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Exhibit 10.8

SUBLEASE

BETWEEN

ORACLE USA, INC.

AND

GUIDEWIRE SOFTWARE, INC.

2211 Bridgepointe Parkway,

San Mateo, California

(“Bridgepointe Building 2”)

Portions of Second (2nd), Third (3rd) and Fourth (4th) Floors


SUBLEASE

THIS SUBLEASE (“Sublease”) is entered into as of July 2, 2007, by and between ORACLE USA, INC., a Colorado corporation (“Sublandlord”) and GUIDEWIRE SOFTWARE, INC., a Delaware corporation (“Subtenant”), with reference to the following facts:

A. Pursuant to that certain Lease dated as of March 11, 1999 (the “Original Master Lease”), as the same has been amended by that certain First Amendment to Lease dated as of June 11, 1999 (the “First Amendment”), by that certain Second Amendment to Lease dated as of July 31, 2000 (the “Second Amendment”) and by that certain Third Amendment to Lease dated as of August 11, 2006 (the “Third Amendment”) (the Original Master Lease, as amended by the First Amendment, the Second Amendment and the Third Amendment, being referred to herein as the “Master Lease”), Sobrato Interests III (“Landlord”), as Landlord, leases to Sublandlord (successor in interest to Siebel Systems, Inc.), as tenant, certain space (the “Master Lease Premises”) consisting of the entire 141,496 rentable square foot building (the “Building” or “Building 2”) located at 2211 Bridgepointe Parkway in the City of San Mateo (“City”), State of California. The Building, together with (i) the 141,496 rentable square foot building located at 2215 Bridgepointe Parkway (“Building 1”) and (ii) the 167,505 rentable square foot building located at 2207 Bridgepointe Parkway (“Building 3”) comprise the “Project,” as more particularly defined in the Master Lease. Pursuant to separate leases, Sublandlord has leased all of Building 1 and all of Building 3; the Master Lease and Sublandlord’s leases for Building 1 and 2 all are scheduled to expire coterminously, on September 17, 2012. A complete copy of the Master Lease is attached hereto as Exhibit G.

B. Subtenant wishes to sublease from Sublandlord, and Sublandlord wishes to sublease to Subtenant, a portion of the Master Lease Premises containing approximately 88,152 rentable square feet as follows: (i) approximately 26,717 rentable square feet located on the second (2nd) floor of the Building, as more particularly described in Exhibit A-1 attached hereto and incorporated herein by reference (the “Second Floor Space”), (ii) approximately 30,718 rentable square feet located on the third (3rd) floor of the Building as more particularly described in Exhibit A-2 attached hereto and incorporated herein by reference (the “Third Floor Space”) and (iii) approximately 30,718 rentable square feet located on the fourth (4th) floor of the Building, as more particularly described in Exhibit A-3 attached hereto and incorporated herein by reference (the “Fourth Floor Space”) (the Second Floor Space, the Third Floor Space and the Fourth Floor Space being referred to herein collectively as the “Subleased Premises”).

NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated by reference into this Sublease, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties, Sublandlord and Subtenant hereby agree as follows:

1. Sublease . Sublandlord hereby subleases to Subtenant and Subtenant hereby subleases from Sublandlord for the term, at the rental, and upon all of the conditions set forth herein, the Subleased Premises.

 

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2. Term .

(a) Generally . The term of this Sublease (“Term”) shall commence on the date (the “Commencement Date”) that is the later to occur of (x) September 1, 2007, (y) the date that Sublandlord delivers possession of the Subleased Premises to Subtenant and (z) the date upon which Sublandlord procures Landlord’s consent to this Sublease (the “Consent”, and the date upon which Sublandlord procures the Consent being the “Effective Date”); provided, that if Subtenant occupies any portion of the Subleased Premises for the purpose of conducting Tenant’s business operations therein prior to the Commencement Date as described above, the date upon which Subtenant so occupies the Subleased Premises will be deemed the Commencement Date. The Term will end on July 31, 2012 (the “Expiration Date”), unless sooner terminated pursuant to any provision hereof. Upon the determination of the Commencement Date, Sublandlord and Subtenant will enter into a letter agreement in the form of Exhibit B attached hereto.

(b) Early Access . Subtenant and Subtenant’s representatives shall have the right to enter the Subleased Premises during the period, if any, commencing on the Effective Date and ending on the day immediately preceding the Commencement Date (the date upon which Subtenant first has such access to the Subleased Premises being referred to herein as the “Early Access Date”) for the sole purposes of construction of Subtenant Alterations (defined in Section 15.2 below), installation of Subtenant’s personal property and the testing of equipment, furniture, fixtures and voice and data cabling, all subject to the terms, conditions and requirements of this Sublease. All of the rights and obligations of the parties under this Sublease (other than Subtenant’s obligation to pay Base Rent, but expressly including without limitation Subtenant’s obligation to pay excess utility charges, Subtenant’s obligation to carry insurance, Subtenant’s indemnification obligations, and/or Subtenant’s liability for damages, costs and expenses incurred by Sublandlord by reason of any default by Subtenant or failure on Subtenant’s part to comply with the terms of this Sublease) shall commence upon the Early Access Date, and Subtenant shall be deemed to occupy the Subleased Premises from and after the Early Access Date. Subtenant shall be liable for any damages to the Subleased Premises caused by Subtenant’s activities at the Subleased Premises from and after the Early Access Date and, prior to entering the Subleased Premises, Subtenant shall obtain all insurance it is required to obtain hereunder and shall provide certificates of such insurance to Sublandlord. Subtenant shall coordinate such entry with Sublandlord, and such entry shall be made in compliance with all terms and conditions of this Sublease, the Master Lease and the rules and regulations attached to the Master Lease.

 

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3. Rent .

3.1 Rent Payments . From and after the Commencement Date Subtenant shall pay to Sublandlord as base rent for the Subleased Premises during the Term (“Base Rent”) the following:

 

Period

  

Assumed Rentable
Area of
Subleased Premises

 

  

Monthly Base Rent
Rate Per Rentable
Square Foot

 

  

Monthly
Base Rent

 

Months 1 - 6

  

 

40,000

  

  

$

0.00

  

  

$

0.00

  

Months 7- 12

  

 

40,000

  

  

$

1.75

  

  

$

70,000.00

  

Months 13-24

  

 

60,000

  

  

$

1.80

  

  

$

108,000.00

  

Months 25 - 36

  

 

88,152

  

  

$

1.86

  

  

$

163,962.72

  

Months 37 - 48

  

 

88,152

  

  

$

1.91

  

  

$

168,370.32

  

Months 49 - Expiration Date

  

 

88,152

  

  

$

1.97

  

  

$

173,659.44

  

As set forth in the table above, “Months 1-6” will be deemed to mean the initial one hundred eighty (180) days of the Term, and the period described as “Months 7-12” will mean the period commencing with the one hundred eighty first (181st) day of the Term and expiring as of the date of expiration of the calendar month in which the date immediately preceding the first (1st) anniversary of the Commencement Date occurs (if such period includes a partial calendar month, Base Rent will be payable for such partial calendar month at the rate of $2,333.33 per day). All subsequent “months” will be calendar months. As noted in the table set forth above, during the initial twenty-four (24) months of the Term, Base Rent will be payable as if Tenant occupied less than all of the Subleased Premises; however, during such period Subtenant will be entitled to occupy all of the Subleased Premises. Base Rent shall be paid on the first day of each month of the Term, except that Subtenant shall pay the first month’s Base Rent (in the amount of $70,000.00) to Sublandlord upon execution and delivery of this Sublease to Sublandlord; said pre-paid Base Rent will be applied towards Base Rent payable as of the seventh (7th) month of the Term. If the Term does not end on the last day of a calendar month, the Base Rent and Additional Rent (hereinafter defined) for any partial month shall be prorated by multiplying the monthly Base Rent and Additional Rent by a fraction, the numerator of which is the number of days of the partial month included in the Term and the denominator of which is the total number of days in the full calendar month. All Rent (hereinafter defined) shall be payable in lawful money of the United States, by regular bank check of Subtenant, to Sublandlord at the following address:

1001 Sunset Boulevard

Rocklin, CA 95765

Attn: Lease Administration

or to such other persons or at such other places as Sublandlord may designate in writing.

3.2 Operating Costs . Except as expressly set forth herein, it is intended that this Sublease be a “net” sublease, such that all Base Rent payable by Subtenant to Sublandlord hereunder will be “net” of all costs to Sublandlord of operating and maintaining the Subleased Premises, the Building and the Project. Accordingly, Subtenant will be responsible for the payment of Subtenant’s Percentage Share (defined below) of both those costs of operation and maintenance of the Building and Project which are payable by Sublandlord to Landlord under the Master Lease, as well as those costs of operation and maintenance of the Subleased Premises, Building and Project which are Sublandlord’s direct responsibility under the Master Lease. The definitions and procedures set forth in this Section 3.2 will govern Subtenant’s payment to Sublandlord of such costs.

 

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(a) Definitions . The following terms shall have the meanings set forth below:

(1) “Additional Rent” shall mean the sums payable pursuant to Section 3.2(b) below.

(2) “Operating Costs ” shall mean the aggregate of (i) Landlord Operating Costs and (ii) Sublandlord Operating Costs, each defined below.

(A) “ Landlord Operating Costs ” shall mean (i) Reimbursable Operating Costs (as such term is defined in the Master Lease) attributable to the Building, as described in Section 8.E of the Original Master Lease; (ii) Reimbursable Operating Costs attributable to the Project, as described in Section 8.E of the Original Master Lease, (iii) taxes payable by Sublandlord pursuant to Section 10 of the Original Master Lease, as well as (iv) costs payable by Sublandlord pursuant to Section 21. W of the Original Master Lease.

(B) “ Sublandlord Operating Costs ” shall mean (i) costs incurred by Sublandlord in complying with Sublandlord’s obligations as set forth in Section 8.B of the Original Master Lease, (ii) costs of utilities paid by Sublandlord pursuant to Section 11 of the Original Master Lease, and (iii) all other costs of Sublandlord incurred in the operation, maintenance, repair and replacement of any portion of the Building and/or Project (including, without limitation, any property management fee paid by Sublandlord to any entity performing management services at the Property and the fair market rental value of any property management office serving the Project, as well as the cost of providing the Project Amenities (described in Section 3.3 below)). Notwithstanding the foregoing to the contrary, Sublandlord Operating Costs will not include the following:

(i) the cost of capital improvements constructed by Sublandlord, except that Sublandlord Operating Costs will include the amortized cost of capital improvements constructed by Sublandlord (x) in order to comply with laws, rules or regulations first enacted or enforced against the Building or Project after the Commencement Date, or (y) to cause a reduction in one or more components in Sublandlord Operating Costs if Sublandlord in good faith believes the amortized cost of such improvements will approximate or be less than the cost savings over the useful life of the item in question or (z) to replace items which Sublandlord is obligated to maintain under the Master Lease or this Sublease. As used in this Section 3.2(a)(2)(B)(i), “amortization” shall mean allocation of the cost (together with reasonable financing charges) of the item being amortized equally to each year of the useful life of such item, as reasonably determined by Sublandlord. Notwithstanding the foregoing, however, Sublandlord may treat as an expense (chargeable in the year incurred), and not as a capital cost, any item costing less than Twenty Five Thousand and No/100 Dollars ($25,000.00);

(ii) any costs or expenses for which Sublandlord is reimbursed by insurance or condemnation proceeds or by a third party (other than by subtenants as part of Operating Costs);

 

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(iii) costs in connection with subleasing space in the Building or Project, including brokerage commissions and legal expenses;

(iv) lease concessions, including rental abatements and construction allowances, granted to specific subtenants;

(v) any penalties or damages that Sublandlord pays to Subtenant under this Sublease or to other occupants in the Project under their respective subleases;

(vi) costs incurred in connection with disputes between Sublandlord and its employees or between Sublandlord and other subtenants or Project occupants;

(vii) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Project unless such wages and benefits are prorated to reflect time spent on operating and managing the Project vis-á-vis time spent on matters unrelated to operating and managing the Project;

(viii) any amounts paid by Sublandlord to its parent organization or to a subsidiary or affiliate of Sublandlord for supplies and/or services rendered in connection with the Project to the extent the same materially exceed the costs of such supplies and/or services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

(ix) any amount paid by Sublandlord for items and services for which Subtenant or any other occupant in the Project directly reimburses Sublandlord pursuant to their respective subleases (i.e., other than by payment of Operating Costs);

(x) acquisition costs (not including those incurred in ordinary maintenance and repair) for sculpture, paintings or other objects of art;

(xi) costs arising from the clean-up or remediation of any Hazardous Materials, except to the extent necessitated by Subtenant or anyone claiming by or through Subtenant or by the employees, agents or contractors of any of them;

(xii) penalties, interest and fines incurred as a result of Sublandlord’s failure to make payments and/or to file any tax or informational returns when due; and

(xiii) any personal property taxes of Sublandlord for equipment or items not used in the operation or maintenance of the Building or Project, nor connected therewith.

 

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(C) If, for thirty (30) or more days during any calendar year, less than ninety-five percent (95%) of the rentable area of the Building is occupied by subtenants, then the Sublandlord Operating Costs for such calendar year shall be deemed to be an amount equal to the Sublandlord Operating Costs which would normally be expected to have been incurred had the Building been at least ninety-five percent (95%) occupied throughout such year, as reasonably determined by Sublandlord (i.e., taking into account that certain expenses depend on occupancy (e.g., janitorial) and certain expenses do not (e.g., landscaping)). Furthermore, if Sublandlord shall not furnish any item or items of service the cost of which is included in Sublandlord Operating Costs to any portions of the Building because such portions are not occupied or because such item is not required by the occupant of such portion of the Building or such occupant is providing such service independently, then, for the purposes of computing Sublandlord Operating Costs, an equitable adjustment shall be made so that the cost of the item in question shall be shared only by occupants actually receiving the benefits thereof.

(3) “Rent” shall mean, collectively, Base Rent, Additional Rent, and all other sums payable by Subtenant to Sublandlord under this Sublease, whether or not expressly designated as “rent”, all of which are deemed and designated as rent pursuant to the terms of this Sublease. Base Rent and Additional Rent are payable hereunder in advance without setoff, deduction, notice or demand. Unless expressly set forth to the contrary in this Sublease, all other amounts payable by Subtenant hereunder are payable within ten (10) business days following Sublandlord’s delivery of an invoice therefor to Subtenant.

(4) “Subtenant’s Percentage Share” shall mean, as applicable given the context, Subtenant’s Building Percentage Share and/or Subtenant’s Project Percentage Share, as follows:

(A) “ Subtenant’s Building Percentage Share ” shall mean 62.30%, which is derived by dividing the rentable area of the Subleased Premises by the rentable area of the Building and multiplying the quotient by 100. Subtenant’s Building Percentage Share will be applicable to Landlord Operating Costs attributable to the Building and Sublandlord Operating Costs attributable to the Building.

(B) “ Subtenant’s Project Percentage Share ” shall mean 19.57%, which is derived by dividing the rentable area of the Subleased Premises by the rentable area of the Project and multiplying the quotient by 100. Subtenant’s Project Percentage Share will be applicable to Landlord Operating Costs attributable to the Project and Sublandlord Operating Costs attributable to the Project.

(b) Payment of Operating Costs . In addition to the Base Rent payable hereunder, from and after the Commencement Date, for each full or partial calendar year of the Term, Subtenant, as Additional Rent, shall pay the applicable Subtenant’s Percentage Share of Operating Costs for the then current calendar year. For the calendar year 2007, Sublandlord’s initial estimate is that Operating Costs will equal $.93 per rentable square foot per month.

 

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(c) Procedure . The determination and adjustment of Additional Rent payable hereunder shall be made in accordance with the following procedures:

(1) Landlord Operating Costs . Sublandlord shall give Subtenant written notice of its estimate of the amount of Subtenant’s Percentage Share of Landlord Operating Costs payable for each calendar year; such estimate may be aggregated with Sublandlord’s estimate of Sublandlord Operating Costs payable for such year. Subtenant may amend such estimate in good faith from time to time during any calendar year. On or before the first day of each calendar month during each full or partial calendar year throughout the Term, Subtenant shall pay to Sublandlord as Additional Rent one-twelfth (1/12th) of such estimated amount. If for any reason Sublandlord has not provided Subtenant with an estimate of the amount of Subtenant’s Percentage Share of Landlord Operating Costs on or before the first day of January of any calendar year during the Term, then (a) until the first day of the calendar month following the month in which Sublandlord delivers such estimate, Subtenant shall continue to pay to Sublandlord on the first day of each calendar month the sum payable by Subtenant under this Section 3.2(c)(1) for the month of December of the preceding year, and (b) together with such estimate, Sublandlord shall give notice to Subtenant stating whether the installments of Landlord Operating Costs payments previously made for such year were greater or less than the installments of Landlord Operating Costs payments to be made for such year, and (i) if there shall be a deficiency, Subtenant shall pay the amount thereof to Sublandlord within ten (10) business days after the delivery of Sublandlord’s estimate, or (ii) if there shall have been an overpayment, Sublandlord shall apply such overpayment as a credit against the next accruing monthly installment(s) of Subtenant’s Percentage Share of Landlord Operating Costs due from Subtenant until fully credited to Subtenant or, at Sublandlord’s discretion, Sublandlord may pay the amount thereof to Subtenant by check, and (c) on the first (1st) day of the calendar month following the month in which Sublandlord’s estimate is given to Subtenant and on the first day of each calendar month throughout the remainder of such calendar year, Subtenant shall pay to Sublandlord an amount equal to one-twelfth (1/12th) of the new Landlord Operating Costs payment, as described above. Subtenant’s estimated payments of Subtenant’s Percentage Share of Landlord Operating Costs shall be reconciled from time to time with the actual amounts thereof due as and when Sublandlord is notified by Landlord of the actual amounts of Landlord Operating Costs; and Sublandlord will deliver to Subtenant a copy of any such notice(s) from Landlord upon which such reconciliation may be based.

(2) Sublandlord Operating Costs .

(A) Sublandlord’s Estimate . On or about the Commencement Date, and on the first day of January of each subsequent full or partial calendar year during the Term, or as soon thereafter as is practicable, Sublandlord shall furnish Subtenant with a statement setting forth in reasonable detail Sublandlord’s estimate of Sublandlord Operating Costs for the calendar year in which the Commencement Date occurs or the forthcoming calendar year, as applicable; such estimate may be aggregated with Sublandlord’s estimate of Sublandlord Operating Costs payable for such year. On or before the first day of each calendar month during such year, Subtenant shall pay to Sublandlord as Additional Rent (i) one-twelfth (1/12th) of Subtenant’s Building Percentage Share of the estimated Sublandlord Operating Costs and (ii) one twelfth (1/12) of Subtenant’s Project Percentage Share of the estimated Sublandlord Operating Costs (as such estimate may be modified from time to time by Sublandlord). If for any reason Sublandlord has not provided Subtenant with an estimate of Sublandlord Operating Costs on or before the first day of January of any calendar year during the Term, then (a) until the first day of the calendar month following the month in which Subtenant

 

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is given Sublandlord’s estimate, Subtenant shall continue to pay to Sublandlord on the first day of each calendar month the sum payable by Subtenant under this Section 3.2(c)(2) for the month of December of the preceding year, and (b) promptly after Sublandlord’s estimate is furnished to Subtenant, Sublandlord shall give notice to Subtenant stating whether the installments of Sublandlord Operating Costs payments previously made for such year were greater or less than the installments of Sublandlord Operating Costs payments to be made for such year, and (i) if there shall be a deficiency, Subtenant shall pay the amount thereof to Sublandlord within ten (10) business days after the delivery of Sublandlord’s estimate, or (ii) if there shall have been an overpayment, Sublandlord shall apply such overpayment as a credit against the next accruing monthly installment(s) of Subtenant’s Percentage Share of Sublandlord Operating Costs due from Subtenant until fully credited to Subtenant or, at Sublandlord’s discretion, Sublandlord may pay the amount thereof to Subtenant by check, and (c) on the first (1st) day of the calendar month following the month in which Sublandlord’s estimate is given to Subtenant and on the first day of each calendar month throughout the remainder of such calendar year, Subtenant shall pay to Sublandlord an amount equal to one-twelfth (l/12th) of the new Sublandlord Operating Costs payment, as described above.

(B) Reconciliation of Sublandlord Operating Costs . On or about the first day of March of each calendar year, or as soon thereafter as is reasonably practicable, Sublandlord will furnish Subtenant with a statement of the actual Sublandlord Operating Costs for the preceding year, reconciling the actual amounts paid pursuant to Sublandlord’s estimate and the actual amounts payable hereunder. Within twenty (20) business days after Sublandlord’s delivery of such statement, Subtenant shall make a lump sum payment to Sublandlord in the amount, if any, by which Subtenant’s Percentage Share of Sublandlord Operating Costs for such preceding year, as shown on such statement, exceeds the aggregate of the monthly installments of Subtenant’s Percentage Share of Sublandlord Operating Costs paid during such preceding year. If Subtenant’s Percentage Share of Sublandlord Operating Costs, as shown on such statement, is less than the aggregate of the monthly installments of Subtenant’s Percentage Share of Sublandlord Operating Costs actually paid by Subtenant during such preceding year, then Sublandlord shall apply such amount to the next accruing monthly installment(s) of Subtenant’s Percentage Share of Sublandlord Operating Costs due from Subtenant until fully credited to Subtenant. Sublandlord’s failure to deliver or delay in delivering a statement of actual Sublandlord Operating Costs with respect to any calendar year shall in no event be construed as Sublandlord’s waiver of the right to so deliver such statement or collect Subtenant’s Percentage Share of Sublandlord Operating Costs as described herein, nor shall it be construed as a waiver of Subtenant’s obligation to pay such amounts.

(C) Subtenant’s Audit Right . Provided that Subtenant is not in default hereunder and has paid all amounts due hereunder (including all Additional Rent), Subtenant may, one hundred twenty (120) days after receiving Sublandlord’s annual statement of Sublandlord Operating Costs and costs for the services described in Section 6 below (“Service Costs”), give Sublandlord written notice (“Review Notice”) that Subtenant intends to cause an independent, nationally recognized certified public accountant who charges for its services on an hourly basis and is not compensated on a so-called “contingency” basis (a “Third Party Auditor”) to inspect, during normal business hours, Sublandlord’s accounting records with respect to Sublandlord Operating Costs and Service Costs for the calendar year covered by such statement (the “Subtenant Review”); provided, however, that, as a condition precedent to any such

 

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inspection, Subtenant shall deliver to Sublandlord a copy of Subtenant’s written agreement with such Third Party Auditor, which agreement shall include provisions which state that (i) such Third Party Auditor will not in any manner solicit or agree to represent any other occupant of the Project with respect to an audit or other review of Sublandlord’s accounting records at the Project, (ii) Subtenant and such Third Party Auditor shall maintain in strict confidence any and all information obtained in connection with the Subtenant Review and shall not disclose such information to any person or entity other than to the legal representatives and management personnel of Subtenant or as required by law, and (iii) Sublandlord is an intended third-party beneficiary of such agreement. Within a reasonable time (not to exceed sixty (60) days) after receipt of the Review Notice, Sublandlord shall make pertinent records available for inspection that are reasonably necessary for Subtenant to conduct its review. If any such records are maintained at a location other than the office of the Project, Subtenant may either inspect the records at such other location or pay for the reasonable cost of copying and shipping the records. Subtenant shall be solely responsible for all costs, expenses and fees incurred for the Subtenant Review. Within sixty (60) days after the records are made available to Subtenant, Subtenant shall have the right to give Sublandlord written notice (an “Objection Notice”) stating in reasonable detail any objection to Sublandlord’s statement of Sublandlord Operating Costs or Service Costs for the applicable year. If Subtenant fails to give Sublandlord an Objection Notice within such sixty (60) day period or fails to provide Sublandlord with a Review Notice within the one hundred twenty (120) day period described above, Subtenant shall be deemed to have approved Sublandlord’s statement of Sublandlord Operating Costs or Service Costs and shall be barred from raising any claims regarding Sublandlord Operating Costs or Service Costs for that calendar year. If Subtenant provides Sublandlord with a timely Objection Notice, Sublandlord and Subtenant shall work together in good faith to resolve any issues raised in Subtenant’s Objection Notice. If Sublandlord and Subtenant determine that Subtenant’s Percentage Share of Sublandlord Operating Costs or Service Costs for the calendar year was overstated by Sublandlord, Sublandlord shall provide Subtenant with a credit against Subtenant’s Percentage Share of Sublandlord Operating Costs or Service Costs next coming due in the amount of the overpayment by Subtenant. If Sublandlord and Subtenant determine that Subtenant’s Percentage Share of Sublandlord Operating Costs or Service Costs for the calendar year was understated by Sublandlord, Subtenant shall pay Sublandlord the amount of any underpayment within thirty (30) days thereafter. The parties’ sole remedy for an error in the determination of Subtenant’s Percentage Share of Sublandlord Operating Costs or Service Costs for any full or partial calendar year shall be for the parties to make appropriate payments or credits, as the case may be, to each other as set forth above. Subtenant shall be responsible for all costs and expenses associated with Subtenant’s Review, and Subtenant shall be responsible for all audit fees, attorneys’ fees and other costs of Subtenant relating to the resolution of any dispute pursuant to this Section (collectively, the “Costs”), provided that if the parties’ final resolution of the dispute concludes that Sublandlord overstated Sublandlord Operating Costs or Service Costs for such year by an amount in excess of five percent (5%) of actual Sublandlord Operating Costs or Service Costs, then Sublandlord shall be responsible for the Costs.

(d) Survival . The expiration or earlier termination of this Sublease shall not affect the rights and obligations of Sublandlord and Subtenant pursuant to this Section 3.2, and such obligations shall survive any expiration or earlier termination of this Sublease.

 

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3.3 Project Amenities Costs . Sublandlord will provide certain Project amenities (the “Project Amenities”) to occupants of the Project, including a fitness center (located in the Building), conference room (anticipated to be located in Building 2), cafeteria (located in Building 1) and, at Sublandlord’s discretion, a day care center. Once occupancy in the Project equals 100,000 rentable square feet or more, Sublandlord will commence operations of the proposed fitness center, conference room and limited cafeteria operations (limited operations means that pre-cooked or pre-prepared food and beverages will be available for sale, but full kitchen cooking operations will not yet commence); at such point as occupancy levels meet or exceed 250,000 rentable square feet, full cafeteria operations will commence. Subtenant will pay its pro-rata share of the cost of providing the Project Amenities (“Project Amenities Costs”) as part of Sublandlord Operating Costs; provided that for the purpose of such payment, such pro-rata share will be determined by dividing the rentable area of the Subleased Premises into the rentable area of the Project, net of the rentable area of the Project Amenities, with the pro-rata allocation to be determined by dividing the rentable area of the Subleased Premises by the rentable area of the Project, net of the rentable area of the Project Amenities, with the pro-rata allocation to be determined by dividing the rentable area of the Subleased Premises by the rentable area of the Project, net of the rentable area of the Project Amenities. Notwithstanding the foregoing, each employee of any Project occupant who desires to use the fitness center, will be required to pay a monthly fee (initially, $25.00 per month, but such fee may be adjusted from time to time by Sublandlord to account for increases in costs of operation of the fitness center) for the right to use the fitness center. Sublandlord will offset all such fees collected against the portion of Project Amenities Costs attributable to the fitness center and which would otherwise be included in Sublandlord Operating Costs.

4. Letter of Credit :

4.1 Initial Letter of Credit . Concurrently with execution hereof, Subtenant has delivered to Sublandlord an unconditional, irrevocable, transferable standby letter of credit (the “Initial Letter of Credit”) in a similar form (as reasonably acceptable to Sublandlord) to that form attached hereto as Exhibit D in the amount of $1,350,000.00 and issued by a financial institution acceptable to Landlord (which must have a credit rating of “AA” or better from both Moody’s and Standard & Poor’s), as security for the full and faithful performance of Subtenant’s obligations under this Sublease. Sublandlord may draw upon the Initial Letter of Credit or any Replacement Letter of Credit (as that term is defined below) on or after the occurrence of either: (i) an uncured event of default under this Sublease; (ii) any failure by Subtenant to deliver to Sublandlord a Replacement Letter of Credit as and when required pursuant to this Section 4; (iii) an uncured failure by Subtenant to perform one or more of its obligations under this Sublease and the existence of circumstances in which Sublandlord is enjoined or otherwise prevented by operation of law from giving to Subtenant a written notice which would be necessary for such failure of performance to constitute an event of default, or (iv) the appointment of a receiver to take possession of all or substantially all of the assets of Subtenant, or an assignment of Subtenant for the benefit of creditors, or any action taken or suffered by Subtenant under any insolvency, bankruptcy, reorganization or other debtor relief proceedings, whether now existing or hereafter amended or enacted; provided that in the event of (i) or (iii), Sublandlord may, at Sublandlord’s sole option, draw upon a portion of the face amount of the Initial Letter of Credit or any Replacement Letter of Credit, as applicable, as required to compensate Sublandlord for damages incurred (with subsequent demands at Sublandlord’s sole election as Sublandlord incurs further damage).

 

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4.2 Delivery of Replacement Letter of Credit . Subtenant shall deliver to Sublandlord a new letter of credit (a “Replacement Letter of Credit”) (the Initial Letter of Credit and any Replacement Letter of Credit being generally referred to herein as a “Letter of Credit”) at least thirty (30) days prior to the expiry date of the Initial Letter of Credit or of any Replacement Letter of Credit held by Sublandlord. Each Replacement Letter of Credit delivered by Subtenant to Sublandlord shall: (i) be issued by a banking institution acceptable to Sublandlord in its reasonable judgment; (ii) be in the same form as the letter of credit attached to this Sublease as Exhibit D; (iii) bear an expiry date not earlier than one (1) year from the date when such Replacement Letter of Credit is delivered to Sublandlord; and (iv) be in an amount not less than the amount specified in Section 4(a). Upon the delivery to Sublandlord of a Replacement Letter of Credit as described in this Section 4(b), Sublandlord shall return the Initial Letter of Credit or any previous Replacement Letter of Credit then held by Sublandlord to the issuing bank. In any event, Subtenant will be obligated to maintain either the Initial Letter of Credit or a Replacement Letter of Credit until the date that is the later to occur of (x) the date that is thirty (30) days following the Expiration Date and (y) the date upon which Subtenant vacates the Subleased Premises and completes any restoration obligations of Subtenant hereunder.

4.3 Draw Upon Letter of Credit . All proceeds of a draw upon any Letter of Credit shall be, at Sublandlord’s sole election, either: (i) applied by Sublandlord to damages incurred by Sublandlord as a result of the event giving rise to the draw, or (ii) held by Sublandlord as a security deposit, and, at the sole election of Sublandlord, applied on one or more occasions to compensate Sublandlord for any foreseeable or unforeseeable loss or damage caused by the act or omission of Subtenant or Subtenant’s officers, agents, employees, independent contractors, or invitees (including, without limitation, to remedy defaults in the payment of rent, to repair damage caused by Subtenant or to clean the Subleased Premises). No trust relationship will be created herein between Sublandlord and Subtenant with respect to any such security deposit, Subtenant hereby waives any and all rights under and the benefits of Section 1950.7 of the California Civil Code, and all other provisions of law now in force or that become in force after the date of execution of this Sublease, to the extent that such laws provide that Sublandlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Subtenant, or to clean the Subleased Premises. Sublandlord and Subtenant agree that Sublandlord may, in addition, claim those sums reasonably necessary to compensate Sublandlord for any other foreseeable or unforeseeable loss or damage caused by the act or omission of Subtenant or Subtenant’s officers, agents, employees, independent contractors, or invitees.

4.4 Sublandlord’s Transfer . If Sublandlord conveys or transfers its interest in the Subleased Premises and, as a part of such conveyance or transfer, Sublandlord assigns its interest in this Sublease: (i) the Initial Letter of Credit or any Replacement Letter of Credit shall be transferred to Sublandlord’s successor; (ii) Sublandlord shall be released and discharged from any further liability to Subtenant with respect to such Initial Letter of Credit and any Replacement Letter of Credit; (iii) Subtenant will be responsible for the payment of any transfer fee or charge imposed by the issuing bank and (iv) any Replacement Letter of Credit thereafter delivered by Subtenant shall state the name of the successor to Sublandlord as the beneficiary of such Replacement Letter of Credit and shall contain such modifications in the text of the Replacement Letter of Credit as are required to appropriately reflect the transfer of Sublandlord’s interest in the Subleased Premises.

 

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4.5 Reduction .

(a) Periodic Reductions . If, as of each applicable Reduction Date (defined below), the Reduction Conditions (defined below) apply, then upon written request by Subtenant, the face amount of the then-current Letter of Credit may be reduced by an amount equal to: (i) One Hundred Fifty Thousand Dollars ($150,000.00) as of the first (1st) Reduction Date, and (ii) Three Hundred Thousand Dollars ($300,000.00) as of each of the second (2nd) and third (3rd) Reduction Dates, and (iii) One Hundred Fifty Thousand Dollars ($150,000.00) as of the fourth (4th) Reduction Date. Such reductions may be accomplished by either (x) Subtenant submitting a Replacement Letter of Credit in the reduced face amount, at which point Sublandlord will return to Subtenant the then-existing Letter of Credit or (y) an amendment to the then-existing Letter of Credit. Notwithstanding the foregoing, if, following any reduction pursuant to the provisions of this Section 4.5, Subtenant is in default under this Sublease (beyond the giving of applicable notice and the passage of applicable grace periods), Sublandlord, in addition to any other remedy available to Sublandlord for such default, shall have the right to require that Subtenant reinstate the Letter of Credit to the initial face amount described in Section 4.1, in which event Subtenant shall so cause a Replacement Letter of Credit in the initial face amount to be delivered to Sublandlord within ten (10) days following notice of such election delivered by Sublandlord. Subtenant’s failure to so cause a Replacement Letter of Credit in such reinstated face amount to be timely delivered to Sublandlord shall constitute a material default under this Sublease without the necessity of additional notice or the passage of additional grace periods. As used herein, the “Reduction Dates” shall mean each of the first (1st) four (4) anniversaries of the Commencement Date, and the “Reduction Conditions” shall mean that, as of each such Reduction Date, all of the following apply: (x) Subtenant is not in default hereunder (beyond the giving of applicable notice and the passage of applicable grace periods), (y) Subtenant has not previously been in default hereunder (similarly defined) and (z) no event which, with the passage of time, would constitute a default hereunder (similarly defined) then exists.

(b) Notwithstanding the foregoing provisions of this Section 4.5(a) to the contrary, if, during the Term, Subtenant completes a public offering of its equity which is “firmly underwritten” by a recognized investment banking institution and the proceeds of which equal or exceed $75,000,000.00, then, upon written request by Subtenant, the face amount of the then-current Letter of Credit may be reduced to an amount equal to $450,000.00 then payable under this Sublease. However, if, following any such reduction, Subtenant is in default under this Sublease, Sublandlord shall have the right to require that Subtenant reinstate the Letter of Credit to the original amount required hereunder, in the same manner as is described in Section 4.5(a) above.

5. Use and Occupancy .

5.1 Use . The Subleased Premises shall be used and occupied only for general office use, and for no other use or purpose.

 

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5.2 Compliance with Master Lease .

(a) By Subtenant . Subtenant agrees that it will occupy the Subleased Premises in accordance with the terms of the Master Lease and will not suffer to be done or omit to do any act which may result in a violation of or a default under any of the terms and conditions of the Master Lease, or render Sublandlord liable for any damage, charge or expense thereunder. Subtenant further covenants and agrees to indemnify Sublandlord against and hold Sublandlord harmless from any claim, demand, action, proceeding, suit, liability, loss, judgment, expense (including attorneys fees) and damages of any kind or nature whatsoever arising out of, by reason of, or resulting from, Subtenant’s failure to perform or observe any of the terms and conditions of the Master Lease or this Sublease. Any other provision in this Sublease to the contrary notwithstanding, Subtenant shall pay to Sublandlord as Rent hereunder any and all sums which Sublandlord may be required to pay Landlord arising out of a request by Subtenant for, or use by Subtenant of, additional or over-standard Building services from Landlord (for example, but not by way of limitation, charges associated with after-hours HVAC usage and overstandard electrical charges).

(b) By Sublandlord . Sublandlord agrees that it will perform its obligations under the Master Lease during the Term and will not amend or modify the Master Lease in any way or knowingly take any action under the Master Lease which would increase Sublandlord’s obligations hereunder (other than in a de minimus way, such as requiring Subtenant to send notices to an additional address, etc.) or materially adversely affect Subtenant’s rights hereunder. Without limitation, Sublandlord agrees that it will not terminate the Master Lease without the prior written consent of Subtenant, except as Sublandlord may be entitled to terminate the Master Lease in the event of casualty or condemnation.

(c) Master Lease Renewal . Sublandlord will not exercise its rights to renew the Master Lease.

5.3 Rules and Regulations . Subtenant shall comply with the rules and regulations for the Building attached hereto as Exhibit E and such amendments or supplements thereto as Sublandlord may adopt from time to time with prior notice to Subtenant (the “Rules and Regulations”), as well as any applicable CC&R’s. Sublandlord agrees that (i) any Rules and Regulations promulgated by Sublandlord shall not be unreasonably modified or amended or enforced in a manner which will unreasonably interfere with the normal and customary conduct of Subtenant’s business and no Rule or Regulation shall unreasonably or materially interfere with Subtenant’s permitted use, (ii) Sublandlord shall provide Subtenant with reasonable advance notice of any modification or amendment of the Rules and Regulations, and (iii) in the event of a conflict between the Rules and Regulations and the provisions of this Sublease, the provisions of this Sublease will control. Without limitation on the foregoing, Subtenant acknowledges that CC&R’s may provide for some or all of the Project common areas to be transferred to a property owners’ association which will assume the obligation to cause to be operated and maintained some or all of the Project common areas (typically, through a property management/maintenance company retained by the property owners’ association in respect of such obligations); in such event, any costs incurred by Sublandlord to pay such property owners’ association fee will be included in Operating Costs. Sublandlord shall not be liable to Subtenant for or in connection with the failure of any other tenant of the Building or Project to comply with any rules and regulations applicable to such other occupant under its lease or sublease.

 

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5.4 Landlord’s Obligations . Subtenant agrees that Sublandlord shall not be required to perform any of the covenants, agreements and/or obligations of Landlord under the Master Lease and, insofar as any of the covenants, agreements and obligations of Sublandlord hereunder are required to be performed under the Master Lease by Landlord thereunder, Subtenant acknowledges and agrees that Sublandlord shall be entitled to look to Landlord for such performance. In addition, Sublandlord shall have no obligation to perform any repairs or any other obligation of Landlord under the Master Lease. Except as expressly set forth herein, Sublandlord shall not be responsible for any failure or interruption, for any reason whatsoever, of the services or facilities that may be appurtenant to or supplied at the Building or Project by Landlord, and no failure to furnish, or interruption of, any such services or facilities shall give rise to any (i) abatement, diminution or reduction of Subtenant’s obligations under this Sublease, or (ii) liability on the part of Sublandlord. Notwithstanding the foregoing, Sublandlord shall promptly take such action as may reasonably be indicated, under the circumstances, to secure such performance upon Subtenant’s request to Sublandlord to do so and shall thereafter use diligent efforts to secure timely completion of such performance by Landlord.

5.5 Maintenance .

(a) Sublandlord’s Maintenance . Sublandlord shall keep and maintain in good repair and working order and make repairs to and perform maintenance upon: (1) all structural elements and components of the Building (except to the extent that the responsibility for such work is Landlord’s pursuant to the Master Lease); (2) mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building in general; (3) the “Building Common Areas” (i.e., those areas within the Building devoted to corridors, elevator lobbies, vending areas and lobby areas (whether at ground level or otherwise), and other similar facilities provided for the common use or benefit of tenants generally and/or the public (excluding those areas within the Building used for elevator shafts, flues, vents, stacks, pipe shafts, risers and other vertical penetrations, mechanical rooms, elevator mechanical rooms, janitorial closets, electrical and telephone closets, mail rooms and similar areas in the Building not designated for the exclusive use of a particular tenant or for the common use of tenants in general); (4) exterior windows of the Building; (5) elevators serving the Building; and (6) Building standard lighting fixtures (i.e., lamp and ballasts) within the Subleased Premises. Sublandlord shall not be responsible for, and Subtenant shall reimburse Sublandlord within ten (10) business days after demand from Sublandlord, for the cost of any repairs, together with an administrative charge in an amount equal to 10% of the cost thereof, for damage caused by any negligent or intentional act or omission of Subtenant or any person claiming through or under Subtenant or any of Subtenant’s employees, contractors or agents or because of use of the Subleased Premises for other than normal and customary office operations. Sublandlord shall perform its obligations under this Section 5.5(a) within a reasonable time (considering the nature and urgency of the repair) after Sublandlord receives written notice of the need for such repairs or maintenance. Notwithstanding anything to the contrary contained in this Sublease, except as provided in Section 6.2 below or as otherwise expressly provided in this Sublease, Sublandlord shall not be liable for and there shall be no abatement of rent with respect to, any injury to or interference with Subtenant’s business arising from any performance or nonperformance of any

 

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repair, maintenance, alteration or improvement in and to any portion of the Project, Building or the Subleased Premises, no actual or constructive eviction of Subtenant shall result from such performance or nonperformance, Subtenant shall not have the right to terminate this Sublease, and Subtenant shall not be relieved from the performance of any covenant or agreement in this Sublease by reason thereof. Subtenant hereby waives and releases its right to make repairs at Sublandlord’s expense under Sections 1932(1), 1933(4), 1941 and 1942 of the California Civil Code or any similar or successor laws now or hereinafter in effect.

(b) Subtenant’s Maintenance . Subtenant shall, at its sole cost and expense, promptly perform all maintenance and repairs to the Subleased Premises that are not Sublandlord’s express responsibility under this Sublease, and shall keep the Subleased Premises in good condition and repair, reasonable wear and tear and repairs that are the express responsibility of Sublandlord under this Sublease excepted. Subtenant’s repair obligations include, without limitation, repairs to: (1) the interior side of demising walls; (2) doors; (3) floor coverings; (4) interior partitions, interior glass, interior window treatments, ceiling tiles, shelving, cabinets, millwork and other tenant improvements; (5) electronic, phone and data cabling and related switches and transmission lines (collectively, “Network Cabling”) that is installed by or for the exclusive benefit of Subtenant and located in the Subleased Premises or other portions of the Building or Project; (6) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing and similar facilities serving Subtenant exclusively (Subtenant will provide Sublandlord with written copies of all maintenance contracts for such work); and (7) alterations or Subtenant Alterations approved by Sublandlord (and, if required, Landlord) and performed by contractors retained by Subtenant, including related HVAC balancing. All work shall be performed in accordance with the rules and procedures described in this Sublease, the Master Lease, or as may otherwise be issued from time to time by Landlord or Sublandlord. If Subtenant fails to make any repairs to the Subleased Premises for more than fifteen (15) days after written notice from Sublandlord (although notice shall not be required if there is an emergency), Sublandlord may make the repairs, and Subtenant shall pay the reasonable cost of the repairs to Sublandlord within ten (10) business days after receipt of an invoice, together with an administrative charge in an amount equal to 10% of the cost of the repairs.

5.6 Compliance with Laws . Subtenant shall comply with all laws, including, without limitation, the Americans with Disabilities Act, regarding the operation of Subtenant’s business and the use, condition, configuration and occupancy of the Subleased Premises and any Subtenant Alterations in the Subleased Premises; provided, however, that Subtenant shall have no obligation to comply with laws requiring improvements to the common areas or the Building structure, except to the extent the same are necessitated by any Subtenant Improvements or Subtenant’s use of the Subleased Premises for other than general office purposes. Sublandlord shall comply with all laws relating to the common areas and the base Building (except to the extent that such compliance is the responsibility of Landlord under the Master Lease), provided that compliance with such laws is not necessitated by Subtenant Improvements or Subtenant’s use of the Subleased Premises for other than general office purposes and is not otherwise the responsibility of Subtenant as expressly provided in this Sublease, and provided further that Sublandlord’s failure to comply therewith would prohibit Subtenant from obtaining or maintaining a certificate of occupancy for the Subleased Premises, would unreasonably and materially affect the safety of Subtenant or Subtenant’s employees,

 

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would create a significant health hazard for Subtenant or Subtenant’s employees or would otherwise materially interfere with Subtenant or Subtenant’s employees’ use and enjoyment of the Subleased Premises. Sublandlord shall be permitted to include in Operating Costs any costs or expenses incurred by Sublandlord under this Section 5.6 to the extent allowed pursuant to the terms of, and amortized to the extent required by, the provisions of Section 3.2 above. Subtenant, within ten (10) days after receipt, shall provide Sublandlord with copies of any notices it receives regarding a violation or alleged violation of any laws. Subtenant shall comply with the rules and regulations of the Building and such other reasonable rules and regulations adopted by Sublandlord from time to time and with all recorded covenants, conditions and restrictions now or hereafter affecting the Building or the Project (collectively, “CC&Rs”) that do not prohibit Subtenant’s use of the Subleased Premises for general office use and to the extent the same do not materially adversely increase Subtenant’s obligations or materially adversely decrease Subtenant’s rights under this Sublease.

6. Services .

6.1 Generally . Sublandlord agrees to furnish Subtenant with the following services on all days, 24-hours per day (except as otherwise stated), all of which shall be included in Operating Costs except as otherwise provided in this Sublease with respect to excess usage:

(a) Water . Running City water from the regular Building outlets for drinking, lavatory and toilet purposes in the Building Common Areas on each floor on which the Subleased Premises are located. If Subtenant desires water in the Subleased Premises for any approved reason, including for kitchen areas in the Subleased Premises, running City water shall be supplied, at Subtenant’s sole cost and expense, from the Building water main through a line and fixtures installed at Subtenant’s sole cost and expense with the prior reasonable consent of Sublandlord. If Subtenant desires hot water in the Subleased Premises, Subtenant, at its sole cost and expense and subject to the prior reasonable consent of Sublandlord, may install a hot water heater in the Subleased Premises;

(b) HVAC .

(1) Generally . Except for the Server Room (defined below), heating, ventilation and air conditioning (“HVAC”) in season during Building Hours (i.e., 8:00 a.m. to 6:00 p.m., Monday through Friday, holidays excepted), at such temperatures and in such amounts as required by governmental authority. Subtenant shall have the right to receive HVAC service during hours other than Building Hours using Sublandlord’s “after-hours” access card system. Subtenant shall pay Sublandlord the standard charge established from time to time by Sublandlord for the additional service, which charge Subtenant acknowledges for after-hours HVAC service is currently $89.60 per floor (or partial floor) per hour as of the date of this Sublease, and which cost may be increased to the extent that Sublandlord’s actual cost (hereinafter defined) of providing such “after hours” HVAC increases from time to time. The minimum time period for after hours HVAC usage shall be one (1) hour. For purpose of this Section 6.1(b), “actual cost” shall mean the actual cost incurred by Sublandlord, as reasonably determined by Sublandlord, inclusive of a reasonable allocation for wear and tear, depreciation, provided that, notwithstanding the foregoing, any amount actually charged by any unrelated third

 

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party to Sublandlord for the supply of HVAC shall be deemed Sublandlord’s “actual cost”. When determining the actual cost of Subtenant’s utility usage pursuant to the terms of this Section 6.1(b), Sublandlord agrees that it shall use the monthly average rate paid by Sublandlord for a particular utility;

(2) Rooftop Chiller . Sublandlord shall provide Subtenant access to, and the right to the use of, the Building’s rooftop supplemental chiller and associated systems, which will be maintained by Sublandlord. Subtenant will pay to Sublandlord as additional Rent hereunder, Sublandlord’s estimate of Subtenant’s proportionate share (i.e., Subtenant’s consumption of chiller services as it relates to the aggregate consumption of such services by all subtenants in the Building) of the aggregate cost of operating such chiller, which aggregate cost Sublandlord initially estimates to be the sum of $72.00 per day; Sublandlord may revise such charges from time to time. Such charge will be payable by Subtenant on a monthly basis as and when Base Rent is payable hereunder. Subtenant shall have the right to audit the costs associated with rooftop chiller services pursuant to Section 3.2(c)(2)(C) above.

(3) Chilled Water Riser . The rooftop chiller has an aggregate capacity of 100 tons at 200 gallons per minute (GPM). As of the date of this Sublease, the portion of the Subleased Premises located on the second (2nd) floor of the Building contains the following supplemental HVAC units (the “Existing Supplemental Units”): one (1) 7.5 ton floor-mounted Liebert unit; one (1) 15 ton floor-mounted Data-Aire unit; two (2) 10 ton floor-mounted Liebert units; six (6) ton ceiling mounted units; and one (1) 7.5 ton ceiling mounted unit.

Upon the mutual execution and delivery of this Sublease, the Existing Supplemental Units shall become the property of Subtenant (Sublandlord will, at Subtenant’s request, provide Subtenant with a bill of sale transferring ownership of the Existing Supplemental Units to Subtenant on an “as-is” basis free of third-party liens or claims). Sublandlord makes no representation or warranty to Subtenant regarding the condition or operability of any Existing Supplemental Units. Subtenant will have the right to use the Existing Supplemental Units or such other supplemental HVAC units as Subtenant elects to install within the Subleased Premises (together with the Existing Supplemental Units, “Supplemental Units”). Subtenant may connect (or leave connected, as the case may be) Supplemental Units to the Building’s chilled water riser; provided, that in no event will Subtenant’s aggregate usage of chilled water in the Subleased Premises exceed fifty (50) tons (assuming a maximum of two (2) GPM per ton). Subtenant will bear all necessary costs of any additional piping or other infrastructure necessary to provide chilled water to the Supplemental Units. Prior to Subtenant’s occupancy or the commencement of any work within the Subleased Premises, Subtenant will submit to Sublandlord a schedule of all Supplemental Units to be operated within the Subleased Premises. In connection with the foregoing, Subtenant will disconnect, cap-off and, if required by Sublandlord, remove (collectively, “Decommission”) all Existing Supplemental Units which Subtenant will not use; Sublandlord will bear the reasonable cost of such Decommissioning work. Prior to commencing any Decommissioning work, Subtenant will deliver to Sublandlord a schedule of the Existing Supplemental Units which are scheduled for Decommissioning, together with a bid or quotation for the cost of such Decommissioning work. At Sublandlord’s election, Sublandlord may require that the Decommissioning work be performed by Sublandlord’s contractor in order to reduce the costs of such work. Sublandlord will have the right to inspect

 

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all Decommissioned Existing Supplemental Units at any time in order to assure that said units are not connected to the chilled water riser (Subtenant acknowledges that connecting Decommissioned Existing Supplemental Units to the chilled water riser could materially and detrimentally affect the ability of Building occupants to be served by the rooftop chiller with adequate capacity and agrees that re-connecting an Existing Supplemental Unit which was previously Decommissioned, or fails to Decommission an Existing Supplemental Unit which was scheduled for Decommissioning, would constitute a material breach hereunder).

(4) Blitz Room . The parties acknowledge that the Subleased Premises contains a room, designated as the “Blitz Room” and identified as such on the attached Exhibit A-4 which is currently served by Existing Supplemental Units. If Subtenant elects to Decommission some or all of the Supplemental Units serving the Blitz Room and as a consequence the Blitz Room does not have sufficient HVAC service from the Building’s HVAC system to support normal office occupancy of the Blitz Room, Sublandlord will, at Sublandlord’s sole cost, arrange for the Blitz Room to be served by sufficient HVAC service to support normal office occupancy per current (as of the date of this Sublease) ASHRAE Standards, the ongoing cost of such HVAC service will be included in Sublandlord Operating Costs.

Subtenant shall be responsible, at its cost, for the cost of purchasing and installing a E-mon D-mon submeter, or another method mutually agreed upon by the parties for each of the Supplemental Unit(s) to measure electricity consumption in connection with Supplemental Units, as well as the cost of all such electricity that is consumed. Upon the expiration or earlier termination of this Sublease, Subtenant shall remove the Supplemental Units and all associated pipes and infrastructure from the Building to the extent such removal is required by Landlord.

(c) Janitorial . Janitor service five (5) days per week (except on dates of the observation of holidays); provided that if Subtenant’s use, floor covering or other improvements require special services in excess of the standard services for the Building, Subtenant shall pay the additional cost attributable to the special services;

(d) Elevators and Access . Nonexclusive, non-attended automatic passenger elevator service during Building Hours, and at least one elevator available at all other times to provide service to the Subleased Premises. Freight elevator access is available, but the vestibules for the freight elevator on each floor will require card key access. Subtenant shall have access to the Subleased Premises 24-hours per day, 7 days a week, subject to temporary closures due to emergency, casualty, Sublandlord’s security requirements and maintenance, repair or changes to the Building or Project;

(e) Electricity . Electricity to the Subleased Premises for general office use, in accordance with and subject to the terms and conditions of Section 7 below;

(f) Security . On-site Project (as opposed to Building) security equipment, personnel and procedures, if any, as Sublandlord may elect in its sole discretion to establish from time to time; and

 

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(g) Other . Such other services as Sublandlord reasonably determines are necessary or appropriate for the Building or Project.

6.2 Interruption of Service . Sublandlord’s failure to furnish, or any interruption or termination of, services due to the application of laws, the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any event or cause beyond the reasonable control of Sublandlord (a “Service Failure”), shall not render Sublandlord liable to Subtenant, constitute a constructive eviction of Subtenant, give rise to an abatement of rent (except as expressly set forth herein), nor relieve Subtenant from the obligation to fulfill any covenant or agreement, provided that if any interruption in services to the Subleased Premises (i) continues for five (5) consecutive business days or more, (ii) is due to the act or omission of Sublandlord or Sublandlord’s employees or agents, (iii) is not attributable to the acts or omissions of Subtenant or Subtenant’s employees, invitees or agents and (iv) prevents Subtenant from occupying any material portion of the Subleased Premises, Base Rent shall abate from and after the fifth (5th) consecutive business day of the interruption to the extent the Subleased Premises are rendered unusable and are actually not used by Subtenant as a result thereof. In no event, however, shall Sublandlord be liable to Subtenant for any loss or damage, direct or indirect, special or consequential, including loss of business or theft of Subtenant’s property, arising out of or in connection with the failure of any security services, personnel or equipment.

7. Use of Electrical Services by Subtenant .

7.1 Normal Electrical Usage . Except for the Server Room, which capacity as of the date of execution of this Sublease shall remain for Subtenant’s use and which is described in Section 7.3 below, the Building has been designed to accommodate electrical receptacle (120/208v) loads of three and one half (3.5) watts per usable square foot and an average lighting load of two (2) watts per usable square foot during Building Hours, with such average determined on a monthly basis (the “Standard Electrical Usage”), which electrical usage shall be subject to applicable laws, including Title 24. Subtenant will design Subtenant’s electrical system serving any equipment producing nonlinear electrical loads to accommodate such nonlinear electrical loads, including, but not limited to, oversizing neutral conductors, derating transformers and/or providing power-line filters. Engineering plans shall include a calculation of Subtenant’s fully connected electrical design load with and without demand factors and shall indicate the number of watts of unmetered and submetered loads. Electrical service to the Subleased Premises may be furnished by one or more companies providing electrical generation, transmission and distribution services, and the cost of electricity may consist of several different components or separate charges for such services, such as generation, distribution and stranded cost charges. Sublandlord shall have the exclusive right to select any company providing electrical service to the Subleased Premises, to aggregate the electrical service for the Project, Building or Subleased Premises with other buildings, to purchase electricity through a broker and/or buyers group and to change the providers and manner of purchasing electricity. Subtenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Subleased Premises. Sublandlord, as part of Operating Costs, shall bear the cost of lamps, starters and ballasts for Building standard lighting fixtures within the Subleased Premises.

 

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7.2 Excess Usag e. Subtenant’s use of electrical service shall not exceed, either in voltage, rated capacity or overall load, the Standard Electrical Usage. If Subtenant requests permission to consume excess electrical service, Sublandlord may refuse to consent or may condition consent upon conditions that Sublandlord reasonably elects (including, without limitation, the installation of utility service upgrades, meters, submeters, air handlers or cooling units), and the additional usage (to the extent permitted by law), installation and maintenance costs shall be paid by Subtenant. Sublandlord shall have the right to separately meter or submeter electrical usage for the Subleased Premises and to measure electrical usage by survey or other commonly accepted methods; if Subtenant is consuming in excess of Standard Electrical Usage, such meter or submeter will be installed at Subtenant’s cost.

7.3 Server Room . As part of the Initial Subtenant Alterations, Subtenant will install an electrical meter in the Server Room for the purpose of measuring the electricity consumed in the Server Room. Subtenant will pay to Sublandlord directly the cost of electricity consumed in the Server Room as shown by such meter, on a monthly basis as Additional Rent hereunder within thirty (30) days following delivery of an invoice by Sublandlord.

8. Master Lease and Sublease Terms .

8.1 Subject to Master Lease . This Sublease is and shall be at all times subject and subordinate to the Master Lease. Subtenant acknowledges that Subtenant has reviewed and is familiar with all of the terms, agreements, covenants and conditions of the Master Lease. Additionally, Subtenant’s rights under this Sublease shall be subject to the terms of the Consent. During the Term and for all periods subsequent thereto with respect to obligations which have arisen prior to the termination of this Sublease, Subtenant agrees to perform and comply with, for the benefit of Sublandlord and Landlord, the obligations of Sublandlord under the Master Lease which pertain to the Subleased Premises and/or this Sublease, except for those provisions of the Master Lease which are directly contradicted by this Sublease, in which event the terms of this Sublease document shall control over the Master Lease. Sublandlord agrees that during the Term, Sublandlord will not amend, modify or voluntarily terminate the Master Lease in a manner which increases Subtenant’s obligations hereunder as materially adversely affects Subtenant’s rights hereunder. The foregoing will not preclude Sublandlord from terminating the Master Lease in the event of casualty or condemnation.

8.2 Incorporation of Terms of Master Lease . The terms, conditions and respective obligations of Sublandlord and Subtenant to each other under this Sublease shall be the terms and conditions of the Master Lease, except for those provisions of the Master Lease which are directly contradicted by this Sublease, in which event the terms of this Sublease shall control over the Master Lease. Therefore, for the purposes of this Sublease, wherever in the Master Lease the word “Landlord” is used it shall be deemed to mean Sublandlord and wherever in the Master Lease the word “Tenant” is used it shall be deemed to mean Subtenant and wherever in the Master Lease the word “Premises” is used it shall be deemed to mean Subleased Premises. Any non-liability, release, indemnity or hold harmless provision in the Master Lease for the benefit of Landlord that is incorporated herein by reference, shall be deemed to inure to the benefit of Sublandlord, Landlord, and any other person intended to be benefited by said

 

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provision, for the purpose of incorporation by reference in this Sublease. Any right of Landlord under the Master Lease (a) of access or inspection, (b) to do work in the Master Lease Premises or in the Building, or (c) in respect of rules and regulations, which is incorporated herein by reference, shall be deemed to inure to the benefit of Sublandlord, Landlord, and any other person intended to be benefited by said provision, for the purpose of incorporation by reference in this Sublease.

8.3 Clarifications . For the purposes of incorporation herein, the terms of the Master Lease are subject to the following additional modifications:

(a) Approvals . In all provisions of the Master Lease (under the terms thereof and without regard to modifications thereof for purposes of incorporation into this Sublease) requiring the approval or consent of Landlord, Subtenant shall be required to obtain the approval or consent of both Sublandlord and Landlord. Except as otherwise provided herein, Sublandlord shall not unreasonably withhold, or delay its consent to or approval of a matter if such consent or approval is required under the provisions of the Master Lease and Landlord has consented to or approved of such matter.

(b) Deliveries . In all provisions of the Master Lease requiring Tenant to submit, exhibit to, supply or provide Landlord with evidence, certificates, or any other matter or thing, Subtenant shall be required to submit, exhibit to, supply or provide, as the case may be, the same to both Landlord and Sublandlord.

(c) Damage; Condemnation . Sublandlord shall have no obligation to restore or rebuild any portion of the Subleased Premises after any destruction or taking by eminent domain; provided that if and to the extent the Subleased Premises contain improvements which constitute “Alterations” or “Tenant Improvements”, as said terms are described in the Master Lease, and Sublandlord, as the Tenant under the Master Lease, is required to restore such Tenant Improvements or Alterations, Sublandlord will perform such work in accordance with the terms of the Master Lease. Sublandlord will not, however, have any obligation to repair or service any Subtenant Alterations.

(d) Insurance . In all provisions of the Master Lease requiring Tenant to designate Landlord as an additional or named insured on its insurance policy, Subtenant shall be required to so designate Landlord and Sublandlord on its insurance policy.

8.4 Exclusions . Notwithstanding the terms of Section 8.2 above, Subtenant shall have no rights nor obligations under the following parts, Sections and Exhibits of the Master Lease:

(a) Original Master Lease : Article 1, Section 2.A.iv (second paragraph), Section 2.A.vi. Section 2.C, Section 3.A (first, third, fourth and fifth sentences only), Section 3.C, Sections 4.A, 4.B. and 4.D, Article 5, Sections 6.A, 6.B (clauses vii, and viii and final sentence only), Sections 6.C, 7.A (the reference to “Landlord” in the seventh sentence will be deemed a reference to Landlord only, not Sublandlord), 8.A (the reference to “Landlord” in this Section will be deemed a reference to Landlord only, not Sublandlord), 8.B, 8.C, 8.D, 8.E, 8.G , 9.B, Article 11, Sections 14.B (final sentence only), 17.B (clause (ii) and references to “Monthly Amortized Costs” only), Article 18, Article 19, Article 20, Sections 21.C, 21.M, 21.T, 21.W.

 

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(b) First Amendment : All.

(c) Second Amendment : All.

(d) Third Amendment : All

8.5 Modifications . Notwithstanding the terms of Section 8.2 above, the following provisions of the Master Lease are modified as described below for the purpose of their incorporation into this Sublease:

(a) With respect to Article 15 of the Original Master Lease, if Landlord elects to terminate the Master Lease pursuant to Section 15.B of the Original Master Lease or if Sublandlord elects to terminate the Master Lease pursuant to Section 15.C of the Original Master Lease, Sublandlord will promptly notify Subtenant and this Sublease will terminate concurrently with the termination of the Master Lease. If neither Landlord nor Sublandlord elects to terminate the Master Lease, Sublandlord will nonetheless provide Subtenant with a copy of Landlord’s notice of the time necessary to complete repairs as provided in Section 15.C of the Original Master Lease, as well as an estimate of the additional time necessary for Sublandlord to complete any repairs required of Sublandlord pursuant to the provisions of Article 15 of the Original Master Lease, and (x) Subtenant will have the same right to terminate the Sublease as Sublandlord has to terminate the Master Lease as described in the second (2nd) and fourth (4th) sentences of Section 15.C of the Original Master Lease as incorporated herein; provided that for such purposes references in the second (2nd) and fourth (4th) sentences of Section 15.C to “Landlord” or Landlord’s” will be deemed to be references to “Sublandlord” or “Sublandlord’s” and “Landlord” or “Landlord’s”.

(b) With respect to Section 17.A of the Original Master Lease, the second (2nd) clause (i) is modified to provide that Sublandlord may terminate this Sublease with respect to an assignment of this Sublease or a proposed sub-sublease of any portion of the Subleased Premises for substantially the remainder of the Term (but in the case of a proposed sub-sublease of a portion of the Subleased Premises, such termination will only be with respect to the portion of the Subleased Premises which Subtenant proposes to sub-sublease, and effective as of the date of such termination, the Base Rent payable hereunder, as well as Subtenant’s Building Percentage Share and Subtenant’s Project Percentage Share, will be adjusted to reflect the reduction in the size of the Subleased Premises).

(c) With respect to Section 17.E of the Original Master Lease, in clauses (ii) and (iii), in each case the phrase “has a net worth at the time of and thereafter sufficient to enable it to meet its obligations under this Lease” is deleted and restated, for the purposes of incorporation herein, as follows: “has a net worth which, in Sublandlord’s reasonable determination, is equal to or in excess of the net worth of Subtenant as of the date immediately preceding the proposed assignment and is sufficient to enable it to meet its obligations under this Lease.”

 

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(d) Except as set forth in Section 8.5(b) above, references in the following provisions of the Master Lease to “Landlord” shall mean “Landlord”; Articles 15 and 16.

(e) With respect to Section 21(g) of the Original Master Lease, Sublandlord will be permitted to enter the Subleased Premises in order to perform any maintenance and repair tasks applicable to the Subleased Premises or the Building or to facilitate the construction of improvements within the Building (for example, access may be necessary in order to install connections between rooftop facilities and the premises of Building occupants on lower floors who are served by such facilities) which work will not require Subtenant’s prior consent, to access the Telecom Riser Room and Mechanical Room and other similar facilities located on the floor(s) on which the Subleased Premises are located; Sublandlord agrees to use reasonable efforts to minimize disturbance to Subtenant’s business operations in the Subleased Premises as a result of any such entry and to provide reasonable (i.e., at least twenty-four (24) hours) advance notice (which may be telephonic) to Subtenant of any such entry, except in the case of emergency.

9. Assignment and Subletting .

9.1 Generally . Subtenant shall not assign this Sublease or further sublet all or any part of the Subleased Premises except subject to and in compliance with all of the terms and conditions of Article 17 of the Original Master Lease, and Sublandlord (in addition to Landlord) shall have the same rights with respect to assignment and subleasing as Landlord has under such Article 17; provided, however, that:

(a) fifty percent (50%) of all excess rent (calculated as provided in Section 17.B of the Original Master Lease) in connection with any such assignment or sublease shall be payable to Sublandlord as and when received by Subtenant;

(b) in connection with any proposed assignment or subletting by Subtenant, Sublandlord will have the right, to be exercised by written notice delivered within twenty (20) days after Subtenant’s submission of all necessary materials requesting Sublandlord’s consent to such assignment or sublease, to terminate this Sublease with respect to the space that is the subject of such proposed assignment or sublease, effective as of the proposed effective date of such proposed assignment or sublease; and

(c) in no event will any sublease by Subtenant subdivide a floor of the Building into a multi-occupant floor.

9.2 Fees and Costs . Subtenant shall pay all fees and costs payable to Master Landlord pursuant to the Master Lease in connection with any proposed assignment, sublease or transfer of the Subleased Premises, together with all of Sublandlord’s reasonable out-of-pocket costs relating to Subtenant’s request for such consent, regardless of whether such consent is granted, and the effectiveness of any such consent shall be conditioned upon Master Landlord’s and Sublandlord’s receipt of all such fees and costs. The sale of shares of Subtenant’s stock on a nationally recognized securities exchange in the normal course of trading (as opposed to the transfer of shares in connection with a merger or acquisition) will not constitute an assignment of Subtenant’s interest in this Sublease.

 

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10. Default . Except as expressly set forth herein, Subtenant shall perform all obligations in respect of the Subleased Premises that Sublandlord would be required to perform pursuant to the Master Lease, to the extent incorporated herein. It shall constitute an event of default hereunder if Subtenant fails to perform any obligation hereunder (including, without limitation, the obligation to pay Rent), or any obligation under the Master Lease which has been incorporated herein by reference, and, in each instance, Subtenant has not remedied such failure after delivery of any written notice required under this Sublease and passage of the cure periods prescribed in Article 13 of the Original Master Lease as incorporated herein, provided that with respect to non-monetary defaults, Subtenant’s cure period shall be longer of (A) one-half of, or (B) five (5) calendar days less than, the actual cure period provided for such non-monetary default under the Master Lease.

11. Remedies . In the event of any default hereunder by Subtenant, Sublandlord shall have all remedies provided to the “Landlord” in the Master Lease as if an event of default had occurred thereunder and all other rights and remedies otherwise available at law and in equity. Without limiting the generality of the foregoing, Sublandlord may continue this Sublease in effect after Subtenant’s breach and abandonment and recover Rent as it becomes due. Sublandlord may resort to its remedies cumulatively or in the alternative.

12. Right to Cure Defaults . If Subtenant fails to perform any of its obligations under this Sublease after expiration of applicable grace or cure periods, then Sublandlord may, but shall not be obligated to, perform any such obligations for Subtenant’s account. All costs and expenses incurred by Sublandlord in performing any such act for the account of Subtenant shall be deemed Rent payable by Subtenant to Sublandlord upon demand, together with interest thereon at the lesser of (i) fifteen percent (15%) per annum or (ii) the maximum rate allowable under law (the “Interest Rate”) from the date of the expenditure until repaid. If Sublandlord undertakes to perform any of Subtenant’s obligations for the account of Subtenant pursuant hereto, the taking of such action shall not constitute a waiver of any of Sublandlord’s remedies. Subtenant hereby expressly waives its rights under any statute to make repairs at the expense of Sublandlord.

13. Sublandlord’s Liability . Notwithstanding any other term or provision of this Sublease, the liability of Sublandlord to Subtenant for any default in Sublandlord’s obligations under this Sublease shall be limited to actual, direct damages, and under no circumstances shall Subtenant, its partners, members, shareholders, directors, agents, officers, employees, contractors, sublessees, successors and/or assigns be entitled to recover from Sublandlord (or otherwise be indemnified by Sublandlord) for (a) any losses, costs, claims, causes of action, damages or other liability incurred in connection with a failure of Landlord, its partners, members, shareholders, directors, agents, officers, employees, contractors, successors and /or assigns to perform or cause to be performed Landlord’s obligations under the Master Lease, (b) lost revenues, lost profit or other consequential, special or punitive damages arising in connection with this Sublease for any reason, or (c) any damages or other liability arising from or incurred in connection with the condition of the Subleased Premises or suitability of the Subleased Premises for Subtenant’s intended uses. Subtenant shall, however, have the right to

 

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seek any injunctive or other equitable remedies as may be available to Subtenant under applicable law. Notwithstanding any other term or provision of this Sublease, no personal liability shall at any time be asserted or enforceable against Sublandlord’s stockholders, directors, officers, or partners on account of any of Sublandlord’s obligations or actions under this Sublease. As used in this Sublease, the term “Sublandlord” means the holder of the tenant’s interest under the Master Lease and the holder of Sublandlord’s interest under this Sublease. In the event of any assignment or transfer of the Sublandlord’s interest under this Sublease, which assignment or transfer may occur at any time during the Term in Sublandlord’s sole discretion, Sublandlord shall be and hereby is entirely relieved of all covenants and obligations of Sublandlord hereunder accruing subsequent to the date of the transfer and it shall be deemed and construed, without further agreement between the parties hereto, that any transferee has assumed and shall carry out all covenants and obligations thereafter to be performed by Sublandlord hereunder. Sublandlord may transfer and deliver any then existing Security Deposit to the transferee of Sublandlord’s interest under this Sublease, and thereupon Sublandlord shall be discharged from any further liability with respect thereto.

14. Attorneys’ Fees . If Sublandlord or Subtenant brings an action to enforce the terms hereof or to declare rights hereunder, the prevailing party who recovers substantially all of the damages, equitable relief or other remedy sought in any such action on trial and appeal shall be entitled to receive from the other party its costs associated therewith, including, without limitation, reasonable attorneys’ fees and costs from the other party.

15. Delivery of Possession .

15.1 Generally . Sublandlord shall deliver, and Subtenant shall accept, possession of the Subleased Premises in their “AS IS” condition as the Subleased Premises exists on the date of such delivery. Sublandlord shall have no obligation to furnish, render or supply any work, labor, services, materials, furniture other than the Furniture, defined below, fixtures, equipment, decorations or other items to make the Subleased Premises ready or suitable for Subtenant’s occupancy. In connection therewith, the parties acknowledge that there is an existing server room located within Second Floor Space (the “Server Room”) which will be delivered by Sublandlord in its “as is” condition, including any existing equipment and racks currently located therein. Subtenant expressly acknowledges that Sublandlord has made no representation or warranty as to the suitability or fitness of any equipment located in the Server Room, and, while any such equipment may be used by Subtenant at Subtenant’s option, all such equipment is accepted by Subtenant in its current “as is” condition. Further, the parties acknowledge that an existing generator providing back-up power for the Building’s life safety systems also supplies back-up power to some, but not all, of the electrical outlets in the Server Room (the primary purpose of such back-up generator being to support the life safety systems of the Building); Sublandlord will continue to maintain and operate such back-up generator, but does not represent or warrant to Subtenant that such back-up generator will timely provide backup power to the Server Room, or, if such power is provided, that such power will be provided in a quantity or quality necessary to maintain Subtenant’s equipment located therein operational. In making and executing this Sublease, Subtenant has relied solely on such investigations, examinations and inspections as Subtenant has chosen to make or has made and has not relied on any representation or warranty concerning the Subleased Premises or the Building, except as expressly set forth in this Sublease. Subtenant acknowledges that Sublandlord has afforded

 

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Subtenant the opportunity for full and complete investigations, examinations and inspections of the Subleased Premises and the Building Common Areas. Subtenant acknowledges that it is not authorized to make or perform any alterations or improvements in or to the Subleased Premises except as permitted by the provisions of this Sublease and


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