as a result of any damage by fire or other casualty but Tenant is occupying and using the Premises, then Landlord shall, upon written request from Tenant, use commercially reasonable efforts to provide Tenant with reasonable alternate parking, which alternate parking shall include, if outside the Project, a commercially reasonable shuttle service from such alternate parking location to the Project, until such time as the damage to the Parking Garage is substantially completed; provided further, however, if Landlord is unable to provide reasonable alternate parking to Tenant within ten (10) Business Days, then Tenant may procure its own alternate parking and Landlord shall, promptly upon being invoiced therefore, reimburse Tenant for the reasonable cost thereof including the cost of a commercially reasonable shuttle service from such alternate parking location to the Project, provided, however, Landlord’s reimbursement obligation shall be limited to $25,000 per calendar month (prorated on a per diem basis) and Tenant shall be responsible for any costs in excess of such cap.

(b) If, as a result of any such damage, all or any portion of the Premises or Project is rendered Untenantable (as defined below), then Landlord, within forty-five (45) days after the occurrence of any such damage, or as soon as reasonably possible thereafter (but in any event within seventy-five (75) days after the occurrence of such damage), shall cause to be delivered to Tenant an estimate (“Restoration Estimate”), prepared by a qualified, independent, experienced and reputable architect and/or general contractor and addressed to Tenant, of the number of days (assuming no unusual delays in the receipt of insurance proceeds, no overtime or other premiums, and no Force Majeure Delays (as defined in Paragraph 19(w))), measured from the date of the casualty, that will be required for Landlord to substantially complete the repair and restoration of (i) all portions of the Common Areas in or surrounding the Premises or on any part of any floor which is leased to Tenant, (ii) those components of the Common Areas consisting of the Building Systems and equipment which serve the Premises, (iii) the main lobby and the Building pedestrian entrances, (iv) the Parking Garage, (v) the base building shell in warm shell condition, and (vi) to the extent required to render the Premises tenantable, any other portion of the Project (“Landlord’s Basic Restoration Work”). If the aforesaid Restoration Estimate exceeds twelve (12) months from the date of such Restoration Estimate, and if as a result of such fire or other casualty a material portion of the Premises shall be rendered Untenantable, then Tenant may elect to terminate this Lease by notifying Landlord in writing of such termination no later than the thirtieth (30th) day following Tenant’s receipt of such Restoration Estimate from Landlord. If (i) the aforesaid Restoration Estimate exceeds ninety (90) days, (ii) such fire or casualty affects the Phase I Premises, and (iii) the fire or casualty shall have occurred within one (1) year of the Phase I Premises Termination Date (as the same may be extended by the parties), then either Landlord or Tenant may elect to terminate this Lease with respect to the Phase I Premises by notifying the other in writing of such termination no later than (a) the thirtieth (30th) day following Tenant’s receipt of such Restoration Estimate from Landlord if Tenant shall so terminate the Lease with respect to the Phase I Premises, and (b) the earlier of the thirtieth (30th) day following Landlord’s delivery of said Restoration Estimate to Tenant and the ninetieth (90th) day after such fire or other casualty, if Landlord shall terminate this Lease with respect to the Phase I Premises. If (i) the aforesaid Restoration Estimate exceeds ninety (90) days, (ii) such fire or casualty affects the Phase II Premises, and (iii) the fire or casualty shall have occurred within one (1) year of the Phase II Premises Termination Date (as the same may be extended by the parties), then either Landlord or Tenant may elect to terminate this Lease with respect to the Phase II Premises by notifying the other in writing of such termination no later than (a) the thirtieth (30th) day following Tenant’s receipt of such Restoration Estimate from Landlord if Tenant shall so terminate the Lease with respect to the Phase II Premises, and (b) the earlier of the thirtieth (30th) day following Landlord’s delivery of said Restoration Estimate to Tenant and the ninetieth (90th) day after such fire or other casualty, if Landlord shall terminate this Lease with respect to the Phase II Premises. If (i) the aforesaid estimate exceeds ninety (90) days, (ii) such fire or casualty affects the Phase III Premises, and (iii) the fire or casualty shall have occurred within one (1) year of the Phase III Premises Termination Date (as the same may be extended by the parties), then either Landlord or Tenant may elect to terminate this Lease with respect to the Phase III Premises by notifying the other in writing of such termination no later than (a) the thirtieth (30th) day following Tenant’s receipt of such estimate from Landlord if Tenant shall so terminate the Lease with respect to the Phase III Premises, and (b) the earlier of the thirtieth (30th) day following Landlord’s delivery of said estimate to Tenant and the ninetieth (90th) day after such fire or other casualty, if Landlord shall terminate this Lease with respect to the Phase III Premises.

 

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(c) If as a result of any fire or other casualty the Building is damaged such that a material portion of the Rentable Area in the Building shall be rendered Untenantable (which may include Untenantability resulting from the inability to provide Building services to such Rentable Area as a result of damage to the Project), irrespective of whether, as a result of any such damage, all or any portion of the Premises is rendered Untenantable, then Landlord, within seventy-five (75) days after the occurrence of any such damage, shall cause to be delivered to Tenant an estimate, prepared by a qualified, independent, experienced and reputable architect and/or general contractor, of the number of days (assuming no unusual delays in the receipt of insurance proceeds, no overtime or other premiums, and no Force Majeure Delays), measured from the date of the casualty, that will be required for Landlord to substantially complete and repair the restoration of the Project. If the aforesaid estimate exceeds twelve (12) months, then, provided that as a result of such fire or other casualty leases covering not less than 100% of the Rentable Area of the Building then subject to lease (excluding the Premises) shall also be terminated, Landlord may elect to terminate this Lease by notifying Tenant in writing of such termination concurrently with Landlord’s delivery of said estimate to Tenant as hereinabove provided.

(d) Any termination notice delivered pursuant to this Paragraph 9 shall be effective on the date of its delivery.

(e) Landlord and Tenant each agree that the rights and remedies provided in this Paragraph 9 shall be their sole rights and remedies on account of any damage caused by fire or other casualty, and, except as expressly provided in this Paragraph 9, (a) each party waives any right to terminate this Lease or account thereof, (b) Tenant waives any right to an abatement of rent on account thereof, and (c) each party waives any right to recover damage from the other party on account of any such damage to the Premises or Project.

(f) Unless this Lease is terminated as provided in this Paragraph 9, Landlord shall proceed with reasonable diligence and promptness, given the nature of the damage to be repaired, to complete Landlord’s Basic Restoration Work, all subject to reasonable delays for insurance adjustments, zoning laws, building codes, and other Laws then in effect and Force Majeure Delays. Notwithstanding anything to the contrary herein set forth, Landlord shall not have any duty pursuant to this Paragraph 9 or otherwise to repair or restore any of the initial leasehold improvements or Tenant Improvements constructed by Tenant pursuant to Exhibits B-1, B-2 and B-3 or any subsequent Alterations constructed pursuant to Paragraph 4 or to Tenant’s equipment, furniture, furnishings, or personal property (as any of the same may have been altered prior to the occurrence of such casualty). Unless this Lease is terminated as provided in this Paragraph 9, if and to the extent that any damaged leasehold improvements or Tenant Improvements must be removed in order for Landlord to prosecute Landlord’s Basic Restoration Work or to eliminate any hazard or nuisance resulting from such damaged leasehold improvements or Tenant Improvements, then, after Landlord gives Tenant access for that purpose, Tenant shall proceed with reasonable diligence, given the nature of the work, to remove such damaged leasehold improvements or Tenant Improvements in accordance with applicable Laws, subject to reasonable delays for insurance adjustments and Force Majeure Delays. Unless this Lease is terminated as provided in this Paragraph 9, in the event of any loss or damage to the Premises by reason of fire or other casualty, Tenant shall restore the Tenant Improvements to a functional, safe, lawful and tenantable condition, but Tenant shall otherwise have no duty or obligation to restore any of the leasehold improvements, equipment, furniture, furnishings or personal property therein. Tenant shall proceed with reasonable diligence, given the nature of the work, to effect such restoration in a good and workmanlike manner and in accordance with applicable Laws, subject to Force Majeure Delays. If this Lease is terminated as provided in this Paragraph 9, Tenant, no later than the expiration or sooner termination of this Lease, shall remove the damaged leasehold improvements or Tenant Improvements to the extent required by applicable Laws (unless the Building is to be razed and/or demolished, in which case Tenant shall have no obligation to remove any such improvements). All of such work shall be done by Tenant at Tenant’s sole cost and expense.

(g) The parties acknowledge that in the event of any loss or damage to the Premises, Building, or Project (or any equipment, fixtures, furnishings or personal property therein) from fire or other casualty, Landlord shall be entitled to the full proceeds of any insurance coverage carried by Landlord in connection with such loss or damage, and Tenant shall be entitled to the full proceeds of any insurance coverage carried by Tenant in connection with such loss or damage.

 

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(h) Notwithstanding any provision in this Lease to the contrary, Landlord shall not be liable for any loss of business, inconvenience or annoyance arising from any repair, restoration or rehabilitation of any portion of the Premises, Building or the Project as a result of any damage from fire or other casualty.

(i) If any fire or casualty damage to the Premises, Building or to the Project renders all or any portion of the Premises Untenantable, then Base Rent and Additional Rent under this Lease shall abate with respect to the Untenantable space during the period beginning with the date such space becomes Untenantable and Tenant ceases to use such space for the normal conduct of its business and ending when: (A) Landlord shall have substantially completed (as hereinafter defined) Landlord’s Basic Restoration Work and delivered the applicable previously Untenantable space to Tenant; and (B) there shall have elapsed a period of time (not to exceed 180 days) sufficient for Tenant, commencing after Landlord shall have provided Tenant with access to the Premises (and provided that the Landlord’s Basic Restoration Work is substantially completed or that the Premises is then otherwise in condition reasonably suitable for Tenant to perform construction and restoration work therein) for that purpose and proceeding with reasonable commercial diligence, to (a) complete the Tenant Improvements pursuant to the terms of Exhibits B-1, B-2 and B-3, if such casualty shall have occurred prior to the completion of such Tenant Improvements, or (b) restore the Tenant Improvements to the condition existing prior to the casualty, or to such other condition as Tenant shall elect as hereinabove provided, if such casualty shall have occurred on or subsequent to the completion of the Tenant Improvements in the Premises (it being agreed that if Tenant is given access to the Premises as provided in this clause (ii) prior to Landlord’s substantial completion of Landlord’s Basic Restoration Work, then the parties shall reasonably cooperate with each other in connection with the respective work being performed by each party). However, if Tenant shall sooner reoccupy such space or any portion thereof for the ordinary conduct of its business, then such abatement shall thereupon end with respect to such space or portion thereof. Such abatement shall be in an amount bearing the same ratio to the total amount of such Base Rent and Additional Rent for such period as the portion of the Rentable Area of the Premises rendered Untenantable bears to the Rentable Area of the entire Premises. If this Lease terminates pursuant to this Paragraph 9, Base Rent and Additional Rent shall be apportioned on a per diem basis and be paid to the date of the fire or casualty with appropriate adjustment for the portion of the Premises that Tenant continues to occupy to conduct its business from the date of the fire or casualty until said termination. For purposes of clause (A) above, the Landlord’s Basic Restoration Work shall be deemed to have been “substantially completed” as of the date of such “substantial completion” identified in a written certification to Tenant from a qualified, independent, experienced and reputable architect, being the date (which date shall not be earlier than three (3) Business Days prior to the date on which such certification is delivered to Tenant) that such architect shall have determined that, in such architect’s professional judgment, the Landlord’s Basic Restoration Work has been completed in accordance with the plans and specifications therefore and all Laws, subject only to minor finish-out and “punch-list” items that shall not interfere with Tenant’s use of the Premises for the purposes set forth in the Lease and shall not prevent Landlord from complying with its duties and obligations under the Lease.

(j) If Landlord does not complete Landlord’s Basic Restoration Work by the lapse of a period of time after such fire or other casualty equal to the following (the “Outside Restoration Period”):

(i) if the initial estimate by the architect did not give rise to a right of termination pursuant to Paragraph 9(b), then the lesser of (x) 125% of the number of days of restoration initially estimated by the architect pursuant to Paragraph 9(b) and (y) fifteen (15) months;

(ii) if the party or parties having such right of termination shall have waived such right of termination, then the lesser of (x) 125% of the number of days of restoration initially estimated by the architect pursuant to Paragraph 9(b) and (y) two (2) years

then Tenant shall have the right to terminate the Lease by delivery of written notice of such election to Landlord following the expiration of the Outside Restoration Period until such time as Landlord substantially completes the Basic Restoration Work. If Tenant timely elects to terminate this Lease pursuant to this Paragraph 9(j), Tenant’s notice of termination shall set forth the date upon which this Lease shall terminate, which date shall be any date within the 120 day period following the date on which it shall have delivered such termination notice.

(k) The terms and provisions of this Paragraph 9 shall apply to any damage to the Building or the Project caused as a result of fire or other casualty, regardless of whether such damage occurs during, or prior to the commencement of, the Initial Term and regardless of whether the cause of such fire or casualty was the acts, omissions, negligence or willful misconduct of Tenant or any Tenant Affiliate.

 

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(l) The term “Untenantable” shall mean the Premises or a portion thereof that cannot reasonably be used and occupied by Tenant (and is not used and occupied by Tenant) in the ordinary and normal course of its business with no material adverse disruption. If a material portion of a floor of the Premises is Untenantable, it shall be reasonable for Tenant to terminate all business operations on such floor and therefore the entire floor shall be deemed Untenantable.

(m) This Lease shall be considered an express agreement governing any case of damage to or destruction of the Premises, the Building or the Project. This Lease sets forth the terms and conditions upon which this Lease may terminate in the event of any damage or destruction. Accordingly, the parties hereby waive the provisions of California Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 (and any successor statutes thereof permitting the parties to terminate this Lease as a result of any damage or destruction).

 

10.

EMINENT DOMAIN

(a) If the entire Building or Project shall be taken or condemned by any competent authority for any public or quasi-public use or purpose, then the Lease Term shall end upon the effective date of such taking or condemnation. If only a part of the Building or Project shall be so taken or condemned:

(i) Landlord shall have the right to terminate this Lease (by written notice thereof to Tenant given no later than sixty (60) days after the later of (1) the effective date of the taking or condemnation in question or (2) the date of the order, settlement or other disposition entered in connection with such condemnation) if: (A) such taking or condemnation would render the operation of the Building economically unfeasible, and (B) the leases of all other tenants in the Building are terminated; it being agreed that any such termination shall be effective upon not less than one hundred eighty (180) days’ written notice prior to the date of termination designated in the notice; and/or

(ii) Tenant shall have the right to terminate this Lease (by written notice thereof to Landlord given no later than sixty (60) days after the effective date of the taking or condemnation in question) if a material portion of the Project is affected thereby, which, for purposes hereof, shall mean if: (A) more than thirty-five percent (35%) of the Rentable Area of the Premises is so taken or condemned, or (B) all portions of the Building or Project providing reasonable access to and from the Premises are so taken or condemned; it being agreed that any such termination shall be effective as of the date of termination specified by Tenant in its notice to Landlord (which date of termination specified by Tenant shall not be earlier than the effective date of the taking or condemnation in question).

If this Lease is terminated pursuant to this Paragraph 10, Base Rent and Additional Rent at the then-current rate shall be apportioned as of the date of the termination of this Lease, and, except as otherwise provided herein, there shall be no apportionment of the award payable as a result of the applicable taking or condemnation to or for the benefit of Tenant. If a portion of the Premises, Building or Project is taken or condemned by any competent authority for any public or quasi-public purpose or use and the Lease is not terminated pursuant to the foregoing provisions of this Paragraph 10, then (I) from and after the date when possession of such portion of the Premises, Building or Project is required for such use until such possession ends, the Base Rent and Tenant’s Proportionate Share, as the case may be, shall be equitably adjusted to reflect the reduced area of the Premises, Building and/or Project, and (II) Landlord shall promptly effect Landlord’s Basic Restoration Work (if any) for the portion of the Premises, Building and Project not taken, but affected by such taking, including any required demising and separation work. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any claim available to Tenant under applicable Law for any taking of any Tenant Improvements or Alterations paid for by Tenant, and of any trade fixtures and personal property of Tenant, and for moving expenses incurred by Tenant in connection with moving to another location.

(b) If any portion of the Project other than the Building is taken by condemnation or if the temporary use or occupancy of all or any part of the Premises shall be taken by condemnation during the Lease Term, this Lease shall be and remain unaffected by such condemnation, and Tenant shall continue to pay in full the Base Rent

 

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and Additional Rent payable hereunder. In the event of any such temporary taking for use or occupancy of all or any part of the Premises, so long as Tenant does not exercise its right to terminate as provided in the next sentence, Tenant shall be entitled to appear, claim, prove and receive the portion of the award for such taking that represents compensation for use or occupancy of the Premises during the Lease Term and Landlord shall be entitled to appear, claim, prove and revive the portion of the award that represents the costs of restoration of the Premises and the use or occupancy of the Premises after the end of the Lease Term hereof.

(c) This Paragraph 10 shall be Tenant’s sole and exclusive remedy in the event of a taking or condemnation relating to the Premises, Building or Project. This Lease sets forth the terms and conditions upon which this Lease may terminate in the event of a taking or condemnation relating to the Premises, Building or Project. Accordingly, the parties waive the provisions of the California Code of Civil Procedure Section 1265.130 and any successor or similar statutes permitting the parties to terminate this Lease as a result of a taking or condemnation relating to the Premises, Building or Project.

 

11.

ASSIGNMENT AND SUBLETTING

(a) Tenant shall not directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, assign, sublet, mortgage or otherwise encumber all or any portion of its interest in this Lease or in the Premises or grant any license for any person other than Tenant or its employees to use or occupy the Premises or any part thereof without obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned. Any such attempted assignment, subletting, license, mortgage, other encumbrance or other use or occupancy without the consent of Landlord shall, at Landlord’s option, be null and void and of no effect. Any mortgage, or encumbrance of all or any portion of Tenant’s interest in this Lease or in the Premises and any grant of a license for any person other than Tenant or its employees to use or occupy the Premises or any part thereof shall be deemed to be an “assignment” of this Lease.

(b) No assignment or subletting of this Lease shall relieve Tenant of its obligation to pay the Rent and to perform all of the other obligations to be performed by Tenant hereunder. The acceptance of Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any subletting or assignment. Consent by Landlord to one subletting or assignment shall not be deemed to constitute a consent to any other or subsequent attempted subletting or assignment. If Tenant desires at any time to assign this Lease or to sublet the Premises or any portion thereof, it shall first notify Landlord of its desire to do so and shall submit in writing to Landlord all pertinent information relating to the proposed assignee or sublessee, and all pertinent information relating to the proposed assignment or sublease. Landlord shall not unreasonably withhold, condition or delay its consent to any proposed sublease or assignment. If Landlord disapproves of any proposed assignment or sublease, Landlord’s response shall explain the grounds for such disapproval. If Landlord fails to make such election within ten (10) Business Days after Landlord’s receipt of the notice from Tenant, then Tenant can send a second written notice (“Second Notice”) to Landlord which substantially provides in all capital letters at the top of such notice as follows: “LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL BE LANDLORD’S DEEMED CONSENT TO THE PROPOSED SUBLEASE OR ASSIGNMENT AS DESCRIBED HEREIN.” If Landlord fails to approve or disapprove of the proposed assignment or sublease within five (5) Business Days after its receipt of the Second Notice, then Landlord shall be deemed to have consented to the proposed assignment or sublease. Tenant shall endeavor to deliver to Landlord, for informational purposes, financial information regarding any potential assignee or subtenant. Any assignment or sublease shall be expressly subject to the terms and conditions of this Lease.

(c) [Intentionally Deleted].

(d) Tenant acknowledges that it shall be reasonable for Landlord to withhold its consent to a proposed assignment or sublease in any of the following instances:

(i) The intended use of the Premises by the assignee or sublessee is not for (I) general office use, except Tenant may use (A) up to a maximum of one (1) floor for food service or the operation of a cafeteria and (B) up to a maximum of one (1) full floor for a fitness center or (II) a Prohibited Use;

 

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(ii) The assignee or sublessee (or any affiliate of the assignee or sublessee) is then negotiating with Landlord or has negotiated with Landlord within the previous three (3) months, or is a current tenant or subtenant within the Building or Project, provided, however, Landlord must be able to accommodate such assignee or sublessee with available inventory in the Building. In the event Tenant seeks to assign the Lease or enter into a sublease, then Tenant may provide written notice to Landlord of its desire to sublease or assign a portion of the Premises and Landlord and Tenant agree, in good faith, to discuss Tenant’s assignment and sublease desires and whether Tenant shall have the right to approach any current tenants or subtenants in the Building; provided, however, Landlord may elect in its reasonable discretion that Tenant shall not have the right to contact any current tenant or subtenants of the Building or Project for Tenant’s subleasing of the Premises or assignment of its Lease if Landlord reasonably believes it can accommodate such tenant’s or subtenant’s space needs in the Building with currently or imminently available inventory in the Building; or

(iii) The identity or business reputation of the assignee or sublessee will, in the good faith judgment of Landlord, materially damage the goodwill or reputation of the Building or Project.

Except as set forth below, the foregoing criteria shall not exclude any other reasonable basis for Landlord to refuse its consent to such assignment or sublease.

The parties hereby agree that it shall not be reasonable under this Lease and under any applicable Law for Landlord to withhold consent to any proposed assignment or sublease due to one or more of the following:

(i) The Transferee (x) would increase the density in the Premises, the Building, or the Project or (y) would be a significantly less prestigious occupant of the Building than Tenant;

(ii) Occupancy of the Premises by the assignee or sublessee would violate any agreement binding upon Landlord, the Building or the Project with regard to the identity of tenants, usage in the Building, or similar matters, provided, however such sublessee or assignee may not use the Premises for a Prohibited Use; or

(iii) The financial condition of the assignee or sublessee.

(e) A change or series of changes in ownership of stock or other ownership interests which would result in direct or indirect change in ownership of less than fifty percent (50%) of the outstanding stock of or other ownership interests in such Tenant as of the date of the execution and delivery of this Lease shall not be considered a change of control. If neither Tenant nor any affiliate which controls Tenant is a corporation, partnership or other entity that is publicly traded on a recognized national stock exchange, any transaction or series of related or unrelated transactions (including, without limitation, any dissolution, merger, consolidation or other reorganization, any withdrawal or admission of a partner or change in a partner’s interest, or any issuance, sale, gift, transfer or redemption of any capital stock of or ownership interest in such entity, whether voluntary, involuntary or by operation of law, or any combination of any of the foregoing transactions) resulting in the transfer of control of such Tenant, shall be deemed to be an assignment of this Lease subject to the provisions of this Paragraph 11. The term “control” as used in this Paragraph 11(e) means the power to directly or indirectly direct or cause the direction of the management or policies of Tenant. Any transfer of control of a subtenant which is a corporation or other entity shall be deemed an assignment of any sublease by such subtenant.

(f) Notwithstanding any assignment or subletting, Tenant shall at all times during the Initial Term and any subsequent renewals or extensions remain fully responsible and liable for the payment of Rent and for compliance with all of Tenant’s other obligations under this Lease. Tenant shall pay to Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined below, within thirty (30) days following receipt thereof by Tenant from any assignee or subtenant (a “Transferee”). “Transfer Premium” shall mean all rent, additional rent or other consideration paid by such Transferee in connection with the assignment or sublease in excess of the Base Rent and Additional Rent payable by Tenant under this Lease during the term of the assignment or sublease on a per rentable square foot basis if less than all of the Premises is transferred, after first deducting the reasonable expenses incurred by Tenant for (i) any free base rent reasonably provided to the Transferee, (ii) any brokerage commissions, legal fees, and reasonable costs of subtenant improvements, including architectural fees in connection with the assignment or sublease, and (iii) in the case of any sublease, any actual costs incurred by Tenant in separately

 

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demising the portion of the Premises. “Transfer Premium” shall also include, but not be limited to, key money, bonus money or other cash consideration paid by Transferee to Tenant in connection with such transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such transfer. Other than with respect to any “Incubator Agreements” entered into by Tenant, no Transfer Premium shall be due with respect to a Permitted Transfer.

(g) If this Lease is assigned or if the Premises is subleased (whether in whole or in part), or in the event of the mortgage or pledge of Tenant’s leasehold interest, or grant of any concession or license within the Premises, or if the Premises are occupied in whole or in part by anyone other than Tenant, then upon a Material Default by Tenant hereunder Landlord may collect Rent from the assignee, sublessee, mortgagee, pledgee, concessionee or licensee or other occupant and, except to the extent set forth in the preceding paragraph, apply the amount collected to the next Rent payable hereunder; and all such Rent collected by Tenant shall be held in deposit for Landlord and immediately forwarded to Landlord. No such transaction or collection of Rent or application thereof by Landlord, however, shall be deemed a waiver of these provisions or a release of Tenant from the further performance by Tenant of its covenants, duties, or obligations hereunder.

(h) If Tenant effects an assignment or sublease or requests the consent of Landlord to any proposed assignment or sublease, then Tenant shall, upon demand, pay Landlord the sum of Landlord’s reasonable attorneys’ fees and costs in connection with such assignment or sublease or request for consent up to a maximum amount of One Thousand Dollars ($1,000.00).

(i) Notwithstanding anything to the contrary in Paragraph 11, Tenant shall have the right, without the consent of Landlord, to assign this Lease or sublet the whole or any part of the Premises to a “Permitted Transferee” (as defined below), provided that any assignment or subletting to a Permitted Transferee shall be subject to the following conditions: (a) no more than ten (10) Business Days following the effective date of the assignment or sublease, Tenant shall deliver to Landlord written notice thereof and any documents creating such assignment or sublease; (b) Tenant shall remain fully liable during the unexpired term of the Lease, including any renewal options; (c) such assignment or sublease is not used as a subterfuge by Tenant to avoid its obligations under this Lease or the restrictions on assignments and sublettings pursuant to this Paragraph 11; (d) any such assignment, sublease or transfer shall be subject to all of the terms, covenants and conditions of the Lease; and (e) the Permitted Transferee to which this Lease is assigned shall expressly assume the obligations of Tenant under the Lease by a document reasonably satisfactory to Landlord. As used in this Lease, “Permitted Transferee” shall be defined as (i) any entity that controls, is controlled by, or is under common control with Tenant, where the term “control” and its derivatives as used in this Lease means the power to directly or indirectly direct or cause the direction of the management or policies of the respective corporation or entity (collectively, an “Affiliate”); (ii) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity in which or with which Tenant, an Affiliate of Tenant, or their respective corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities, so long as Tenant’s obligations hereunder are assumed by the Permitted Transferee; (iii) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity which acquires all or substantially all of Tenant’s assets and/or ownership interests; (iv) an entity acquiring and continuing Tenant’s business operations at or from the Premises; (v) any individual or entity that has entered into an “Incubator Agreement” (or similar document) with Tenant to occupy a portion of the Premises which is not separately demised; or (vi) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity that enters into a sale/leaseback, synthetic lease, or other similar financing transaction with Tenant which includes Tenant remaining in occupancy of the Premises. Within ten (10) Business Days following execution of any such Incubator Agreement, Tenant shall furnish Landlord with copies of any Incubator Agreements executed by Tenant for space at the Project and Tenant shall be required to pay a Transfer Premium (as defined in Paragraph 11(f)) with respect to any such Incubator Agreements.

 

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12.

DEFAULT

(a) Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” or “Default” (herein so called) under this Lease by Tenant:

(i) Tenant shall fail to pay Rent or any other rental or sums payable by Tenant hereunder within five (5) Business Days after Landlord notifies Tenant of such nonpayment (“Payment Default”); provided, however, Landlord shall only be obligated to provide such written notice to Tenant four (4) times within any calendar year and in the event Tenant fails to timely pay Rent or any other sums for a fifth time during any calendar year, then Tenant shall be in default for such late payment and Landlord shall have no obligation or duty to provide notice of such non-payment to Tenant prior to declaring an event of default under this Lease;

(ii) the failure by Tenant to observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than monetary failures as specified in Paragraph 12(a)(i) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently prosecute such cure to completion (“Non-Monetary Default”);

(iii) the making by Tenant of any general assignment for the benefit of creditors,

(iv) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days);

(v) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease or of substantially all of guarantor’s assets, where possession is not restored to Tenant or guarantor within ninety (90) days;

(vi) the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of substantially all of guarantor’s assets or of Tenant’s interest in this Lease where such seizure is not discharged within ninety (90) days;

(vii) any material representation or warranty made by Tenant in this Lease or any other document delivered in connection with the execution and delivery of this Lease or pursuant to this Lease proves to be incorrect in any material respect and Tenant fails to cure, within thirty (30) days of receiving written notice from Landlord, by taking such actions necessary to ensure that the conditions or facts represented and warranted by Tenant result in such representation and/or warranty being true and accurate;

(viii) Tenant shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution;

(ix) [intentionally deleted]; or

(x) any assignment in violation of Section 11 of this Lease or any sublease in excess of two (2) floors of the Building in violation of Section 11 of this Lease and Tenant fails to cure within thirty (30) days of receiving written notice from Landlord; provided, however, that if Tenant requires more than thirty (30) days to cure, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently prosecute such cure to completion no later than ninety (90) days after receiving Landlord’s original written notice.

Notwithstanding the foregoing, the term “Material Default” shall mean (i) any Payment Default beyond the applicable notice and cure period set forth in Paragraph 12(a)(i), (ii) any assignment in violation of Section 11 of this Lease or any sublease in excess of two (2) floors of the Building in violation of Section 11 of this Lease beyond the applicable notice and cure period set forth in Paragraph 12(a)(x), (iii) any Non-Monetary Default which is not cured within the applicable notice and cure period set forth in Paragraph 12(a)(ii), or (iv) or any other default expressly classified as a Material Default herein.

 

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(b) Landlord’s Remedies; Termination. In the event of any event of default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder and Landlord shall have all the rights and remedies of a Landlord provided by Section 1951.2 of the California Civil Code. In the event that Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant:

(i) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus

(ii) the worth at the time of the award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus

(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom.

As used in subparagraph (i) and subparagraph (ii) of Paragraph 12(b) above, the “worth at the time of award” is computed by allowing interest at the Default Rate (as defined below). As used in subparagraph (iii) of Paragraph 12(b) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(c) Landlord’s Remedies; Re-Entry Rights. In the event of any Event of Default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed, stored and/or disposed of pursuant to Paragraph 5(c) of this Lease or any other procedures permitted by applicable Law. No re-entry or taking possession of the Premises by Landlord pursuant to this Paragraph 12(c), and no acceptance of surrender of the Premises or other action on Landlord’s part, shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction.

(d) Continuation of Lease. Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any Event of Default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all Rent as it becomes due.

(e) Landlord’s Right to Perform. Except as specifically provided otherwise in this Lease, all covenants and agreements by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement or offset of Rent. If Tenant shall fail to pay any sum of money (other than Base Rent) or perform any other act on its part to be paid or performed hereunder and such failure shall continue for thirty (30) days with respect to monetary obligations and with respect to non-monetary obligations, except in case of emergencies, in which such case, such shorter period of time as is reasonable under the circumstances) after Tenant’s receipt of written notice thereof from Landlord, Landlord may, without waiving or releasing Tenant from any of Tenant’s obligations, make such payment or perform such other act on behalf of Tenant. All reasonable sums so paid by Landlord and all necessary incidental costs incurred by Landlord in performing such other acts shall be payable by Tenant to Landlord within thirty (30) days after demand therefor as Additional Rent.

(f) Interest. If any monthly installment of Rent or Operating Expenses, or any other amount payable by Tenant hereunder is not received by Landlord within ten (10) Business Days following the date when due, it shall

 

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bear interest at the Default Rate from the date due until paid. All interest, and any late charges imposed pursuant to Paragraph 12(g) below, shall be considered Additional Rent due from Tenant to Landlord under the terms of this Lease. The term “Default Rate” as used in this Lease shall mean the lesser of (A) the rate announced from time to time by Wells Fargo Bank or, if Wells Fargo Bank ceases to exist or ceases to publish such rate, then the rate announced from time to time by the largest (as measured by deposits) chartered bank operating in the State, as its “prime rate” or “reference rate”, plus four percent (4%), or (B) the maximum rate of interest permitted by Law.

(g) Late Charges. Tenant acknowledges that, in addition to interest costs, the late payments by Tenant to Landlord of any monthly installment of Base Rent, Additional Rent or other sums due under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impractical to fix. Such other costs include, without limitation, processing, administrative and accounting charges and late charges that may be imposed on Landlord by the terms of any mortgage, deed to secure debt, deed of trust or related loan documents encumbering the Premises, the Building or the Project. Accordingly, if any monthly installment of Base Rent, Additional Rent or any other amount payable by Tenant hereunder is not received by Landlord by the due date thereof, Tenant shall pay to Landlord an additional sum of three percent (3%) of the overdue amount as a late charge, but in no event more than the maximum late charge allowed by Law; provided, however, that such late payment charge shall not apply to the first time within any calendar year in which Tenant fails to pay any Rent within ten (10) Business Days after the date on which it is due. The parties agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of any late payment as hereinabove referred to by Tenant, and the payment of late charges and interest are distinct and separate in that the payment of interest is to compensate Landlord for the use of Landlord’s money by Tenant, while the payment of late charges is to compensate Landlord for Landlord’s processing, administrative and other costs incurred by Landlord as a result of Tenant’s delinquent payments. Acceptance of a late charge or interest shall not constitute a waiver of Tenant’s Default with respect to the overdue amount or prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Lease or at law or in equity now or hereafter in effect.

(h) Rights and Remedies Cumulative. All rights, options and remedies of Landlord contained in this Paragraph 12 and elsewhere in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or in equity, whether or not stated in this Lease, subject to any remedies specifically excluded herein. Nothing in this Paragraph 12 shall be deemed to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to any provision of this Lease.

(i) Tenant’s Waiver of Redemption. Tenant hereby waives and surrenders for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future Law to redeem any of the Premises or to have a continuance of this Lease after termination of this Lease or of Tenant’s right of occupancy or possession pursuant to any court order or any provision hereof, and (ii) the benefits of any present or future Law which exempts property from liability for debt or for distress for Rent.

(j) Waiver of Consequential and Special Damages. Under no circumstances whatsoever shall Landlord ever be liable for punitive, consequential or special damages under this Lease and Tenant waives any rights it may have to such damages under this Lease in the event of a breach or default by Landlord under this Lease. Except as otherwise set forth in Paragraph 19(f) of this Lease, Tenant shall not be liable to Landlord for punitive, consequential or special damages under this Lease, and except as otherwise set forth in Paragraph 19(f) of this Lease, Landlord waives any rights it may have to such damages under this Lease in the event of a breach or default by Tenant under this Lease. Except as otherwise set forth in Paragraph 19(f) of this Lease, neither Tenant nor the Tenant Affiliates shall be liable under any circumstances for injury or damage to, or interference with, Landlord’s business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.

 

13.

ACCESS; CONSTRUCTION

(a) Landlord reserves from the leasehold estate hereunder, in addition to all other rights reserved by Landlord under this Lease, the right to use the roof and exterior walls of the Premises and the area beneath, adjacent to and above the Premises. Landlord also reserves the right to install, use, maintain, repair, replace and relocate equipment, machinery, meters, pipes, ducts, plumbing, conduits and wiring through the Premises, which serve other

 

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portions of the Building or the Project in a manner and in locations which do not unreasonably interfere with Tenant’s use of the Premises. In addition, Landlord shall have free access to any and all mechanical installations of Landlord, including, without limitation, machine rooms, telephone rooms and electrical closets. Tenant agrees that there shall be no construction of partitions or other obstructions which materially interfere with or which threaten to materially interfere with Landlord’s free access thereto, or materially interfere with the moving of Landlord’s equipment to or from the enclosures containing said installations.

(b) Except in the event of an emergency (when no notice is necessary), Landlord shall during normal business hours upon not less than twenty-four (24) hours written notice (including via email to the address listed in Paragraph 19(d) hereof), have the right to (i) enter the Premises to inspect the same, (ii) supply janitorial service and any other service to be provided by Landlord to Tenant hereunder (provided that no notice is required for any janitorial service provided in the ordinary course or for any general duties of the Building engineers performed in their ordinary course), (iii) exhibit the Premises to prospective purchasers, lenders or tenants (with respect to prospective tenants only during the last fifteen (15) months of the respective Lease Term for each such space), (iv) post notices of non-responsibility, or (v) to do any other act permitted or contemplated to be done by Landlord hereunder, all without being deemed guilty of an eviction of Tenant and without liability for abatement of Rent or otherwise. For such purposes, Landlord may also erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed. Landlord shall conduct all such inspections and/or improvements, alterations and repairs so as to minimize, to the extent reasonably practical and without material additional expense to Landlord, any interruption of or interference with the business of Tenant. For each of such purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises (excluding Tenant’s vaults and safes, access to which shall be provided by Tenant upon Landlord’s reasonable request). 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 or any portion thereof, and Landlord shall have the right, at any time during the Lease Term, to provide whatever access control measures it deems reasonably necessary to the Project, without any interruption or abatement in the payment of Rent by Tenant. Any entry into the Premises obtained by Landlord by any of such means shall not under any circumstances be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant from the Premises or any portion thereof. No provision of this Lease shall be construed as obligating Landlord to perform any repairs, Alterations or decorations to the Premises or the Project except as otherwise expressly agreed to be performed by Landlord pursuant to the provisions of this Lease.

(c) Access to the Premises by Landlord shall be in accordance with the security, safety and confidentiality requirements that Tenant may reasonably adopt from time to time following written notice to Landlord, including, without limitation, a requirement that persons (including Landlord or Landlord Indemnitees) having access to the Premises shall sign and deliver to Tenant a confidentiality and nondisclosure agreement in form and content reasonably acceptable to Tenant and Landlord. Tenant may reasonably restrict access by any visitor whom Landlord intends to bring onto the Premises who is, or may reasonably be suspected by Tenant to be or represent a competitor of Tenant. Landlord’s entry shall cause the least interference to Tenant’s business as is reasonably possible. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or any Landlord Parties while the same are in the Premises.

 

14.

BANKRUPTCY – Intentionally Deleted

 

15.

SUBSTITUTION OF PREMISES – Intentionally Deleted

 

16.

SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES

(a) Tenant agrees that this Lease and the rights of Tenant hereunder shall be subject and subordinate to any and all deeds to secure debt, deeds of trust, security interests, mortgages, master leases, ground leases or other security documents and any and all modifications, renewals, extensions, consolidations and replacements thereof (collectively, “Security Documents”) which now or hereafter constitute a lien upon the Project, the Building or the Premises. In addition, Landlord shall have the right to subordinate or cause to be subordinated any such Security Documents to this Lease and in such case, in the event of the termination or transfer of Landlord’s estate or interest in the Project by reason of any termination or foreclosure of any such Security Documents, Tenant shall, notwithstanding such subordination, attorn to and become the Tenant of the successor-in-interest to Landlord at the

 

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option of such successor-in-interest. Tenant’s agreement to subordinate this Lease to any Security Document shall be subject to Tenant’s receipt of an SNDA Agreement (as hereinafter defined). An “SNDA Agreement” shall mean an agreement between Landlord, Tenant and the holder of such Security Document, substantially in the form of the SNDA (as defined below). Tenant shall execute, acknowledge and deliver within fifteen (15) days of written demand therefor an SNDA Agreement; the failure to do so by Tenant within such time period following an additional written notice and five (5) Business Day cure period shall be a material default hereunder. Upon execution of this Lease, Tenant and Landlord shall also execute and deliver a fully-executed subordination, non-disturbance and attornment agreement (“SNDA”). Landlord represents to Tenant that, as of the Effective Date there are no Security Documents encumbering the Building or Project or any lien of any Security Documents now in force against the Building or Project or any part thereof except as follows:

(i) A deed of trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby.

 

Amount:

  

$135,000,000.00

Dated:

  

October 10, 2000

Trustor:

  

National Office Partners Limited Partnership, a
Delaware limited partnership

Trustee:

  

Commonwealth Land Title Company

Beneficiary:

  

New York Teachers’ Retirement System

Loan No.:

  

none shown

Recorded:

  

October 17, 2000, Instrument No. 2000-G850303-00,
Reel H744, Image 589, of Official Records

re-recorded October 30, 2000, Reel H753, Image 45,
Instrument No. G856485, Official Records

As amended by that certain Assignment and Assumption of Loan pertaining to said Deed of Trust executed by and between NOP 50 Fremont, LP., a Delaware Limited Partnership; National Office Partners Limited Partnership, a Delaware limited partnership; and New York Teachers’ Retirement System, a public pension system created and existing pursuant to and by virtue of Article 11 of the Education Law of the State of New York and having the powers and privileges of a corporation pursuant to section 502 thereof, recorded August 15, 2003, Reel I452, Image 45, Series No. 2003-H513801-00. Official Records.

As amended by that certain Amended and Restated Deed of Trust, Security Agreement, with Assignment of Rents and Leases and Fixture Filing, recorded August 22, 2003, Reel I457, Image 11, Series No. 2003-H518098-00, Official Records.

As amended by that certain Assignment and Assumption of Loan pertaining to said Deed of Trust executed by and between NOP 50 Fremont, LP., a Delaware Limited Partnership; National Office Partners Limited Partnership, a Delaware limited partnership; and New York Teachers’ Retirement System, a public pension system created and existing pursuant to and by virtue of Article 11 of the Education Law of the State of New York and having the powers and privileges of a corporation pursuant to section 502 thereof, recorded December 27, 2004, Series No. 2004-H878781-00, Official Records; and

(ii) An Assignment of certain of the lessor’s interest under leases referred to therein,

 

Assigned to:

  

New York Teachers’ Retirement System

Recorded:

  

October 17, 2000, Instrument No. 2000-G850303-00,
Reel H744, Image 590, of Official Records

re-recorded October 30, 2000, Reel H753, Image 46,
Instrument No. G856485, Official Records

Which assignment recites, among other things, that it is given as additional security for the Deed of Trust.

 

Recorded:

  

October 17, 2000, Instrument No. 2000-G850304-00,
Reel H744, Image 590, of Official Records

re-recorded October 30, 2000, Reel H753, Image 46,
Instrument No. G856486, Official Records

 

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Amended and Restated Assignment of Rents and Leases, recorded August 22, 2003, Reel I457, Image 12, Series No. 2003-H518099-00, Official Records.

(b) Tenant shall, upon not less than ten (10) Business Days’ prior notice by Landlord, execute, acknowledge and deliver to Landlord a statement in writing in the form attached hereto as Exhibit D. If Tenant fails to timely execute, acknowledge and deliver such estoppel certificate (or provide written comments to any proposed certificate delivered by Landlord), Landlord may provide to Tenant a second written request with respect to such estoppel certificate which written notice must state in bold and all caps “FAILURE TO RESPOND TO THIS WRITTEN NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT HEREOF SHALL CONSTITUTE ACCEPTANCE OF AN ESTOPPEL CERTIFICATE”. If Tenant fails to execute and deliver such certificate (or provide written comments to any proposed certificate delivered by Landlord) within a five (5) Business Day period following the receipt of Landlord’s second written request therefor, such failure shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception. Any statement delivered pursuant to this Paragraph 16 may be relied upon by any prospective purchaser of the fee of the Building or the Project or any mortgagee, ground lessor or other like encumbrances thereof or any assignee of any such encumbrance upon the Building or the Project.

(c) Landlord shall, within ten (10) Business Days after receipt of a written request from Tenant, execute and deliver (or provide written comments to any proposed certificate delivered by Tenant) to Tenant a statement certifying: (a) the date of commencement and expiration of this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there have been modifications to this Lease, that this lease is in full force and effect, as modified, and stating the date and nature of such modifications); (c) the date to which the rent and other sums payable under this Lease have been paid; (d) the fact that there are no current defaults under this Lease by either Landlord or Tenant except as specified in Landlord’s statement; and (e) such other factual matters as may be reasonably requested by Tenant. Landlord agrees that any statement delivered pursuant to this Paragraph 16(c) may be relied upon by any assignee, lender, subtenant or investor of Tenant. Landlord irrevocably agrees that if Landlord fails to execute and deliver such certificate within such ten (10) Business Day period (or provide written comments to any proposed certificate delivered by Tenant), Tenant may provide to Landlord a second written request with respect to such estoppel certificate which written notice must state in bold and all caps “FAILURE TO RESPOND TO THIS WRITTEN NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT HEREOF SHALL CONSTITUTE AN EVENT OF DEFAULT”. If Landlord fails to execute and deliver such certificate (or provide written comments to any proposed certificate delivered by Tenant) within a five (5) Business Day period following the receipt of Tenant’s second written request therefor, such failure shall constitute an event of default without any further cure period.

(d) Landlord’s Waiver of Security Interest in Tenant’s Personal Property. Landlord hereby acknowledges and agrees that any and all of Tenant’s movable furniture, furnishings, trade fixtures and equipment at the Premises (“Tenant’s Property”) may be financed by a third-party lender or lessor (an “Equipment Lienor”), and Landlord hereby (a) waives any rights to Tenant’s Property, and (b) agrees to recognize the rights of any such Equipment Lienor, subject to and in accordance with a commercially reasonable waiver agreement to be entered into by and between Landlord and the Equipment Lienor following request by Tenant.

(e) Requirements for New Landlord Financing. Landlord hereby acknowledges that the maturity date of the loan evidenced by the Security Documents described in Paragraph 16(a) above is prior to the first date upon which Tenant may exercise Tenant’s Purchase Option in accordance with Addendum Eight. Landlord shall have the right to execute new Security Documents in its sole and absolute discretion, provided that the loan amount with respect to any such Security Documents executed prior to the expiration of the Option Period (as defined in Addendum Eight) (“New Security Documents”) shall not exceed a seventy-five percent (75%) loan to value ratio determined as of the execution date of such New Security Documents. In addition, Landlord shall request of all potential lenders that such New Security Documents include provisions pre-approving the assumption of such New Security Documents by salesforce.com, inc. should Tenant exercise any right to acquire the Project. As a material inducement to Tenant’s agreement to lease the Premises and obtain Tenant’s Purchase Option, Landlord hereby agrees to deliver to Tenant for informational purposes only copies of all New Security Documents, and any

 

55


amendments or modifications thereto, within ten (10) Business Days following the full execution and delivery thereof. Except as set forth in this Paragraph 16(e), Tenant shall have no right to approve or be consulted with respect to the terms and conditions of such New Security Documents.

 

17.

SALE BY LANDLORD; TENANT’S REMEDIES; NONRECOURSE LIABILITY

(a) In the event of a sale or conveyance by Landlord of the Building or the Project, Landlord shall be released from any and all liability under this Lease from and after the date of such transfer; provided the new owner of the Building assumes in writing all of the obligations of Landlord under this Lease. If the Security Deposit has been deposited by Tenant to Landlord prior to such sale or conveyance, Landlord shall transfer the Security Deposit to the purchaser, and upon delivery to Tenant of notice thereof, Landlord shall be discharged from any further liability in reference thereto. Notwithstanding the foregoing, in the event of a sale or conveyance by Landlord of the Building or the Project prior to payment in full of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance, as a condition to Landlord’s release from liability under this Lease from and after the date of such transfer, Landlord shall escrow with a title company reasonably determined by Tenant all unpaid amounts of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance (“Escrow Funds”). Prior to the closing of such sale or conveyance of the Building or Project, Landlord and Tenant agree to enter into an escrow agreement governing the Escrow Funds in accordance with the terms and provisions of Paragraph 17(c) below, so that such Escrow Funds shall be made available to Tenant to reimburse Tenant for any portion of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance that Tenant may be entitled to in accordance with Paragraph 17(c). For the purposes of this Paragraph 17(a), the term “sale or conveyance” shall include, without limitation, a foreclosure, deed-in-lieu transaction, or any other exercise of a similar remedy by Landlord’s lender.

(b) Landlord shall not be in default of any obligation of Landlord hereunder unless Landlord fails to perform any of its obligations under this Lease within thirty (30) days after receipt of written notice of such failure from Tenant; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, Landlord shall not be in default if Landlord commences to cure such default within the thirty (30) day period and thereafter diligently prosecutes the same to completion. All obligations of Landlord hereunder shall be construed as covenants, not conditions.

(c) If an Emergency Situation (as defined herein) or Adverse Condition involving the Premises or Tenant’s personnel or property exists, then Landlord shall promptly commence and diligently perform all Landlord Repairs or take such other actions, if any, required of Landlord under this Lease necessary to cure or remediate such Emergency Situation or Adverse Condition. Notwithstanding anything to the contrary contained herein, if (i) any Emergency Situation occurs or (ii) there is an actual breach by Landlord of one of its obligations under this Lease (“Landlord Breach”), and such Emergency Situation or Landlord Breach will have a material and adverse impact on Tenant’s ability to conduct its business in the Premises, or any portion thereof constituting at least a full floor or more (an “Adverse Condition”), including, for example, any failure to provide (or cause to be provided) electricity, HVAC, condenser water or elevator access to the Premises, then Tenant shall give Landlord telephonic notice to both Landlord’s property manager and Tenant’s principal contact with Landlord, being either John Cornuke or Erik Sobek, unless Landlord notifies Tenant otherwise. Thereafter, Landlord shall have (i) forty-eight (48) hours to commence a cure with respect to such Emergency Situation or (ii) five (5) Business Days to commence a cure of such Adverse Condition, and, in each case, shall diligently prosecute such cure to completion (collectively “Emergency Repairs”). In addition, if Tenant in writing (“Tenant Self-Help Notice”) notifies Landlord that it intends to undertake self-help remedies for such Emergency Repairs, then Landlord shall indicate in writing within forty-eight (48) hours of receipt of such Tenant Self-Help Notice whether Landlord reasonably and in good faith disputes Tenant’s right to perform self-help as set forth herein (a “Landlord Dispute Notice”). Landlord’s failure to timely deliver a Landlord Dispute Notice shall conclusively be deemed Landlord’s waiver of any claim that Tenant improperly performed self-help in accordance with this Paragraph 17(c). For purposes hereof, the term “Emergency Situation” shall mean a situation which poses an imminent threat: (x) to the physical well-being of persons at the Building, (y) of material damage to Tenant’s personal property in the Premises. If Landlord fails to commence to perform such Emergency Repairs within the applicable timeframe (i.e., forty-eight (48) hours with respect to an Emergency Situation or five (5) Business Days with respect to Adverse Conditions) after Landlord receives notice of the applicable Emergency Condition or Adverse Condition, or, to the extent Landlord commences to cure with such time period but fails to diligently pursue such Emergency Repairs to completion, then Tenant, upon providing

 

56


Landlord with such prior written notice as is reasonable under the circumstances (which notice: (x) may, if circumstances so dictate, be given by contacting by telephone any representative of Landlord at the office of the Building or any person designated by Landlord in writing to Tenant from time to time as an emergency contact person for the Building (it being agreed that Tenant shall use reasonable efforts to actually speak with (as opposed to leaving a message for) each such representative or emergency contact person of Landlord, but that if Tenant is unable to reach any such contact person or representative of Landlord and the Emergency Situation in question requires immediate action, Tenant may undertake such action without actually speaking with any such representative or contact person, in which event Tenant shall leave a message for such person, if an answering machine or message service is available therefore), and (y) shall clearly indicate that Tenant intends to take steps necessary to remedy the event giving rise to the Emergency Situation or Adverse Condition in question), may perform such Emergency Repairs or other actions at Landlord’s expense; provided, however, that in no event shall Tenant undertake any actions which will or are reasonably likely to materially and adversely affect (other than to a de minimis extent) (A) the roof or structure of the Building or (B) any base Building systems or equipment. If Tenant exercises its right to perform Emergency Repairs or other actions on Landlord’s behalf, as provided above, then Landlord shall reimburse the actual out-of-pocket reasonable cost thereof together with an administration fee equal to five percent (5%) of such costs within thirty (30) days following Tenant’s delivery of: (i) a written notice describing in reasonable detail the action taken by the Tenant, and (ii) reasonably satisfactory evidence of the cost of such remedy. Landlord shall, within ten (10) Business Days following Tenant’s written request for reimbursement of the costs of the Emergency Repairs notify Tenant of whether Landlord reasonably and in good faith disputes that Tenant did not perform the Emergency Repairs in the manner permitted by this Lease or that the amount Tenant requests be reimbursed from Landlord for performance of the Emergency Repairs is incorrect (“Landlord’s Set-Off Notice”). In any case, in the event any Emergency Repairs are not accomplished by Landlord within a forty-eight (48) hour period with respect to an Emergency Condition or five (5) Business Day period with respect to Adverse Conditions despite Landlord’s diligent efforts, Landlord, within three (3) Business Days following Tenant’s written request therefore, shall provide to Tenant a schedule determined in good faith setting forth the basic steps Landlord proposes to be taken to effect the Emergency Repairs or other actions in a commercially reasonable time frame given the specifics of the Emergency Repairs required and the times when such work is proposed to be done and thereafter Landlord shall proceed to complete such Emergency Repairs within the time schedule so provided. If Tenant undertakes any action pursuant to this paragraph, Tenant shall (a) proceed in accordance with all applicable Laws; (b) retain to effect such actions only such reputable contractors and suppliers as are duly licensed in the City of San Francisco and are listed on the most recent list furnished to Tenant of Landlord’s approved contractors for the Building and are insured in accordance with the provisions of Paragraph 4 of this Lease; (c) effect such repairs or perform such other actions in a good and workmanlike and commercially reasonable manner; (d) use new or like new materials; (e) take reasonable efforts to minimize any material interference or impact on the other tenants and occupants of the Project, and (f) otherwise comply with all applicable requirements set forth in Paragraph 4(f) of this Lease. Notwithstanding anything in this Paragraph 17(c) to the contrary, the foregoing self-help right (i) shall not apply in the event of any fire or casualty at the Project, it being acknowledged and agreed that Paragraph 9 shall govern with respect to any such fire or casualty event, (ii) shall not apply in the event of any condemnation, it being acknowledged and agreed that Paragraph 10 shall govern with respect to any such condemnation, or (iii) shall not permit Tenant to access any other tenant’s or occupant’s space at the Project.

Subject to any express limitations set forth herein to the contrary, the remedies provided for in this Lease are in addition to all other remedies available to Tenant at law or in equity by statute or otherwise. Without limiting the generality of the foregoing, if Landlord fails to pay or reimburse Tenant when due any amount owed to Tenant under this Lease, including, without limitation: (i) Tenant fails to receive any portion of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance actually owed to Tenant in connection with the construction of the Phase I Premises Improvements, Phase II Premises Improvements, and/or Phase III Premises Improvements or the Expansion Space, as applicable, within thirty (30) days after submission of all required documents and information as required by this Lease; (ii) Landlord fails to reimburse Tenant in connection with the exercise of Tenant’s rights pursuant to this Paragraph 17(c); or (iii) monetary damages awarded to Tenant in an order or judgment issued by either a binding arbitration proceeding (as set forth in the following paragraph) or court in any legal proceeding, then Tenant shall have the right (subject to the limitations set forth below), in addition to all other remedies available to Tenant at law or in equity by statute or otherwise, to either off-set against Rent due under this Lease or otherwise abate payments of Base Rent, Operating Expenses or other Rent an amount equal to the applicable amounts owed to Tenant plus interest on the amounts owed to Tenant from the date incurred until such offset occurs at the Default Rate. Notwithstanding the foregoing, Tenant shall deliver notice to Landlord of

 

57


Tenant’s intent to off-set against Rent under this Paragraph 17(c) at least ten (10) Business Days prior to exercising its right of off-set. Tenant shall not be permitted to exercise off-set rights to the extent that Landlord has delivered a Landlord Dispute Notice or Landlord Set-Off Notice (as to disputed amounts only) until such dispute is finally adjudicated pursuant to the arbitration process set forth in this Paragraph 17(c). In addition, notwithstanding anything in this paragraph to the contrary, in the event Tenant exercises its off-set rights herein, then Tenant shall only be permitted to off-set up to fifty percent (50%) of the Base Rent due in the applicable calendar month (the “Monthly Cap”) in which Tenant seeks to off-set and, in the event the amount that Tenant may off-set hereunder is greater than the Monthly Cap, then Tenant shall carryover any such excess amounts to future months until the total off-set amount is exhausted.

In the event Landlord delivers (i) a Landlord Allowance Notice (as defined in Exhibit B), (ii) a Landlord Dispute Notice or (iii) a Landlord Set-Off Notice, then Tenant shall have the right, by notice to Landlord of its intent to do so, to submit the dispute to arbitration in accordance with this paragraph. Within ten (10) Business Days of the delivery of such notice, Landlord and Tenant shall designate an arbitrator to promptly decide the dispute. In the event Landlord and Tenant are unable to agree on an arbitrator, in writing and within the time provided, Landlord and Tenant shall each designate an arbitrator within an additional two (2) Business Days and notify the other thereof in writing. The two (2) arbitrators will meet within ten (10) days of the designation of the second of them to determine the dispute and, if they are unable to do so, then, within ten (10) days after their meeting they shall designate a third arbitrator and, if they are unable to agree, in writing and within the time provided, on such third arbitrator, the third arbitrator shall be selected by the Chief Judge of the United States District Court for the Northern District of California, upon the application of either Landlord or Tenant (with contemporaneous notice by the applicant to the other). This arbitration mechanism shall be solely limited to the determination whether a set-off of Base Rent is permitted hereunder (i) in the case of Tenant’s demand for an off-set arising from Landlord’s failure to disburse payment of any tenant improvement allowance, if Tenant has satisfied all delivery and other requirements necessary for Tenant to request a disbursement of the applicable allowance and the amount that such disbursement should be, or (ii) in the case of Tenant’s demand for an off-set arising from Tenant’s exercise of its self-help rights under this Paragraph 17(c), if Tenant has properly and appropriately exercised its self-help rights in accordance with the terms of this Lease and the amount that Tenant is entitled to receive arising from such self-help. If any arbitrator fails, refuses, or is unable to act, or if either Landlord or Tenant fails or refuses to appoint an arbitrator it is required to appoint under the terms hereof, then an arbitrator shall be appointed in his stead in the same manner as provided for the third arbitrator when the two (2) arbitrators appointed by Landlord and Tenant are unable to agree on same in writing and within the time provided. The reasonable fees and expenses of the third arbitrator or of the only arbitrator, if there is only one, shall be borne by the non-prevailing party in the arbitration, as determined by the arbitrator, taking into account the entirety of the decision. Any arbitrator designated to serve shall be a disinterested party who has been actively engaged in commercial leasing, either as a landlord or a tenant or a legal or other representative of a landlord or a tenant, in the county in which the Premises are located, for a period of not less than ten (10) years immediately prior to his or her appointment. If there is only one arbitrator, his or her written decision shall be final and binding on Landlord and Tenant. If there are two (2) arbitrators and they are in agreement as to the determination of the issue, their written decision shall be final and binding on Landlord and Tenant. If there are three (3) arbitrators and any two of them are in agreement as to the determination of the issue, their written decision shall be final and binding on Landlord and Tenant. The parties agree to use good faith, reasonable efforts to have the arbitration procedure discussed in this paragraph be finalized within ninety (90) days from the appointment of the arbitrator.

(d) Notwithstanding anything contained in this Lease to the contrary, the obligations of Landlord under this Lease (including any actual or alleged breach or default by Landlord) do not constitute personal obligations of the individual partners, directors, officers, trustees, members or shareholders of Landlord or Landlord’s members or partners, and Tenant shall not seek recourse against the individual partners, directors, officers, trustees, members or shareholders of Landlord or against Landlord’s members or partners or against any other persons or entities having any interest in Landlord, or against any of their personal assets for satisfaction of any liability with respect to this Lease. Any liability of Landlord for a default by Landlord under this Lease, or a breach by Landlord of any of its obligations under the Lease, shall be limited solely to its interest in the Project (which shall include the proceeds of any financing or sale and any rents, insurance proceeds and condemnation awards), and in no event shall any personal liability be asserted against Landlord in connection with this Lease nor shall any recourse be had to any other property or assets of Landlord, its partners, directors, officers, trustees, members, shareholders or any other persons or entities having any interest in Landlord (other than the proceeds of

 

58


any financing or sale and any rents, insurance proceeds and condemnation awards); provided, however, with respect to the payment of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance, the liability of Landlord shall not be limited to its interest in the Project but rather any liability for the payment of the Phase I Premises Allowance, Phase II Premises Allowance or Phase III Premises Allowance shall be satisfied solely from the assets and properties of the Teachers Insurance and Annuity Association of America’s Real Estate Account established as a separate investment account of TIAA under New York law on February 22, 1995, and under the regulation of the State of New York Insurance Department (the “Separate Account”) (including all assets and properties allocated to or held for the account of the Separate Account), and in no event shall any recourse be had to any assets or properties held by TIAA in its general investment account or in any other of its existing or future separate accounts other than the Separate Account.

(e) Notwithstanding anything contained in this Lease to the contrary, the obligations of Tenant under this Lease (including any actual or alleged breach or default by Tenant) do not constitute personal obligations of the individual partners, directors, officers, trustees, members or shareholders of Tenant or Tenant’s members or partners, and Landlord shall not seek recourse against the individual partners, directors, officers, trustees, members or shareholders of Tenant or against Tenant’s members or partners or against any other persons or entities having any interest in Tenant, or against any of their personal assets for satisfaction of any liability with respect to this Lease.

 

18.

PARKING; COMMON AREAS

(a) Tenant shall have the right to the nonexclusive use of the number of parking spaces located in the parking areas of the Project specified in Item 13 of the Basic Lease Provisions (the “Parking Garage”) for the parking of operational motor vehicles used by Tenant, its visitors, officers and employees only. Landlord reserves the right, at any time upon written notice to Tenant, to designate the location of Tenant’s parking spaces as determined by Landlord in its reasonable and non-discriminatory discretion. The use of such spaces shall be subject to the rules and regulations adopted by Landlord from time to time for the use of the parking areas. Landlord further reserves the right to make such changes to the parking system as Landlord may deem necessary or reasonable from time to time; provided that Landlord shall use commercially reasonable efforts (without any obligation to engage overtime labor or commence any litigation) to minimize the extent and duration of any resulting interference with Tenant’s parking rights. Except as otherwise expressly agreed to in this Lease, Tenant agrees that Tenant, its visitors, officers and employees shall not be entitled to park in any reserved or specially assigned areas designated by Landlord from time to time in the Project’s parking areas. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s officers, employees, suppliers, shippers, customers or invitees to be loaded, unloaded or parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the prohibited activities described in this Paragraph, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord.

(b) Subject to subparagraph (c) below and the remaining provisions of this Lease, Tenant shall have the nonexclusive right, in common with others, to the use of such entrances, lobbies, fire vestibules, restrooms (excluding restrooms on any full floors leased by a tenant), mechanical areas, ground floor corridors, elevators and elevator foyers, Parking Garage, electrical and janitorial closets, telephone and equipment rooms, loading and unloading areas, the Project’s plaza areas, if any, ramps, drives, stairs, and similar access ways and service ways and other common areas and facilities in and adjacent to the Building and the Project as are designated from time to time by Landlord for the general nonexclusive use of Landlord, Tenant and the other tenants of the Project and their respective employees, agents, representatives, licensees and invitees (“Common Areas”). The use of such Common Areas shall be subject to the rules and regulations contained herein and the provisions of any CC&Rs (as defined herein). Tenant shall keep all of the Common Areas free and clear of any obstructions created or permitted by Tenant or resulting from Tenant’s operations, and shall use the Common Areas only for normal activities, parking and ingress and egress by Tenant and its employees, agents, representatives, licensees and invitees to and from the Premises, the Building or the Project. If, in the reasonable opinion of Landlord, unauthorized persons are using the Common Areas by reason of the presence of Tenant in the Premises, Tenant, upon demand of Landlord, shall correct such situation by appropriate action or proceedings against all such unauthorized persons. Nothing herein shall affect the rights of Landlord at any time to remove any such unauthorized persons from said areas or to prevent the use of any of said areas by unauthorized persons. Landlord reserves the right to make such changes, alterations,

 

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additions, deletions, improvements, repairs or replacements in or to the Building, the Project (including the Premises) and the Common Areas as Landlord may reasonably deem necessary or desirable, including, without limitation, constructing new buildings and making changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading areas, landscaped areas and walkways; provided, however, that (i) there shall be no unreasonable permanent obstruction of access to or use of the Premises resulting therefrom, and (ii) Landlord shall use commercially reasonable efforts to minimize any interruption with Tenant’s use of the Premises. Notwithstanding any provision of this Lease to the contrary, the Common Areas shall not in any event be deemed to be a portion of or included within the Premises leased to Tenant and the Premises shall not be deemed to be a portion of the Common Areas. This Lease is granted subject to the terms hereof, the rights and interests of third parties under existing liens, easements and encumbrances affecting such property, all zoning regulations, rules, ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction over the Project or any part thereof.

(c) Notwithstanding any provision of this Lease to the contrary, Landlord specifically reserves the right to redefine the term “Project” for purposes of allocating and calculating Operating Expenses so as to include or exclude areas as Landlord shall from time to time reasonably determine or reasonably specify (and any such determination or specification shall be without prejudice to Landlord’s right to revise thereafter such determination or specification). In addition, Landlord shall have the right to contract or otherwise arrange for amenities, services or utilities (the cost of which is included within Operating Expenses) to be on a common or shared basis to both the Project (i.e., the area with respect to which Operating Expenses are determined) and adjacent areas not included within the Project, so long as the basis on which the cost of such amenities, services or utilities is allocated to the Project is determined on an arms-length basis or some other basis reasonably determined by Landlord. In the case where the definition of the Project is revised for purposes of the allocation or determination of Operating Expenses, Tenant’s Proportionate Share shall be appropriately revised to equal the percentage share of all Rentable Area contained within the Project (as then defined) represented by the Premises. Landlord shall have the sole right to reasonably determine which portions of the Project and other areas, if any, shall be served by common management, operation, maintenance and repair. Landlord shall also have the right, in its sole discretion, to allocate and prorate any portion or portions of the Operating Expenses on a building-by-building basis, on an aggregate basis of all buildings in the Project, or any other reasonable manner, and if allocated on a building-by-building basis, then Tenant’s Proportionate Share shall, as to the portion of the Operating Expenses so allocated, be based on the ratio of the Rentable Area of the Premises to the Rentable Area of the Building. Landlord shall have the exclusive rights to the airspace above and around, and the subsurface below, the Premises and other portions of the Building and Project.

 

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MISCELLANEOUS

(a) Attorneys’ Fees. In the event of any legal action or proceeding brought by either party against the other arising out of this Lease, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs (including, without limitation, court costs and expert witness fees) incurred in such action. Such amounts shall be included in any judgment rendered in any such action or proceeding.

(b) Waiver. No waiver by Landlord or Tenant of any provision of this Lease or of any breach by the other party hereunder shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach by the other party. Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval under this Lease shall not be deemed to render unnecessary the obtaining of Landlord’s consent to or approval of any subsequent act of Tenant. No act or thing done by Landlord or Landlord’s agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, unless in writing signed by Landlord. The delivery of the keys to any employee or agent of Landlord shall not operate as a termination of the Lease or a surrender of the Premises. The acceptance of any Rent by Landlord following a breach of this Lease by Tenant shall not constitute a waiver by Landlord of such breach or any other breach unless such waiver is expressly stated in a writing signed by Landlord.

(c) Notices. Any notice, demand, request, consent, approval, disapproval or certificate (“Notice”) required or desired to be given under this Lease shall be in writing and given by certified mail, return receipt requested, by personal delivery or by a nationally recognized overnight delivery service (such as Federal Express or UPS) providing a receipt for delivery. Notices may not be given by facsimile or e-mail. The date of giving any

 

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Notice shall be deemed to be the date upon which delivery is actually made by one of the methods described in this Section 19(c) (or attempted if said delivery is refused or rejected). If a Notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next Business Day. All notices, demands, requests, consents, approvals, disapprovals, or certificates shall be addressed at the address specified in Item 14 of the Basic Lease Provisions or to such other addresses as may be specified by written notice from Landlord to Tenant. Either party may change its address by giving reasonable advance written Notice of its new address in accordance with the methods described in this Paragraph; provided, however, no notice of either party’s change of address shall be effective until fifteen (15) days after the addressee’s actual receipt thereof. For the purpose of this Lease, Landlord’s counsel may provide Notices to Tenant on behalf of Landlord and such notices shall be binding on Tenant as if such notices have been provided directly by Landlord.

(d) Access Control. Landlord shall be the sole determinant of the type and amount of any access control or courtesy guard services to be provided to the Project, if any. LANDLORD SHALL NOT BE LIABLE TO TENANT, AND TENANT HEREBY WAIVES ANY CLAIM AGAINST LANDLORD, FOR (I) ANY UNAUTHORIZED OR CRIMINAL ENTRY OF THIRD PARTIES INTO THE PREMISES, THE BUILDING OR THE PROJECT, (II) ANY DAMAGE TO PERSONS, OR (III) ANY LOSS OF PROPERTY IN AND ABOUT THE PREMISES, THE BUILDING OR THE PROJECT, BY OR FROM ANY UNAUTHORIZED OR CRIMINAL ACTS OF THIRD PARTIES, REGARDLESS OF ANY ACTION, INACTION, FAILURE, BREAKDOWN, MALFUNCTION AND/OR INSUFFICIENCY OF THE ACCESS CONTROL OR COURTESY GUARD SERVICES PROVIDED BY LANDLORD, IF ANY EXCEPT TO THE EXTENT CAUSED BY OR RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD. As of the Effective Date of this Lease, Landlord’s current security program is set forth in Exhibit M attached hereto. Tenant shall provide such supplemental security services and shall install within the Premises such supplemental security equipment, systems and procedures as may reasonably be required for the protection of its employees and invitees, provided that Tenant shall coordinate such services and equipment with any security provided by Landlord. The determination of the extent to which such supplemental security equipment, systems and procedures are reasonably required shall be made in the sole judgment, and shall be the sole responsibility, of Tenant and may include, without limitation, key-card systems, access gates (provided that such gates are located entirely within the Premises and not in any Common Areas), security lighting and video monitoring equipment (including in the ceilings of the Common Areas adjacent to the Premises, subject to Landlord’s reasonable approval of the locations thereof) (“Tenant’s Security Equipment”). The installation of any Tenant’s Security Equipment shall be subject to all applicable codes, laws and ordinances and Tenant shall be responsible, at its sole cost and expense, for all costs in connection with ensuring that Tenant’s Security Equipment is in compliance with all applicable laws, codes and ordinances. Notwithstanding anything to the contrary set forth herein, at the end of each respective Lease Terms or upon the earlier termination of this Lease, at Landlord’s option, Tenant shall either: (1) remove, at Tenant’s sole cost and expense, any Tenant’s Security Equipment and restore all portions of the Premises and the Building affected by such removal to their condition immediately prior to the installation of such equipment, ordinary wear and tear excepted; or (2) leave any such Tenant’s Security Equipment in place, in which event the Tenant’s Security Equipment shall be the property of Landlord. Subject to Landlord’s prior written approval, such approval not to be unreasonably withheld, delayed or conditioned, at Tenant’s sole cost, Tenant shall be permitted to tie Tenant’s Security Equipment into the Building Systems if requested by Tenant provided that (a) Tenant’s Security Equipment is compatible with the Building Systems, and (b) Tenant’s Security System does not materially and adversely interfere with the Building Systems. In addition, Tenant shall have the right to contract directly with Landlord’s security contractor as well as utilize its own employees or third parties to perform security services within the Premises. Tenant acknowledges that it has neither received nor relied upon any representation or warranty made by or on behalf of Landlord with respect to the safety or security of the Premises or the Project or any part thereof or the extent or effectiveness of any security measures or procedures now or hereafter provided by Landlord, and further acknowledges that Tenant has made its own independent determinations with respect to all such matters. Tenant shall be entitled to utilize Building stairwells to access floors of the Premises and may install security card readers or other security devices on such stairwells to maintain security and access by persons other than Tenant employees. Notwithstanding anything to the contrary contained herein, if any breach of security in the Premises shall occur, then Landlord shall immediately provide notice to Tenant via telephone call and e-mail to the following: (a) via telephone to 650-653-4600, and (b) via email to gocenter@salesforce.com or such other number(s) and/or email address(es) as Tenant shall from time to time notify Landlord in writing.

 

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(e) Storage. Any storage space at any time leased to Tenant hereunder shall be used exclusively for storage. Notwithstanding any other provision of this Lease to the contrary, (i) Landlord shall have no obligation to provide heating, cleaning, water or air conditioning therefor, and (ii) Landlord shall be obligated to provide to such storage space only such electricity as will, in Landlord’s judgment, be adequate to light said space as storage space.

(f) Holding Over. If Tenant retains possession of any portion of the Premises after the termination or expiration of the respective Lease Term relating to such portion of the Premises, then Tenant shall, at Landlord’s election become a tenant at sufferance (and not a tenant at will) for such portion of the Premises in which Tenant is holding over, such possession shall be subject to immediate termination by Landlord at any time, and all of the other terms and provisions of this Lease (excluding any expansion or renewal option or other similar right or option) shall be applicable during such holdover period, except that Tenant shall pay Landlord from time to time, upon demand, for the first thirty (30) days of such holdover an amount equal to one hundred twenty-five percent (125%) of the Base Rent payable by Tenant immediately prior to such holding over, and thereafter an amount equal to one hundred fifty percent (150% ) of the Base Rent payable by Tenant immediately prior to such holding over, computed on a per diem basis for each month or part thereof during such holding over for such portion of the Premises in which Tenant is holding over; provided, however, the holdover rent shall be calculated in full floor increments only so that if Tenant is only holding over in a portion of a particular floor, then the holdover rent shall be calculated based on the square footage of the entire floor. All other payments (including payment of Additional Rent) shall continue under the terms of this Lease. In addition, Tenant shall also be liable to Landlord for all direct and consequential damages which Landlord may suffer by reason Tenant’s failure to timely surrender the Premises; provided, however, as a condition of Tenant’s obligations under this Paragraph 19(f), Landlord shall give Tenant written notice of the existence of a prospective successor tenant for the Premises or any portion thereof, or the existence of any other matter which might give rise to a claim by Landlord for consequential damages, and Landlord’s reasonable estimate of the amount of such claim (to the extent such amount can reasonably be estimated by Landlord on the basis of information then available to Landlord) at least thirty (30) days prior to the date Landlord shall require Tenant’s surrender of the Premises, and Tenant shall not be responsible to Landlord for any consequential damages if Tenant shall surrender the Premises on or prior to one hundred twenty (120) days after the later of (i) delivery of such notice detailing the potential consequential damages (it being agreed, however, that Landlord does not need to identify the prospective tenant by name in its notice, and it being further agreed that such notice may be given prior to the scheduled expiration date of this Lease), or (ii) the expiration or earlier termination of this Lease. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Paragraph shall not be construed as consent for Tenant to retain possession of the Premises or any portion thereof.

(g) Condition of Premises. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS LEASE, LANDLORD HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT’S INTENDED PURPOSE OR USE, WHICH DISCLAIMER IS HEREBY ACKNOWLEDGED BY TENANT. THE TAKING OF POSSESSION BY TENANT ON THE APPLICABLE DELIVERY DATE AS SET FORTH IN ITEM 9 OF THE BASIC LEASE PROVISIONS SHALL BE CONCLUSIVE EVIDENCE THAT TENANT:

(i) ACCEPTS THE PREMISES, THE BUILDING AND PROJECT AS SUITABLE FOR THE PURPOSES FOR WHICH THE PREMISES WERE LEASED; AND

(ii) WAIVES ALL CLAIMS BASED ON ANY IMPLIED WARRANTY OF SUITABILITY OR HABITABILITY.

(h) Quiet Possession. Upon Tenant’s paying the Rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on Tenant’s part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the term hereof without hindrance or ejection by any person lawfully claiming under Landlord.

(i) Matters of Record. Except as otherwise provided herein, this Lease and Tenant’s rights hereunder are subject and subordinate to all matters affecting Landlord’s title to the Project recorded in the Real Property Records of the County in which the Project is located prior to the Effective Date, including, without limitation, all CC&Rs. Tenant agrees for itself and all persons in possession or holding under it that it will comply with and not

 

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violate any CC&Rs. Landlord reserves the right, from time to time, to grant such easements, rights and dedications as Landlord deems necessary or desirable, and to cause the recordation of parcel maps and covenants, conditions and restrictions affecting the Premises, the Building or the Project, as long as such easements, rights, dedications, maps, and covenants, conditions and restrictions do not adversely affect the use of the Premises by Tenant, including without limitation, any signage rights, access to the Project, access or utility of the Parking Garage, or material reduction in the outdoor portions of the Project available for public use.

(j) Successors and Assigns. Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

(k) Brokers. Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the brokers named in Item 12 of the Basic Lease Provisions and that it knows of no other real estate broker or agent who is or might be entitled to a commission in connection with this Lease. Tenant hereby agrees to indemnify, defend and hold Landlord harmless for, from and against all claims for any brokerage commissions, finders’ fees or similar payments by any persons, other than those listed in Item 12 of the Basic Lease Provisions, claiming to have represented Tenant in connection with this Lease and all costs, expenses and liabilities incurred in connection with such claims, including reasonable attorneys’ fees and costs.

Landlord warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the brokers named in Item 12 of the Basic Lease Provisions and that it knows of no other real estate broker or agent who is or might be entitled to a commission in connection with this Lease. Landlord hereby agrees to indemnify, defend and hold Tenant harmless for, from and against all claims for any brokerage commissions, finders’ fees or similar payments by any persons, other than those listed in Item 12 of the Basic Lease Provisions, claiming to have represented Landlord in connection with this Lease and all costs, expenses and liabilities incurred in connection with such claims, including reasonable attorneys’ fees and costs.

(l) Project or Building Name and Signage. Intentionally Deleted.

(m) Memorandum of Lease and Option. Concurrently with the execution and delivery of this Lease, the parties shall promptly execute and Landlord shall record, at its sole cost and expense, a short form memorandum in substantially the form attached hereto as Exhibit K. Within ten (10) Business Days after Landlord’s written request following the expiration or earlier termination of this Lease, Tenant shall execute and deliver to Landlord in recordable form, a quitclaim deed designating Landlord as the transferee.

(n) Examination of Lease. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution by and delivery to both Landlord and Tenant.

(o) Time. Time is of the essence of this Lease and each and all of its provisions.

(p) Defined Terms and Marginal Headings. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular and for purposes of Paragraphs 5, 7, 13 and 18, the term Landlord shall include Landlord, its employees, contractors and agents. The marginal headings and titles to the articles of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.

(q) Conflict of Laws; Prior Agreements; Separability. This Lease shall be governed by and construed pursuant to the laws of the State of California. This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease. No prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. The illegality, invalidity or unenforceability of any provision of this Lease shall in no way impair or invalidate any other provision of this Lease, and such remaining provisions shall remain in full force and effect.

 

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(r) Authority. If Tenant is a corporation or limited liability company, each individual executing this Lease on behalf of Tenant hereby covenants and warrants that Tenant is a duly authorized and existing corporation or limited liability company, that Tenant has and is qualified to do business in the State, that the corporation or limited liability company has full right and authority to enter into this Lease, and that each person signing on behalf of the corporation is authorized to do so. This Lease shall not be construed to create a partnership, joint venture or similar relationship or arrangement between Landlord and Tenant hereunder.

(s) Landlord Representations and Warranties. To induce Tenant to execute this Lease, and in addition to the other representations and warranties of Landlord contained in this Lease, Landlord warrants and represents that:

(i) As of the Effective Date, except with respect to any rights of a holder of a Security Document arising from a default of such Security Document, no person or entity (except Tenant) currently has any right to purchase the Project or take a ground lease of the Project.

(ii) As of the Effective Date, no person or entity (except Tenant) has any preferential right to lease the Expansion Space or, except for the Existing Rights, any other portion of the Building superior to Tenant’s right to lease the other portions of the Building other than the Excluded Space (as defined in Addendum Six).

(iii) If Landlord is a corporation or limited liability company, each individual executing this Lease on behalf of Landlord hereby covenants and warrants that Landlord is a duly authorized and existing corporation or limited liability company, that Landlord has and is qualified to do business in the State, that the corporation or limited liability company has full right and authority to enter into this Lease, and that each person signing on behalf of the corporation is authorized to do so.

(iv) The covenants, conditions, and restrictions that are of public record which affect or encumber the Project as of the Effective Date are listed in Exhibit J attached hereto (the “CC&Rs”).

(t) Cafeteria.

(i) Construction and Use. Subject to the terms and conditions of this Paragraph 19(t) and the Work Letters (to the extent constructed pursuant to the Tenant Improvements) Tenant may include a cafeteria (“Cafeteria”) in the Premises. The location of the Cafeteria shall be in the location within the Premises proposed by Tenant and reasonably agreed to by Landlord. Tenant, at Tenant’s expense, shall obtain and maintain all governmental permits and licenses necessary to operate the Cafeteria and shall comply with all applicable Laws relating to the maintenance, operation and use thereof.

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

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

(B) Tenant shall install grease traps/interceptors located within the Cafeteria as required by Laws for all food preparation areas having pot sinks or any grease-producing appliances that

 

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discharge into the waste system. Tenant shall be responsible for the proper care, cleaning and maintenance of the grease traps located within the Cafeteria and any piping required therefor in accordance with all Laws. Tenant shall follow all reasonable recommendations of Tenant’s grease trap maintenance provider regarding the maintenance of the grease traps, including any recommended chemical treatments and any recommended intervals for the emptying and/or hydrojetting of the grease traps and connecting pipes. Tenant, as Additional Rent, shall be liable for the cost of any maintenance to or repairs of any of the Building pumps and pipes reasonably documented by Landlord to the extent necessitated by Tenant’s failure to comply with the terms and conditions of this provision.

(C) If, in the reasonable opinion of Landlord, offensive odors are escaping from the Cafeteria into the Project or Common Areas, Landlord shall promptly notify Tenant and Tenant shall use diligent efforts to cure such situation. If such objectionable odors continue to escape from the Cafeteria into the Project or Common Areas after notice from Landlord, then Tenant shall have fifteen (15) days to commence to cure such situation and thereafter shall diligently prosecute such cure to completion. Notwithstanding the foregoing, Landlord, at Tenant’s sole cost and expense, shall have the right, but not the obligation, to undertake any such repairs or other work that Tenant is required to perform under this Paragraph 19(t) that Tenant fails or refuses to perform in a timely and efficient manner after expiration of all applicable notice and cure periods.

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

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

(F) Notwithstanding anything to the contrary set forth herein, Tenant may at any time, cease operating the Cafeteria, and (i) remove the improvements in the Cafeteria and (ii) at Tenant’s election install improvements customary for general office use in the former Cafeteria.

(G) Tenant shall hire a pest control company duly licensed by the State of California and acceptable to Landlord to provide to the Cafeteria pest control service regularly and as necessary for the purpose of preventing and/or eliminating rodents and pests from the Cafeteria. No grease shall be allowed to accumulate in the Cafeteria. Any grease hood ventilation equipment shall include a fine pre-filter and activated charcoal filters or their equivalent. All kitchen ventilating equipment shall be so operated and maintained as to prevent the emission of odors and smoke from the Premises.

(H) Tenant shall provide suitable water-tight receptacles for garbage from or attributable to the Cafeteria. Tenant shall implement garbage procedures eliminating all garbage from the Cafeteria at least once daily. Said procedures shall ensure the transportation of garbage, without spillage, from the Premises to points of collection specified by Landlord. The collection of garbage shall be arranged by Tenant at its expense. Any spillage of Tenant’s garbage (whether caused by Tenant’s staff, by trespassers, by acts of God, or by any other cause whatsoever) shall be immediately cleaned up by Tenant, and failure to do so shall allow Landlord immediately to clean said spillage at Tenant’s expense. Tenant shall purchase and maintain a minimum of two (2) (or such higher number as the Fire Marshal may require) fire extinguishers in the Cafeteria in serviceable condition during the entire Lease Term.

 

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

(u) Rules and Regulations. Tenant agrees to comply with all rules and regulations of the Building and the Project imposed by Landlord as set forth on Exhibit C attached hereto, as the same may be reasonably changed from time to time upon reasonable notice to Tenant; provided that, no modification of such rules and regulations may increase Tenant’s costs to lease and occupy the Premises or reduce any services to be provided to Tenant hereunder. Landlord shall not be liable to Tenant for the failure of any other tenant or any of its assignees, subtenants, or their respective agents, employees, representatives, invitees or licensees to conform to such rules and regulations.

(v) Joint Product. This Agreement is the result of arms-length negotiations between Landlord and Tenant and their respective attorneys. Accordingly, neither party shall be deemed to be the author of this Lease and this Lease shall not be construed against either party.

(w) Generator Usage. Subject to Tenant obtaining all necessary governmental permits and approvals and compliance with all matters of record, and so long as Tenant shall not materially adversely impact any Building systems, Tenant shall have the right but not the obligation to install, operate and maintain, at Tenant’s sole cost and expense, a back-up generator (“Tenant’s Generator”) in the Building or Project. Tenant’s Generator shall be and remain the sole and exclusive property of Tenant. Tenant shall pay the rental cost of any parking spaces (which shall be based on the prevailing market rate charged by Landlord or the operator of the parking garage for the use of such parking spaces) that are used to install the Tenant’s Generator, which such rental shall be payable monthly and included in Tenant’s Rent payment. Landlord shall have the right to review and approve, such review and approval not to be unreasonably withheld or delayed, Tenant’s plans and specifications for the proposed equipment, including, without limitation, the size, method of installation and visibility of such equipment. The location of Tenant’s Generator shall be limited to an area reasonably acceptable to Landlord and Tenant. In conjunction with the installation of Tenant’s Generator, subject to Landlord’s prior approval of Tenant’s plans and specifications, Tenant shall have the right to install an emergency generator connection on the outside of the Building for the purpose of connecting Tenant’s Generator to the Premises and an appurtenant electrical grounding system. Furthermore, Tenant shall have the right to install conduits from Tenant’s Generator to the Premises, provided, however, that such conduits are installed to Landlord’s reasonable satisfaction in accordance with the design and architectural standards for the Building. Tenant, at its sole cost and expense, shall install, maintain, repair, replace and operate the Tenant’s Generator in good working condition and in a first class manner. Tenant must obtain (and provide Landlord with copies of) all necessary approvals, permits and licenses from all governmental authorities having jurisdiction over the Tenant’s Generator prior to the installation of the Tenant’s Generator. Tenant shall use, operate, maintain and repair the Tenant’s Generator throughout the Lease Term in accordance with all applicable local, state and federal Laws, rules and regulations (including any environmental laws, rules or regulations). Tenant shall use a contractor listed on Landlord’s the then current list of approved contractors or as otherwise approved by Landlord, in Landlord’s reasonable discretion, to install the Tenant’s Generator in accordance with the plans and specifications approved by Landlord. Tenant’s installation and maintenance of the Tenant’s Generator shall be performed during the Building’s non-business hours and in a manner so as not to create a disturbance to other tenants located in the Building. The Tenant’s Generator shall be operated in a manner so as not to cause any noise, odor or vibration or any other disturbance which may materially interfere with the operations of other tenants in the Building. Tenant shall, at Tenant’s sole cost and expense, screen the Tenant’s Generator from view in a manner reasonably acceptable to Landlord. In the event that the Tenant’s Generator causes soil, oil, fumes or other debris to accumulate on the Building’s brick, glass concrete or other services, Tenant shall immediately clean such soil, oil, fumes or other debris at its sole cost and expense upon receipt of notice from Landlord, or, at Landlord’s option, Landlord may clean the debris and Tenant shall immediately reimburse Landlord for the reasonable costs of such cleaning upon receipt of notice from Landlord. Tenant shall install, at its sole cost and expense, in compliance with the plans approved by Landlord, a submeter or lapse time meter or similar device to measure the electrical consumption of the Tenant’s Generator, which device shall be approved by Landlord. Tenant shall pay to Landlord the actual cost of such electrical service provided in connection with the Tenant’s Generator. In the event that the presence of the Tenant’s Generator at the Building causes an increase in Landlord’s insurance costs, Tenant agrees

 

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to pay such increase in costs to Landlord as additional rent. Tenant shall disconnect and remove the Tenant’s Generator at or prior to the termination or expiration of this Lease and restore the Premises, Building and Project and all other areas (including greenery and landscaping) in or about the Premises, Building and Project where any portion of the Tenant’s Generator is installed to its original condition immediately prior to such installation, reasonable wear and tear excepted and to repair any damage covered by such disconnection and/or removal. The terms and provisions of this Paragraph 19(w) shall survive the termination or earlier expiration of this Lease.

(x) Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, acts of war, terrorism, terrorist activities, inability to obtain services, labor, or materials or reasonable substitutes therefore, governmental actions, civil commotions, fire, flood, earthquake or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease and except as to Tenant’s obligations under Paragraph 19(f) of this Lease (collectively, a “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure. Any delays caused by an event of Force Majeure shall be referred to herein as a “Force Majeure Delay”.

(y) Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.

(z) Waiver of Right to Jury Trial. LANDLORD AND TENANT WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CONTRACT OR TORT CLAIM, COUNTERCLAIM, CROSS-COMPLAINT, OR CAUSE OF ACTION IN ANY ACTION, PROCEEDING, OR HEARING BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT’S USE OR OCCUPANCY OF THE LEASED PREMISES, INCLUDING WITHOUT LIMITATION ANY CLAIM OF INJURY OR DAMAGE OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY CURRENT OR FUTURE LAW, STATUTE, REGULATION, CODE, OR ORDINANCE. Landlord and Tenant agree that this paragraph constitutes a written consent to waiver of trial by jury within the meaning of California Code of Civil Procedure Section 631(a)(2), and Tenant does hereby authorize and empower Landlord to file this paragraph and/or this Lease, as required, with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

(aa) Office and Communications Services. Landlord has advised Tenant that certain office and communications services may be offered to tenants of the Building by a concessionaire under contract to Landlord (“Provider”). Tenant shall be permitted to contract with Provider for the provision of any or all of such services on such terms and conditions as Tenant and Provider may agree. Tenant acknowledges and agrees that: (i) Landlord has made no warranty or representation to Tenant with respect to the availability of any such services, or the quality, reliability or suitability thereof; (ii) the Provider is not acting as the agent or representative of Landlord in the provision of such services, and Landlord shall have no liability or responsibility for any failure or inadequacy of such services, or any equipment or facilities used in the furnishing thereof, or any act or omission of Provider, or its agents, employees, representatives, officers or contractors; (iii) Landlord shall have no responsibility or liability for the installation, alteration, repair, maintenance, furnishing, operation, adjustment or removal of any such services, equipment or facilities; and (iv) any contract or other agreement between Tenant and Provider shall be independent of this Lease, the obligations of Tenant hereunder, and the rights of Landlord hereunder, and, without limiting the foregoing, no default or failure of Provider with respect to any such services, equipment or facilities, or under any contract or agreement relating thereto, shall have any effect on this Lease or give to Tenant any offset or defense to the full and timely performance of its obligations hereunder, or entitle Tenant to any abatement of rent or additional rent or any other payment required to be made by Tenant hereunder, or constitute any accrual or constructive eviction of Tenant, or otherwise give rise to any other claim of any nature against Landlord.

 

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(bb) OFAC Compliance.

(i) Tenant. Tenant certifies, represents, warrants and covenants that:

(A) It is not acting and will not act, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person”, or other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and

(B) It is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or nation.

(ii) Landlord. Landlord certifies, represents, warrants and covenants that:

(A) It is not acting and will not act, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person”, or other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and

(B) It is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or nation.

(cc) No Easement For Light, Air And View. This Lease conveys to Tenant no rights for any light, air or view. No diminution of light, air or view, or any impairment of the visibility of the Premises from inside or outside the Building, by any structure or other object that may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of Rent under this Lease, constitute an actual or constructive eviction of Tenant, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder.

(dd) Nondisclosure of Lease Terms. Other than any disclosures required by federal security laws, Tenant agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord, and that disclosure of the terms hereof could adversely affect the ability of Landlord to negotiate with other tenants. Tenant hereby agrees that Tenant and its partners, officers, directors, employees, agents, real estate brokers and sales persons and attorneys shall not disclose the terms of this Lease to any other person without Landlord’s prior written consent, except to any accountants of Tenant in connection with the preparation of Tenant’s financial statements or tax returns, to an assignee of this Lease or subtenant of the Premises, or to an entity or person to whom disclosure is require by applicable law or in connection with any action brought to enforce this Lease.

(ee) Business Day. For purposes hereof, “Business Day” shall be all calendar days except Saturdays and Sundays and holidays observed by national banks in the State.

(ff) ERISA. Tenant is not an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), which is subject to Title I of ERISA, or a “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, which is subject to Section 4975 of the Internal Revenue Code of 1986; and (b) the assets of Tenant do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986; and (c) Tenant is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and assets of Tenant do not constitute plan assets of one or more such plans; or (d) transactions by or with Tenant are not in violation of state statutes applicable to Tenant regulating investments of and fiduciary obligations with respect to governmental plans.

(gg) Intentionally Deleted.

(hh) Restrooms. Landlord hereby represents to Tenant that upon each respective Delivery Date set forth in Item 9 of the Basic Lease Provisions, the restrooms in the portions of the floors being delivered to Tenant shall be in compliance with the Americans With Disabilities Act of 1990 (Public Law 101-336 {July 26, 1990}) (“ADA”).

 

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(ii) Path of Travel. Landlord hereby represents to Tenant that upon each respective Delivery Date set forth in Item 9 of the Basic Lease Provisions, the path of travel from the Building lobby to those portions of the floors being delivered to Tenant shall be in compliance with the ADA.

(jj) Child Care Facility. Within ten (10) Business Days after Tenant’s written request, Landlord agrees to cooperate with Tenant in order to assess the feasibility of locating a child care facility in a portion of the retail area of the Project. Landlord’s cooperation shall consist of the following: (i) Landlord shall assess the strategic relocation, termination or other arrangements to create space in the retail area of the Project for the child care facility, (ii) Landlord shall support Tenant’s efforts with state and local government jurisdictions to secure any necessary approvals for the operation of a child care facility at the Project, and (iii) Landlord shall cooperate with Tenant in order to make rooftop space available (to the extent allowed by Law) on the selected retail area building for an outdoor play area, to the extent the foregoing is feasible. In the event Tenant is able to retain all necessary permits and approvals and Landlord is able to relocate and/or terminate the retail tenants in order to provide space for the child care facility, then Landlord agrees to lease to Tenant the child care facility for an initial term coterminous with the Phase I Premises, and Tenant shall pay rental for such space equal to the then prevailing market rate for comparable retail space in the Financial District of San Francisco without taking into account the use of such space as a childcare facility, and taking into further account the size of the Lease, the length of the term, market escalations and the credit of Tenant. In such event the parties shall agree to enter into an amendment to this Lease documenting the addition of the child care facility, which shall thereafter be included in the definition of “Premises” hereunder and subject to the terms and conditions relating to the Premises. Such amendment shall provide that Tenant shall be responsible for all costs associated with the construction, operation, and maintenance of the child care facility, Tenant shall acquire any insurance required by Landlord for the child care facility and, upon the termination of the term with respect to such child care facility, Tenant shall be responsible for restoring the space to its original condition prior to such space’s use as a child care facility. If the parties cannot agree upon the rent for the child care facility the rent shall be determined pursuant to an arbitration in accordance with Addendum 1 hereof. Tenant hereby agrees to reimburse Landlord, upon thirty (30) days written request, for any and all costs reasonably incurred by Landlord in connection with assisting and cooperating with Tenant pursuant to this Paragraph 19(jj), including, without limitation, (i) all costs and expenses associated with terminating, relocating or making other arrangements with existing tenants of the Project in order to make space available for the child care facility to the extent such costs are approved in writing in advance by Tenant, (ii) all costs and expenses associated with the application, procurement and maintenance of any required permits or approvals from the applicable authorities, and (iii) any and all costs, including legal and in-house costs, associated with the construction of the child care facility and/or outdoor play area for the child care facility. Notwithstanding the foregoing to the contrary, Landlord hereby advises Tenant that Tenant shall not be permitted to use any portions of the plaza area and/or ground floor retail spaces as play areas for Tenant’s child care facility. Tenant also covenants that it shall meet all of Landlord’s insurance requirements for a day care or child care center or facility.

(kk) Planned Capital Project. Landlord is in the process of (i) renovating the Building lobby (including ground floor elevator lobby), and (ii) modifying the Building elevator system to be a destination system for the upper bank elevators (collectively the “Renovation Work”). The current plans and timeline for completion with respect to such Renovation Work are attached hereto as Exhibit H (the “Renovation Plans”). Landlord, in its reasonable discretion, shall be permitted to change and amend the Renovation Plans without reducing the scope or quality of the Renovation Work. Notwithstanding anything herein to the contrary, Landlord may also renovate the plaza area, but any plaza renovation and the scope and design of such renovations shall be determined by Landlord in its sole and absolute discretion. Landlord agrees that Tenant shall be permitted to participate in the planning and design meetings in connection with such Renovation Work; provided, however, Landlord shall retain the final decision-making authority to select the space planning and design with respect to such Renovation Work substantially in accordance with the Renovation Plans. Landlord shall provide Tenant with ongoing progress updates and construction schedules as to the status of the Renovation Work upon Tenant’s request. The cost of the Renovation Work shall be at Landlord’s sole cost and expense and not as an Operating Expense. Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s business and access to the Premises in performing the Renovation Work Landlord shall use commercially reasonable efforts to commence the Renovation Work on or before October 1, 2012, and if Landlord has not commenced construction of the lobby portion of the Renovation Work on or before October 1, 2012, then Tenant shall be entitled to an abatement against Base Rent for the Premises of $5,000.00 per day until such time as the lobby portion of the Renovation Work is commenced. If such Renovation Work is not substantially completed on or before July 31, 2013, as such date shall be extended for any delays caused by Force Majeure, Tenant shall be entitled to an abatement against Base Rent for the Premises of $5,000 per day until such time as the Renovation Work is completed.

 

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(ll) Rooftop Rights.

(i) Subject to the applicable terms and conditions contained in this Lease, Tenant shall have an irrevocable license (the “License”), at no additional charge to Tenant, to install, operate, maintain and use, during the Lease Term: (a) three (3) non-revenue producing telecommunications antennae, microwave dishes, satellite dishes, cell phone boosters and other communications equipment to serve Tenant’s business in the Premises (collectively, “Rooftop Equipment”) on the roof of the Building in the locations reasonably specified by Landlord (the “License Area”); and (b) connections for the Rooftop Equipment for (i) electrical wiring to the Building’s existing electrical supply, and (ii) cable or similar connection necessary to connect the Rooftop Equipment with Tenant’s related equipment located in the Premises. The routes or paths for such wiring and connections shall be through the Building’s existing risers, conduits and shafts, subject to Landlord’s reasonable approval of plans and installation pursuant to Paragraph 4 above (all such electrical and other connections are referred to, collectively, as the “Connections”). Notwithstanding anything in this Lease to the contrary, Tenant shall have the right to use its proportionate share of all risers, conduits and shafts in the Building as reasonably determined by Landlord. The Rooftop Equipment and Connections are collectively referred to as the “Equipment.” All costs associated with the design, fabrication, engineering, permitting, installation, screening, maintenance, repair and removal of the Equipment shall be borne solely by Tenant. Tenant’s rights under this Paragraph 19(ll) are subject to the following: (a) applicable governmental laws; (b) the right of Landlord to supervise any roof penetrations and/or to designate the contractor required to perform any such roof penetrations; (c) Landlord’s approval of the plans and specifications for the Equipment and all connecting cables from the roof of the Building to the Premises; (d) compliance with the conditions of any roof bond maintained by Landlord on the Building and/or Project; (e) the Rooftop Equipment not being visible at street level; and (f) the Rooftop Equipment not interfering with any then existing satellite dish, antenna or other equipment on the roof of the Building or any other Building systems. Tenant shall be responsible for the repair of any damage to any portion of the Building caused by Tenant’s installation, use or removal of the Rooftop Equipment. Notwithstanding anything in this Lease to the contrary, upon the expiration or earlier termination of the Lease, Tenant shall be required to remove any and all Equipment and restore the Premises, Building and Project to the condition existing prior to their installation.

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

(mm) No Continuous Operation. Notwithstanding any provision of this Lease to the contrary, Tenant shall (a) not be required to occupy or to continuously operate the Premises, and Tenant shall have the right to cease operations (whether or not Tenant vacates the Premises) without same constituting a default by Tenant under this Lease provided Tenant continues to pay Rent and perform its other obligations under this Lease, and (b) have the right to remain open for business only on the days and during the hours Tenant determines is commercially practical.

(nn) No Relocation Rights. Landlord shall have no rights to relocate Tenant without Tenant’s prior written approval, which may be withheld for any or no reason in Tenant’s sole discretion.

(oo) Sustainability. Tenant shall be required to provide to Landlord the following at the frequency required to maintain LEED for the existing Building certification.

 

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(i) Durable Goods Purchases will be logged in categories of electronic-powered equipment and furniture, and the ratio (in each category, by cost) of those purchases meeting identified sustainability criteria will be tracked. Tenant is encouraged to install ENERGY STAR labeled dishwashers to eliminate disposable utensils, cups and plates. ENERGY STAR labeled computer equipment and other electric-powered equipment are also encouraged. Examples include computer equipment, kitchen appliances, copiers, AV and teleconferencing equipment and trade equipment.

(ii) Furniture: Tenant shall make sustainable purchases for furniture (including cubicles and workstations) meeting the criteria of containing at least:

(A) 10% post-consumer or 20% post-industrial recycled content; or

(B) 70% material salvaged from off-site or outside the organization; or

(C) 70% material salvaged from on-site, through an internal organization materials and reuse program; or

(D) 50% rapidly renewal materials; or

(E) 50% Forest Stewardship Council (FSC) – certified wood.

(iii) Ongoing Consumables: Tenant shall make sustainable purchases for low cost materials meeting the criteria of containing at least:

(A) 10% post-consumer or 20% post-industrial recycled content; or

(B) 50% rapidly renewal materials; or

(C) 50% materials harvested and processed or extracted and processed within 500 miles of the project; or

(D) 50% Forest Stewardship Council (FSC) – certified paper products; or

(E) Rechargeable batteries.

(iv) Facility Alterations and Additions: Tenant shall make sustainable purchases to reduce air quality impacts from materials when renovating space meeting the criteria of containing at least:

(A) 10% post-consumer or 20% post-industrial recycled content; or

(B) 70% material salvaged from off-site or outside the organization; or

(C) 70% material salvaged from on-site, through an internal organization materials and reuse program; or

(D) 50% rapidly renewal materials; or

(E) 50% Forest Stewardship Council (FSC) – certified wood; or

(F) 50% material harvested and processed or extracted and processed within 500 miles of the Project.

(v) Adhesives and sealants shall have VOC content less than the current VOC content of SCAQMD or BAAQMD regulation 8, Rule 51.

 

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(vi) Paints and coatings shall have VOC emissions not exceeding the VOC and chemical component limits of GS-11 requirements.

(vii) Noncarpet finished flooring shall be FloorScore-certified and constitute a minimum of 25% of the finished floor area.

(viii) Carpet shall meet the requirements of the CRI Green Label Plus Carpet Testing program.

(ix) Composite panels and agrifiber products shall contain no added urea-formaldehyde resins.

(x) Food: should Tenant build a cafeteria, then sustainable purchases of 25% of the total shall be made to reduce the impacts of transportation and production by meeting the criteria of:

(A) Being labeled USDA Organic, Food Alliance Certified, Rainforest Alliance Certified, Protected Harvest Certified, Fair Trade or Marine Stewardship Council’s Blue Eco-Label or other equivalent label; or

(B) Produced within 100 miles of the site.

(xi) Tenant shall commit to closing window shades, composting, reporting Materials & Resource items, day cleaning, participating in the current Landlord program for co-mingled recyclables, compost and landfill at major collection points.

(xii) Landlord will continue following sustainable practices: sustainable purchasing; green cleaning; day cleaning; low mercury lighting; MERV 13 filtering; maintenance of ENERGYSTAR label if possible; Integrated Pest Management; low water landscaping with native and drought-tolerant species in the plaza; participation in a transportation management program; and cooling tower chemical management.

(xiii) Tenant will pay a separate charge if they require a monthly waste audit.

(xiv) Landlord will cooperate with Tenant’s efforts to achieve LEED Commercial Interiors certification and other sustainable goals such as San Francisco Green Business.

(pp) Pets. Subject to the provisions of this paragraph and to the extent allowed by Law, Tenant shall be permitted to have no more than six (6) dogs (“Pets”) in the Premises. All Pets shall be under the physical control and supervision of Tenant’s employees at all times and must be on leashes while in any area of the Building or the Project outside of the Premises. All Pets brought into the Premises shall have been properly vaccinated. Tenant shall diligently endeavor to prevent any objectionable Pet-related noises or odors to emanate from the Premises. Tenant shall diligently endeavor to prevent any Pets from unreasonably interfering with other tenants or those having business in the Building. Tenant’s right to bring Pets into the Premises pursuant to this Section is personal to the original named Tenant and its Affiliates under this Lease, and shall apply only to the portions of the Premises occupied by Tenant. All local laws and regulations related to the Pets must be complied with by Tenant. Tenant shall be financially responsible to Landlord for all damages, costs, expenses incurred and/or claims made as a result of or in connection with the Pets, and Tenant shall hold Landlord harmless and indemnify Landlord for any and all damages, costs, expenses and/or claims made against Landlord relating to or in connection with the Pets at the Project.

(qq) Restricted Party. Provided that (i) this Lease is then in full force and effect and (ii) Tenant leases and occupies at least 300,000 square feet of Rentable Area, Landlord agrees that after the Effective Date, Landlord shall not, without the prior written consent of Tenant, enter into any lease, license or other occupancy agreement at the Building (each, an “Occupancy Agreement”) with any Restricted Party (hereinafter defined) or permit any tenant, subtenant, licensee or other occupant of the Building under an Occupancy Agreement to assign its lease, license or other agreement for space in the Building or sublet any portion of its premises to a Restricted Party. For purposes hereof, the term “Restricted Party” shall mean the list of persons and entities identified by Tenant from

 

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time to time by written notice to Landlord and their respective Restricted Affiliates (defined below); provided that, until such time as Tenant delivers such initial notice this provision shall not apply. For purposes hereof, the term “Restricted Affiliates” shall mean any person, corporation, limited liability company, association, trust or partnership which (i) controls, is controlled by or is under common control with such entity, or (ii) which results from a merger or consolidation with such entity, or (iii) which succeeds to the business and assets of such entity. Once during each 12-month period during the Term, Tenant shall be entitled to change any of the entities listed upon thirty (30) days’ prior written notice to Landlord, but the list shall in no event exceed twelve (12) entities at any given time. Any change in the entities listed above shall be effective only on a prospective basis, and Landlord shall not be liable to Tenant or be deemed to have violated the terms of this paragraph under any Occupancy Agreement entered into by Landlord with respect to any such new entity prior to receipt of Tenant’s notice adding such entity to the list of Restricted Parties. Notwithstanding anything herein to the contrary, (i) any Restricted Party must be a competitor of Tenant or in Tenant’s business industry as reasonably determined by Tenant, and (ii) Landlord shall not be deemed to have violated the terms of this paragraph if (A) any tenant or occupant of the Building, whether existing as of the Effective Date of this Lease or any future tenant or occupant, merges or consolidates with or into, or acquires or is acquired by, any of the afore described Restricted Parties, provided, that such transaction was not consummated for the purpose of circumventing this Section, or (B) a tenant or occupancy under an Occupancy Agreement listed on Exhibit O has the right under its Occupancy Agreement to sublease or assign its Occupancy Agreement to a Restricted Party and Landlord does not have a reasonable right under such Occupancy Agreement listed on Exhibit O to prevent such tenant from assigning or subletting its rights under the Occupancy Agreement to a Restricted Party.

(rr) Standards of Performance and Approvals. Unless otherwise expressly provided in this Lease, whenever approval, consent or satisfaction (collectively, an “approval”) is required of a party pursuant to this Lease or an Exhibit hereto, such approval shall not be unreasonably withheld or delayed. Unless provision is made for a specific time period, approval (or disapproval) shall be given within thirty (30) days after receipt of the request for approval. Nothing contained in this Lease shall limit the right of a party to act or exercise its business judgment in a subjective manner with respect to any matter as to which it has been (i) specifically granted such right, (ii) granted the right to act in its sole discretion or sole judgment, or (iii) granted the right to make a subjective judgment hereunder, whether “objectively” reasonable under the circumstances, and any such exercise shall not be deemed inconsistent with any covenant of good faith and fair dealing implied by law to be part of this Lease.

(ss) Anti-corruption. It is the intent of the parties that no payments or transfers of anything of value shall be made which have the purpose or effect of public or commercial bribery, acceptance of or acquiescence in extortion, kickbacks, or other unlawful or improper means of obtaining business or any improper advantage. The parties shall comply with all international anti-corruption laws, such as the Foreign Corrupt Practices Act 15 U.S.C. § 78dd-1, et seq. and with respect to the parties’ obligations under this Lease, each party will not at any time, directly or indirectly, pay, offer, authorize or promise to pay, offer, or authorize the payment of, any monies or any other thing of value to: (i) any officer or employee of any government, department, agency or instrumentality thereof; (ii) any other person acting in an official capacity for or on behalf of any government, department, agency or instrumentality thereof; (iii) any political party or any official or employee thereof; (iv) any candidate for political office; (v) any other person, firm, corporation or other entity at the suggestion, request or direction of, or for the benefit of, any government officer or employee, political party or official or employee thereof, or candidate for political office; or (vi) any other person, firm, corporation or other entity with knowledge that some or all of those monies or other thing of value will be paid over to any officer or employee of any government department, agency or instrumentality, political party or officer or employee thereof, or candidate for political office.

[SIGNATURE PAGE TO FOLLOW]

 

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SIGNATURE PAGE TO OFFICE LEASE

BY AND BETWEEN TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, AS LANDLORD,

AND SALESFORCE.COM, INC., AS TENANT

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

 

LANDLORD”:

   

TENANT”:

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account    

SALESFORCE.COM, INC.,

a Delaware corporation

        
By:   

/s/ John B. Cornuke

    By:  

/s/ Burke F. Norton

Name:   

John B. Cornuke

    Name:  

Burke F. Norton

Title:   

Director

    Title:  

Executive Vice President

 

*

NOTE:

If Tenant is a corporation incorporated in a state other than California, then Tenant shall deliver to Landlord a certified copy of a corporate resolution in a form reasonably acceptable to Landlord authorizing the signatory(ies) to execute this Lease.

Signature Page To Office Lease


SCHEDULE 1

AGGREGATE BASE RENT SCHEDULE

Schedule 1 to the Basic Lease Information - Aggregate Monthly Base Rent

 

2013

 

January 1, 2013

   $ —     

February 1, 2013

   $ —     

March 1, 2013

   $ —     

April 1, 2013

   $ 275,669.17   

May 1, 2013

   $ 275,669.17   

June 1, 2013

   $ 275,669.17   

July 1, 2013

   $ 275,669.17   

August 1, 2013

   $ 443,292.00   

September 1, 2013

   $ 443,292.00   

October 1, 2013

   $ 557,788.67   

November 1, 2013

   $ 570,826.67   

December 1, 2013

   $ 691,471.67   

2014

 

January 1, 2014

   $ 808,861.67   

February 1, 2014

   $ 808,861.67   

March 1, 2014

   $ 984,038.75   

April 1, 2014

   $ 984,038.75   

May 1, 2014

   $ 984,038.75   

June 1, 2014

   $ 1,068,157.50   

July 1, 2014

   $ 1,068,157.50   

August 1, 2014

   $ 1,068,157.50   

September 1, 2014

   $ 1,078,229.83   

October 1, 2014

   $ 1,078,229.83   

November 1, 2014

   $ 1,101,639.67   

December 1, 2014

   $ 1,101,639.67   

2015

 

January 1, 2015

   $ 1,101,639.67   

February 1, 2015

   $ 1,101,639.67   

March 1, 2015

   $ 1,101,639.67   

April 1, 2015

   $ 1,101,639.67   

May 1, 2015

   $ 1,101,639.67   

June 1, 2015

   $ 1,101,639.67   

July 1, 2015

   $ 1,101,639.67   

August 1, 2015

   $ 1,101,639.67   

September 1, 2015

   $ 1,111,712.00   

October 1, 2015

   $ 1,111,712.00   

November 1, 2015

   $ 1,135,121.83   

December 1, 2015

   $ 1,135,121.83   

2016

 

January 1, 2016

   $ 1,135,121.83   

February 1, 2016

   $ 1,135,121.83   

March 1, 2016

   $ 1,135,121.83   

April 1, 2016

   $ 1,135.121.83   

May 1, 2016

   $ 1,135,121.83   

June 1, 2016

   $ 1,135,121.83   

July 1, 2016

   $ 1,135,121.83   

August 1, 2016

   $ 1,135,121.83   

September 1, 2016

   $ 1,145,194.17   

October 1, 2016

   $ 1,145,194.17   

November 1, 2016

   $ 1,168,604.00   

December 1, 2016

   $ 1,168,604.00   

2017

 

January 1, 2017

   $ 1,168,604.00   

February 1, 2017

   $ 1,168,604.00   

March 1, 2017

   $ 1,168,604.00   

April 1, 2017

   $ 1,168,604.00   

May 1, 2017

   $ 1,168,604.00   

June 1, 2017

   $ 1,168,604.00   

July 1, 2017

   $ 1,168,604.00   

August 1, 2017

   $ 1,168,604.00   

September 1, 2017

   $ 1,178,676.33   

October 1, 2017

   $ 1,178,676.33   

November 1, 2017

   $ 1,202,086.17   

December 1, 2017

   $ 1,202,086.17   

2018

 

January 1, 2018

   $ 1,202,086.17   

February 1, 2018

   $ 1,202,086.17   

March 1, 2018

   $ 1,202,086.17   

April 1, 2018

   $ 1,202,086.17   

May 1, 2018

   $ 1,202,086.17   

June 1, 2018

   $ 1,202,086.17   

July 1, 2018

   $ 1,202,086.17   

August 1, 2018

   $ 1,202,086.17   

September 1, 2018

   $ 1,212,158.50   

October 1, 2018

   $ 1,212,158.50   

November 1, 2018

   $ 1,235,568.33   

December 1, 2018

   $ 1,235,568.33   

2019

 

January 1, 2019

   $ 1,235,568.33   

February 1, 2019

   $ 1,235,568.33   

March 1, 2019

   $ 1,235,568.33   

April 1, 2019

   $ 1,235,568.33   

May 1, 2019

   $ 1,235,568.33   

June 1, 2019

   $ 1,235,568.33   

July 1, 2019

   $ 1,235,568.33   

August 1, 2019

   $ 1,235,568.33   

September 1, 2019

   $ 1,245,640.67   

October 1, 2019

   $ 1,245,640.67   

November 1, 2019

   $ 1,269,050.50   

December 1, 2019

   $ 1,269,050.50   

2020

 

January 1, 2020

   $ 1,269,050.50   

February 1, 2020

   $ 1,269,050.50   

March 1, 2020

   $ 1,269,050.50   

April 1, 2020

   $ 1,269.050.50   

May 1, 2020

   $ 1,269,050.50   

June 1, 2020

   $ 1,269,050.50   

July 1, 2020

   $ 1,269,050.50   

August 1, 2020

   $ 1,269,050.50   

September 1, 2020

   $ 1,279,122.83   

October 1, 2020

   $ 1,279,122.83   

November 1, 2020

   $ 1,302,532.67   

December 1, 2020

   $ 1,302,532.67   

2021

 

January 1, 2021

   $ 1,302,532.67   

February 1, 2021

   $ 1,302,532.67   

March 1, 2021

   $ 1,302,532.67   

April 1, 2021

   $ 1,302,532.67   

May 1, 2021

   $ 1,302,532.67   

June 1, 2021

   $ 1,302,532.67   

July 1, 2021

   $ 1,302,532.67   

August 1, 2021

   $ 1,302,532.67   

September 1, 2021

   $ 1,312,605.00   

October 1, 2021

   $ 1,312,605.00   

November 1, 2021

   $ 1,336,014.83   

December 1, 2021

   $ 1,336,014.83   

2022

 

January 1, 2022

   $ 1,336,014.83   

February 1, 2022

   $ 1,336,014.83   

March 1, 2022

   $ 1,336,014.83   

April 1, 2022

   $ 1,336,014.83   

May 1, 2022

   $ 1,336,014.83   

June 1, 2022

   $ 1,336,014.83   

July 1, 2022

   $ 1,336,014.83   

August 1, 2022

   $ 1,336,014.83   

September 1, 2022

   $ 1,346,087.17   

October 1, 2022

   $ 1,346,087.17   

November 1, 2022

   $ 1,369,497.00   

December 1, 2022

   $ 1,369,497.00   
 

 

Schedule 1 - 1


2023

 

January 1, 2023

   $ 1,369,497.00   

February 1, 2023

   $ 1,369,497.00   

March 1, 2023

   $ 1,369,497.00   

April 1, 2023

   $ 1,369,497.00   

May 1, 2023

   $ 1,369,497.00   

June 1, 2023

   $ 1,369,497.00   

July 1, 2023

   $ 1,369,497.00   

August 1, 2023

   $ 1,369,497.00   

September 1, 2023

   $ 1,379,569.33   

October 1, 2023

   $ 1,379,569.33   

November 1, 2023

   $ 1,402,979.17   

December 1, 2023

   $ 1,402,979.17   

2024

 

January 1, 2024

   $ 1,402,979.17   

February 1, 2024

   $ 1,402,979.17   

March 1, 2024

   $ 1,402,979.17   

April 1, 2024

   $ 1,402,979.17   

May 1, 2024

   $ 1,402,979.17   

June 1, 2024

   $ 1,402,979.17   

July 1, 2024

   $ 1,402,979.17   

August 1, 2024

   $ 1,402,979.17   

September 1, 2024

   $ 1,413,051.50   

October 1, 2024

   $ 1,413,051.50   

November 1, 2024

   $ 1,436,461.33   

December 1, 2024

   $ 1,436,461.33   

2025

 

January 1, 2025

   $ 1,436,461.33   

February 1, 2025

   $ 836,713.33   

March 1, 2025

   $ 836,713.33   

April 1, 2025

   $ 836,713.33   

May 1, 2025

   $ 836,713.33   

June 1, 2025

   $ 836,713.33   

July 1, 2025

   $ 836,713.33   

August 1, 2025

   $ 836,713.33   

September 1, 2025

   $ 846,785.67   

October 1, 2025

   $ 846,785.67   

November 1, 2025

   $ 857,157.50   

December 1, 2025

   $ 857,157.50   

2026

 

January 1, 2026

   $ 857,157.50   

February 1, 2026

   $ 857,157.50   

March 1, 2026

   $ 857,157.50   

April 1, 2026

   $ 857,157.50   

May 1, 2026

   $ 857,157.50   

June 1, 2026

   $ 857,157.50   

July 1, 2026

   $ 857,157.50   

August 1, 2026

   $ 857,157.50   

September 1, 2026

   $ 867,229.83   

October 1, 2026

   $ 867,229.83   

November 1, 2026

   $ 877,601.67   

December 1, 2026

   $ 877,601.67   

2027

 

January 1, 2027

   $ 877,601.67   

February 1, 2027

   $ 877,601.67   

March 1, 2027

   $ 877,601.67   

April 1, 2027

   $ 877,601.67   

May 1, 2027

   $ 877,601.67   

June 1, 2027

   $ 877,601.67   

July 1, 2027

   $ 877,601.67   

August 1, 2027

   $ 877,601.67   

September 1, 2027

   $ 887,674.00   

October 1, 2027

   $ 887,674.00   

November 1, 2027

   $ 404,501.50   

December 1, 2027

   $ 404,501.50   

2028

 

January 1, 2028

   $ 404,501.50   

February 1, 2028

   $ 404,501.50   

March 1, 2028

   $ 404,501.50   

April 1, 2028

   $ 404,501.50   

May 1, 2028

   $ 404,501.50   

June 1, 2028

   $ 404,501.50   

July 1, 2028

   $ 404,501.50   

August 1, 2028

   $ 404,501.50   

September 1, 2028

   $ 404,501.50   

October 1, 2028

   $ 404,501.50   

November 1, 2028

   $ 414,873.33   

December 1, 2028

   $ 414,873.33   

2029

 

January 1, 2029

   $ 414,873.33   

February 1, 2029

   $ 414,873.33   

March 1, 2029

   $ 414,873.33   

April 1, 2029

   $ 414,873.33   

May 1, 2029

   $ 414,873.33   

June 1, 2029

   $ 414,873.33   

July 1, 2029

   $ 414,873.33   

August 1, 2029

   $ 414,873.33   

September 1, 2029

   $ 414,873.33   

October 1, 2029

   $ 414,873.33   

November 1, 2029

   $ 425,245.17   

December 1, 2029

   $ 425,245.17   

2030

 

January 1, 2030

   $ 425,245.17   

February 1, 2030

   $ 425,245.17   

March 1, 2030

   $ 425,245.17   

April 1, 2030

   $ 425,245.17   
 

 

Schedule 1 - 2


EXHIBIT A-1

FLOOR PLAN OF THE PREMISES

[GRAPHIC]

 

A-1 - 1

Phase I


[GRAPHIC]

 

A-1 - 2

Phase I


[GRAPHIC]

 

A-1 - 3

Phase I


[GRAPHIC]

 

A-1 - 4

Phase I


[GRAPHIC]

 

A-1 - 5

Phase I


[GRAPHIC]

 

A-1 - 6

Phase I


[GRAPHIC]

 

A-1 - 7

Phase I


[GRAPHIC]

 

A-1 - 8

Phase I


[GRAPHIC]

 

A-1 - 9

Phase II


[GRAPHIC]

 

A-1 - 10

Phase II


[GRAPHIC]

 

A-1 - 11

Phase II


[GRAPHIC]

 

A-1 - 12

Phase II


[GRAPHIC]

 

A-1 - 13

Phase II


[GRAPHIC]

 

A-1 - 14

Phase II


[GRAPHIC]

 

A-1 - 15

Phase III


[GRAPHIC]

 

A-1 - 16

Phase III


[GRAPHIC]

 

A-1 - 17

Phase III


[GRAPHIC]

 

A-1 - 18

Phase III


[GRAPHIC]

 

A-1 - 19

Phase III


[GRAPHIC]

 

A-1 - 20

Phase III


[GRAPHIC]

 

A-1 - 21

Phase III


EXHIBIT A-2

LEGAL DESCRIPTION OF THE PROJECT

DESCRIPTION OF REAL PROPERTY

Real property in the City of San Francisco, Country of San Francisco, State of California, described as follows:

PARCEL ONE:

Lot 19, Parcel A, as described on that certain Parcel Map entitled “Parcel Map Being a Vertical Subdivision of Assessor’s Lot 18, Block 3709”, filed in the Office of The Recorder of the City and County of San Francisco, on August 14, 1991, Series No. E955768, in Book 40 of Parcel Maps, at Pages 169 to 171, inclusive.

APN: Lot 19, Block 3709.

PARCEL TWO:

Lot 20, Parcel B, as described on that certain Parcel Map entitled “Parcel Map Being a Vertical Subdivision of Assessor’s Lot 18, Block 3709”, filed in the Office of the Recorder of the City and County of San Francisco, on August 14, 1991, Series No. E955768, in Book 40 of Parcel Maps, at Pages 169 to 171, inclusive.

APN: Lot 19, Block 3709.

PARCEL THREE:

A non-exclusive easement appurtenant to Parcels One and Two for roadway, light and air as granted in Deed from Isabel Sprague, formerly known as Isabel W. Donahue and formerly known as Belle W. Donahue, to Chas. C. Moore & Co., Engineers, a corporation and Martin Investment company, a corporation, dated July 7, 1913, recorded January 19, 1914, in Book 772 of Deeds at pages 285, in Office of the Recorder of the City and County of San Francisco, State of California, and in Agreement by and between Isabel W. Sprague and Chas. C. Moore and Co., Engineers, a corporation and Martin Investments Company, a corporation, dated November 6, 1913, recorded January 19, 1914, in Book 41 of Covenants, at page 220, in the Office of the Recorder.

PARCEL FOUR, AS TO AN UNDIVIDED 2/3 INTEREST IN AND TO:

Commencing at a point on the Northwesternly line of Mission Street, distant thereon 129 feet, 6 inches Northeasternly from the Intersection of said Northwesternly line of Mission Street with the Northeasternly line of First Street; running thence Northwesternly along said Northwesternly line of Mission Street 16 feet; then at a right angle Northwesternly 113 feet, 4 inches; thence at a right angle Southwesternly 16 feet; thence at a right angle Southeasternly 113 feet, 4 inches to the Northwesternly line of Mission Street and the point of commencement.

APN: LOT 6A, BLOCK 3709 AND LOT 19, BLOCK 3709 AND LOT 20, BLOCK 3709.

 

A-2 - 1


PARCEL FIVE:

A non-exclusive easement over and across Parcel Four for the purpose of construction, operation and repair of a pedestrian walkway, as contained in that certain Grant of Easement recorded January 2, 1987 in Book E250 at Page 441, Official Records.

APN: LOT 6A, BLOCK 3709 AND LOT 19, BLOCK 3709 AND LOT 20, BLOCK 3709.

 

A-2 - 2


EXHIBIT A-3

EXPANSION SPACE FLOOR PLANS

[GRAPHIC]

 

A-3-1


[GRAPHIC]

 

A-3-2


[GRAPHIC]

 

A-3-3


[GRAPHIC]

 

A-3-4


[GRAPHIC]

 

A-3-5


EXHIBIT B-1

PHASE I PREMISES WORK LETTER

THIS PHASE I PREMISES WORK LETTER is attached as Exhibit B-1 to the Lease between, TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA for the benefit of its Real Estate Account, as Landlord, and SALESFORCE.COM.INC., a Delaware corporation, as Tenant, and constitutes the further agreement between Landlord and Tenant as follows:

(a) Phase I Premises Improvements; Phase I Premises Allowance. The leasehold improvements which may be constructed by Tenant in the Phase I Premises (the “Phase I Premises Improvements”), at Tenant’s sole cost and expense (except for the Phase I Premises Allowance, as specified in Item 18(a) of the Basic Lease Provisions of the Lease), shall be constructed in accordance with the Phase I Premises Final Plans to be submitted by Tenant and reviewed and approved by Landlord in accordance with the provisions of Paragraph (b) of this Exhibit B-1.

Landlord shall have no obligation to construct or to pay for the construction of the Phase I Premises Improvements, except that Landlord agrees to contribute toward the cost of construction of the Phase I Premises Improvements the cash sum of up to the Phase I Premises Allowance (as defined in Item 18(a) of the Basic Lease Provisions of this Lease). Notwithstanding anything in this Lease or in this Phase I Premises Work Letter to the contrary, but subject to Paragraph (g) of this Work Letter, the Phase I Premises Allowance shall be used only for the construction of the Phase I Premises Improvements, and if Tenant does not submit a request for payment of the entire Phase I Premises Allowance to Landlord by May 31, 2015 (the “Construction Termination Date”), then Landlord’s obligation to provide the remainder of the Phase I Premises Allowance, as specified in Item 18(a) of the Basic Lease Provisions, shall terminate and become null and void, and Tenant shall be deemed to have waived its rights in and to said remaining Phase I Premises Allowance. The construction costs that may be reimbursed from the Phase I Premises Allowance shall include only the following: (i) payment of the cost of preparing the Phase I Premises Temporary Plans and the Phase I Premises Final Plans (each as defined below), including mechanical, electrical, plumbing and structural drawings and of all other aspects necessary to complete the Phase I Premises Final Plans; (ii) the payment of plan check, permit and license fees relating to construction of the Phase I Premises Improvements; (iii) construction of the Phase I Premises Improvements, including, without limitation, the following: (aa) installation within the Phase I Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items; (bb) all electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the Phase I Premises; (cc) the furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within the Phase I Premises, including the cost of meter and key control for after-hour air conditioning; (dd) any additional improvements to the Phase I Premises required for Tenant’s use of the Phase I Premises including, but not limited to, odor control, special heating, ventilation and air conditioning, noise or vibration control or other special systems or improvements; (ee) all fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the Phase I Premises; (ff) all plumbing, fixtures, pipes and accessories necessary for the Phase I Premises; and (gg) testing and inspection costs; and (iv) charges of Tenant’s consultants, architects, space planners, engineers and other consultants relating to the Phase I Premises Improvements. Landlord shall deduct from the Phase I Premises Allowance a construction management fee (“Phase I Premises Construction Management Fee”) in the amount of (i) One Hundred Fifty Dollars ($150) per hour (the “Hourly Rate”) for every hour reasonably and actually spent by Landlord’s construction management and/or property management personnel supervising or overseeing the Phase I Improvements plus (ii) the reasonable and actual cost of any materials expended by such construction management and/or property management personnel. Landlord’s construction management and/or property management personnel shall only be permitted to spend up to eight (8) hours per week during the planning and construction of the Phase I Premises Improvements; provided, however, any unused hours in a given week may be applied and used in any weeks where Landlord’s property management personnel spend more than the allotted time for such week. No other costs, fees or expenses of the Phase I Premises Improvements shall be reimbursable out of the Phase I Premises Allowance. Landlord shall provide reasonable documentation of the calculation of its administration/supervision fee as part of its submission to Tenant. Landlord and Tenant agree to revisit the eight (8) hours per week limitation to the Phase I Premises Construction Management Fee within six (6) months after the Effective Date to insure it is fair to both Landlord and Tenant.

 

B-1-1


The payment of the Phase I Premises Allowance shall be as follows:

(i) Payment of the Phase I Premises Allowance will be made by Landlord directly to Tenant or Tenant’s contractors, as directed by Tenant. Within thirty (30) days following Landlord’s receipt and reasonable approval of the Tenant Deliveries (defined below), Landlord shall deliver to Tenant (not more than once each month) a check made out to Tenant or Tenant’s Contractor and/or vendors in an amount equal to Landlord’s proportion of the invoiced amount set forth in an invoice from Tenant to Landlord setting forth the work on the Phase I Premises Improvements which was completed over the period since the prior disbursement request. In order to evidence that such work on the Phase I Premises Improvements has been completed, each time that Tenant requests that Landlord fund a portion of the Phase I Premises Allowance to Tenant, Tenant shall deliver to Landlord the following (collectively the “Tenant Deliveries”): (i) an invoice or invoices evidencing the amount of work on the Phase I Premises Improvements that was completed over the period since the prior disbursement request (standard AIA forms shall be acceptable), (ii) a certificate executed by (A) Tenant and Tenant’s Contractor or vendors, and (B) the architect firm Gensler (“Gensler”) (if Gensler is not Tenant’s architect, then Landlord shall pay Gensler’s fees) shall confirm that the work deemed completed as set forth in the invoice submitted by Tenant to Landlord has indeed been completed, (iii) a lien release for the completed work for which disbursement is sought in a form reasonably satisfactory to Landlord executed by Tenant’s Contractor, and (iv) Tenant shall not then be in Material Default of any of the provisions of the Lease. Upon the payment of such invoiced amount, Landlord shall deduct that amount from the remaining portion of the Phase I Premises Allowance. Landlord shall indicate whether it disputes and reasonably disapproves the Tenant Deliveries within five (5) Business Days following receipt thereof (a “Landlord Allowance Notice”). If Landlord fails to give a Landlord Allowance Notice within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE REQUEST FOR DISBURSEMENT WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH REQUEST.” If Landlord fails to send a Landlord Allowance Notice within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted Tenant Deliveries. Notwithstanding anything herein to the contrary, Landlord shall have the right to withhold the customary ten percent (10%) retainage from each request for payment for protection against mechanics’ and materialmens’ liens by subcontractors and suppliers.

(ii) Once (i) the Phase I Premises Improvements with respect to a full floor have been substantially completed in accordance with the Phase I Premises Final Plans and all punch-list items with respect to such floor have been completed; (ii) Tenant has delivered to Landlord satisfactory evidence that all mechanics’ lien rights of all contractors, suppliers, subcontractors, or materialmen furnishing labor, supplies or materials in the construction or installation of the Phase I Premises Improvements with respect to such full floor have been unconditionally waived, released, or extinguished; and (iii) Tenant has delivered to Landlord a final certificate of occupancy for such full floor of the Phase I Premises, if required, then within thirty (30) days thereof Landlord shall deliver to Tenant the remaining ten percent (10%) of the Phase I Premises Allowance attributable to and allocable to the Phase I Premises Improvements for such completed full floor. Subject to Paragraph (g) of this Work Letter, if the actual cost of the Phase I Premises Improvements is less than the Phase I Premises Allowance, then Tenant shall not receive any credit whatsoever for the difference between the actual cost of the Phase I Premises Improvements and the Phase I Premises Allowance.

Notwithstanding the foregoing, Landlord shall pay the Phase I Premises Allowance in proportion to the percentage of the Phase I Premises Allowance to the total cost of the Phase I Premises Improvements and Tenant will pay the remainder. In other words, if the cost of the Phase I Premises Improvements is estimated to be $15,000,000 and the Phase I Premises Allowance remains $11,734,200.00, then each time Landlord is to pay an invoice out of the Phase I Premises Allowance, Landlord shall pay 78.228% of the invoice (until 90% of the Phase I Premises Allowance is paid out) and Tenant shall pay 21.772% of the invoice.

 

B-1-2


Tenant warrants and guarantees that title to all work, materials and equipment covered by a request for payment, whether incorporated in the Phase I Premises or not, shall be free and clear of all liens, claims, security interests or encumbrances and that no work, materials or equipment covered by a request for payment shall have been acquired by Tenant subject to an agreement under which an interest therein or an encumbrance thereon is retained by the seller or otherwise imposed by Tenant or such other person.

(b) Preparation and Review of Plans for Phase I Premises Improvements. Tenant shall retain a space planner (the “Space Planner”) for the Phase I Premises Improvements, and the Space Planner shall prepare certain plans, drawings and specifications (the “Phase I Premises Temporary Plans”) for the construction of the Phase I Premises Improvements in the Phase I Premises to be constructed by a general contractor selected by Tenant pursuant to this Work Letter. Tenant shall deliver the Phase I Premises Temporary Plans to Landlord following their completion. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase I Premises Temporary Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its approval or disapproval of such proposed Phase I Premises Temporary Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase I Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase I Premises Temporary Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN FIVE (5) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Temporary Plans within five (5) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase I Premises Temporary Plans as submitted. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase I Premises Temporary Plans in compliance with Landlord’s reasonable request and resubmit the same for Landlord’s final review and approval or comment within five (5) Business Days of Landlord’s receipt of such revised plans. Such process shall be repeated until final approval by Landlord of the proposed Phase I Premises Temporary Plans. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the prior version of the Phase I Premises Temporary Plans. Once Landlord has approved the Phase I Premises Temporary Plans, the approved Phase I Premises Temporary Plans shall be thereafter known as the “Phase I Premises Final Plans”. The Phase I Premises Final Plans shall include the complete and final layout, plans and specifications for the Phase I Premises showing all doors, light fixtures, electrical outlets, telephone outlets, wall coverings, plumbing improvements (if any), data systems wiring, floor coverings, wall coverings, painting, any other improvements to the Phase I Premises beyond the shell and core improvements provided by Landlord and any demolition of existing improvements in the Phase I Premises. The improvements shown in the Phase I Premises Final Plans shall comply with all applicable laws, rules, regulations, codes and ordinances. Tenant, using the Space Planner, shall prepare or cause to be prepared and submitted the Phase I Premises Final Plans, concurrently, and in each case by receipted courier or delivery service, to Landlord’s construction representative, Hines GS Properties, Inc., 50 Fremont, San Francisco, California Attn: Kari Aycock, (Tel) 415-543-5600 (“Landlord’s Construction Representative”), and Landlord’s offices at 4675 MacArthur Boulevard, Suite 1100, Newport Beach, California 92660, Attn: John Cornuke, for Landlord’s review and approval, which shall be consistent with the description of the Phase I Premises Improvements set forth in the Phase I Premises Temporary Plans.

Each set of proposed Phase I Premises Final Plans furnished by Tenant shall include at least two (2) sets of full-sized prints. Unless Landlord shall otherwise agree in writing, the Phase I Premises Final Plans shall be signed/stamped by the Space Planner, and shall include (to the extent relevant or applicable) such additional plans reasonably requested by Landlord related to the Phase I Premises Improvements, including, without limitation, any and all additional plans related to Tenant’s specific use of the Phase I Premises, or as may be required by local city ordinance or building code.

Tenant shall submit all Phase I Premises Final Plans concurrently to Landlord’s Construction Representative and offices, as designated above, for Landlord’s review and approval. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase I Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed Phase I Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any

 

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additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase I Premises Temporary Plans, Landlord shall respond, in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase I Premises Final Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN THREE (3) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Phase I Premises Final Plans within three (3) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase I Premises Final Plans as submitted. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the Phase I Premises Temporary Plans. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase I Premises Final Plans in compliance with Landlord’s request and to resubmit the same for Landlord’s final review and approval or comment. Such process shall be repeated as necessary until final approval by Landlord of the proposed Phase I Premises Final Plans has been obtained. Landlord may at any time by written notice given in accordance with the notice provisions of the Lease change the name and/or address of the designated Landlord’s construction representative to receive plans delivered by Tenant to Landlord. In the event that Tenant disagrees with any of the changes to the proposed Phase I Premises Final Plans required by Landlord, then Landlord and Tenant shall consult with respect thereto and each party shall use all reasonable efforts to promptly resolve any disputed elements of such proposed Phase I Premises Final Plans. If any dispute regarding the design of the Phase I Premises Improvements arises, which is not settled within ten (10) Business Days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Phase I Premises Improvements, provided (a) Tenant acts reasonably, (b) Tenant’s decision will not adversely affect the Building’s structural components or Building Systems, and (c) the applicable Phase I Premises Improvements in dispute (i) are customary office improvements, (ii) comply with Laws, (iii) do not affect the exterior appearance of the Building, and (iv) are substantially similar to those improvements depicted in Exhibit G attached hereto. For purposes hereof, “Business Days” shall be all calendar days except Saturdays and Sundays and holidays observed by national banks in the State in which the Phase I Premises are situated.

Tenant shall be permitted to deliver to Landlord for review the Phase I Premises Temporary Plans or Phase I Premises Final Plans for portions of the Premises as opposed to the entire Premises at once at Tenant’s election, and Landlord shall review such partial delivery in the same manner per portion as if the delivery was related to the entire Phase I Premises; provided, however, that any such Phase I Premises Temporary Plans or Phase I Premises Final Plans must be submitted in, at a minimum, full floor increments so that the plans submitted are complete and comprehensive as to at least two (2) respective full floors.

Notwithstanding the preceding provisions of this Paragraph (b), under no circumstances whatsoever shall (i) any combustible materials be utilized above finished ceiling or in any concealed space, (ii) any structural load, temporary or permanent, be placed or exerted on any part of the Building without the prior written approval of Landlord, or (iii) any holes be cut or drilled in any part of the roof or other portion of the Building shell without the prior written approval of Landlord.

In the event that Tenant proposes any changes to the Phase I Premises Final Plans (or any portion thereof) after the same have been approved by Landlord, Landlord shall not unreasonably withhold, condition or delay its consent to any such changes, provided the changes do not, in Landlord’s reasonable opinion, adversely affect the Building structure, systems, or equipment, or the external appearance of the Phase I Premises. Landlord shall have three (3) Business Days after Landlord’s receipt of the proposed changes to the Phase I Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed changes to the Phase I Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed changes to the Phase I Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the changes to the Phase I Premises Final Plans within such three (3) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Final Plans within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase I Premises Final Plans as submitted.

 

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Tenant shall be solely responsible for obtaining any business or other license or permit required for the conduct of its business at the Phase I Premises.

(c) Construction of the Phase I Premises Improvements. Construction or installation of the Phase I Premises Improvements shall be performed by a licensed general contractor or contractors selected by Tenant and reasonably approved by Landlord, such approval not to be unreasonably withheld or delayed (the “Tenant’s Contractor,” whether one or more), pursuant to a written construction contract negotiated and entered into by and between the Tenant’s Contractor and Tenant. Any sub-contractors used for the roof, life safety systems, structure, mechanical, electrical and plumbing portions of the Phase I Premises Improvements must be included in the list of approved sub-contractors attached hereto as Exhibit N. Each such contract shall (i) obligate Tenant’s Contractor to comply with all rules and regulations of Landlord relating to construction activities in the Building, (ii) name Landlord as an additional indemnitee under the provisions of the contract whereby the Tenant’s Contractor holds Tenant harmless from and against any and all claims, damages, losses, liabilities and expenses arising out of or resulting from the performance of such work, (iii) name Landlord as a beneficiary of (and a party entitled to enforce) all of the warranties of the Tenant’s Contractor with respect to the work performed thereunder and the obligation of the Tenant’s Contractor to replace defective materials and correct defective workmanship for a period of not less than one (1) year following final completion of the work under such contract, (iv) evidence the agreement of the Tenant’s Contractor that the provisions of the Lease shall control over the provisions of the contract with respect to distribution or use of insurance proceeds, in the event of a casualty during construction, and (v) evidence the waiver and release by the Tenant’s Contractor of any lien or right to assert a lien on all or any portion of the fee estate of Landlord in and to the Building as a result of the work performed or to be performed thereunder (and obligating the Tenant’s Contractor to include a substantially similar release and waiver provision in all subcontracts and purchase orders entered under or pursuant to the contract). Tenant hereby acknowledges and agrees that it shall not retain any contractor or subcontractor which may disrupt harmonious labor relations at the Project for any portion of the Phase I Premises Improvements.

Tenant acknowledges and understands that all roof penetrations involved in the construction of the Phase I Premises Improvements must be performed by the Landlord’s Building roofing contractor. All costs, fees and expenses incurred with such contractor in performing such work shall be a cost of the Phase I Premises Improvements, payable in accordance with the provisions of this Exhibit B-1. Tenant shall not be responsible for any water, gas, electricity, sewer or other utilities used or consumed at the Phase I Premises during the construction of the Phase I Premises Improvements; provided, however, Tenant shall make reasonable efforts to curtail the use of utilities during the construction of the Phase I Premises Improvements. During construction of the Phase I Premises Improvements, and subject to the terms and conditions hereof, Tenant shall be entitled to use, free of any charge (except as described herein), the freight elevator (provided that Tenant shall pay for overtime use and uses such freight elevator in common with other tenants and occupants of the Building and for the cost of any additional staffing that is required), and loading docks and/or passenger elevators at all times, subject to Tenant not unreasonably interfering with the ingress or egress and use by other tenants of the Building. Notwithstanding the foregoing, if available, Tenant shall be entitled to reserve exclusive use of the freight elevator upon not less than forty eight (48) hours prior notice to Landlord. Tenant will be permitted reasonable use of the loading dock so long as it does not unreasonably impede other tenants’ normal and reasonable use of these facilities and their ability to conduct business. In the event Tenant seeks to use any parking spaces in the Parking Garage during the construction of the Phase I Premises Improvements, Tenant shall pay the for the parking charges attributable to such parking spaces.

Tenant specifically agrees to carry, or cause the Tenant’s Contractor to carry, during all such times as the Tenant’s work is being performed, insurance in accordance with Landlord’s insurance standards and protocols as set forth in Exhibit B-4 attached hereto and incorporated herein for all purposes. Tenant shall not commence construction of the Phase I Premises Improvements until Tenant has delivered to Landlord’s construction representative (i) certificates of the insurance policies described above, (ii) copies of all permits required for construction of the Phase I Premises Improvements and a copy of the permitted Phase I Premises Final Plans as approved by the appropriate governmental agency, and (iii) a copy of the signed construction contract for the Phase I Premises Improvements (a copy of each subsequently signed contract shall be forwarded to Landlord’s construction

 

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representative without request or demand, promptly after execution thereof and prior to the performance of any work thereunder) between Tenant and its general contractor. Notwithstanding the foregoing, if permitted by Law, Tenant may commence demolition work prior to delivery of the items set forth in subsection (ii) above. All of the construction work shall be the responsibility of and supervised by Tenant.

(d) Requirements for Tenant’s Work. All of Tenant’s construction with respect to the Phase I Premises shall be performed in substantial compliance with this Exhibit B-1 and the Phase I Premises Final Plans therefor previously approved in writing by Landlord (and any changes thereto approved by Landlord as herein provided), and in a good and workmanlike manner, utilizing only new materials. All such work shall be performed by Tenant in material compliance with all applicable building codes, regulations and all other legal requirements and Laws. All materials utilized in the construction of Tenant’s Phase I Premises Improvements must be confined to within the Phase I Premises. All trash and construction debris not located wholly within the Phase I Premises must be removed each day from the Project at the sole cost and expense of Tenant. Throughout the construction of the Phase I Premises Improvements Tenant shall provide Landlord with manifests of construction waste recycling. Landlord shall have the right at all times to monitor the Phase I Premises Improvements for compliance with the requirements of this Exhibit B-1. If Landlord determines that any such requirements are not being materially complied with, Landlord shall promptly notify Tenant and if Tenant does not promptly remedy such non-compliance, then Landlord may immediately require the cessation of all work being performed in or around the Phase I Premises or the Project until such time as Landlord is satisfied that the applicable requirements will be observed. Any approval given by Landlord with respect to Tenant’s construction or the Phase I Premises Temporary Plans or Phase I Premises Final Plans therefor, and/or any monitoring of Tenant’s work by Landlord, shall not make Landlord liable or responsible in any way for the condition, quality or function of such matters or constitute any undertaking, warranty or representation by Landlord with respect to any of such matters.

(e) No Liens; Indemnification. Tenant shall have no authority to place any lien upon the Phase I Premises, or the Building, or any portion thereof or interest therein, nor shall Tenant have any authority in any way to bind Landlord, and any attempt to do so shall be void and of no effect. If, because of any actual or alleged act or omission of Tenant, or Tenant’s Contractor, or any subcontractors or materialmen, any lien, affidavit, charge or order for the payment of money shall be filed against Landlord, the Phase I Premises, the Building, or any portion thereof or interest therein, whether or not such lien, affidavit, charge or order is valid or enforceable, Tenant shall, at its sole cost and expense, cause the same to be discharged of record by payment, bonding or otherwise no later than thirty (30) days after notice to Tenant of the filing thereof, but in any event prior to the foreclosure thereof. With respect to the contract for labor or materials for construction of the Phase I Premises Improvements, Tenant acts as principal and not as the agent of Landlord. Landlord expressly disclaims liability for the cost of labor performed for or supplies or materials furnished to Tenant. Landlord may post one or more “notices of non-responsibility” for the construction of the Phase I Premises Improvements. No contractor of Tenant is intended to be a third-party beneficiary with respect to the Phase I Premises Allowance, or the agreement of Landlord to make such Phase I Premises Allowance available for payment of or reimbursement for the costs of construction of the Phase I Premises Improvements. Tenant agrees to indemnify, defend and hold Landlord harmless from all claims (including all costs and expenses of defending against such claims) arising or alleged to arise from any act or omission of Tenant or Tenant’s agents, employees, contractor, subcontractors, suppliers, materialmen, architects, designers, surveyors, engineers, consultants, laborers, or invitees, or arising from any bodily injury or property damage occurring or alleged to have occurred incident to any of the work to be performed by Tenant or its contractors or subcontractors with respect to the Phase I Premises except to the extent caused by or related to the negligence or willful misconduct of Landlord or its agents or employees. Any default by Tenant under this Exhibit B-1 shall constitute a Default by Tenant under the Lease.

(f) Substantial Completion. “Substantial Completion” of construction of the Phase I Premises Improvements shall be defined as (i) the date upon which Gensler determines that the Tenant Improvements have been substantially completed in accordance with the Phase I Premises Final Plans, and (ii) the date upon which a temporary certificate of occupancy (or its equivalent) is issued for the Phase I Premises by the appropriate governmental authority. After the completion of the Phase I Premises Improvements, Tenant shall, upon demand, execute and deliver to Landlord a letter of acceptance of improvements performed on the Phase I Premises. The failure of Tenant to take possession of or to occupy the Phase I Premises shall not serve to relieve Tenant of obligations arising on the Phase I Premises Commencement Date or delay the payment of Rent by Tenant.

 

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(g) Minimum Floor Expenditures and Excess Phase I Premises Allowance. Provided that Tenant makes a minimum expenditure of at least $40.00 per square foot of Rentable Area on a floor comprising the Phase I Premises that are eligible for reimbursement from the Phase I Premises Allowance as determined on a pro rata basis (“Minimum Floor Expenditure”), then Tenant shall be permitted to either (i) apply any excess, unused portion of the Phase I Premises Allowance attributable to a particular floor in the Phase I Premises for which the Minimum Floor Expenditure was achieved towards the construction of Phase I Premises Improvements to other floors in the Phase I Premises, or (ii) apply any excess, unused Phase I Premises Allowance attributable to a particular floor in the Phase I Premises for which the Minimum Floor Expenditure was achieved towards the cost of the Phase II Premises Improvements and/or Phase III Premises Improvements. In order to apply such excess, unused portions of the Phase I Premises Allowance as set forth in (i) and (ii) in the preceding sentence, Tenant shall be required to submit invoices and documentation, including, without limitation, a sworn affidavit from Tenant’s Space Planner, evidencing that Tenant has met the Minimum Floor Expenditure for each floor in the Phase I Premises.

(h) Delay in Completion of Phase I Premises Improvements. If Landlord is in default under this Lease (past any applicable notice and cure periods) or if there is any violation of Law at the Project caused by Landlord, in either case, and such default by Landlord (past any applicable notice and cure periods) or violation of Law by Landlord materially impedes or materially increases the cost of (i) the Phase I Premises Improvements, (ii) the time and/or cost for Tenant to obtain any building permits and any other governmental approvals that are required for Tenant to perform the Phase I Premises Improvements, or (iii) Tenant obtaining a certificate of occupancy or an amendment to the certificate of occupancy for the Phase I Premises Improvements, then, in such event, Landlord, at Landlord’s expense, shall use diligent efforts to cure the default or violation as promptly as is reasonably practicable. If Landlord fails to remedy the default under this Lease (past any applicable notice and cure periods) or the violation of Law by Landlord within ten (10) Business Days after Tenant gives Landlord notice thereof, then, for each day of delay, Tenant shall be entitled to a one (1) day abatement of Base Rent attributable to the portion of the Phase I Premises so affected.

 

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EXHIBIT B-2

PHASE II PREMISES WORK LETTER

THIS PHASE II PREMISES WORK LETTER is attached as Exhibit B-2 to the Lease between, TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account, as Landlord, and SALESFORCE.COM.INC., a Delaware corporation, as Tenant, and constitutes the further agreement between Landlord and Tenant as follows:

(i) Phase II Premises Improvements; Phase II Premises Allowance. The leasehold improvements which may be constructed by Tenant in the Phase II Premises (the “Phase II Premises Improvements”), at Tenant’s sole cost and expense (except for the Phase II Premises Allowance, as specified in Item 18(b) of the Basic Lease Provisions of the Lease), shall be constructed in accordance with the Phase II Premises Final Plans to be submitted by Tenant and reviewed and approved by Landlord in accordance with the provisions of Paragraph (b) of this Exhibit B-2.

Landlord shall have no obligation to construct or to pay for the construction of the Phase II Premises Improvements, except that Landlord agrees to contribute toward the cost of construction of the Phase II Premises Improvements the cash sum of up to the Phase II Premises Allowance (as defined in Item 18(b) of the Basic Lease Provisions of this Lease). Notwithstanding anything in this Lease or in this Phase II Premises Work Letter to the contrary, but subject to Paragraph (g) of this Work Letter, the Phase II Premises Allowance shall be used only for the construction of the Phase II Premises Improvements, and if Tenant does not submit a request for payment of the entire Phase II Premises Allowance to Landlord by May 31, 2015 (the “Construction Termination Date”), then Landlord’s obligation to provide the remainder of the Phase II Premises Allowance, as specified in Item 18(b) of the Basic Lease Provisions, shall terminate and become null and void, and Tenant shall be deemed to have waived its rights in and to said remaining Phase II Premises Allowance. The construction costs that may be reimbursed from the Phase II Premises Allowance shall include only the following: (i) payment of the cost of preparing the Phase II Premises Temporary Plans and the Phase II Premises Final Plans (each as defined below), including mechanical, electrical, plumbing and structural drawings and of all other aspects necessary to complete the Phase II Premises Final Plans; (ii) the payment of plan check, permit and license fees relating to construction of the Phase II Premises Improvements; (iii) construction of the Phase II Premises Improvements, including, without limitation, the following: (aa) installation within the Phase II Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items; (bb) all electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the Phase II Premises; (cc) the furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within the Phase II Premises, including the cost of meter and key control for after-hour air conditioning; (dd) any additional improvements to the Phase II Premises required for Tenant’s use of the Phase II Premises including, but not limited to, odor control, special heating, ventilation and air conditioning, noise or vibration control or other special systems or improvements; (ee) all fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the Phase II Premises; (ff) all plumbing, fixtures, pipes and accessories necessary for the Phase II Premises; and (gg) testing and inspection costs; and (iv) charges of Tenant’s consultants, architects, space planners, engineers and other consultants relating to the Phase II Premises Improvements. Landlord shall deduct from the Phase II Premises Allowance a construction management fee (“Phase II Premises Construction Management Fee”) in the amount of (i) One Hundred Fifty Dollars ($150) per hour (the “Hourly Rate”) for every hour reasonably and actually spent by Landlord’s construction management and/or property management personnel supervising or overseeing the Phase II Improvements plus (ii) the reasonable and actual cost of any materials expended by such construction management and/or property management personnel. Landlord’s construction management and/or property management personnel shall only be permitted to spend up to eight (8) hours per week during the planning and construction of the Phase II Premises Improvements; provided, however, any unused hours in a given week may be applied and used in any weeks where Landlord’s property management personnel spend more than the allotted time for such week. No other costs, fees or expenses of the Phase II Premises Improvements shall be reimbursable out of the Phase II Premises Allowance. Landlord shall provide reasonable documentation of the calculation of its administration/supervision fee as part of its submission to Tenant. Landlord and Tenant agree to revisit the eight (8) hours per week limitation to the Phase II Premises Construction Management Fee within six (6) months after the Effective Date to insure it is fair to both Landlord and Tenant.

 

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The payment of the Phase II Premises Allowance shall be as follows:

(i) Payment of the Phase II Premises Allowance will be made by Landlord directly to Tenant or Tenant’s contractors, as directed by Tenant. Within thirty (30) days following Landlord’s receipt and reasonable approval of the Tenant Deliveries (defined below), Landlord shall deliver to Tenant (not more than once each month) a check made out to Tenant or Tenant’s Contractor and/or vendors in an amount equal to Landlord’s proportion of the invoiced amount set forth in an invoice from Tenant to Landlord setting forth the work on the Phase II Premises Improvements which was completed over the period since the prior disbursement request. In order to evidence that such work on the Phase II Premises Improvements has been completed, each time that Tenant requests that Landlord fund a portion of the Phase II Premises Allowance to Tenant, Tenant shall deliver to Landlord the following (collectively the “Tenant Deliveries”): (i) an invoice or invoices evidencing the amount of work on the Phase II Premises Improvements that was completed over the period since the prior disbursement request (standard AIA forms shall be acceptable), (ii) a certificate executed by (A) Tenant and Tenant’s Contractor or vendors, and (B) the architect firm Gensler (“Gensler”) (if Gensler is not Tenant’s architect, then Landlord shall pay Gensler’s fees) shall confirm that the work deemed completed as set forth in the invoice submitted by Tenant to Landlord has indeed been completed, (iii) a lien release for the completed work for which disbursement is sought in a form reasonably satisfactory to Landlord executed by Tenant’s Contractor, and (iv) Tenant shall not then be in Material Default of any of the provisions of the Lease. Upon the payment of such invoiced amount, Landlord shall deduct that amount from the remaining portion of the Phase II Premises Allowance. Landlord shall indicate whether it disputes and reasonably disapproves the Tenant Deliveries within five (5) Business Days following receipt thereof (a “Landlord Allowance Notice”). If Landlord fails to give a Landlord Allowance Notice within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE REQUEST FOR DISBURSEMENT WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH REQUEST.” If Landlord fails to send a Landlord Allowance Notice within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted Tenant Deliveries. Notwithstanding anything herein to the contrary, Landlord shall have the right to withhold the customary ten percent (10%) retainage from each request for payment for protection against mechanics’ and materialmens’ liens by subcontractors and suppliers.

(ii) Once (i) the Phase II Premises Improvements with respect to a full floor have been substantially completed in accordance with the Phase II Premises Final Plans and all punch-list items with respect to such floor have been completed; (ii) Tenant has delivered to Landlord satisfactory evidence that all mechanics’ lien rights of all contractors, suppliers, subcontractors, or materialmen furnishing labor, supplies or materials in the construction or installation of the Phase II Premises Improvements with respect to such full floor have been unconditionally waived, released, or extinguished; and (iii) Tenant has delivered to Landlord a final certificate of occupancy for such full floor of the Phase II Premises, if required, then within thirty (30) days thereof Landlord shall deliver to Tenant the remaining ten percent (10%) of the Phase II Premises Allowance attributable to and allocable to the Phase II Premises Improvements for such completed full floor. Subject to Paragraph (g) of this Work Letter, if the actual cost of the Phase II Premises Improvements is less than the Phase II Premises Allowance, then Tenant shall not receive any credit whatsoever for the difference between the actual cost of the Phase II Premises Improvements and the Phase II Premises Allowance.

Notwithstanding the foregoing, Landlord shall pay the Phase II Premises Allowance in proportion to the percentage of the Phase II Premises Allowance to the total cost of the Phase II Premises Improvements and Tenant will pay the remainder. In other words, if the cost of the Phase II Premises Improvements is estimated to be $15,000,000 and the Phase II Premises Allowance is $9,065,100.00, then each time Landlord is to pay an invoice out of the Phase II Premises Allowance, Landlord shall pay 59% of the invoice (until 90% of the Phase II Premises Allowance is paid out) and Tenant shall pay 41% of the invoice.

 

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Tenant warrants and guarantees that title to all work, materials and equipment covered by a request for payment, whether incorporated in the Phase II Premises or not, shall be free and clear of all liens, claims, security interests or encumbrances and that no work, materials or equipment covered by a request for payment shall have been acquired by Tenant subject to an agreement under which an interest therein or an encumbrance thereon is retained by the seller or otherwise imposed by Tenant or such other person.

(j) Preparation and Review of Plans for Phase II Premises Improvements. Tenant shall retain a space planner (the “Space Planner”) for the Phase II Premises Improvements, and the Space Planner shall prepare certain plans, drawings and specifications (the “Phase II Premises Temporary Plans”) for the construction of the Phase II Premises Improvements in the Phase II Premises to be constructed by a general contractor selected by Tenant pursuant to this Work Letter. Tenant shall deliver the Phase II Premises Temporary Plans to Landlord following their completion. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase II Premises Temporary Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its approval or disapproval of such proposed Phase II Premises Temporary Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase II Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase II Premises Temporary Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN FIVE (5) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Temporary Plans within five (5) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase II Premises Temporary Plans as submitted. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase II Premises Temporary Plans in compliance with Landlord’s reasonable request and resubmit the same for Landlord’s final review and approval or comment within five (5) Business Days of Landlord’s receipt of such revised plans. Such process shall be repeated until final approval by Landlord of the proposed Phase II Premises Temporary Plans. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the prior version of the Phase II Premises Temporary Plans. Once Landlord has approved the Phase II Premises Temporary Plans, the approved Phase II Premises Temporary Plans shall be thereafter known as the “Phase II Premises Final Plans”. The Phase II Premises Final Plans shall include the complete and final layout, plans and specifications for the Phase II Premises showing all doors, light fixtures, electrical outlets, telephone outlets, wall coverings, plumbing improvements (if any), data systems wiring, floor coverings, wall coverings, painting, any other improvements to the Phase II Premises beyond the shell and core improvements provided by Landlord and any demolition of existing improvements in the Phase II Premises. The improvements shown in the Phase II Premises Final Plans shall comply with all applicable laws, rules, regulations, codes and ordinances. Tenant, using the Space Planner, shall prepare or cause to be prepared and submitted the Phase II Premises Final Plans, concurrently, and in each case by receipted courier or delivery service, to Landlord’s construction representative, Hines GS Properties, Inc., 50 Fremont, San Francisco, California Attn: Kari Aycock, (Tel) 415-543-5600 (“Landlord’s Construction Representative”), and Landlord’s offices at 4675 MacArthur Boulevard, Suite 1100, Newport Beach, California 92660, Attn: John Cornuke, for Landlord’s review and approval, which shall be consistent with the description of the Phase II Premises Improvements set forth in the Phase II Premises Temporary Plans.

Each set of proposed Phase II Premises Final Plans furnished by Tenant shall include at least two (2) sets of full-sized prints. Unless Landlord shall otherwise agree in writing, the Phase II Premises Final Plans shall be signed/stamped by the Space Planner, and shall include (to the extent relevant or applicable) such additional plans reasonably requested by Landlord related to the Phase II Premises Improvements, including, without limitation, any and all additional plans related to Tenant’s specific use of the Phase II Premises, or as may be required by local city ordinance or building code.

Tenant shall submit all Phase II Premises Final Plans concurrently to Landlord’s Construction Representative and offices, as designated above, for Landlord’s review and approval. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase II Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed Phase II Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any

 

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additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase II Premises Temporary Plans, Landlord shall respond, in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase II Premises Final Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN THREE (3) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Phase II Premises Final Plans within three (3) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase II Premises Final Plans as submitted. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the Phase II Premises Temporary Plans. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase II Premises Final Plans in compliance with Landlord’s request and to resubmit the same for Landlord’s final review and approval or comment. Such process shall be repeated as necessary until final approval by Landlord of the proposed Phase II Premises Final Plans has been obtained. Landlord may at any time by written notice given in accordance with the notice provisions of the Lease change the name and/or address of the designated Landlord’s construction representative to receive plans delivered by Tenant to Landlord. In the event that Tenant disagrees with any of the changes to the proposed Phase II Premises Final Plans required by Landlord, then Landlord and Tenant shall consult with respect thereto and each party shall use all reasonable efforts to promptly resolve any disputed elements of such proposed Phase II Premises Final Plans. If any dispute regarding the design of the Phase II Premises Improvements arises, which is not settled within ten (10) Business Days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Phase II Premises Improvements, provided (a) Tenant acts reasonably, (b) Tenant’s decision will not adversely affect the Building’s structural components or Building Systems, and (c) the applicable Phase II Premises Improvements in dispute (i) are customary office improvements, (ii) comply with Laws, (iii) do not affect the exterior appearance of the Building, and (iv) are substantially similar to those improvements depicted in Exhibit G attached hereto. For purposes hereof, “Business Days” shall be all calendar days except Saturdays and Sundays and holidays observed by national banks in the State in which the Phase II Premises are situated.

Tenant shall be permitted to deliver to Landlord for review the Phase II Premises Temporary Plans or Phase II Premises Final Plans for portions of the Premises as opposed to the entire Premises at once at Tenant’s election, and Landlord shall review such partial delivery in the same manner per portion as if the delivery was related to the entire Phase II Premises; provided, however, that any such Phase II Premises Temporary Plans or Phase II Premises Final Plans must be submitted in, at a minimum, full floor increments so that the plans submitted are complete and comprehensive as to at least two (2) respective full floors.

Notwithstanding the preceding provisions of this Paragraph (b), under no circumstances whatsoever shall (i) any combustible materials be utilized above finished ceiling or in any concealed space, (ii) any structural load, temporary or permanent, be placed or exerted on any part of the Building without the prior written approval of Landlord, or (iii) any holes be cut or drilled in any part of the roof or other portion of the Building shell without the prior written approval of Landlord.

In the event that Tenant proposes any changes to the Phase II Premises Final Plans (or any portion thereof) after the same have been approved by Landlord, Landlord shall not unreasonably withhold, condition or delay its consent to any such changes, provided the changes do not, in Landlord’s reasonable opinion, adversely affect the Building structure, systems, or equipment, or the external appearance of the Phase II Premises. Landlord shall have three (3) Business Days after Landlord’s receipt of the proposed changes to the Phase II Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed changes to the Phase II Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed changes to the Phase II Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the changes to the Phase II Premises Final Plans within such three (3) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Final Plans within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase II Premises Final Plans as submitted.

 

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Tenant shall be solely responsible for obtaining any business or other license or permit required for the conduct of its business at the Phase II Premises.

(k) Construction of the Phase II Premises Improvements. Construction or installation of the Phase II Premises Improvements shall be performed by a licensed general contractor or contractors selected by Tenant and reasonably approved by Landlord, such approval not to be unreasonably withheld or delayed (the “Tenant’s Contractor,” whether one or more), pursuant to a written construction contract negotiated and entered into by and between the Tenant’s Contractor and Tenant. Any sub-contractors used for the roof, life safety systems, structure, mechanical, electrical and plumbing portions of the Phase II Premises Improvements must be included in the list of approved sub-contractors attached hereto as Exhibit N. Each such contract shall (i) obligate Tenant’s Contractor to comply with all rules and regulations of Landlord relating to construction activities in the Building, (ii) name Landlord as an additional indemnitee under the provisions of the contract whereby the Tenant’s Contractor holds Tenant harmless from and against any and all claims, damages, losses, liabilities and expenses arising out of or resulting from the performance of such work, (iii) name Landlord as a beneficiary of (and a party entitled to enforce) all of the warranties of the Tenant’s Contractor with respect to the work performed thereunder and the obligation of the Tenant’s Contractor to replace defective materials and correct defective workmanship for a period of not less than one (1) year following final completion of the work under such contract, (iv) evidence the agreement of the Tenant’s Contractor that the provisions of the Lease shall control over the provisions of the contract with respect to distribution or use of insurance proceeds, in the event of a casualty during construction, and (v) evidence the waiver and release by the Tenant’s Contractor of any lien or right to assert a lien on all or any portion of the fee estate of Landlord in and to the Building as a result of the work performed or to be performed thereunder (and obligating the Tenant’s Contractor to include a substantially similar release and waiver provision in all subcontracts and purchase orders entered under or pursuant to the contract). Tenant hereby acknowledges and agrees that it shall not retain any contractor or subcontractor which may disrupt harmonious labor relations at the Project for any portion of the Phase II Premises Improvements.

Tenant acknowledges and understands that all roof penetrations involved in the construction of the Phase II Premises Improvements must be performed by the Landlord’s Building roofing contractor. All costs, fees and expenses incurred with such contractor in performing such work shall be a cost of the Phase II Premises Improvements, payable in accordance with the provisions of this Exhibit B-2. Tenant shall not be responsible for any water, gas, electricity, sewer or other utilities used or consumed at the Phase II Premises during the construction of the Phase II Premises Improvements; provided, however, Tenant shall make reasonable efforts to curtail the use of utilities during the construction of the Phase II Premises Improvements. During construction of the Phase II Premises Improvements, and subject to the terms and conditions hereof, Tenant shall be entitled to use, free of any charge (except as described herein), the freight elevator (provided that Tenant shall pay for overtime use and uses such freight elevator in common with other tenants and occupants of the Building and for the cost of any additional staffing that is required), and loading docks and/or passenger elevators at all times, subject to Tenant not unreasonably interfering with the ingress or egress and use by other tenants of the Building. Notwithstanding the foregoing, if available, Tenant shall be entitled to reserve exclusive use of the freight elevator upon not less than forty eight (48) hours prior notice to Landlord. Tenant will be permitted reasonable use of the loading dock so long as it does not unreasonably impede other tenants’ normal and reasonable use of these facilities and their ability to conduct business. In the event Tenant seeks to use any parking spaces in the Parking Garage during the construction of the Phase II Premises Improvements, Tenant shall pay the for the parking charges attributable to such parking spaces.

Tenant specifically agrees to carry, or cause the Tenant’s Contractor to carry, during all such times as the Tenant’s work is being performed, insurance in accordance with Landlord’s insurance standards and protocols as set forth in Exhibit B-4 attached hereto and incorporated herein for all purposes. Tenant shall not commence construction of the Phase II Premises Improvements until Tenant has delivered to Landlord’s construction representative (i) certificates of the insurance policies described above, (ii) copies of all permits required for construction of the Phase II Premises Improvements and a copy of the permitted Phase II Premises Final Plans as approved by the appropriate governmental agency, and (iii) a copy of the signed construction contract for the Phase II Premises Improvements (a copy of each subsequently signed contract shall be forwarded to Landlord’s

 

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construction representative without request or demand, promptly after execution thereof and prior to the performance of any work thereunder) between Tenant and its general contractor. Notwithstanding the foregoing, if permitted by Law, Tenant may commence demolition work prior to delivery of the items set forth in subsection (ii) above. All of the construction work shall be the responsibility of and supervised by Tenant.

(l) Requirements for Tenant’s Work. All of Tenant’s construction with respect to the Phase II Premises shall be performed in substantial compliance with this Exhibit B-2 and the Phase II Premises Final Plans therefor previously approved in writing by Landlord (and any changes thereto approved by Landlord as herein provided), and in a good and workmanlike manner, utilizing only new materials. All such work shall be performed by Tenant in material compliance with all applicable building codes, regulations and all other legal requirements and Laws. All materials utilized in the construction of Tenant’s Phase II Premises Improvements must be confined to within the Phase II Premises. All trash and construction debris not located wholly within the Phase II Premises must be removed each day from the Project at the sole cost and expense of Tenant. Throughout the construction of the Phase II Premises Improvements Tenant shall provide Landlord with manifests of construction waste recycling. Landlord shall have the right at all times to monitor the Phase II Premises Improvements for compliance with the requirements of this Exhibit B-2. If Landlord determines that any such requirements are not being materially complied with, Landlord shall promptly notify Tenant and if Tenant does not promptly remedy such non-compliance, then Landlord may immediately require the cessation of all work being performed in or around the Phase II Premises or the Project until such time as Landlord is satisfied that the applicable requirements will be observed. Any approval given by Landlord with respect to Tenant’s construction or the Phase II Premises Temporary Plans or Phase II Premises Final Plans therefor, and/or any monitoring of Tenant’s work by Landlord, shall not make Landlord liable or responsible in any way for the condition, quality or function of such matters or constitute any undertaking, warranty or representation by Landlord with respect to any of such matters.

(m) No Liens; Indemnification. Tenant shall have no authority to place any lien upon the Phase II Premises, or the Building, or any portion thereof or interest therein, nor shall Tenant have any authority in any way to bind Landlord, and any attempt to do so shall be void and of no effect. If, because of any actual or alleged act or omission of Tenant, or Tenant’s Contractor, or any subcontractors or materialmen, any lien, affidavit, charge or order for the payment of money shall be filed against Landlord, the Phase II Premises, the Building, or any portion thereof or interest therein, whether or not such lien, affidavit, charge or order is valid or enforceable, Tenant shall, at its sole cost and expense, cause the same to be discharged of record by payment, bonding or otherwise no later than thirty (30) days after notice to Tenant of the filing thereof, but in any event prior to the foreclosure thereof. With respect to the contract for labor or materials for construction of the Phase II Premises Improvements, Tenant acts as principal and not as the agent of Landlord. Landlord expressly disclaims liability for the cost of labor performed for or supplies or materials furnished to Tenant. Landlord may post one or more “notices of non-responsibility” for the construction of the Phase II Premises Improvements. No contractor of Tenant is intended to be a third-party beneficiary with respect to the Phase II Premises Allowance, or the agreement of Landlord to make such Phase II Premises Allowance available for payment of or reimbursement for the costs of construction of the Phase II Premises Improvements. Tenant agrees to indemnify, defend and hold Landlord harmless from all claims (including all costs and expenses of defending against such claims) arising or alleged to arise from any act or omission of Tenant or Tenant’s agents, employees, contractor, subcontractors, suppliers, materialmen, architects, designers, surveyors, engineers, consultants, laborers, or invitees, or arising from any bodily injury or property damage occurring or alleged to have occurred incident to any of the work to be performed by Tenant or its contractors or subcontractors with respect to the Phase II Premises except to the extent caused by or related to the negligence or willful misconduct of Landlord or its agents or employees. Any default by Tenant under this Exhibit B-2 shall constitute a Default by Tenant under the Lease.

(n) Substantial Completion. “Substantial Completion” of construction of the Phase II Premises Improvements shall be defined as (i) the date upon which Gensler determines that the Tenant Improvements have been substantially completed in accordance with the Phase II Premises Final Plans, and (ii) the date upon which a temporary certificate of occupancy (or its equivalent) is issued for the Phase II Premises by the appropriate governmental authority. After the completion of the Phase II Premises Improvements, Tenant shall, upon demand, execute and deliver to Landlord a letter of acceptance of improvements performed on the Phase II Premises. The failure of Tenant to take possession of or to occupy the Phase II Premises shall not serve to relieve Tenant of obligations arising on the Phase II Premises Commencement Date or delay the payment of Rent by Tenant.

 

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(o) Minimum Floor Expenditures and Excess Phase II Premises Allowance. Provided that Tenant makes a minimum expenditure of at least $40.00 per square foot of Rentable Area on a floor comprising the Phase II Premises that are eligible for reimbursement from the Phase II Premises Allowance as determined on a pro rata basis (“Minimum Floor Expenditure”), then Tenant shall be permitted to either (i) apply any excess, unused portion of the Phase II Premises Allowance attributable to a particular floor in the Phase II Premises for which the Minimum Floor Expenditure was achieved towards the construction of Phase II Premises Improvements to other floors in the Phase II Premises, or (ii) apply any excess, unused Phase II Premises Allowance attributable to a particular floor in the Phase II Premises for which the Minimum Floor Expenditure was achieved towards the cost of the Phase I Premises Improvements and/or Phase III Premises Improvements. In order to apply such excess, unused portions of the Phase II Premises Allowance as set forth in (i) and (ii) in the preceding sentence, Tenant shall be required to submit invoices and documentation, including, without limitation, a sworn affidavit from Tenant’s Space Planner, evidencing that Tenant has met the Minimum Floor Expenditure for each floor in the Phase II Premises.

(p) Delay in Completion of Phase II Premises Improvements. If Landlord is in default under this Lease (past any applicable notice and cure periods) or if there is any violation of Law at the Project caused by Landlord, in either case, and such default by Landlord (past any applicable notice and cure periods) or violation of Law by Landlord materially impedes or materially increases the cost of (i) the Phase II Premises Improvements, (ii) the time and/or cost for Tenant to obtain any building permits and any other governmental approvals that are required for Tenant to perform the Phase II Premises Improvements, or (iii) Tenant obtaining a certificate of occupancy or an amendment to the certificate of occupancy for the Phase II Premises Improvements, then, in such event, Landlord, at Landlord’s expense, shall use diligent efforts to cure the default or violation as promptly as is reasonably practicable. If Landlord fails to remedy the default under this Lease (past any applicable notice and cure periods) or the violation of Law by Landlord within ten (10) Business Days after Tenant gives Landlord notice thereof, then, for each day of delay, Tenant shall be entitled to a one (1) day abatement of Base Rent attributable to the portion of the Phase II Premises so affected.

 

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EXHIBIT B-3

PHASE III PREMISES WORK LETTER

THIS PHASE III PREMISES WORK LETTER is attached as Exhibit B-3 to the Lease between, TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account, as Landlord, and SALESFORCE.COM.INC., a Delaware corporation, as Tenant, and constitutes the further agreement between Landlord and Tenant as follows:

(q) Phase III Premises Improvements; Phase III Premises Allowance. The leasehold improvements which may be constructed by Tenant in the Phase III Premises (the “Phase III Premises Improvements”), at Tenant’s sole cost and expense (except for the Phase III Premises Allowance, as specified in Item 18(c) of the Basic Lease Provisions of the Lease), shall be constructed in accordance with the Phase III Premises Final Plans to be submitted by Tenant and reviewed and approved by Landlord in accordance with the provisions of Paragraph (b) of this Exhibit B-3.

Landlord shall have no obligation to construct or to pay for the construction of the Phase III Premises Improvements, except that Landlord agrees to contribute toward the cost of construction of the Phase III Premises Improvements the cash sum of up to the Phase III Premises Allowance (as defined in Item 18(c) of the Basic Lease Provisions of this Lease). Notwithstanding anything in this Lease or in this Phase III Premises Work Letter to the contrary, but subject to Paragraph (g) of this Work Letter, the Phase III Premises Allowance shall be used only for the construction of the Phase III Premises Improvements, and if Tenant does not submit a request for payment of the entire Phase III Premises Allowance to Landlord by May 31, 2015 (the “Construction Termination Date”), then Landlord’s obligation to provide the remainder of the Phase III Premises Allowance, as specified in Item 18(c) of the Basic Lease Provisions, shall terminate and become null and void, and Tenant shall be deemed to have waived its rights in and to said remaining Phase III Premises Allowance. The construction costs that may be reimbursed from the Phase III Premises Allowance shall include only the following: (i) payment of the cost of preparing the Phase III Premises Temporary Plans and the Phase III Premises Final Plans (each as defined below), including mechanical, electrical, plumbing and structural drawings and of all other aspects necessary to complete the Phase III Premises Final Plans; (ii) the payment of plan check, permit and license fees relating to construction of the Phase III Premises Improvements; (iii) construction of the Phase III Premises Improvements, including, without limitation, the following: (aa) installation within the Phase III Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items; (bb) all electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the Phase III Premises; (cc) the furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within the Phase III Premises, including the cost of meter and key control for after-hour air conditioning; (dd) any additional improvements to the Phase III Premises required for Tenant’s use of the Phase III Premises including, but not limited to, odor control, special heating, ventilation and air conditioning, noise or vibration control or other special systems or improvements; (ee) all fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the Phase III Premises; (ff) all plumbing, fixtures, pipes and accessories necessary for the Phase III Premises; and (gg) testing and inspection costs; and (iv) charges of Tenant’s consultants, architects, space planners, engineers and other consultants relating to the Phase III Premises Improvements. Landlord shall deduct from the Phase III Premises Allowance a construction management fee (“Phase III Premises Construction Management Fee”) in the amount of (i) One Hundred Fifty Dollars ($150) per hour (the “Hourly Rate”) for every hour reasonably and actually spent by Landlord’s construction management and/or property management personnel supervising or overseeing the Phase III Improvements plus (ii) the reasonable and actual cost of any materials expended by such construction management and/or property management personnel. Landlord’s construction management and/or property management personnel shall only be permitted to spend up to eight (8) hours per week during the planning and construction of the Phase III Premises Improvements; provided, however, any unused hours in a given week may be applied and used in any weeks where Landlord’s property management personnel spend more than the allotted time for such week. No other costs, fees or expenses of the Phase III Premises Improvements shall be reimbursable out of the Phase III Premises Allowance. Landlord shall provide reasonable documentation of the calculation of its administration/supervision fee as part of its submission to Tenant. Landlord and Tenant agree to revisit the eight (8) hours per week limitation to the Phase III Premises Construction Management Fee within six (6) months after the Effective Date to insure it is fair to both Landlord and Tenant.

 

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The payment of the Phase III Premises Allowance shall be as follows:

(i) Payment of the Phase III Premises Allowance will be made by Landlord directly to Tenant or Tenant’s contractors, as directed by Tenant. Within thirty (30) days following Landlord’s receipt and reasonable approval of the Tenant Deliveries (defined below), Landlord shall deliver to Tenant (not more than once each month) a check made out to Tenant or Tenant’s Contractor and/or vendors in an amount equal to Landlord’s proportion of the invoiced amount set forth in an invoice from Tenant to Landlord setting forth the work on the Phase III Premises Improvements which was completed over the period since the prior disbursement request. In order to evidence that such work on the Phase III Premises Improvements has been completed, each time that Tenant requests that Landlord fund a portion of the Phase III Premises Allowance to Tenant, Tenant shall deliver to Landlord the following (collectively the “Tenant Deliveries”): (i) an invoice or invoices evidencing the amount of work on the Phase III Premises Improvements that was completed over the period since the prior disbursement request (standard AIA forms shall be acceptable), (ii) a certificate executed by (A) Tenant and Tenant’s Contractor or vendors, and (B) the architect firm Gensler (“Gensler”) (if Gensler is not Tenant’s architect, then Landlord shall pay Gensler’s fees) shall confirm that the work deemed completed as set forth in the invoice submitted by Tenant to Landlord has indeed been completed, (iii) a lien release for the completed work for which disbursement is sought in a form reasonably satisfactory to Landlord executed by Tenant’s Contractor, and (iv) Tenant shall not then be in Material Default of any of the provisions of the Lease. Upon the payment of such invoiced amount, Landlord shall deduct that amount from the remaining portion of the Phase III Premises Allowance. Landlord shall indicate whether it disputes and reasonably disapproves the Tenant Deliveries within five (5) Business Days following receipt thereof (a “Landlord Allowance Notice”). If Landlord fails to give a Landlord Allowance Notice within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE REQUEST FOR DISBURSEMENT WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH REQUEST.” If Landlord fails to send a Landlord Allowance Notice within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted Tenant Deliveries. Notwithstanding anything herein to the contrary, Landlord shall have the right to withhold the customary ten percent (10%) retainage from each request for payment for protection against mechanics’ and materialmens’ liens by subcontractors and suppliers.

(ii) Once (i) the Phase III Premises Improvements with respect to a full floor have been substantially completed in accordance with the Phase III Premises Final Plans and all punch-list items with respect to such floor have been completed; (ii) Tenant has delivered to Landlord satisfactory evidence that all mechanics’ lien rights of all contractors, suppliers, subcontractors, or materialmen furnishing labor, supplies or materials in the construction or installation of the Phase III Premises Improvements with respect to such full floor have been unconditionally waived, released, or extinguished; and (iii) Tenant has delivered to Landlord a final certificate of occupancy for such full floor of the Phase III Premises, if required, then within thirty (30) days thereof Landlord shall deliver to Tenant the remaining ten percent (10%) of the Phase III Premises Allowance attributable to and allocable to the Phase III Premises Improvements for such completed full floor. Subject to Paragraph (g) of this Work Letter, if the actual cost of the Phase III Premises Improvements is less than the Phase III Premises Allowance, then Tenant shall not receive any credit whatsoever for the difference between the actual cost of the Phase III Premises Improvements and the Phase III Premises Allowance.

Notwithstanding the foregoing, Landlord shall pay the Phase III Premises Allowance in proportion to the percentage of the Phase III Premises Allowance to the total cost of the Phase III Premises Improvements and Tenant will pay the remainder. In other words, if the cost of the Phase III Premises Improvements is estimated to be $15,000,000 and the Phase III Premises Allowance remains $9,334,650, then each time Landlord is to pay an invoice out of the Phase III Premises Allowance, Landlord shall pay 62.2% of the invoice (until 90% of the Phase III Premises Allowance is paid out) and Tenant shall pay 37.8% of the invoice.

 

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Tenant warrants and guarantees that title to all work, materials and equipment covered by a request for payment, whether incorporated in the Phase III Premises or not, shall be free and clear of all liens, claims, security interests or encumbrances and that no work, materials or equipment covered by a request for payment shall have been acquired by Tenant subject to an agreement under which an interest therein or an encumbrance thereon is retained by the seller or otherwise imposed by Tenant or such other person.

(r) Preparation and Review of Plans for Phase III Premises Improvements. Tenant shall retain a space planner (the “Space Planner”) for the Phase III Premises Improvements, and the Space Planner shall prepare certain plans, drawings and specifications (the “Phase III Premises Temporary Plans”) for the construction of the Phase III Premises Improvements in the Phase III Premises to be constructed by a general contractor selected by Tenant pursuant to this Work Letter. Tenant shall deliver the Phase III Premises Temporary Plans to Landlord following their completion. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase III Premises Temporary Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its approval or disapproval of such proposed Phase III Premises Temporary Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase III Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase III Premises Temporary Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN FIVE (5) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Temporary Plans within five (5) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase III Premises Temporary Plans as submitted. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase III Premises Temporary Plans in compliance with Landlord’s reasonable request and resubmit the same for Landlord’s final review and approval or comment within five (5) Business Days of Landlord’s receipt of such revised plans. Such process shall be repeated until final approval by Landlord of the proposed Phase III Premises Temporary Plans. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the prior version of the Phase III Premises Temporary Plans. Once Landlord has approved the Phase III Premises Temporary Plans, the approved Phase III Premises Temporary Plans shall be thereafter known as the “Phase III Premises Final Plans”. The Phase III Premises Final Plans shall include the complete and final layout, plans and specifications for the Phase III Premises showing all doors, light fixtures, electrical outlets, telephone outlets, wall coverings, plumbing improvements (if any), data systems wiring, floor coverings, wall coverings, painting, any other improvements to the Phase III Premises beyond the shell and core improvements provided by Landlord and any demolition of existing improvements in the Phase III Premises. The improvements shown in the Phase III Premises Final Plans shall comply with all applicable laws, rules, regulations, codes and ordinances. Tenant, using the Space Planner, shall prepare or cause to be prepared and submitted the Phase III Premises Final Plans, concurrently, and in each case by receipted courier or delivery service, to Landlord’s construction representative, Hines GS Properties, Inc., 50 Fremont, San Francisco, California Attn: Kari Aycock, (Tel) 415-543-5600 (“Landlord’s Construction Representative”), and Landlord’s offices at 4675 MacArthur Boulevard, Suite 1100, Newport Beach, California 92660, Attn: John Cornuke, for Landlord’s review and approval, which shall be consistent with the description of the Phase III Premises Improvements set forth in the Phase III Premises Temporary Plans.

Each set of proposed Phase III Premises Final Plans furnished by Tenant shall include at least two (2) sets of full-sized prints. Unless Landlord shall otherwise agree in writing, the Phase III Premises Final Plans shall be signed/stamped by the Space Planner, and shall include (to the extent relevant or applicable) such additional plans reasonably requested by Landlord related to the Phase III Premises Improvements, including, without limitation, any and all additional plans related to Tenant’s specific use of the Phase III Premises, or as may be required by local city ordinance or building code.

Tenant shall submit all Phase III Premises Final Plans concurrently to Landlord’s Construction Representative and offices, as designated above, for Landlord’s review and approval. Landlord shall have five (5) Business Days after Landlord’s receipt of the proposed Phase III Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed Phase III Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any

 

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additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed Phase III Premises Temporary Plans, Landlord shall respond, in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the Phase III Premises Final Plans within such five (5) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN THREE (3) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Phase III Premises Final Plans within three (3) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase III Premises Final Plans as submitted. Landlord may not disapprove of any matter which has been previously approved by Landlord or that is logically consistent with the Phase III Premises Temporary Plans. Tenant shall, following its receipt of Landlord’s comments and objections, redraw the proposed Phase III Premises Final Plans in compliance with Landlord’s request and to resubmit the same for Landlord’s final review and approval or comment. Such process shall be repeated as necessary until final approval by Landlord of the proposed Phase III Premises Final Plans has been obtained. Landlord may at any time by written notice given in accordance with the notice provisions of the Lease change the name and/or address of the designated Landlord’s construction representative to receive plans delivered by Tenant to Landlord. In the event that Tenant disagrees with any of the changes to the proposed Phase III Premises Final Plans required by Landlord, then Landlord and Tenant shall consult with respect thereto and each party shall use all reasonable efforts to promptly resolve any disputed elements of such proposed Phase III Premises Final Plans. If any dispute regarding the design of the Phase III Premises Improvements arises, which is not settled within ten (10) Business Days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Phase III Premises Improvements, provided (a) Tenant acts reasonably, (b) Tenant’s decision will not adversely affect the Building’s structural components or Building Systems, and (c) the applicable Phase III Premises Improvements in dispute (i) are customary office improvements, (ii) comply with Laws, (iii) do not affect the exterior appearance of the Building, and (iv) are substantially similar to those improvements depicted in Exhibit G attached hereto. For purposes hereof, “Business Days” shall be all calendar days except Saturdays and Sundays and holidays observed by national banks in the State in which the Phase III Premises are situated.

Tenant shall be permitted to deliver to Landlord for review the Phase II Premises Temporary Plans or Phase II Premises Final Plans for portions of the Premises as opposed to the entire Premises at once at Tenant’s election, and Landlord shall review such partial delivery in the same manner per portion as if the delivery was related to the entire Phase II Premises; provided, however, that any such Phase II Premises Temporary Plans or Phase II Premises Final Plans must be submitted in, at a minimum, full floor increments so that the plans submitted are complete and comprehensive as to at least two (2) respective full floors.

Notwithstanding the preceding provisions of this Paragraph (b), under no circumstances whatsoever shall (i) any combustible materials be utilized above finished ceiling or in any concealed space, (ii) any structural load, temporary or permanent, be placed or exerted on any part of the Building without the prior written approval of Landlord, or (iii) any holes be cut or drilled in any part of the roof or other portion of the Building shell without the prior written approval of Landlord.

In the event that Tenant proposes any changes to the Phase III Premises Final Plans (or any portion thereof) after the same have been approved by Landlord, Landlord shall not unreasonably withhold, condition or delay its consent to any such changes, provided the changes do not, in Landlord’s reasonable opinion, adversely affect the Building structure, systems, or equipment, or the external appearance of the Phase III Premises. Landlord shall have three (3) Business Days after Landlord’s receipt of the proposed changes to the Phase III Premises Final Plans to review the same and notify Tenant in writing of any comments or required changes, or to otherwise give its reasonable approval or disapproval of such proposed changes to the Phase III Premises Final Plans and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlord’s approval. If Landlord disapproves of any proposed changes to the Phase III Premises Temporary Plans, Landlord shall respond in writing, stating the grounds for such disapproval. If Landlord fails to give written comments to or approve the changes to the Phase III Premises Final Plans within such three (3) Business Day period, then Tenant shall provide a second notice (“Second Notice”) which provides at the top of such notice in all capital letters as follows: “LANDLORD’S FAILURE TO APPROVE OR DISAPPROVE OF THE PLANS ENCLOSED HEREIN WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL BE CONSTRUED AS

 

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LANDLORD’S DEEMED APPROVAL OF SUCH PLANS.” If Landlord fails to either approve or disapprove of the Final Plans within two (2) Business Days of receiving Tenant’s Second Notice then Landlord shall be deemed to have accepted the Phase III Premises Final Plans as submitted.

Tenant shall be solely responsible for obtaining any business or other license or permit required for the conduct of its business at the Phase III Premises.

(s) Construction of the Phase III Premises Improvements. Construction or installation of the Phase III Premises Improvements shall be performed by a licensed general contractor or contractors selected by Tenant and reasonably approved by Landlord, such approval not to be unreasonably withheld or delayed (the “Tenant’s Contractor,” whether one or more), pursuant to a written construction contract negotiated and entered into by and between the Tenant’s Contractor and Tenant. Any sub-contractors used for the roof, life safety systems, structure, mechanical, electrical and plumbing portions of the Phase III Premises Improvements must be included in the list of approved sub-contractors attached hereto as Exhibit N. Each such contract shall (i) obligate Tenant’s Contractor to comply with all rules and regulations of Landlord relating to construction activities in the Building, (ii) name Landlord as an additional indemnitee under the provisions of the contract whereby the Tenant’s Contractor holds Tenant harmless from and against any and all claims, damages, losses, liabilities and expenses arising out of or resulting from the performance of such work, (iii) name Landlord as a beneficiary of (and a party entitled to enforce) all of the warranties of the Tenant’s Contractor with respect to the work performed thereunder and the obligation of the Tenant’s Contractor to replace defective materials and correct defective workmanship for a period of not less than one (1) year following final completion of the work under such contract, (iv) evidence the agreement of the Tenant’s Contractor that the provisions of the Lease shall control over the provisions of the contract with respect to distribution or use of insurance proceeds, in the event of a casualty during construction, and (v) evidence the waiver and release by the Tenant’s Contractor of any lien or right to assert a lien on all or any portion of the fee estate of Landlord in and to the Building as a result of the work performed or to be performed thereunder (and obligating the Tenant’s Contractor to include a substantially similar release and waiver provision in all subcontracts and purchase orders entered under or pursuant to the contract). Tenant hereby acknowledges and agrees that it shall not retain any contractor or subcontractor which may disrupt harmonious labor relations at the Project for any portion of the Phase III Premises Improvements.

Tenant acknowledges and understands that all roof penetrations involved in the construction of the Phase III Premises Improvements must be performed by the Landlord’s Building roofing contractor. All costs, fees and expenses incurred with such contractor in performing such work shall be a cost of the Phase III Premises Improvements, payable in accordance with the provisions of this Exhibit B-3. Tenant shall not be responsible for any water, gas, electricity, sewer or other utilities used or consumed at the Phase III Premises during the construction of the Phase III Premises Improvements; provided, however, Tenant shall make reasonable efforts to curtail the use of utilities during the construction of the Phase III Premises Improvements. During construction of the Phase III Premises Improvements, and subject to the terms and conditions hereof, Tenant shall be entitled to use, free of any charge (except as described herein), the freight elevator (provided that Tenant shall pay for overtime use and uses such freight elevator in common with other tenants and occupants of the Building and for the cost of any additional staffing that is required), and loading docks and/or passenger elevators at all times, subject to Tenant not unreasonably interfering with the ingress or egress and use by other tenants of the Building. Notwithstanding the foregoing, if available, Tenant shall be entitled to reserve exclusive use of the freight elevator upon not less than forty eight (48) hours prior notice to Landlord. Tenant will be permitted reasonable use of the loading dock so long as it does not unreasonably impede other tenants’ normal and reasonable use of these facilities and their ability to conduct business. In the event Tenant seeks to use any parking spaces in the Parking Garage during the construction of the Phase III Premises Improvements, Tenant shall pay the for the parking charges attributable to such parking spaces.

Tenant specifically agrees to carry, or cause the Tenant’s Contractor to carry, during all such times as the Tenant’s work is being performed, insurance in accordance with Landlord’s insurance standards and protocols as set forth in Exhibit B-4 attached hereto and incorporated herein for all purposes. Tenant shall not commence construction of the Phase III Premises Improvements until Tenant has delivered to Landlord’s construction representative (i) certificates of the insurance policies described above, (ii) copies of all permits required for construction of the Phase III Premises Improvements and a copy of the permitted Phase III Premises Final Plans as approved by the appropriate governmental agency, and (iii) a copy of the signed construction contract for the Phase

 

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III Premises Improvements (a copy of each subsequently signed contract shall be forwarded to Landlord’s construction representative without request or demand, promptly after execution thereof and prior to the performance of any work thereunder) between Tenant and its general contractor. Notwithstanding the foregoing, if permitted by Law, Tenant may commence demolition work prior to delivery of the items set forth in subsection (ii) above. All of the construction work shall be the responsibility of and supervised by Tenant.

(t) Requirements for Tenant’s Work. All of Tenant’s construction with respect to the Phase III Premises shall be performed in substantial compliance with this Exhibit B-3 and the Phase III Premises Final Plans therefor previously approved in writing by Landlord (and any changes thereto approved by Landlord as herein provided), and in a good and workmanlike manner, utilizing only new materials. All such work shall be performed by Tenant in material compliance with all applicable building codes, regulations and all other legal requirements and Laws. All materials utilized in the construction of Tenant’s Phase III Premises Improvements must be confined to within the Phase III Premises. All trash and construction debris not located wholly within the Phase III Premises must be removed each day from the Project at the sole cost and expense of Tenant. Throughout the construction of the Phase III Premises Improvements Tenant shall provide Landlord with manifests of construction waste recycling. Landlord shall have the right at all times to monitor the Phase III Premises Improvements for compliance with the requirements of this Exhibit B-3. If Landlord determines that any such requirements are not being materially complied with, Landlord shall promptly notify Tenant and if Tenant does not promptly remedy such non-compliance, then Landlord may immediately require the cessation of all work being performed in or around the Phase III Premises or the Project until such time as Landlord is satisfied that the applicable requirements will be observed. Any approval given by Landlord with respect to Tenant’s construction or the Phase III Premises Temporary Plans or Phase III Premises Final Plans therefor, and/or any monitoring of Tenant’s work by Landlord, shall not make Landlord liable or responsible in any way for the condition, quality or function of such matters or constitute any undertaking, warranty or representation by Landlord with respect to any of such matters.

(u) No Liens; Indemnification. Tenant shall have no authority to place any lien upon the Phase III Premises, or the Building, or any portion thereof or interest therein, nor shall Tenant have any authority in any way to bind Landlord, and any attempt to do so shall be void and of no effect. If, because of any actual or alleged act or omission of Tenant, or Tenant’s Contractor, or any subcontractors or materialmen, any lien, affidavit, charge or order for the payment of money shall be filed against Landlord, the Phase III Premises, the Building, or any portion thereof or interest therein, whether or not such lien, affidavit, charge or order is valid or enforceable, Tenant shall, at its sole cost and expense, cause the same to be discharged of record by payment, bonding or otherwise no later than thirty (30) days after notice to Tenant of the filing thereof, but in any event prior to the foreclosure thereof. With respect to the contract for labor or materials for construction of the Phase III Premises Improvements, Tenant acts as principal and not as the agent of Landlord. Landlord expressly disclaims liability for the cost of labor performed for or supplies or materials furnished to Tenant. Landlord may post one or more “notices of non-responsibility” for the construction of the Phase III Premises Improvements. No contractor of Tenant is intended to be a third-party beneficiary with respect to the Phase III Premises Allowance, or the agreement of Landlord to make such Phase III Premises Allowance available for payment of or reimbursement for the costs of construction of the Phase III Premises Improvements. Tenant agrees to indemnify, defend and hold Landlord harmless from all claims (including all costs and expenses of defending against such claims) arising or alleged to arise from any act or omission of Tenant or Tenant’s agents, employees, contractor, subcontractors, suppliers, materialmen, architects, designers, surveyors, engineers, consultants, laborers, or invitees, or arising from any bodily injury or property damage occurring or alleged to have occurred incident to any of the work to be performed by Tenant or its contractors or subcontractors with respect to the Phase III Premises except to the extent caused by or related to the negligence or willful misconduct of Landlord or its agents or employees. Any default by Tenant under this Exhibit B-3 shall constitute a Default by Tenant under the Lease.

(v) Substantial Completion. “Substantial Completion” of construction of the Phase III Premises Improvements shall be defined as (i) the date upon which Gensler determines that the Tenant Improvements have been substantially completed in accordance with the Phase III Premises Final Plans, and (ii) the date upon which a temporary certificate of occupancy (or its equivalent) is issued for the Phase III Premises by the appropriate governmental authority. After the completion of the Phase III Premises Improvements, Tenant shall, upon demand, execute and deliver to Landlord a letter of acceptance of improvements performed on the Phase III Premises. The failure of Tenant to take possession of or to occupy the Phase III Premises shall not serve to relieve Tenant of obligations arising on the Phase III Premises Commencement Date or delay the payment of Rent by Tenant.

 

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(w) Minimum Floor Expenditures and Excess Phase III Premises Allowance. Provided that Tenant makes a minimum expenditure of at least $40.00 per square foot of Rentable Area on a floor comprising the Phase III Premises that are eligible for reimbursement from the Phase III Premises Allowance as determined on a pro rata basis (“Minimum Floor Expenditure”), then Tenant shall be permitted to either (i) apply any excess, unused portion of the Phase III Premises Allowance attributable to a particular floor in the Phase III Premises for which the Minimum Floor Expenditure was achieved towards the construction of Phase III Premises Improvements to other floors in the Phase III Premises, or (ii) apply any excess, unused Phase III Premises Allowance attributable to a particular floor in the Phase III Premises for which the Minimum Floor Expenditure was achieved towards the cost of the Phase I Premises Improvements and/or Phase II Premises Improvements. In order to apply such excess, unused portions of the Phase III Premises Allowance as set forth in (i) and (ii) in the preceding sentence, Tenant shall be required to submit invoices and documentation, including, without limitation, a sworn affidavit from Tenant’s Space Planner, evidencing that Tenant has met the Minimum Floor Expenditure for each floor in the Phase III Premises.

(x) Delay in Completion of Phase III Premises Improvements. If Landlord is in default under this Lease (past any applicable notice and cure periods) or if there is any violation of Law at the Project caused by Landlord, in either case, and such default by Landlord (past any applicable notice and cure periods) or violation of Law by Landlord materially impedes or materially increases the cost of (i) the Phase III Premises Improvements, (ii) the time and/or cost for Tenant to obtain any building permits and any other governmental approvals that are required for Tenant to perform the Phase III Premises Improvements, or (iii) Tenant obtaining a certificate of occupancy or an amendment to the certificate of occupancy for the Phase III Premises Improvements, then, in such event, Landlord, at Landlord’s expense, shall use diligent efforts to cure the default or violation as promptly as is reasonably practicable. If Landlord fails to remedy the default under this Lease (past any applicable notice and cure periods) or the violation of Law by Landlord within ten (10) Business Days after Tenant gives Landlord notice thereof, then, for each day of delay, Tenant shall be entitled to a one (1) day abatement of Base Rent attributable to the portion of the Phase III Premises so affected.

 

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EXHIBIT B-4

LANDLORD’S CONTRACTOR INSURANCE REQUIREMENTS

CERTIFICATE OF INSURANCE REQUIREMENTS

 

 

Any companies performing work on behalf of, or in, 50 Fremont Center must have a valid Certificate of Insurance on file with the Property Management Office. Please make sure that the certificate is completed in accordance with the information and limits of liability stated below and includes an ISO Additional Insured Endorsement CG 2037 or CG 2026:

 

CERTIFICATE HOLDER:

  

Hines GS Properties, Inc.

    

50 Fremont Street, Suite 100

    

San Francisco, California 94105

LOGO

 

ADDITIONAL INSUREDS:

  

Hines GS Properties, Inc.

    

        and

  
    

Teacher’s Insurance and Annuity Association of America for the Benefit of its Real Estate Account

 

COVERAGE:

     
  a)   

Workers Compensation:

  

In kind and amount as prescribed by statute

  b)   

Employers Liability:

  

$1,000,000

  c)   

Commercial General Liability:

  

$1,000,000 per occurrence

       

$2,000,000 general aggregate

  d)   

Commercial Automobile Liability:

  

$1,000,000

  e)   

Umbrella Liability:

  

$9,000,000

  f)    Professional Liability / Errors and Omissions   

$2,000,000

 

Please note that these policies must not be canceled to as to affect insurance described by the certificate until thirty (30) days after written notice of such cancellation has been delivered to the 50 Fremont Property Management Office.

 

Also an important note: Please make sure that the additional insured “Hines GS Properties, Inc.” and “Teacher’s Insurance and Annuity Association of America for the Benefit of its Real Estate Account” are listed.

 

Our address is:

  

Hines

50 Fremont Street, Suite 100

San Francisco, CA 94105

Phone: (415) 543-5600

Fax: (415) 543-1870

 

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CERTIFICATE OF INSURANCE REQUIREMENTS

 

 

Any companies performing work on behalf of, or in, Fifty Fremont must have a valid Certificate of Insurance on file with the Property Management Office. Please make sure that the certificate is completed in accordance with the information and limits of liability stated below and includes an ISO Additional Insured Endorsement CG 2037 or CG 2026:

 

CERTIFICATE HOLDER:

  

Hines GS Properties, Inc.

    

50 Fremont Street, Suite 100 San

    

Francisco, California 94105

LOGO

 

ADDITIONAL INSUREDS:

  

Hines GS Properties, Inc.

    

        and

  
    

Teacher’s Insurance and Annuity Association of America for the Benefit of its Real Estate Account

 

COVERAGE:

     
  a)   

Workers Compensation:

  

In kind and amount as prescribed by statute

  b)   

Employers Liability:

  

$1,000,000

  c)   

Commercial General Liability:

  

$1,000,000 per occurrence

       

$2,000,000 general aggregate

  d)   

Commercial Automobile Liability:

  

$1,000,000

  e)   

Umbrella Liability:

  

$3,000,000

 

Please note that these policies must not be canceled to as to affect insurance described by the certificate until thirty (30) days after written notice of such cancellation has been delivered to the 50 Fremont Property Management Office.

 

Also an important note: Please make sure that the additional insured “Hines GS Properties, Inc.” and “Teacher’s Insurance and Annuity Association of America for the Benefit of its Real Estate Account” are listed.

 

Our address is:

  

Hines

50 Fremont Street, Suite 100

San Francisco, CA 94105

Phone: (415) 543-5600

Fax: (415) 543-1870

 

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[GRAPHIC]

 

B-4-3


[GRAPHIC]

 

B-4-4


[GRAPHIC]

 

B-4-5


EXHIBIT C

BUILDING RULES AND REGULATIONS

1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways and corridors of halls shall not be obstructed or used for any purpose other than ingress and egress. The halls, passages, entrances, elevators, stairways, balconies and roof are not for the use of the general public, and the Landlord shall in all cases retain the right to control and prevent access thereto of all persons whose presence, in the judgment of the Landlord, shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom the Tenant normally deals only for the purpose of conducting its business in the Premises (such as clients, customers, office suppliers and equipment vendors, and the like) unless such persons are engaged in illegal activities. No tenant and no employees of any tenant shall go upon the roof of the Building without the written consent of Landlord.

2. No awnings or other projections shall be attached to the outside walls of the Building. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises other than Landlord standard window coverings. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent, of a quality, type, design and bulb color approved by Landlord. Neither the interior nor the exterior of any windows shall be coated or otherwise sunscreened without the written consent of Landlord.

3. No sign, advertisement, notice or handbill shall be exhibited, distributed, painted or affixed by any tenant on, about or from any part of the Premises, the Building or the Project without the prior written consent of the Landlord. If the Landlord shall have given such consent at the time, whether before or after the execution of this Lease, such consent shall in no way operate as a waiver or release of any of the provisions hereof or of this Lease, and shall be deemed to relate only to the particular sign, advertisement or notice so consented to by the Landlord and shall not be construed as dispensing with the necessity of obtaining the specific written consent of the Landlord with respect to each and every such sign, advertisement or notice other than the particular sign, advertisement or notice, as the case may be, so consented to by the Landlord. In the event of the violation of the foregoing by any tenant, Landlord may remove or stop same without any liability, and may charge the expense incurred in such removal or stopping to such tenant. Interior signs on doors and the directory tablet shall be inscribed, painted or affixed for each tenant by the Landlord at the expense of such tenant, and shall be of a size, color and style acceptable to the Landlord. The directory tablet will be provided exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names therefrom.

4. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into halls, passageways or other public places in the Building shall not be covered or obstructed by any tenant, nor shall any bottles, parcels or other articles be placed on the window sills. Tenant shall see that the windows, transoms and doors of the Premises are closed and securely locked before leaving the Building and must observe strict care not to leave windows open when it rains. Tenant shall exercise extraordinary care and caution that all water faucets or water apparatus are entirely shut off before Tenant or Tenant’s employees leave the Building, and that all electricity, gas or air shall likewise be carefully shut off, so as to prevent waste or damage. Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by closing window coverings when the sun’s rays fall directly on the windows of the Premises. Tenant shall not tamper with or change the setting of any thermostats or temperature control valves.

5. The toilet rooms, water and wash closets and other plumbing fixtures shall not be used for any purpose other than those for which they were considered, and no sweepings, rubbish, rags or other substances shall be thrown therein. All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose subtenants, assignees or any of their servants, employees, agents, visitors or licensees shall have caused the same.

6. No tenant shall mark, paint, drill into, or in any way deface any part of the Premises, the Building or the Project other than cosmetic changes within the Premises. No boring, cutting or stringing of wires or laying of linoleum or other similar floor coverings shall be permitted, except with the prior written consent of the Landlord and as the Landlord may direct.

 

C-1


7. No bicycles, vehicles, birds or animals of any kind shall be brought into or kept in or about the Premises, and no cooking shall be done or permitted by any tenant on the Premises, except that the preparation of coffee, tea, hot chocolate and similar items (including those suitable for microwave heating) for tenants and their employees shall be permitted, provided that the power required therefor shall not exceed that amount which can be provided by a 30 amp circuit. No tenant shall cause or permit any unusual or objectionable odors to be produced or permeate the Premises. Smoking or carrying lighted cigars, cigarettes or pipes in the Building is prohibited.

8. The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage may be incidental to the permitted use of the Premises. No tenant shall occupy or permit any portion of the Premises to be occupied as an office for a public stenographer or typist, or for the manufacture or sale of liquor, narcotics, or tobacco (except by a cigarette vending machine for use by Tenant’s employees) in any form, or as a medical office, or as a barber or manicure shop, or as an employment bureau, without the express written consent of Landlord. No tenant shall engage or pay any employees on the Premises except those actually working for such tenant on the Premises nor advertise for laborers giving an address at the Premises. The Premises shall not be used for lodging or sleeping or for any immoral or illegal purposes.

9. No tenant shall make, or permit to be made any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio, phonograph, unusual noise, or in any other way. No tenant shall throw anything out of doors, windows or skylights or down the passageways.

10. No tenant, subtenant or assignee nor any of their servants, employees, agents, visitors or licensees shall at any time bring or keep upon the Premises any inflammable, combustible or explosive fluid, chemical or substance.

11. All removals, or the carrying in or out of any safes, freight, furniture, or bulky matter of any description must take place during the hours which Landlord shall determine from time to time, without the express written consent of Landlord. The moving of safes or other fixtures or bulky matter of any kind must be done upon previous notice to the Project Management Office and under its supervision, and the persons employed by any tenant for such work must be acceptable to the Landlord. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into the Building and to exclude from the Building all safes, freight or other bulky articles which violate any of these Rules and Regulations or the Lease of which these Rules and Regulations are a part. Landlord reserves the right to prescribe the weight and position of all safes, which must be placed upon supports approved by Landlord to distribute the weight.

12. No tenant shall purchase spring water, ice, towel, janitorial maintenance or other similar services from any person or persons not approved by Landlord.

13. Landlord reserves the right to exclude from the Building between the hours of 6:00 P.M. and 7:00 A.M. and at all hours on Saturday, Sunday and legal holidays all persons who do not present a pass or card key to the Building approved by the Landlord. Each tenant shall be responsible for all persons who enter the Building with or at the invitation of such tenant and shall be liable to Landlord for all acts of such persons. Landlord shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. In case of an invasion, mob riot, public excitement or other circumstances rendering such action advisable in Landlord’s opinion, Landlord reserves the right, without abatement of Rent, to require all persons to vacate the Building and to prevent access to the Building during the continuance of the same for the safety of the tenants, the protection of the Building, and the property in the Building.

14. Any persons employed by any tenant to do janitorial work shall, while in the Building and outside of the Premises, be subject to and under the control and direction of the Project Management Office (but not as an agent or servant of said Office or of the Landlord), and such tenant shall be responsible for all acts of such persons.

15. All doors opening onto public corridors shall be kept closed, except when in use for ingress and egress.

 

C-2


16. The requirements of Tenant will be attended to only upon application to the Project Management Office.

17. Canvassing, soliciting and peddling in the Building are prohibited and each tenant shall report and otherwise cooperate to prevent the same.

18. No air conditioning unit, or individual space heaters or personal refrigerators or hot plates or other similar apparatus shall be installed or used by any tenant without the written consent of Landlord.

19. There shall not be used in any space, or in the public halls of the Building, either by any tenant or others, any hand trucks, except those equipped with rubber tires and rubber side guards.

20. The term “personal goods or services vendors” as used herein means persons who periodically enter the Building of which the Premises are a part for the purpose of selling goods or services to a tenant, other than goods or services which are used by the Tenant only for the purpose of conducting its business in the Premises. “Personal goods or services” include, but are not limited to, drinking water and other beverages, food, barbering services and shoeshining services but shall exclude all food delivery services. Landlord reserves the right to prohibit personal goods and services vendors from access to the Building except upon Landlord’s prior written consent and upon such reasonable terms and conditions, including, but not limited to, the payment of a reasonable fee and provision for insurance coverage, as are related to the safety, care and cleanliness of the Building, the preservation of good order thereon, and the relief of any financial or other burden on Landlord or other tenants occasioned by the presence of such vendors or the sale by them of personal goods or services to the Tenant or its employees. If necessary for the accomplishment of these purposes, Landlord may exclude a particular vendor entirely or limit the number of vendors who may be present at any one time in the Building.

21. The Building is a non-smoking building. Smoking is prohibited at all times within the entire Building, including all leased premises, as well as all public/common areas and parking areas for the Building, including any attached parking garage structure. This prohibition applies during business and non-business hours to restrooms, elevators, elevator lobbies, first floor lobby, stairwells, common hallways, the lunch room and any other public/common area, as well as to all areas within the Leased Premises by Tenants. Smoking is only permitted in the designated smoking area outside the Building at least 25 feet away from the entrances to the Building.

22. The Building and Project is a weapons free environment. No tenant, owner of a tenant, officer or employee of a tenant, visitor of tenant, contractor or subcontractor of tenant, or any other party shall carry weapons (concealed or not) of any kind in the building, or parking areas without a valid license. This prohibition applies to all public areas, including without limitation, restrooms, elevators, elevator lobbies, first floor lobby, stairwells, common hallways, all areas within the leased premises of tenants, all surface parking areas and the surrounding land related to the Building.

23. In case of conflict between these Rules and Regulations and the Lease, the terms and conditions of the Lease shall prevail.

 

C-3


EXHIBIT D

FORM TENANT ESTOPPEL CERTIFICATE

 

TO:

 

 

 

(“Landlord”)

  
 

 

    
 

 

    

and:

      
 

 

 

(“Third Party”)

  
 

 

    
 

 

    

Re:

 

Property Address:

  
 

Lease Date:                     

 

Between                                                              , Landlord and

 

                                                             , Tenant

 

Square Footage Leased:                                                              

 

Suite No.

 
 

Floor:

 

The undersigned tenant (“Tenant”) hereby certifies to Third Party and Landlord as follows:

1. The above-described Lease has not been canceled, modified, assigned, extended or amended except                                                              .

2. Base Rent has been paid to the first day of the current month and all additional rent has been paid and collected in a current manner. There is no prepaid rent except $        , and the amount of the security deposit is $        .

3. Base Rent is currently payable in the amount of $          monthly exclusive of Tenant’s Proportionate Share of Operating Expenses.

4. The Lease terminates on                 , 20     subject to any renewal option(s) set forth in the Lease.

5. All work to be performed for Tenant under the Lease has been performed as required and has been accepted by Tenant, except                                                              .

6. The Lease is: (a) in full force and effect; (b) to Tenant’s actual knowledge, free from default; and (c) to Tenant’s actual knowledge, Tenant has no claims against the Landlord or offsets against rent.

7. The estimated amount of Tenant’s Proportionate Share of Operating Expenses, as defined in the said Lease, is                                         .

8. The undersigned has no right or option to purchase all or any part of the Premises or the Building of which the Premises are a part except as may be set forth in the Lease.

9. There are no other agreements written or oral between the undersigned and the Landlord with respect to the Lease and/or the Premises and Building except                                         .

10. The statements contained herein may be relied upon by the Landlord and by any third party.

If a blank in this document is not filled in, the blank will be deemed to read “none”.

 

D-1


If Tenant is a corporation, the undersigned signatory is a duly appointed Officer of the corporation.

 

Dated this      day of                 , 20    .

Tenant:

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

D-2


EXHIBIT E

TENANT’S COMMENCEMENT LETTER

 

To:

 

 

  

(“Landlord”)

Date:

 

 

  

Tenant’s Commencement Letter

 

 

The undersigned, as the Tenant under that certain Office Lease (the “Lease”) dated                     , made and entered into between                                         , a                                          as Landlord, and the undersigned, as Tenant, hereby certifies that:

 

 

1.

The undersigned has accepted possession and entered into occupancy of the portion of the Premises located on                                         .

 

 

2.

The Delivery Date with respect to that portion of the Premises located on the          floor(s) of the Building was                                         .

 

 

3.

The Commencement Date with respect to that portion of the Premises located on the          floor(s) of the Building is                                         .

 

 

4.

The Termination Date with respect to that portion of the Premises located on the          floor(s) of the Building is                                         .

 

 

5.

The Lease is in full force and effect and has not been modified or amended.

 

Very truly yours,

 

 

 

,

a

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

E-1


EXHIBIT F

FORM OF LETTER OF CREDIT

[BANK]

 

BENEFICIARY:

   

APPLICANT:

 

TEACHERS INSURANCE AND ANNUITY

   

 

 

,

ASSOCIATION OF AMERICA, for the benefit of its

   

a

 

 

 

Real Estate Account

   

 

 

 

   

 

 

 

     

 

     
   

AMOUNT: USD $6,000,000.00 (SIX MILLION AND 00/100 DOLLARS)

Ladies and Gentlemen:

We hereby issue this Irrevocable Standby Letter of Credit No.              (“Letter of Credit”) in your favor for the account of                                         , a                                          (“Tenant”) for a sum not to exceed an aggregate amount of $6,000,000.00 effective immediately and expiring at our office at                                                               on                                                               (“Expiry Date”). Notwithstanding anything herein to the contrary, this Letter of Credit shall automatically renew on a year-to-year basis, the first such renewal commencing on the day immediately following the Expiry Date unless we notify you (Beneficiary) in writing at least thirty (30) days prior to the Expiry Date (or the applicable subsequent Expiry Date, following any such renewal) that we will not renew this Letter of Credit. Partial Drawings are permitted hereunder, and each drawing under this Letter of Credit shall permanently reduce the face amount of this Letter of Credit by the amount of such drawing.

We undertake that drawings under this Letter of Credit will be duly honored upon presentation to us at our office indicated above on any Business Day (as defined below) on or before the Expiry Date of your sight draft(s) drawn on us, bearing the clause: “Drawn under                                          Irrevocable Standby Letter of Credit No.             ”, together with a statement in the form of Annex A (as stated below) purportedly executed by your authorized officer and regardless of whether Tenant disputes the content of such statement. Payment will be made hereunder not later than 1:00 p.m. Eastern Standard time on the third Business Day (as defined below) following the date such demand for payment is presented as aforesaid. Payment of any amount drawn under this Letter of Credit will be made in immediately available funds by wire transfer to you at such account as you shall specify or in such other manner as you specify in the sight draft presented to us with respect to such payment. For purposes of this Letter of Credit, the term “Business Day” shall mean a day upon which banks in New York, New York are open for commercial business.

THE BENEFICIARY’S RIGHTS UNDER THIS LETTER OF CREDIT ARE TRANSFERABLE IN ITS ENTIRETY (BUT NOT IN PART) AND ONLY DEUTSCHE BANK AG NEW YORK BRANCH, OR ITS SUCCESSORS OR ASSIGNS, IS AUTHORIZED TO ACT AS THE TRANSFERRING BANK. WE SHALL NOT RECOGNIZE ANY TRANSFER OF THIS LETTER OF CREDIT UNTIL THIS ORIGINAL LETTER OF CREDIT TOGETHER WITH ANY AMENDMENTS, A SIGNED AN COMPLETED TRANSFER FORM IN THE FORM ATTACHED HERETO AS ATTACHMENT A, AND PAYMENT OF OUR STANDARD TRANSFER FEE OF  1/4 OF 1% (MIN. US$250.00) IS RECEIVED BY US. TRANSFER CHARGES ARE FOR ACCOUNT OF THE BENEFICIARY. UNDER NO CIRCUMSTANCES SHALL THIS LETTER OF CREDIT BE TRANSFERRED TO ANY PERSON OR ENTITY WITH WHICH U.S. PERSONS OR ENTITIES ARE PROHIBITED FROM CONDUCTING BUSINESS UNDER U.S. FOREIGN ASSET CONTROL REGULATIONS AND OTHER APPLICABLE U.S. LAWS AND REGULATIONS.

 

F-1


This Letter of Credit sets forth in full the terms of our undertaking and such undertaking shall not in any way be modified, amended or amplified by reference to any document or instrument referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates and any such reference shall not be deemed to incorporate herein by reference to any document or instrument.

Except as stated herein, this undertaking is not subject to any condition or qualification. Our obligations under this Letter of Credit shall be the individual obligation of             Bank, in no way contingent upon reimbursement with respect thereto.

This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision) International Chamber of Commerce Publication No. 500 (“ISP 98”) and, to the extent not inconsistent with the ISP 98, the laws of the State of New York.

 

F-2


ANNEX A

CERTIFICATE RELATING TO                      BANK

IRREVOCABLE LETTER OF CREDIT NO.             

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account, (“Landlord”) hereby requests payment of                      United States Dollars (U.S. $            ) pursuant to Letter of Credit No.                      (“Letter of Credit”) dated                     .

In connection with such request, the Landlord hereby certifies that Tenant has not complied with the terms and conditions of that certain Lease dated                     , 2012, entered into by and between TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account, as landlord, and                                         , a                                         , as tenant.

 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, for the benefit of its Real Estate Account

By:

 

 

Name:

 

 

Title:

 

 

Dated:                     , 20    

 

F-3


EXHIBIT G

EXAMPLES OF IMPROVEMENTS

[GRAPHIC]

Rectilinear ceiling tile set perpendicular to the window line, with direct/indirect pendant lighting as shown.

[GRAPHIC]

Fixtures inset to ceiling grid; conference rooms with silicone butt-jointed glass and clear anodized aluminum framing.

 

G-1


[GRAPHIC]

An example of pendant lighting and ceiling soffits not considered building standard.

[GRAPHIC]

Resilient flooring and sustainable cabinetry, carpet tile and base, dark-painted exposed slab, similar as shown.

 

G-2


EXHIBIT H

CURRENT RENOVATION PLANS

The following is a rendering of the proposed Renovation Work in the main lobby of the Building:

[GRAPHIC]

Building Elevator Modernization

The Building maintains twenty passenger elevators servicing floors B through 41. The elevators are original base building Otis Elevonic 101 elevators, installed in 1983. Otis was awarded the modernization contract, the scope of which includes replacing the outdated Elevonic 101 controllers with Otis Elevonic 411 controllers and regenerative Quattro drives, Destination Dispatch controls, new door operators, and achieving 12mG ride quality for the high-rise and shuttle elevators.

Tenants now utilize a destination dispatch control system, in which the Destination Floor is selected at a lobby keypad, and calls are dispatched to elevators accordingly, thereby grouping travelers for more efficient dispatch.

Upon completion of all six high rise elevators, modernizations will begin on the two shuttle elevators that service B level through the 2nd floor. These elevators currently have motor generator drives that operate very slowly and waste significant amounts of energy in order to power the generators. Modernization will include upgrades to Elevonic RM controllers that will also communicate with the Destination Dispatch control system. Modernization of these elevators is scheduled to begin mid-January and be completed by approximately May 25, 2012.

Early Implementation of Compass Destination Dispatch on the mid and low rise elevators will begin upon completion of the Shuttle Elevator modernization, and may be completed by approximately August 17, 2012. When the high rise and shuttle elevators are modernized, they will all communicate via Destination Dispatch controls.

Building Lobby Renovation

Currently, the renovation is scheduled to begin in approximately February 2012. The scope includes new glass around the ground floor after the black granite surrounding each opening is demolished. The larger openings, along with efficient lighting will bring a diaphanous feeling to the new materials that will replace the current finishes. Adze-finished limestone for the walls, Jet-Mist granite for the floors and a high-level hard lid ceiling will compliment the expanded space. The elevator lobby ceiling shall be raised to the same height as main ceiling and

 

H-1


the lobby will stretch from Mission Street at the South to the plaza at the North. An LED lit canopy will extend 12 feet over the sidewalk on the exterior and continue to the interior. Elevator lobbies will have walnut accent walls and new signage with a touchscreen tenant directory. A new security console will complete the sleek look of the lobby renovations.

The stairwells that exit onto Fremont shall be relocated to further increase the porosity and visibility of the project. Two story lanterns will be installed on each exterior corner to complete the motif of bringing light to the new entrance of the Building. The lobby project will be complete by approximately July 31, 2013.

 

H-2


EXHIBIT I

FORM OF PURCHASE AND SALE AGREEMENT

 

I-1


50 Fremont, San Francisco, California

PURCHASE AND SALE

AGREEMENT

dated

                    , 20    

by and between

                                                             ,

SELLER

and

                                                             ,

PURCHASER

 

I-2


50 Fremont, San Francisco, California

 

TABLE OF CONTENTS

 

Article I

 

SALE OF THE PROPERTY

     6   
 

1.1

 

Sale of Property

     6   
 

1.2

 

No Representations

     7   
 

1.3

 

No Reliance

     7   
 

1.4

 

Acceptance of Deed

     7   
 

1.5

 

“AS IS”

     7   
 

1.6

 

Seller Release from Liability

     8   
 

1.7

 

Purchaser’s Waiver of Objections

     10   
 

1.8

 

Survival

     11   

Article II

 

PURCHASE PRICE

     11   
 

2.1

 

Purchase Price

     11   

Article III

 

DEPOSIT AND OPENING OF ESCROW

     13   
 

3.1

 

Deposit

     13   
 

3.2

 

Interest Bearing

     13   
 

3.3

 

Application

     14   
 

3.4.

 

Independent Consideration

     14   

Article IV

 

CONDITIONS TO CLOSING

     17   
 

4.1

 

Conditions to Purchaser’s Obligation to Purchase

     17   
 

4.2

 

Conditions to Seller’s Obligation to Sell

     20   
 

4.3

 

No Financing Contingency

     20   

Article V

 

THE CLOSING

     22   
 

5.1

 

Date and Manner of Closing

     22   
 

5.2

 

Closing

     22   
 

5.3

 

Delay in Closing; Authority to Close

     22   

Article VI

 

DUE DILIGENCE PERIOD

     23   
 

6.1

 

Review and Approval of Documents and Materials

     23   
 

6.2

 

Reliability of Information

     24   
 

6.3

 

Due Diligence Period

     24   
 

6.4

 

Termination

     24   

Article VII

 

INSPECTIONS

     25   

Article VIII

 

TITLE AND SURVEY

     25   
 

8.1

 

Title Documents

     25   
 

8.2

 

Survey

     25   
 

8.3

 

Title Objections

     25   
 

8.4

 

Title Updates

     26   
 

8.5

 

Encumbrances

     26   
 

8.6

 

Waiver

     26   
 

8.7

 

Notice of Commencement

     26   

 

I-3


50 Fremont, San Francisco, California

 

 

8.8

 

Seller’s Failure to Remove

     27   

Article IX

 

RISK OF LOSS

     27   
 

9.1

 

Casualty

     27   
 

9.2

 

Condemnation

     27   

Article X

 

OPERATION OF THE PROPERTY

     28   
 

10.1

 

Operations

     28   
 

10.2

 

Tenant Defaults

     28   
 

10.3

 

Service Contracts/Leases During Due Diligence Period

     28   
 

10.4

 

Services Contracts/Leases After Due Diligence Period

     28   
 

10.5

 

Purchaser Assumes Costs

     28   

Article XI

 

CLOSING PRORATIONS AND ADJUSTMENTS; PAYMENT OF CLOSING COSTS

     31   
 

11.1

 

General

     31   
 

11.2

 

Prorations

     31   
 

11.3

 

Rents

     31   
 

11.4

 

Security Deposits

     32   
 

11.5

 

Final Adjustment After Closing

     33   
 

11.6

 

Thirty-Day Month

     34   

Article XII