SHORT FORM OFFICE LEASE BY AND BETWEEN BERNARDO REGENCY, LLC, a Delaware limited liability company, AS LANDLORD AND LIFEVANTAGE CORPORATION a Colorado corporation, AS TENANT FOR THAT PROPERTY LOCATED AT 11545 W. Bernardo Court, San Diego, California

 

Additional Insured

Additional Rent

Affiliates

Alterations

Amortization Rate

Approved Working Drawings

Architect

Base Building

Base Rent

Billing Address

Brokers

Building

Building Standard

Building Structure

Business Hours

Claims

Commencement Date

Common Areas

Construction Allowance

Contractor

Cost-Saving Expenses

Date

Default

Default Rate

Design Problem

Encumbrance

Estimated Additional Rent

Expenses

Expiration Date

Force Majeure

Hazardous Materials

Holdover

Holidays

HVAC

Interest Notice

Interruption Estimate

Land

Landlord

Late Charge

Lease

Leasehold Improvements

Liability Limit

Mandated Expenses

Market Rent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year 1

Year 2

Year 3

Year 4

Year 5

 

 

 

 

 

 

 

▇▇▇▇▇▇▇▇ Regency, LLC

c/o CABI Developers

▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

Los Angeles, California 90035

Attn: V.P./Legal

 

 

 

 

 

 

 

▇▇▇▇▇▇▇▇ Regency, LLC

c/o CABI Developers

▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attn: V.P./Legal

 

CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. (for Landlord); and Corporate Real Estate Consultants (for Tenant). Brokers will be paid by Landlord in accordance with a separate agreement with Landlord.

 

 

Twelve (12) unreserved parking passes, for the use and access to the Building’s Parking Facility subject to the terms set forth in Exhibit C to this Lease.

 

 

 

 

None; Landlord shall construct the Improvements on a “turn key” basis in accordance with the Work Letter attached to this Lease as Exhibit E.

 

 

From 8:00 a.m. to 6:00 p.m., Monday through Friday, and from 9:00 a.m. to 1:00 p.m. on Saturdays, except for the days observed for: excepting New Year’s Day, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Day, President’s Day, Memorial Day, Independence Day, Labor Day, Veteran’s Day, Thanksgiving and the day after Thanksgiving and Christmas, and in Landlord’s reasonable discretion, any other holidays recognized by landlords of comparable projects to the Building (“Holidays”).

Building Structure. “Building Structure” means the structural components in the Building, including foundations, floor and ceiling slabs, roofs, exterior walls, exterior glass and mullions, columns, beams, shafts, and emergency stairwells. The Building Structure excludes the Leasehold Improvements (and similar improvements to other premises) and the Mechanical Systems.

Mechanical Systems. “Mechanical Systems” means the mechanical, electronic, physical or informational systems generally serving the Building or Common Areas, including the sprinkler, plumbing, heating, ventilating, air conditioning, lighting, communications, security, drainage, sewage, waste disposal, vertical transportation, and fire/life safety systems.

Leasehold Improvements. “Leasehold Improvements” means all non-structural improvements in the Premises or exclusively serving the Premises, and any structural improvements to the Building made to accommodate Tenant’s particular use of the Premises. The Leasehold Improvements may exist in the Premises as of the Date, or be installed by Landlord or Tenant under this Lease at the cost of either party. The Leasehold Improvements include: (1) interior walls and partitions (including those surrounding structural columns entirely or partly within the Premises); (2) the interior one-half of walls that separate the Premises from adjacent areas designated for leasing; (3) the interior drywall on exterior structural walls, and walls that separate the Premises from the Common Areas; (4) stairways and stairwells connecting parts of the Premises on different floors, except those required for emergency exiting; (5) the frames, casements, doors, windows and openings installed in or on the improvements described in the foregoing clauses (1) through (4), or that provide entry/exit to/from the Premises; (6) all hardware, fixtures, cabinetry, railings, paneling, woodwork and finishes in the Premises or that are installed in or on the improvements described in the foregoing clauses (1) through (5); (7) if any part of the Premises is on the ground floor, the ground floor exterior windows (including mullions, frames and glass); (8) integrated ceiling systems (including grid, panels and lighting); (9) carpeting and other floor finishes; (10) kitchen, rest room, laboratory or other similar facilities that exclusively serve the Premises (including plumbing fixtures, toilets, sinks and built-in appliances); and (11) the sprinkler, plumbing, heating, ventilating, air conditioning, electrical, metering, lighting, communications, security, drainage, sewage, waste disposal, vertical transportation, fire/life safety, and other mechanical, electronic, physical or informational systems that exclusively serve the Premises, including the parts of each system that are connected to the Mechanical Systems from the common point of distribution for each system to and throughout the Premises (such items in this subsection (11) shall be referred to the “Systems”).

Exclusions from the Premises. The Premises does not include: (1) any areas above the finished ceiling or integrated ceiling systems, or below the finished floor coverings that are not part of the Leasehold Improvements, (2) janitor’s closets, (3) stairways and stairwells to be used for emergency exiting or as Common Areas, (4) rooms for Mechanical Systems or connection of telecommunication equipment, (5) vertical transportation shafts, (6) vertical or horizontal shafts, risers, chases, flues or ducts, and (7) any easements or rights to natural light, air or view.

Commencement Date. The “Commencement Date” means the date that is the earlier of:

The day that Landlord tenders the Premises to Tenant with Landlord’s Work substantially complete or that date that Landlord would have tendered possession of the Premises but for delay caused by Tenant.

Expiration Date. “Expiration Date” means the date that is the Scheduled Term (plus that many additional days required for the Expiration Date to be the last day of a Month) after the later of:

Early Occupancy. Tenant may not enter the Premises for any purpose until Landlord tenders the Premises to Tenant. If Tenant conducts business in any part of the Premises before the Scheduled Commencement Date, Tenant will pay Base Rent for that period at the rate for the first Month that Base Rent is due, without discount or excuse. Notwithstanding anything to the contrary provided herein, and provided that Tenant and its agents do not interfere with Landlord’s Contractor’s work in the Building and the Premises, Landlord shall allow Tenant access to the Premises ten (10) days prior to the Substantial Completion of the Premises for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant’s data and telephone equipment) in the Premises. Prior to Tenant’s entry into the Premises as permitted by the terms of this Section, Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant’s entry. Tenant shall hold Landlord harmless from and indemnify, protect and defend Landlord against any loss or damage to the Building or Premises and against injury to any persons caused by Tenant’s actions pursuant to this Section.

Late Occupancy. If Landlord fails to tender possession of the Premises to Tenant by the Scheduled Commencement Date due to delay caused by Tenant or Force Majeure, Landlord will not be in default of this Lease.

Confirmation of Term. If applicable, Landlord shall notify Tenant of the Commencement Date using a Notice of Lease Term (“NLT”) in the form attached to this Lease as Exhibit D. Tenant shall execute and deliver to Landlord the NLT within 10 business days after its receipt, but Tenant’s failure to do so will not reduce Tenant’s obligations or Landlord’s rights under this Lease.

Return of the Premises. At the end of the Term, Tenant will return possession of the Premises to Landlord vacant, free of Tenant’s Personal Property, in broom-clean condition, and with all Leasehold Improvements in good working order and repair (excepting ordinary wear and tear), except that Landlord may require

Tenant, by notice at least 10 days before the expiration of the Term, to remove (and restore the Premises damaged by removal):

All Tenant’s Wiring; and

Any item of Leasehold Improvements (not part of the original Leasehold Improvements made by Landlord as outlined in the Work Letter or the Systems) or Alterations (other than Tenant’s Wiring) if either:

When Landlord consented to the installation of the improvement, Landlord reserved Landlord’s right to have Tenant remove the improvement at the end of the Term; or

Tenant failed to obtain Landlord’s written consent under § 8.1 (a) for an item of Alterations to become part of the Premises.

Correction by Landlord. If Tenant fails to return possession of the Premises to Landlord in the condition required under (a), then Tenant shall reimburse Landlord for the costs incurred by Landlord to put the Premises in the condition required under (a), plus Landlord’s standard administration fee.

Abandoned Property. Tenant’s Personal Property left behind in the Premises after the end of the Term will be considered abandoned and Landlord may move, store, retain or dispose of these items at Tenant’s cost, including Landlord’s standard administration fee.

Taxes. For each full or partial Year Tenant shall pay as in the manner described below the Tenant’s Share of the Taxes for such Year in excess of the Taxes for the Base Year. “Taxes” means the total costs incurred by Landlord for: (1) real and personal property taxes and assessments (including ad valorem and special assessments) levied on the Project and Landlord’s personal property used in connection with the Project; (2) taxes on rents or other income derived from the Building; (3) capital and place-of-business taxes; (4) taxes, assessments or fees in lieu of the taxes described in the foregoing clauses (1) through (3); and (5) the reasonable costs incurred to reduce the taxes described in the foregoing clauses (1) through (4). Taxes excludes net income taxes and taxes paid under §4.3.

Expenses. For each full or partial Year, Tenant shall pay in the manner described below the Tenant’s Share of the Expenses for such Year in excess of the Expenses for the Base Year. “Expenses” means the total costs incurred by Landlord to operate, manage, administer, equip, secure, protect, repair, replace, refurbish, clean, maintain, decorate and inspect the Project, including a fee to manage the Project not to exceed 5% of the gross revenue of the Project. Expenses that vary with occupancy will be calculated as if the Building is 95% occupied and operating and all such services are provided to all tenants.

Expenses include:

Standard Services provided under §6.1 (excluding electrical service pursuant to Section 6.3);

Repairs and maintenance performed under §7.2;

Insurance maintained under §9.2 (including deductibles paid);

Wages, salaries and benefits of personnel to the extent they render services to the Project;

Costs of operating the Project management office (including reasonable rent);

Amortization installments of costs required to be capitalized and incurred:

To comply with insurance requirements or laws (“Mandated Expenses”);

That are reasonably calculated to reduce other Expenses or the rate of increase in other Expenses (“Cost-Saving Expenses”); or

That are reasonably calculated to improve or maintain the safety, health or access of Project occupants, and otherwise maintain the quality, appearance, or integrity of the Project (“Quality Expenses”).

Expenses exclude:

Taxes;

Mortgage payments (principal and interest), and ground lease rent;

Commissions, advertising costs, attorney’s fees and costs of improvements in connection with leasing space in the Building;

Costs reimbursed by insurance proceeds or tenants of the Building (other than as Direct Costs);

Depreciation;

Except for the costs identified in §4.2(b)(1)(F), costs required to be capitalized according to sound real estate accounting and management principles, consistently applied;

Collection costs and legal fees paid in disputes with tenants; and

Costs to maintain and operate the entity that is Landlord (as opposed to operation and maintenance of the Project).

Costs incurred by Landlord due to the violation by Landlord of the terms and conditions of any lease of space in the Project or any law, code, regulation, ordinance or the like;

Landlord’s general corporate overhead and general and administrative expenses; and

Costs incurred to (i) comply with laws relating to the removal of any Hazardous Material, unless caused by Tenant or any Tenant Parties, and (ii) to remove, remedy, contain, or treat any Hazardous Material, which Hazardous Material is brought onto the Project after the date hereof by Landlord or any other tenant of the Project or any other person.

Each item of Mandated Expenses and Quality Expenses will be fully amortized in equal annual installments, with interest on the principal balance at Amortization Rate, over the number of years, not to exceed 10, that Landlord projects the item of Expenses will be productive for its intended use, without replacement, but properly repaired and maintained.

Each item of Cost-Saving Expenses will be fully amortized in equal annual installments, with interest on the principal balance at the Amortization Rate, over the number of years that Landlord reasonably estimates for the present value of the projected savings in Expenses (discounted at the Amortization Rate) to equal the cost.

Any item of Expenses of significant cost that is not required to be capitalized but is unexpected or does not typically recur may, in Landlord’s discretion, be amortized in equal annual installments, with interest on the principal balance at the Amortization Rate, over a number of years determined by Landlord.

“Amortization Rate” means the prime rate of Citibank, N.A. (or a comparable financial institution selected by Landlord), plus 3%.

Subject to the specific provisions of this Article 4, Landlord will use sound real estate accounting and management principles, consistently applied, to determine Direct Costs.

Estimates. Landlord will provide to Tenant a reasonably detailed itemization of estimated Direct Costs for each Year. During the Term, if for any Year, Tenant’s Share exceeds Tenant Share for the Base Year, Tenant will pay an amount equal to the excess (“Excess”), in equal Monthly installments, on the first day of each Month. If Landlord has not provided Tenant with Landlord’s estimate of Direct Costs for a Year, then Tenant will pay the estimated Excess until the estimate is revised by Landlord. Landlord may reasonably revise its estimate of Direct Costs for a Year and after receipt of the revised estimate, Tenant will pay the monthly installments of Excess based on the revised estimate for the remainder of the Year or until the estimate is later revised by Landlord. The aggregate estimates of Direct Costs paid by Tenant in a Year is the “Estimated Direct Costs.”

Settlement. As soon as practicable after the end of each Year, Landlord will give Tenant a statement of the actual Direct Costs for the Year, and which shall indicate the amount, if any, of the Excess. Direct Costs for any partial Year will be prorated based on a 365-day calendar year. The statement of Direct Costs is conclusive, binds Tenant, and Tenant waives all rights to contest the statement, except for items of Direct Costs to which Tenant objects by notice to Landlord given within 90 days after receipt of Landlord’s statement; however, Tenant’s objection will not relieve Tenant from its obligation to pay Direct Costs pending resolution of any objection. If the Direct Costs exceed the Estimated Direct Costs for the Year, then Tenant shall pay any underpayment in Excess to Landlord in a lump sum as Rent within 30 days after receipt of Landlord’s statement of Direct Costs. If the Estimated Direct Costs exceeds the Direct Costs for the Year, then Landlord shall credit any overpayment in Excess against Rent next due. However, if the Term ends during a Year, then Landlord may, in Landlord’s sole discretion, elect either of the following: (1) to forego the settlement of Excess Direct Costs for the Year that is otherwise required and accept the payments of estimated Excess for the final Year in satisfaction of Tenant’s obligations to pay Excess for the final Year, or (2) to have Landlord’s and Tenant’s obligations under this §4.2(e) survive the end of the Term.

Audit. Tenant shall have the right to review and/or audit Landlord’s books and records regarding Tenant’s Share of Operating Costs at Landlord’s offices during normal business hours on ten (10) business days’ prior notice (“Review Notice”) for a period of ninety (90) days following Tenant’s receipt of the Annual Statement (the “Review Period”). Within a reasonable time after receipt of Tenant’s review/audit notice, Landlord shall make all pertinent records available for inspection that are reasonably necessary for Tenant to conduct its review. If any records are maintained at a location other than the office of the Project, Tenant may either inspect the records at such other location or pay for the reasonable cost of copying and shipping the records. Any audit shall be conducted by a reputable firm of certified public accountants (“Tenant’s CPA”) which, along with Tenant, agrees to be bound by a confidentiality agreement, on a noncontingent fee basis. Tenant shall have no right to contest, review or audit such statement if a Default has occurred and is continuing, or if Tenant fails to give such written notice during the Review Period. Within ninety (90) days after the records are made available to Tenant, Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any objection to the books and records that Tenant has reviewed. If Tenant fails to give Landlord an Objection Notice within the 90-day period or fails to provide Landlord with a Review Notice within the 90-day period described above, Tenant shall be deemed to have approved Landlord’s statement of Operating Costs for such year and shall be barred from raising any claims regarding the Operating Costs for that year. Landlord may elect to contest the conclusion of Tenant’s auditor in the Objection Notice by giving a written contest notice (the “Contest Notice”) to Tenant within sixty (60) days after receipt of the Objection Notice, such Contest Notice containing the name of a firm of certified public accountants appointed by Landlord (“Landlord’s CPA”). Landlord’s CPA and Tenant’s CPA shall meet and confer within forty-five (45) days after the Contest Notice is given in an attempt to agree on any disputed items. If Landlord’s CPA and Tenant’s CPA are unable to agree on all disputed items within forty-five (45) days after the Contest Notice, then each of Landlord’s CPA and Tenant’s CPA shall propose and deliver to each other in writing an amount to be paid by Tenant to Landlord or Landlord to Tenant relating to the Operating Costs being audited. Tenant’s CPA and Landlord’s CPA shall agree on a third CPA experienced in real estate accounting unaffiliated with

Landlord, Tenant and their respective CPA’s and who has not worked for Landlord, Tenant or their respective CPA’s in the last ten (10) years. Such third CPA (the “Deciding CPA”) shall meet for one day or less with Landlord’s CPA and Tenant’s CAP within fifteen (15) business days after the appointment of such Deciding CPA, and at the end of such meeting the Deciding CPA shall choose in writing either Tenant’s CPA’s proposal or Landlord’s CPA’s proposal, and such decision shall be final, binding and nonappealable. If Landlord and Tenant determine that Operating Costs for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the next installment of Rental in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant determine that Operating Costs for the calendar year are greater than reported, Tenant shall pay Landlord the amount of any underpayment within thirty (30) days. Landlord shall pay for Landlord’s CPA, Tenant shall pay for Tenant’s CPA and the cost of the Deciding CPA shall be divided equally among the parties. No books and records may be removed from Landlord’s office. Notwithstanding the foregoing, if it is determined that Operating Costs reflected in the Annual Statement have been overstated by five percent (5%) or more, than Landlord shall pay for the reasonable cost of Tenant’s CPA and the Deciding CPA.

Tenant’s Compliance. Subject to the remaining terms of this Lease, Tenant shall comply at Tenant’s expense with all laws and directives of Landlord’s insurers concerning:

Any chemical wastes, contaminants, pollutants or substances that are hazardous, toxic, infectious, flammable or dangerous, or regulated by any local, state or federal statute, rule, regulation or

Notwithstanding the foregoing, nothing in this Paragraph 5.2(a) shall require Tenant to bear any expenses for any structural changes, modifications or Alterations to the Premises or the Project or any changes to the Systems unless such changes are necessitated by Tenant’s particular use of, or improvement to, the Premises or the Project.

Landlord’s Compliance. The cost of Landlord’s compliance with laws or directives of Landlord’s insurers concerning the Project, other than those that are Tenant’s obligation under subsection (a), will be included in Expenses to the extent allowed under §4.2.

Heating, ventilation and air-conditioning (“HVAC”) during Business Hours as reasonably required to comfortably use and occupy the Premises and interior Common Areas;

Tempered water from the public utility for use in Common Areas rest rooms, and water from the public utility for use in customary kitchen facilities located in the Premises;

Janitorial services to the Premises and interior Common Areas 5 days a week, except Holidays, and pest control services in the Common Areas as needed to keep the Common Areas free from infestation;

Access to the Premises (by at least 1 passenger elevator if not on the ground floor);

Labor to replace fluorescent tubes and ballasts in Building Standard light fixtures in the Premises;

Electricity from Landlord’s selected provider(s) for Common Areas lighting;

Standard Services Provided. During the Term, Landlord shall provide the Standard Services to Tenant. The cost of the Standard Services is included in Expenses. Landlord is not responsible for any inability to provide Standard Services due to either the concentration of personnel or equipment in the Premises; or Tenant’s use of equipment in the Premises that is not customary office equipment or has special cooling requirements.

HVAC. If Tenant requests HVAC service to the Premises during non-Business Hours, Tenant will pay as Rent Landlord’s scheduled rate for this service.

Lighting. Landlord will furnish Building Standard lamps, bulbs, ballasts and starters that are part of the Leasehold Improvements at no cost to Tenant (but shall be included in Direct Costs), and non Building standard lamps, bulbs, ballasts and starters that are part of the Leasehold Improvements for purchase by

Tenant at Landlord’s cost, plus Landlord’s standard administration fee. Landlord will install non-Building Standard items at Landlord’s scheduled rate for this service.

Other Utilities and Services. Tenant will pay as Rent the actual cost of utilities or services (other than HVAC and lighting addressed in (a) and (b), and subject to Section 6.3 below) either used by Tenant or provided at Tenant’s request in excess of that provided as part of the Standard Services, plus Landlord’s standard administration fee. Tenant’s excess consumption may be estimated by Landlord unless either Landlord requires or Tenant elects to install Building Standard meters to measure Tenant’s consumption.

Additional Systems and Metering. Landlord may require Tenant, at Tenant’s expense, to upgrade or modify existing Mechanical Systems serving the Premises or the Leasehold Improvements to the extent necessary to meet Tenant’s excess requirements (including installation of Building Standard meters to measure the same).

Providers. Each Telecommunication Services provider that does not already provide service to the Building shall be subject to Landlord’s approval, which Landlord may withhold in Landlord’s sole discretion. Without liability to Tenant, the license of any Telecommunication Services provider servicing the Building may be terminated under the terms of the license, or not renewed upon the expiration of the license.

Tenant’s Wiring. Landlord may, in its sole discretion, designate the location of all wires, cables, fibers, equipment, and connections (“Tenant’s Wiring”) for Tenant’s Telecommunication Services, restrict and control access to telephone cabinets and rooms. Tenant may not use or access the Base Building, Common Areas or roof for Tenant’s Wiring without Landlord’s prior written consent, which Landlord may withhold in Landlord’s sole discretion. Tenant’s Wiring will be subject to removal in accordance with §3.3.

No Beneficiaries. This §6.4 is solely for Tenant’s benefit, and no one else shall be considered a beneficiary of these provisions.

Consent Required. All Alterations to excess of $1,500 require Landlord’s prior written consent. If a Design Problem exists, Landlord may withhold its consent in Landlord’s sole discretion; otherwise, Landlord will not unreasonably withhold its consent. Unless Tenant obtains Landlord’s prior written consent to the Alterations becoming part of the Premises to be tendered to Landlord on termination of the Lease, Landlord may require Tenant to remove Alterations and restore the Premises under §3.3 upon termination of this Lease.

Design Problem Defined. “Design Problem” means a condition that results, or will result, from work proposed, being performed or that has been completed that either:

Exceeds the capacity, adversely affects, is incompatible with, or impairs Landlord’s ability to maintain, operate, alter, modify or improve the Base Building;

Locates any equipment, Tenant’s Wiring or Tenant’s Personal Property on the roof of the Building, in Common Areas or in telecommunication or electrical closets, except for connections of Tenant’s Wiring to service provided by Telecommunications Services providers; or

Cases a “work of visual art” (as defined in the Visual Artists Rights Act of 1990) to be incorporated into or made a part of the Building.

Performance of Alterations. Alterations shall be performed by Tenant in a good and ▇▇▇▇▇▇▇-like manner according to plans and specifications approved by Landlord. All Alterations shall comply with law and insurance requirements. Landlord’s designated contractors must perform Alterations affecting the Base Building or Mechanical Systems; and, all other work will be performed by qualified contractors that meet Landlord’s insurance requirements and are otherwise approved by Landlord. Promptly after completing Alterations, Tenant will deliver to Landlord “as-built” CADD plans, proof of payment, a copy of the recorded notice of completion, and all unconditional lien releases.

Bonding. If requested by Landlord, before commencing Alterations Tenant shall at Tenant’s cost obtain bonds, or deposit with Landlord other security acceptable to Landlord for the payment and completion of the Alterations. These bonds or other security shall be in form and amount acceptable to Landlord.

Alterations Fee. Tenant shall pay Landlord as Rent 5% of the total construction costs of the Alterations to cover review of Tenant’s plans and construction coordination by Landlord’s employees. In addition, Tenant shall reimburse Landlord for the actual cost that Landlord reasonably incurs to have engineers, architects or other professional consultants review Tenant’s plans and work in progress, or inspect the completed Alterations.

Tenant’s Coverage. Before taking possession of the Premises for any purpose (including construction of Tenant improvements, if any) and during the Term, Tenant will provide and keep in force the following coverage:

Commercial general liability insurance insuring Tenant’s use and occupancy of the Premises and use of the Common Areas, and covering personal and bodily injury, death, and damage to others’ property of not less than the Liability Limit. Each of these policies shall include cross liability and severability of interests clauses, and be written on an occurrence, and not claims-made, basis. Each of these policies shall name Landlord, the Building property manager, each secured lender, and any other party reasonably designated by Landlord as an additional insured (“Additional Insured”).

All risk insurance (including standard extended coverage endorsement perils, leakage from fire protective devices and other water damage) covering the full replacement cost of the Leasehold Improvements and Tenant’s Personal Property. Each of these policies shall name Landlord and each Additional Insured an additional insured to the extent of their interest in the Leasehold Improvements. Each of these policies shall include a provision or endorsement in which the insurer waives its right of subrogation against Landlord and each Additional Insured.

Insurance covering the perils described in (2) for Tenant’s loss of income or insurable gross profits with a limit not less than Tenant’s annual Rent. Each of these policies shall include a provision or

endorsement in which the insurer waives its right of subrogation against Landlord and each Additional Insured.

If any boiler or machinery is operated in the Premises, boiler and machinery insurance.

Insurance required by law, including workers’ compensation insurance.

Employers liability insurance with limits not less than $1 million.

Commercial automobile liability insurance covering all owned, hired, and non-owned vehicles with a combined single limit of not less than $1 million for each accident or person.

Insurance covering the Leasehold Improvements and Tenant’s Personal Property against loss or damage; provided, however, that Tenant may elect to self-insure this coverage. If Tenant does not elect to self-insure this coverage, then each of these policies shall name Landlord and each Additional Insured an additional insured to the extent of their interest in the Leasehold Improvements.

Insurers and Terms. Each policy required under (a) shall be written with insurance companies that are licensed to do business in the state in which the Building is located and have a rating of not less than A and a Financial Size Class of at least VIII by A.M. Best Company. The proceeds of policies providing coverage under subsection (a)(2) of this §9.1 will be payable to Landlord, Tenant and each Encumbrance holder as their interests may appear. Tenant will cooperate with Landlord in collecting any insurance proceeds that may be due in the event of loss, and Tenant will execute and deliver to Landlord proofs of loss and any other instruments that Landlord may require to recover such insurance proceeds.

Proof of Insurance. At least 10 days prior to the Commencement Date, and throughout the Term, Tenant will provide Landlord with certificates of insurance establishing that the coverage required under subsection (a) is in effect. Tenant will provide replacement certificates at least 30 days before any policy expires that the expiring policy has been renewed or replaced.

Landlord’s Coverage. During the Term, Landlord will provide and keep in force the following coverage:

Commercial general liability insurance.

All risk insurance (including standard extended coverage endorsement perils, leakage from fire protective devices and other water damage) covering the Project improvements (excepting the Leasehold Improvements to be insured by Tenant). Each of these policies shall include a provision or endorsement in which the insurer waives its right of subrogation against Tenant.

Insurance covering the perils described in (2) for Landlord’s loss of rental income or insurable gross profits. Each of these policies shall include a provision or endorsement in which the insurer waives its right of subrogation against Tenant.

Boiler and machinery insurance.

Other insurance that Landlord elects to maintain.

Terms. Each of the policies required under (a) will have those limits, deductibles, retentions and other terms that Landlord prudently determines.

Landlord’s Estimates. Landlord will assess the damage to the Project (but not the Leasehold Improvements) and notify Tenant of Landlord’s reasonable estimate of the time required to substantially complete repairs and restoration of the Project (“Repair Estimate”) within 30 days after the date of the casualty. Landlord will also estimate the time that all or a portion of the Premises will be Untenantable (“Interruption Estimate”). “Untenantable” means that the Premises are not reasonably accessible or are unfit for the Use. Within 30 days after the later of the casualty, issuance of the Repair Estimate, issuance of

the Interruption Estimate, or receipt of any denial of coverage or reservation of rights from Landlord’s insurer, each party may terminate the Lease by written notice to the other on the following conditions:

Landlord may elect to terminate this Lease if either:

The Repair Estimate exceeds 180 days, or

The damage or destruction occurs in the last 12 Months of the Term; or

The repair and restoration is not fully covered by insurance maintained or required to be maintained by Landlord (subject only to those deductibles or retentions Landlord elected to maintain) or Landlord’s insurer denies coverage or reserves its rights on coverage.

Tenant may elect to terminate this Lease if the Interruption Estimate exceeds 180 days.

Repairs. If neither party terminates the Lease under (a), then the Lease shall remain in full force and effect and the parties will proceed as follows:

Landlord will repair and restore the Project (but not Leasehold Improvements) to the condition existing prior to such damage, except for modifications required by law. Landlord will perform such work reasonably promptly, subject to delay for loss adjustment, delay caused by Tenant and Force Majeure.

Tenant will repair and restore the Leasehold Improvements reasonably promptly to the condition existing prior to such damage, but not less than then current Building Standards, except for modifications required by law.

Tenant may not terminate this Lease if the actual time to perform the repairs and restoration exceeds the Repair Estimate, or the actual interruption exceeds the Interruption Estimate.

Landlord’s Waivers. Landlord waives any Claims against Tenant and its Affiliates for perils insured or required to be insured by Landlord under subsections (2) and (3) of §9.2(a), except to the extent caused by the gross negligence or willful misconduct of Tenant or its Affiliates.

Tenant’s Indemnity. Unless waived by Landlord under (a), Tenant will indemnify and defend Landlord and its Affiliates and hold each of them harmless from and against Claims arising from:

Any accident or occurrence on or about the Premises, except to the extent caused by Landlord’s or its Affiliates’ gross negligence or willful misconduct;

Tenant’s or its Affiliates’ negligence or willful misconduct; or

Any claim for commission or other compensation by any person other than the Brokers for services rendered to Tenant in procuring this Lease.

Tenant’s Waivers. Tenant waives any Claims against Landlord and its Affiliates for:

Any peril insured or required to be insured by Tenant under subsections (2), (3) and (8) of §9.1(a), except to the extent caused by the gross negligence or willful misconduct of Landlord or its Affiliates, but in no case will Landlord be liable for any special or consequential damages (including interruption of business, loss of income, or loss of opportunity); or

Damage caused by any public utility, public work, other tenants or occupants of the Project, or persons other than Landlord; or

Damages in excess of the insurance Landlord maintains under §9.1.

Landlord’s Indemnity. Unless waived by Tenant under (a), Landlord will indemnify and defend Tenant and its Affiliates and hold each of them harmless from and against Claims arising from:

Landlord’s or its Affiliates’ gross negligence or willful misconduct; or

Any claim for commission or other compensation by any person other than the Brokers for services rendered to Landlord in procuring this Lease.

Total Taking. If because of a Taking substantially all of the Premises is untenantable for substantially all of the remaining Term, then the Lease terminates on the date of the Taking.

Partial Taking. If a Taking does not cause the Lease to be terminated under (a), then Landlord will restore (and alter, as necessary) the Premises to be tenantable, unless the Lease is terminated by either Landlord or Tenant under the following circumstances:

Landlord may terminate the Lease upon 60 days prior written notice to Tenant if Landlord reasonably determines that it is uneconomical to restore or alter the Premises to be tenantable.

Tenant may terminate the Lease upon 60 days prior written notice to Landlord if the Taking causes more than 20% of the Premises to be Untenantable for the remainder of the Term and Tenant cannot reasonably operate Tenant business for the Use in the remaining Premises.

If the Lease is not terminated under (a) or (b), the Rent payable by Tenant will be reduced for the term of the Taking based upon the RSF Premises rendered Untenantable by the Taking and that Tenant does not actually use.

Sublease of all or part of the premises, or assignment, mortgage, hypothecation or other conveyance of an interest in this Lease;

Use of the Premises by anyone other than Tenant with Tenant’s consent;

Change in Tenant’s form of organization (e.g., a change from a partnership to limited liability company);

Transfer of 51% or more of Tenant’s assets, shares (excepting shares transferred in the normal course of public trading), membership interests, partnership interests or other ownership interests; or

Either (1) controls, is controlled by, or is under common control with Tenant (for purposes hereof, “control” shall mean ownership of not less than 50% of all of the voting stock or legal and equitable interest in the entity in question), (2) results from the merger or consolidation of Tenant, or (3) acquires all or substantially all of the stock and/or assets of Tenant as a going concern;

Has a tangible net worth and liquid assets immediately following the Transfer not less than the greater of (1) Tenant’s tangible net worth and liquid assets preceding the Transfer, or (2) Tenant’s tangible net worth and liquid assets as of the execution of this Lease;

Will not, by occupying the Premises, cause Landlord to breach any other lease or other agreement affecting the Project; and

Tenant’s Notice. Tenant shall notify Landlord at least 30 days prior to the proposed Transfer of the name and address of the proposed transferee and the proposed use of the Premises, and include in the notice the Transfer documents and copies of the proposed transferee’s balance sheet and income statement for the most recent complete fiscal year.

Landlord’s Rights. Within 30 days after receipt of Tenant’s complete notice, Landlord may either:

If the proposed Transfer is either an assignment of this Lease or sublease of substantially all of the Premises, terminate this Lease as of the proposed Transfer date;

If the proposed Transfer is a sublease of all of the Premises or any part of the Premises that will be separately demised and have its own entrance from the Common Areas, exercise a right of first refusal to sublease such portion of the Premises at the lesser of (A) the Rent (prorated for subletting part of the Premises), or (B) the rent payable in the proposed Transfer; or

Consent or deny consent to the proposed Transfer, consent not to be unreasonably withheld if:

The proposed transferee, in Landlord’s reasonable opinion, has the financial capacity to meet its obligations under the proposed Transfer;

The proposed use is consistent with the Use and will not cause Landlord to be in breach of any lease or other agreement affecting the Project;

The proposed transferee is typical of tenants that directly lease premises in first-class office buildings;

The proposed transferee is not an existing tenant or an Affiliate of an existing tenant, or a party with which Landlord is actively negotiating to lease space in the Building (or has, in the last 6 months, been actively negotiating to lease space in the Building);

The proposed transferee is not an agency of any government, medical facility or entity having sovereign immunity;

Compelling Consent. If Landlord does not consent to a Transfer, Tenant’s sole remedy against Landlord will be an action for specific performance or declaratory relief, and Tenant may not terminate this Lease or seek monetary damages.

Liable for any obligation of Landlord under this Lease, or be subject to any counterclaim, defense or offset accruing before Successor Landlord succeeds to Landlord’s interest;

Bound by any modification or amendment of this Lease made without Successor Landlord’s consent,

Bound by any prepayment of more than one month’s Rent;

Obligated to return any Security Deposit not paid over to Successor Landlord, or

Obligated to perform any improvements to the Premises (or provide an allowance therefor). Upon Successor Landlord’s request, Tenant will, without charge, promptly execute, acknowledge and deliver to Successor Landlord any instrument reasonably necessary required to evidence such attornment.

The Commencement Date and Expiration Date;

The documents that constitute the Lease, and that the Lease is unmodified and in full force and effect;

The date through which Base Rent, Additional Rent, and other Rent has been paid;

That neither Landlord nor Tenant is in Default;

That Landlord has satisfied all Lease obligations to improve the Premises (or provide Tenant an allowance therefor) and Tenant has accepted the Premises;

That Tenant solely occupies the Premises; and

Such other matters concerning this Lease or Tenant’s occupancy that Landlord may reasonably require.

Tenant will be in “Default” of this Lease if Tenant either:

Fails to pay Rent when due, and the failure continues for 5 days after Landlord notifies Tenant of this failure under §17.2 (Tenant waiving any other notice that may be required by law);

Fails to perform a non-monetary Lease obligation of Tenant and the failure continues for 30 days after Landlord notifies Tenant of this failure, but if it will reasonably take more than 30 days to perform this obligation, then Tenant will have a reasonable time to perform this obligation, but only if Tenant commences performing this obligation within 30 days after Landlord notifies Tenant of this failure;

Consummates a Transfer that violates Article 13;

Fails, within 15 days after it occurs, to discharge any attachment or levy on Tenant’s interest in this Lease;

Fails, within 60 days after it occurs, to have vacated or dismissed any appointment of a receiver or trustee of Tenant’s assets (or any Lease guarantor’s assets), or any voluntary or involuntary bankruptcy or assignment for the benefit of Tenant’s creditors (or any Lease guarantor’s creditors); or

Is listed or named as a Blocked Person, or Tenant acts directly or indirectly for or on behalf of any Blocked Person in connection with this Lease.

If Tenant is in Default, Landlord may, without prejudice to the exercise of any other remedy, exercise any remedy available under law, including those described below:

Landlord has the remedy described in California Civil Code §1951.4. Landlord may continue this Lease in effect after Tenant’s breach and abandonment (until Landlord terminates Tenant’s right

to possess the Premises under (2), below) and recover Rent as it becomes due. If Landlord elects this remedy, any Transfer Tenant proposes will be subject only to reasonable limitations.

Landlord has the remedy described in California Civil Code §1951.2. If Tenant does not abandon the Premises, Landlord may terminate Tenant’s right to possess the Premises and recover from Tenant all of the following:

The worth at the time of award (computed by allowing interest at the rate in (3), below, on amounts due prior to award, and discounting amounts due after award at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%) of:

The unpaid Rent earned as of termination;

The amount that the unpaid Rent earned after termination to the date of award exceeds the rental loss that Tenant proves could have been reasonably avoided; and

The amount that the unpaid Rent for the balance of the Term after the date of award exceeds the rental loss that Tenant proves could have been reasonably avoided; and

Any other amount necessary to compensate Landlord for damage caused by Tenant’s failure to observe this Lease (or which, in the ordinary course of things would be likely to result therefrom, including costs of obtaining mitigating rental income, such as excused rent, brokerage commissions, improvements, parking concessions, lease takeovers, cash payments, advertising, and moving costs).

For any amounts owed under (1) or (2), recover interest at the greater of the interest rate permitted under law or 10% (“Default Rate”) from the date each amount is due until paid by Tenant.

Landlord will be in “Default” of this Lease if Landlord fails to perform any Lease obligation of Landlord and this failure continues for 30 days after Tenant notifies Landlord of such failure, or such longer period of time as is reasonable if more than 30 days is reasonably required to perform this obligation if performance commences within this 30-day period and is diligently prosecuted to completion.

If Landlord is in Default, then Tenant may exercise any remedy available under law that is not waived or limited under this Lease, subject to the following:

Tenant may not terminate this Lease due to any Landlord Default until Tenant notifies each Encumbrance holder and each Encumbrance holder is provided a reasonable opportunity to gain legal possession of the Project and, after gaining possession, cure the Default.

Landlord’s liability under this Lease is limited to Landlord’s interest in the Building.

No liability under this Lease is assumed by Landlord’s Affiliates.

 

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Attach any awnings, signs, displays or projections to either the outside walls or windows of the Building, or to any part of the Premises visible from outside the Premises;

Hang any non-Building Standard curtains, blinds, shades or screens in any window or door of the Premises;

Coat or sunscreen the interior or exterior of any windows; or

Place any objects on windowsills.