znga-8k_20190524.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 24, 2019

 

ZYNGA INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-35375

42-1733483

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

 

699 Eighth Street

San Francisco, CA 94103

 

94103

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (855) 449-9642

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock

ZNGA

Nasdaq Global Select Market

 

 


 

 

Item 1.01.  Entry into a Material Definitive Agreement.

On May 24, 2019, Big Dog Holdings LLC (“Seller”), a wholly-owned subsidiary of Zynga Inc. (“Zynga”), and BCP-CG 650 Property LLC (“Buyer”), an affiliate of Beacon Capital Partners, LLC, entered into an Agreement of Purchase and Sale (the “Sale Agreement”) pursuant to which (i) Buyer will purchase from Seller all of its interest in the real property located at 650 Townsend Street and 699 Eighth Street in San Francisco, California (the “Building”) (including all of the preexisting leases among Seller and third-party tenants in the Building) and (ii) Zynga will enter into an office lease with Buyer to lease back approximately 185,000 rentable square feet of office space located in the Building (the “Lease”), where Zynga’s corporate headquarters is currently located and is expected to remain.

The aggregate pre-tax consideration to be paid by Buyer to Seller pursuant to the Sale Agreement is approximately $600 million in cash (the “Purchase Price”), $25 million of which is to be deposited into an escrow account. The Purchase Price will be subject to adjustment for customary closing costs and other matters as set forth in the Sale Agreement.

The closing of the sale of the Building is expected to take place before the end of July 2019, subject to customary closing conditions and deliveries.

Pursuant to and upon closing of the Sale Agreement, Zynga will enter into the Lease, providing for a 12-year lease commencing in July 2019 and expiring in July 2031, with options to extend the term of the Lease by up to a maximum of an additional 22 years.  The initial base rent will be approximately $10 million for the first year of the Lease, and may increase by an amount not to exceed 3.25% per year commencing July 2020.

The foregoing descriptions of the Sale Agreement and the Lease do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibits 10.1 and 10.2, respectively, hereto and are incorporated herein by reference.

Item 2.01.  Completion of Acquisition or Disposition of Assets.

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.01.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

 

Description

10.1*+

 

Agreement of Purchase and Sale, dated as of May 24, 2019, by and between Big Dog Holdings LLC, a subsidiary of the registrant, and BCP-CG 650 Property LLC

10.2*+

 

Form of Office Lease, by and between the registrant, as tenant, and BCP-CG 650 Property LLC, as landlord

 

*  Certain portions of this exhibit have been redacted to preserve confidentiality. The registrant hereby undertakes to provide further information regarding such redacted information to the Commission upon request.

+  Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to provide further information regarding such omitted materials to the Commission upon request.

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

ZYNGA INC.

 

 

 

 

Date:  May 28, 2019

 

By:

/s/ Gerard Griffin

 

 

 

Gerard Griffin

 

 

 

Chief Financial Officer

 

 

znga-ex101_24.htm

 

Exhibit 10.1

650 townsend street and 699 eighth Street
san francisco, california

AGREEMENT OF PURCHASE AND SALE

This Agreement, dated as of May 24, 2019, is between BIG DOG HOLDINGS LLC, a Delaware limited liability company (“Seller”), and BCP-CG 650 Property LLC, a Delaware limited liability company (“Buyer”).

RECITALS:

This Agreement is entered into on the basis of the following facts, understandings and intentions of the parties:

A.

Seller is the owner of that certain real property located in the City and County of San Francisco, State of California, commonly known as 650 Townsend Street and 699 Eighth Street and more particularly described in Exhibit A attached hereto (the “Real Property”).

B.

Buyer desires to purchase the Property (as defined in Section 1.1 below) from Seller and Seller desires to sell the Property to Buyer, upon the terms and conditions stated in this Agreement.

C.

Concurrently with Closing (as defined in Section 1.2(b)(4) below), Buyer will lease to Seller’s parent corporation, Zynga Inc., a Delaware corporation (“Zynga”) and Zynga will lease from Buyer, a portion of the Improvements (as defined in Section 1.1(a) below) the “Zynga Lease Premises”) pursuant to the terms and conditions of that certain Office Lease between Buyer, as landlord, and Seller, as tenant, which will be dated and effective as of the Closing Date (as defined in Section 8.2 below), a copy of which is attached hereto as Exhibit L (the “Zynga Lease”, and Exhibit L is referred to herein as the “Zynga Lease Form”).

D.

In order to effectuate the foregoing, Seller and Buyer desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants of the parties herein contained and other valuable consideration, the parties hereby agree as follows:

Certain portions of this document have been omitted pursuant to Item 601(b)(10) of Regulation S‑K and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The marked information has been omitted because it is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. The registrant hereby undertakes to provide further information regarding such marked information to the Commission upon request.


 

ARTICLE I

PURCHASE AND SALE OF PROPERTY

Section 1.1Sale.

Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to the terms, covenants and conditions set forth herein, all of Seller’s right, title and interest in and to the following property (collectively, the “Property”):

(a)Real Property.  That certain real property commonly known as 650 Townsend Street and 699 Eighth Street in the City of San Francisco, State of California, as more particularly described in Exhibit A attached hereto and made a part hereof (the “Land”), together with (1) all improvements located thereon (the “Improvements”), (2) all rights, benefits, privileges, easements, tenements, hereditaments, rights-of-way and other appurtenances thereon or in any way appertaining thereto, including all mineral rights, development rights, air and water rights, and (3) all strips and gores and any land lying in the bed of any street, road or alley, open or proposed, adjoining such Land (collectively, the “Real Property”);

(b)Leases.  All of the landlord’s interest in and to all of the Leases (as defined in Section 2.1(b) below) of the Real Property, including Leases entered into after the date of this Agreement as permitted by this Agreement except for the Excluded Rights;

(c)Tangible Personal Property.  All of the equipment, machinery, furniture, furnishings, supplies and other tangible personal property, if any, owned by Seller and now or hereafter located on and used exclusively in the operation, ownership or maintenance of the Real Property (collectively, the “Tangible Personal Property”), but specifically excluding from the Tangible Personal Property (1) any items of personal property owned by tenants of the Property, (2) any items of personal property not owned by Seller and located in Seller’s property management office, if any, located on the Real Property, (3) any items of personal property owned by third parties and leased to Seller, (4) proprietary computer software, systems and equipment and related licenses used in connection with the operation or management of the Property, (5) all personal property and trade fixtures owned by Seller or Zynga and located in the Zynga Lease Premises, including, without limitation, equipment, furniture, decorations, art and trade fixtures, and (6) all items of personal property described on Exhibit J to be attached hereto prior to Closing and made a part hereof, provided that such Exhibit J shall (i) not include any personal property that is fitness center equipment, engineering equipment or theater equipment used for operating the theater, and (ii) shall be prepared by Seller and be reasonably approved by Buyer.  Seller shall provide to Buyer a proposed list of excluded personal property to be attached as Exhibit J within thirty (30) days of the Effective Date.  Buyer shall respond to Seller’s request for approval of the proposed list of excluded personal property within five (5) days after the receipt of such list.  Seller shall provide to Buyer any list which is in Seller’s possession of such Tangible Personal Property, if any, on the Effective Date; and

(d)Intangible Personal Property.  To the extent assignable at no cost to Seller, all intangible personal property, if any, owned by Seller and related to the Real Property and the Improvements, including, without limitation: any plans and specifications and other architectural

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and engineering drawings for the Improvements; any warranties; any domain names, website addresses and phone numbers for the operation of the Property; any Service Contracts (as defined in Section 2.1 below) and other contract rights related to the Property (but only to the extent Sellers obligations thereunder are expressly assumed by Buyer pursuant to the Assignment of Leases as defined in Section 8.3 below), but specifically excluding all Service Contracts described on Exhibit K attached hereto and made a part hereof (the “Excluded Service Contracts”); and any governmental permits, approvals and licenses (including any pending applications) (collectively, the Intangible Personal Property).  Notwithstanding anything to the contrary contained herein, there shall be excluded from the assignment of any rights of Seller under any Leases or other Intangible Personal Property (i) any rights of Seller against third parties including, without limitation, tenants, with respect to the period prior to Closing, (ii) except to the extent Seller receives a credit therefor at Closing, the rights of Seller to rents and other payments from tenants and other third parties prior to the Closing Date in accordance with the provisions of Section 8.5 below governing the same, and (iii) any and all rights of Seller, Zynga and their affiliates to intellectual property, trade names, trademarks, patents, logos, or any other intangible property of any kind whatsoever other than the Intangible Personal Property, including without limitation the names Zynga and any derivatives thereof and Big Dog Holdings LLC and any derivatives thereof (collectively, the Excluded Rights).

Section 1.2Purchase Price.

(a)The purchase price of the Property is Six Hundred Two Million, Six Hundred Seventy-Nine Thousand, and Five Hundred Ninety-Eight Dollars ($602,679,598) (the “Purchase Price”).  

(b)The Purchase Price shall be paid as follows:

(1)Within one (1) business day after the Effective Date, Buyer shall deposit in escrow with First American Title Insurance Company, 1737 North First Street, Suite 500, San Jose, CA 95112, Attention: [***] (the “Title Company”) cash or other immediately available funds in an amount equal Twenty-Five Million Dollars ($25,000,000) (the “Deposit”). If Buyer fails to deposit the Deposit in escrow on the Effective Date, (i) Seller shall have the remedies provided for in this Section below, and (ii) this Agreement shall automatically terminate, and neither party shall have any further rights or obligations hereunder except as provided in this Section and Sections 6.1, 9.3, 9.5 and 9.9.

(2)The Deposit shall be considered fully earned by Seller as consideration for entering into the Agreement and shall be nonrefundable except as otherwise expressly provided herein.

(3)At the same time as the Deposit is provided to Title Company, Buyer shall deliver to Seller in cash the sum of One Hundred Dollars ($100.00) (the “Independent Contract Consideration”) which amount has been bargained for and agreed to as consideration for Buyer’s exclusive right to purchase the Property, and for Seller’s execution and delivery of this Agreement.  Notwithstanding anything to the contrary contained herein, the Independent Contract Consideration is in addition to and independent of all other consideration provided in this Agreement, and is nonrefundable in all events.

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The Deposit shall be held in an interest bearing account and all interest thereon, less investment fees, if any, shall be deemed a part of the Deposit.  If the sale of the Property as contemplated hereunder is consummated, then the Deposit shall be paid to Seller at the Closing (as defined in Section 1.2(b)(4) below) and credited against the Purchase Price.  If the sale of the Property is not consummated due to Seller’s default, then Buyer may elect, as Buyer’s sole and exclusive remedy, EITHER TO: (1) terminate this Agreement and receive a refund of the Deposit, in which event neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9 below, or (2) enforce specific performance of this Agreement, including without limitation, CAUSING SELLER’S PARENT COMPANY, ZYNGA INC., TO SIGN THE Zynga Lease.  SELLER REPRESENTS AND WARRANTS THAT IT HAS THE AUTHORITY TO CAUSE ZYNGA INC. TO SIGN THE ZYNGA LEASE.   IF the sale of the property is not consummated solely due to seller’s default BY selling the property to a third party and buyer elects to receive a refund of the deposit pursuant to subclause (1), then buyer shall also receive a reimbursement from seller for ONE HUNDRED FIFTY PERCENT (150%) OF BUYER’S, REASONABLE, ACTUAL, DOCUMENTED OUT-OF-POCKET COSTS INCURRED IN CONNECTION WITH THIS AGREEMENT UP TO A MAXIMUM REIMBUSRMENT AMOUNT EQUAL TO SEVEN HUNDRED THOUSAND dOLLARS ($700,000). Buyer shall not have any other rights or remedies hereunder as a result of any default by Seller prior to Closing, and Buyer hereby waives any other such remedy as a result of a default hereunder by Seller.  IF THE SALE IS NOT CONSUMMATED DUE TO ANY DEFAULT BY BUYER HEREUNDER, THEN SELLER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES.  IF BUYER DOES NOT TIMELY DELIVER THE DEPOSIT PURSUANT TO SECTION 1.2(B)(1) AND THE SALE IS NOT CONSUMMATED, THEN SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY, SHALL BE ENTITIED TO DAMAGES IN THE AMOUNT OF THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A FAILURE TO CONSUMMATE THIS SALE DUE TO BUYER’S DEFAULT PRIOR TO CLOSING, INCLUDING WITHOUT LIMTATION BUYER’S DEFAULT IN TIMELY DELIVERING THE DEPOSIT PURSUANT TO SECTION 1.2(B)(1), WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.  AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT.  BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION.  THE FOREGOING LIMITATIONS OF REMEDIES FOR SELLER AND BUYER ARE NOT INTENDED TO LIMIT EITHER PARTY’S APPLICBALE OBLIGATIONS UNDER SECTIONS 6.1, 9.3, 9.5 AND 9.9.

INITIALS:

 

SELLER

/s/ GG

 

BUYER

/s/ CM

 

(4)The balance of the Purchase Price (plus or minus the prorations pursuant to Section 8.5 hereof) shall be paid to Seller in cash or by wire transfer of other immediately available funds at the consummation of the purchase and sale contemplated hereunder (the “Closing”).

ARTICLE II

CONDITIONS

Section 2.1Buyer’s Conditions Precedent.

Subject to the provisions of Section 9.3 hereof, Seller has provided and/or shall provide Buyer and its consultants and other agents and representatives with access to the Property to perform Buyer’s inspections and review and determine the present condition of the Property.  Seller has delivered or made available to Buyer at Seller’s offices or at the Real Property or on a website, and has delivered or made available to Buyer at Seller’s offices or at the Real Property or on a website, copies of all Due Diligence Materials (as defined in Section 2.2 below) in Seller’s possession, except as otherwise specifically provided herein.  Notwithstanding anything to the contrary contained herein, the Due Diligence Materials shall expressly exclude (i) those portions of the Due Diligence Materials that would disclose Seller’s cost of acquisition of the Real Property, or cost of construction of the Improvements and related soft costs, or any estimates of costs to repair, replace, remediate or maintain the Real Property, (ii) any reports, presentations, summaries and the like prepared for any of Seller’s boards, committees, partners or investors in connection with its consideration of the acquisition of the Real Property, construction of the Improvements or sale of the Property, (iii) any proposals, letters of intent, draft contracts or the like prepared by or for other prospective purchasers of the Property or any part thereof, (iv) Seller’s internal memoranda, attorney-client privileged materials, appraisals, structural or physical inspection reports, and (v) any information which is the subject of a confidentiality agreement between Seller and a third party (the items described in clauses (i), (ii) (iii), (iv) and (v) being collectively referred to as the “Confidential Information”).  Buyer has reviewed and hereby approves of the following:  

(a)Title to the Property and survey matters (subject to Section 4.1 below).

(b)The Due Diligence Materials, including, but not limited to, tenant leases, any guaranties thereof and any other occupancy agreements, and all amendments and modifications thereof (collectively, the “Leases”) affecting the Property, and of all contracts pertaining to the operation of the Property, including all management, leasing, service and maintenance agreements, and equipment leases (collectively, the “Service Contracts”).  

(c)The physical condition of the Property.  

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(d)The zoning, land use, building, environmental and other statutes, rules, or regulations applicable to the Property.  

(e)The tenant correspondence files, operating statements and books and records pertaining to the operation of the Property in each case for each of the three (3) most recent years during which the Property has been owned by Seller and for the current year (to the extent available), current real estate tax bills, any warranties, licenses, permits, certificates of occupancy, plans and specifications, and any current rent roll, current accounts receivable schedule and list of Tangible Personal Property in such form as Seller shall have in its possession for the Property, and other agreements or documents pertaining to the Property which will be binding on Buyer after Closing.

(f)The Zynga Lease in the form attached hereto as Exhibit L and made a part hereof.

(g)Any other matters Buyer deems relevant to the Property.

Section 2.2Approval of Due Diligence.

Buyer hereby approves the Property and all of the matters described in Sections 2.1(a)-(h) above (subject to the provisions of Section 4.1 below as to title and survey matters), including, without limitation, all documents, Service Contracts and other contracts, agreements, Leases, Initial Plans, the Cost of Improvements, the Zynga Lease in the form attached hereto as Exhibit L, and reports and other items and materials related to the Property prepared by or on behalf of Buyer or in Buyer’s possession or delivered to Buyer through May 23, 2019, on that certain data site located at [***] (collectively, the “Due Diligence Materials”). The Deposit is nonrefundable except as otherwise expressly provided herein.

ARTICLE III

BUYER’S EXAMINATION

Section 3.1Representations and Warranties of Seller.

Subject to the disclosures contained in Schedule 1 attached hereto and made a part hereof (the “Disclosure Items”) and matters contained in the Due Diligence Materials, Seller hereby makes the following representations and warranties with respect to the Property.  Notwithstanding anything to the contrary contained herein or in any document delivered in connection herewith, Seller shall have no liability to Purchaser with respect to the content of the Disclosure Items.

(a)Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.  

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(b)Seller is not a foreign person as defined in Section 1445 of the Internal Revenue Code of 1986, as amended (the Code) and any related regulations.  

(c)Subject to the provisions of Section 9.17 below, (i) this Agreement has been, and all documents executed by Seller which are to be delivered to Buyer at Closing will be, duly authorized, executed and delivered by Seller, and (ii) this Agreement does not and such other documents will not violate any provision of any agreement or judicial order to which Seller is a party or to which Seller or the Property is subject.

(d)Seller has been duly organized, is validly existing, and is in good standing in the state in which it was formed, and, if so required to, is qualified to do business in the state in which the Real Property is located.  

(e)(A) The only Leases in force for the Property are set forth in a tenant list attached hereto as Exhibit B and made a part hereof, and Seller has received no written notice of any default by Seller with respect to such Leases which has not been cured. (B) (i) Seller has delivered to Buyer a true and complete list of the Leases, (ii) Seller has delivered to Buyer a true and complete list of any security deposits made by each tenant which has not been applied, (iii) no rent has been paid more than one (1) month in advance of its due date, (iv) all tenant improvement work to be constructed by Seller pursuant to a Lease has been constructed, (v) there are no unpaid Leasing Costs with respect to the current terms of any Leases except as set forth on the attached Exhibit M and Exhibit M-1, and (vi) there are no pending audits initiated by any tenant in writing under the Leases with respect to operating expenses or other charges under the Leases.

(f)The only Service Contracts in effect for the Property are set forth in a list of Service Contracts attached hereto as Exhibit G and made a part hereof. To the best of Seller’s knowledge, the copy of each Service Contract delivered to Buyer is true and complete. Seller has received no written notice of any default by Seller with respect to such Service Contracts which has not been cured.

(g)Except as set forth on Schedule 1, Seller has received no written notice of any litigation or governmental or condemnation proceeding (including, but not limited to any condemnation proceeding) pending with respect to the Property, or with respect to Seller which impairs Seller’s ability to perform its obligations under this Agreement, except for any personal injury or property damage action for which there is adequate insurance coverage.

(h)Seller has received no written notice from any governmental authority of any violation of any law applicable to the Property (including, without limitation, any Environmental Law as defined in Section 3.6(a)(2) below) that has not been corrected.

(i)Seller is in compliance with the requirements of Executive Order No. 13224, 66 Fed Reg. 49079 (September 25, 2001) (the “Order”) and other similar requirements contained in the rules and regulations of the Office of Foreign Asset Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other Executive Orders in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “OFAC Laws”).

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(j)There are no employees of the Property for which Buyer shall have liability past Closing.

(k)Seller has not granted any option or right of first refusal or first opportunity to any party to acquire any fee or ground leasehold interest in any portion of the Property.

(l)There are no outstanding tax appeals with respect to the Property.

(m)There are no brokerage fees or commissions due and payable by Seller in connection with the leasing of space at the Property, except as set forth on Exhibit M attached hereto and made a part hereof.

(n)There are no collective bargaining agreements with respect to the Property except as set forth on Schedule 1.  

(m)Seller has paid all parking taxes due and payable to the City and County of San Francisco with respect to the Property through April 30, 2019.

Each of the representations and warranties of Seller contained in this Section 3.1:  (1) shall be true in all material respects as of the date of Closing, except that any updates to the representations and warranties of Seller in Section 3.1(e)(B) due to factual changes occurring after the Effective Date shall not give Buyer the right to terminate this Agreement under Section 3.2, subject in each case to (x) any Exception Matters (as defined in Section 3.2 below), (y) the Disclosure Items, and (z) other matters expressly permitted in this Agreement or otherwise specifically approved in writing; and (2) shall survive the Closing as provided in Section 3.3 below.  

Section 3.2No Liability for Exception Matters.

As used herein, the term “Exception Matter” shall refer to a matter which would make a representation or warranty of Seller contained in this Agreement untrue or incorrect and which is disclosed to Buyer in the Due Diligence Materials or the Disclosure Items, or is otherwise actually known to Buyer before the Closing, including, without limitation, matters disclosed in any tenant estoppel certificate or from interviews with tenants, property managers or any other person.  If Buyer first obtains actual knowledge of any Material Exception Matter, as such term is defined below, after the Effective Date and prior to Closing and such Exception Matter was not contained in the Due Diligence Materials or the Disclosure Items, Buyer’s sole remedy shall be to terminate this Agreement on the basis thereof, upon written notice to Seller within the earlier of (a) ten (10) business days following Buyer’s discovery of such Exception Matter or (b) the Closing, which ever occurs first, in which event the Deposit shall be promptly returned to Buyer, unless within five (5) business days after receipt of such notice or by the Closing, as the case may be, Seller notifies Buyer in writing that it elects to attempt to cure or remedy such Exception Matter, in which event there shall be no return of the Deposit unless and until Seller is unable to so cure or remedy within the time period set forth below. Seller shall be entitled to extend the Closing Date (as defined in Section 8.2 below) for up to fifteen (15) business days in order to attempt to cure or remedy any Exception Matter.  Buyer’s failure to give notice within ten (10) business days after it has obtained knowledge of a Material Exception Matter shall be deemed a waiver by Buyer of such Exception Matter.  Seller shall have no obligation to cure or remedy any Exception Matter, even if Seller has notified Buyer of Seller’s election to attempt to cure or remedy any Exception

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Matter (except as specifically provided in Section 4.1(c) hereof), and, subject to Buyers right to terminate this Agreement as set forth above, Seller shall have no liability whatsoever to Buyer with respect to any Exception Matters.  Upon any termination of this Agreement, neither party shall have any further rights nor obligations hereunder, except as provided in Sections 6.1, 9.3, 9.5 and 9.9.  If Buyer obtains actual knowledge of any Exception Matter before the Closing, but nonetheless elects (or is deemed to have elected) to proceed with the acquisition of the Property or is obligated to proceed with the acquisition of the Property, Seller shall have no liability with respect to such Exception Matter, notwithstanding any contrary provision, covenant, representation or warranty contained in this Agreement or in any Other Documents (as defined in Section 9.18 below).  As used in this Section 3.2, the term Material Exception Matter shall mean an Exception Matter that would have a negative impact on the value of the Property in excess of One Million Dollars ($1,000,000), in the aggregate with all other Exception Matters.  

Section 3.3Survival of Seller’s Representations and Warranties of Sale.

The representations and warranties of Seller contained herein or in any Other Documents shall survive for a period of six (6) months after the Closing.  Any claim which Buyer may have against Seller for a breach of any such representation or warranty, whether such breach is known or unknown, which is not specifically asserted by written notice to Seller within such six (6) month period shall not be valid or effective, and Seller shall have no liability with respect thereto.  Throughout the six (6) month period described in this Section, Seller shall maintain its legal existence and a net worth (as defined as assets minus liabilities) equal to at least one percent (1%) of the Purchase Price.

Section 3.4Seller’s Knowledge.

For purposes of this Agreement and any document delivered at Closing, whenever the phrase “to the best of Seller’s knowledge” or the “knowledge” of Seller or words of similar import are used, they shall be deemed to mean and are limited to the current actual knowledge only of Ken Stuart, at the times indicated only, and not any implied, imputed or constructive knowledge of such individual(s) or of Seller or any Seller Related Parties (as defined in Section 3.7 below), and without any independent investigation or inquiry having been made or any implied duty to investigate, make any inquiries or review the Due Diligence Materials.  Furthermore, it is understood and agreed that such individual(s) shall have no personal liability in any manner whatsoever hereunder or otherwise related to the transactions contemplated hereby.

Section 3.5Representations and Warranties of Buyer.

Buyer represents and warrants to Seller as follows:

(a)This Agreement and all documents executed by Buyer which are to be delivered to Seller at Closing do not and at the time of Closing will not violate any provision of any agreement or judicial order to which Buyer is a party or to which Buyer is subject.  

(b)Buyer has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Buyer’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Buyer’s assets, (iv) suffered the attachment or other judicial seizure of all, or

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substantially all, of Buyers assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

(c)Buyer has been duly organized, is validly existing and is in good standing in the state in which it was formed, and, if required to do so, is qualified to do business in the state in which the Real Property is located.  This Agreement has been, and all documents executed by Buyer which are to be delivered to Seller at Closing will be, duly authorized, executed and delivered by Buyer.

(d)Buyer is purchasing the Property as investment rental property, and not for Buyer’s own operations or use.

(e)Other than Seller’s Broker (as defined in Section 6.1 below) Buyer has had no contact with any broker or finder with respect to the Property.

(f)Buyer is in compliance with, and all beneficial owners of Buyer are in compliance with, the OFAC laws.

Each of the representations and warranties of Buyer contained in this Section shall be deemed remade by Buyer as of the Closing and shall survive the Closing.  

Section 3.6Buyer’s Independent Investigation.

(a)Buyer acknowledges and agrees that it has been given a full opportunity to inspect and investigate prior to the date hereof each and every aspect of the Property, either independently or through agents of Buyer’s choosing, including, without limitation:  

(1)All matters relating to title and survey, together with all governmental and other legal requirements such as taxes, assessments, zoning, use permit requirements and building codes.  

(2)The physical condition and aspects of the Property, including, without limitation, the interior, the exterior, the square footage within the improvements on the Real Property and within each tenant space therein, the structure, seismic aspects of the Property, the foundation, roof, paving, parking facilities, utilities, and all other physical and functional aspects of the Property.  Such examination of the physical condition of the Property shall include an examination for the presence or absence of Hazardous Materials, as defined below, which shall be performed or arranged by Buyer (subject to the provisions of Section 9.3 hereof) at Buyer’s sole expense.  For purposes of this Agreement, “Hazardous Materials” shall mean inflammable explosives, radioactive materials, asbestos, asbestos–containing materials, polychlorinated biphenyls, lead, lead-based paint, radon, under and/or above ground tanks, hazardous materials, hazardous wastes, hazardous substances, oil, or related materials, which are listed or regulated in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 6901, et seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe Drinking Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.), and the Toxic Substance Control Act (15 U.S.C. Section 2601, et seq.), the California Hazardous Waste Control Law (California Health and

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Safety Code Section 25100, et seq.), the Porter-Cologne Water Quality Control Act (California Water Code Section 13000, et seq.), and the Safe Drinking Water and Toxic Enforcement Act of 1986 (California Health and Safety Code Section 25249.5, et seq.) and any other applicable federal, state or local laws (collectively, Environmental Laws).

(3)Any easements and/or access rights affecting the Property.  

(4)The Leases and all matters in connection therewith, including, without limitation, the ability of the tenants to pay the rent and the economic viability of the tenants.  

(5)The Service Contracts and any other documents or agreements of significance affecting the Property.

(6)All other matters of material significance affecting the Property, including, but not limited to, the Due Diligence Materials and the Disclosure Items.  

(b)Except as expressly stated herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller to Buyer in connection with the transaction contemplated hereby.  Buyer acknowledges and agrees that all materials, data and information delivered by Seller to Buyer in connection with the transaction contemplated hereby are provided to Buyer as a convenience only and that any reliance on or use of such materials, data or information by Buyer shall be at the sole risk of Buyer, except as otherwise expressly stated herein.  Without limiting the generality of the foregoing provisions, Buyer acknowledges and agrees that (a) any environmental or other report with respect to the Property which is delivered by Seller to Buyer shall be for general informational purposes only, (b) Buyer shall not have any right to rely on any such report delivered by Seller to Buyer, but rather will rely on its own inspections and investigations of the Property and any reports commissioned by Buyer with respect thereto, (c) neither Seller, any affiliate of Seller nor the person or entity which prepared any such report delivered by Seller to Buyer shall have any liability to Buyer for any inaccuracy in or omission from any such report and (d) the failure to deliver any report as to the environmental or other condition of the Property, including any proposal for work at the Property which was not performed by Seller, shall not be actionable by Buyer under this Agreement or otherwise.

(c)EXCEPT for Seller’s representations and warranties EXPRESSLY SET FORTH IN SECTION 3.1 ABOVE, BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN “AS IS WITH ALL FAULTS” BASIS AND THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ANY SELLER RELATED PARTIES, OR THEIR AGENTS OR BROKERS, OR ANY OTHER PERSON ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO ANY MATTERS CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION:  (i) the quality, nature, adequacy and physical condition and aspects of the Property, including, but not limited to, the structural elements, seismic aspects of the Property, foundation, roof, appurtenances, access, landscaping, parking facilities and the electrical, mechanical, HVAC, plumbing, sewage, and utility systems,

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facilities and appliances, the square footage within the improvements on the Real Property and within each tenant space therein, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Property, (iv) the development potential of the Property, and the Propertys use, habitability, merchantability, or fitness, suitability, value or adequacy of the Property for any particular purpose, (v) the zoning or other legal status of the Property or any other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of any governmental or quasi-governmental entity or of any other person or entity, (vii) the presence of Hazardous Materials on, under or about the Property or the adjoining or neighboring property, (viii) the quality of any labor and materials used in any improvements on the Real Property, (ix) the condition of title to the Property, (x) the Leases, Service Contracts, or other documents or agreements affecting the Property, or any information contained in any rent roll furnished to Buyer for the Property, (xi) the value, economics of the operation or income potential of the Property, or (x) any other fact or condition which may affect the Property, including without limitation, the physical condition, value, economics of operation or income potential of the Property.  In addition, Seller shall have no legal obligation to apprise Buyer regarding any event or other matter involving the Property which occurs after the Effective Date or to otherwise update the Due Diligence Items, unless and until an event or other matter occurs which would cause Seller to be unable to remake any of its representations or warranties contained in this Agreement.

Section 3.7Release.

(a)Without limiting the above, and subject to the representations and warranties of Seller contained in Section 3.1 hereof, and in the Zynga Lease, Buyer on behalf of itself and its successors and assigns waives its right to recover from, and forever releases and discharges, Seller, Zynga (Zynga, Seller’s and Zynga’s affiliates, the partners, trustees, beneficiaries, shareholders, members, managers, directors, officers, employees and agents and representatives of each of them, and their respective heirs, successors, personal representatives and assigns are collectively referred to herein as the “Seller Related Parties”), from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, court costs and attorneys’ fees and disbursements), whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or in any way be connected with or related to the Property, this Agreement and/or the transactions contemplated hereunder, including, without limitation (i) the physical condition of the Property including, without limitation, all structural and seismic elements, all mechanical, electrical, plumbing, sewage, heating, ventilating, air conditioning and other systems, the environmental condition of the Property and the presence of Hazardous Materials on, under or about the Property, (ii) any law or regulation applicable to the Property, including, without limitation, any Environmental Law and any other federal, state or local law, (iii) the Disclosure Items, (iv) any Exception Matter or (v) any other matter. Notwithstanding the foregoing, this Section 3.7 shall not void the remedies available to Buyer pursuant to Section 1.2(b) with respect to a breach of Seller’s covenants in this Agreement, including, without limitation, Sections 7.1 and 7.4.

(b)In connection with Section 3.7(a) above, Buyer expressly waives the benefits of Section 1542 of the California Civil Code, which provides as follows:  “A GENERAL

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RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASING PARTY.  BUYER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY LEGAL COUNSEL OF ITS CHOICE IN CONNECTION WITH THIS AGREEMENT, AND THAT SUCH COUNSEL HAS EXPLAINED TO BUYER THE PROVISIONS OF THIS SECTION 3.7.  BY INITIALING BELOW, BUYER CONFIRMS IT HAS AGREED TO THE PROVISIONS OF THIS SECTION 3.7.

In this connection, Buyer hereby agrees, represents and warrants that Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses and other claims and liabilities which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Seller and the Seller Related Parties from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses and other claims and liabilities.

Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 3.7.  Buyer has initialed this Section 3.7 to further indicate its awareness and acceptance of each and every provision hereof; provided, however that failure of Buyer to initial this Section 3.7 below shall not invalidate this Section 3.7 nor any other provision of this Agreement.

SELLER

 

BUYER

/s/ GG

 

/s/ CM

 

Section 3.8Energy Use Disclosures.

Buyer acknowledges and agrees that: (a) it has received all disclosures and other documentation or information for the Property required under Section 25402.10 of the California Public Resources Code and its implementing regulations; (b) such disclosure information is for the current occupancy and use of the Property; (c) the energy profiles of the Properties will vary depending on future occupancy or use of the Property; (d) the Property has not been proposed for LEED ratings; and (e) Seller make no claims, representations or warranties regarding the future Energy Star profile of the Property.

Section 3.9Survival.

The provisions of this Article III shall survive the Closing subject to the limitations and qualifications contained in such provisions and in Sections 9.11 and 9.19 hereof.

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ARTICLE IV

TITLE

Section 4.1Conditions of Title.

(a)As of the date hereof, Buyer hereby approves all title and survey matters disclosed in the (i) updated preliminary title report or commitment (the “Title Report”) from the Title Company delivered to Buyer prior to the date hereof, together with copies of all underlying documents relating to title exceptions referred to therein and (ii) the plat or survey of the Property and any update thereto from a duly licensed surveyor (the “Survey”) as necessary to support the issuance of the Title Policy (as defined in Section 4.2 below). Buyer shall provide to Seller a copy of the Survey, which shall be certified to the Title Company, Buyer and Seller.  Buyer shall pay the entire cost of the Survey.  If Closing does not occur, Buyer shall, if Seller so requests, assign to Seller all contract rights Buyer has with the surveyor and in such event Seller shall reimburse Buyer for the cost of the Survey.  

(b)In the event the Title Company amends or updates the Title Report after the Effective Date (each, a “Title Report Update”), Buyer shall furnish Seller with a written statement of objections, if any, to the title to the Property (collectively, “Objections”) to any matter first raised in a Title Report Update within three (3) business days after its receipt of such Title Report Update (each, a “Title Update Review Period”).  Should Buyer fail to notify Seller in writing of any Objections to any matter first disclosed in a Title Report Update prior to the Title Update Review Period, Buyer shall be deemed to have approved such matters which shall be considered to be “Conditions of Title” as defined in Section 4.1(e) below.

(c)If Seller receives a timely Objection in accordance with Section 4.1(b) (“Buyer’s Notice”), Seller shall have the right, but not the obligation, within five (5) business days after receipt of Buyer’s Notice (“Seller’s Response Period”), to elect to attempt to cure any such matter upon written notice to Buyer (“Seller’s Response”), and may extend the Closing Date for up to fifteen (15) business days to allow such cure.  If Seller does not give any Seller’s Response, Seller shall be deemed to have elected not to attempt to cure any such matters.  Notwithstanding the foregoing, Seller shall in any event be obligated to cure all matters or items (i) that are monetary liens (including, without limitation, mortgage or deed of trust liens or security interests against the Property), in each case granted by Seller (and not tenants of the Property or other third parties), (ii) real estate tax liens, other than liens for taxes and assessments not yet delinquent and (iii) that have been voluntarily placed against the Property by Seller (and not tenants of the Property or other third parties) after the date of this Agreement and that are not otherwise permitted pursuant to the provisions hereof.  Seller shall be entitled to apply the Purchase Price towards the payment or satisfaction of such liens, and may cure any Objection by causing the Title Company to insure against collection of the same out of the Property in a manner reasonably acceptable to Buyer.  

(d)If Seller elects (or is deemed to have elected) not to attempt to cure any Objections raised in any Buyer’s Notice timely delivered by Buyer to Seller pursuant to Section 4.1(b), or if Seller notifies Buyer that it elects to attempt to cure any such Objection but then does not for any reason effect such cure on or before the Closing Date as it may be extended hereunder, then Buyer, as its sole and exclusive remedy, shall have the option of terminating this Agreement

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by delivering written notice thereof to Seller within three (3) business days after (as applicable) (i) its receipt of Sellers Response stating that Seller will not attempt to cure any such Objection or (ii) the expiration of Sellers Response Period if Seller does not deliver a Sellers Response or (iii) Sellers failure to cure by the Closing Date (as it may be extended hereunder) any Objection which Seller has previously elected to attempt to cure pursuant to a Sellers Response.  In the event of such a termination, the Deposit shall be returned to Buyer, and neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9.  If no such termination notice is timely received by Seller hereunder, Buyer shall be deemed to have waived all such Objections in which event those Objections shall become Conditions of Title under Section 4.1(e).  If the Closing is not consummated for any reason other than Sellers default hereunder, Buyer shall be responsible for any title or escrow cancellation charges.

(e)At the Closing, Seller shall convey title to the Property to Buyer by deed in the form of Exhibit C attached hereto (the “Deed”) subject to no exceptions other than:  

(1)Interests of tenants in possession under the Leases (in effect on the Effective Date, subject to Sections 7.1 and 7.2 with respect to New Leases (as defined in Section 7.2 below)) and the interest of Zynga as tenant in possession under the Zynga Lease;

(2)Matters created by or with the written consent of Buyer;

(3)Non-delinquent liens for real estate taxes and assessments; and

(4)Any exceptions disclosed by the Title Report and any Title Report Update which is approved or deemed approved by Buyer in accordance with this Article IV above, and any other exceptions to title disclosed by the public records or which would be disclosed by an inspection and/or survey of the Property.

All of the foregoing exceptions shall be referred to collectively as the “Conditions of Title.”  By acceptance of the Deed and the Closing of the purchase and sale of the Property, (x) Buyer agrees it is assuming for the benefit of Seller all of the obligations of Seller with respect to the Conditions of Title from and after the Closing, and (y) Buyer agrees that Seller shall have conclusively satisfied its obligations with respect to title to the Property.  The provisions of this Section shall survive the Closing.

(f)Notwithstanding anything to the contrary contained herein, Buyer hereby acknowledges that Seller is in the process of [***].  Seller shall deliver to Buyer any revised draft [***] prior to its execution and Buyer shall have three (3) business days to review and reasonably approve such revised draft [***] and provide any comments in Buyer’s reasonable discretion. Seller shall use commercially reasonable efforts to incorporate Buyer’s reasonable comments into any draft [***] and Seller shall keep Buyer apprised of the status of the [***]. Seller shall not execute and/or record the [***] against the Property without Buyer’s prior written approval.

Section 4.2Evidence of Title.

Delivery of title in accordance with the foregoing shall be evidenced by the willingness of the Title Company to issue, at Closing, its Owner’s ALTA Policy of Title Insurance in the amount of the Purchase Price showing title to the Real Property vested in Buyer, subject only to the

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Conditions of Title (the “Title Policy”). The issuance of the Title Policy at Closing is a condition in favor of Buyer. Buyer shall have the right to have the Title Policy written by co-insurers and to have re-insurance title policies issued, but such matters shall not be conditions to Closing. If this condition is not satisfied, then Buyer shall have the right to terminate this Agreement in which case the Deposit shall be returned to Buyer, and neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9. The Title Policy may contain such endorsements as reasonably required by Buyer provided that the issuance of such endorsements shall not be a condition to Buyer’s obligations hereunder.  Buyer shall pay the costs for all such endorsements.  Other than providing the Owner’s Declaration (defined below), Seller shall have no obligation to provide any indemnity or agreement to the Title Company or Buyer to support the issuance of the Title Policy.

ARTICLE V

RISK OF LOSS AND INSURANCE PROCEEDS

Section 5.1Minor Loss.

Buyer shall be bound to purchase the Property for the full Purchase Price as required by the terms hereof, without regard to the occurrence or effect of any damage to the Property or destruction of any improvements thereon or condemnation of any portion of the Property, provided that: (a) (i) the cost to repair any such damage or destruction does not exceed an amount equal to three percent (3%) of the Purchase Price in the estimate of an architect or contractor selected by Seller and reasonably acceptable to Buyer or in the case of a condemnation, the diminution in the value of the remaining Property as a result of a partial condemnation is not material (as hereinafter defined) and (ii) such damage or destruction does not result in [***], and (b) upon the Closing, there shall be a credit against the Purchase Price due hereunder equal to the amount of any insurance proceeds or condemnation awards collected by Seller as a result of any such damage or destruction or condemnation, plus the amount of any insurance deductible, less any sums expended by Seller toward the collection of such proceeds or awards and the restoration or repair of the Property (the nature of which restoration or repairs, but not the right of Seller to effect such restoration or repairs, shall be subject to the approval of Buyer, which approval shall not be unreasonably withheld, conditioned or delayed).  If the proceeds or awards have not been collected as of the Closing, then such proceeds or awards shall be assigned to Buyer, except to the extent needed to reimburse Seller for sums expended to collect such proceeds or awards or to repair or restore the Property, and Seller shall retain the rights to such proceeds and awards to such extent.

Section 5.2Major Loss.

If (i) the cost to repair the damage or destruction as specified above exceeds an amount equal to three percent (3%) of the Purchase Price in the estimate of an architect or contractor selected by Seller and reasonably acceptable to Buyer or the diminution in the value of the remaining Property as a result of a condemnation is material (as hereinafter defined) and/or (ii) [***], then Buyer may, at its option to be exercised within five (5) business days of Seller’s notice of the occurrence of the damage or destruction or the commencement of condemnation proceedings, either terminate this Agreement or consummate the purchase for the full Purchase Price as required by the terms hereof.  If Buyer elects to terminate this Agreement by delivering

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written notice thereof to Seller or fails to give Seller notice within such five (5) business day period that Buyer will proceed with the purchase, then this Agreement shall terminate, the Deposit shall be returned to Buyer and neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9.  If Buyer elects to proceed with the purchase, then upon the Closing, there shall be a credit against the Purchase Price due hereunder equal to the amount of any insurance proceeds or condemnation awards collected by Seller as a result of any such damage or destruction or condemnation, plus the amount of any insurance deductible, less any sums expended by Seller toward the collection of such proceeds or awards or to restoration or repair of the Property (the nature of which restoration or repairs, but not the right of Seller to effect such restoration or repairs, shall be subject to the approval of Buyer, which approval shall not be unreasonably withheld, conditioned or delayed).  If the proceeds or awards have not been collected as of the Closing, then such proceeds or awards shall be assigned to Buyer, except to the extent needed to reimburse Seller for sums expended to collect such proceeds or awards or to repair or restore the Property, and Seller shall retain the rights to such proceeds and awards to such extent.  A condemnation shall be deemed material if any portion of any net rentable area of the Property is taken, or any parking is taken which would cause the Property to be in violation of any existing laws or regulations, including but not limited to, zoning regulations, or the existing access to the Property is materially and adversely affected, permanently.

ARTICLE VI

BROKERS AND EXPENSES

Section 6.1Brokers.

The parties represent and warrant to each other that no broker or finder was instrumental in arranging or bringing about this transaction except for Eastdil Secured (“Seller’s Broker”).  At Closing, Seller shall pay the commission due, if any, to Seller’s Broker, which shall be paid pursuant to a separate agreement between Seller and Seller’s Broker.  If any other person brings a claim for a commission or finder’s fee based upon any contact, dealings or communication with Buyer or Seller, then the party through whom such person makes his claim shall defend the other party (the “Indemnified Party”) from such claim, and shall indemnify the Indemnified Party and hold the Indemnified Party harmless from any and all costs, damages, claims, liabilities or expenses (including without limitation, court costs and reasonable attorneys’ fees and disbursements) incurred by the Indemnified Party in defending against the claim.  The provisions of this Section 6.1 shall survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement.  

Section 6.2Expenses.

Except as expressly provided in this Agreement, each party hereto shall pay its own expenses incurred in connection with this Agreement and the transactions contemplated hereby.

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ARTICLE VII

LEASES AND OTHER AGREEMENTS

 

Section 7.1

Buyer’s Approval of New Leases and Agreements Affecting the Property.

(a)Between the Effective Date and the Closing, Seller shall continue to lease the Property in the same manner as before the making of this Agreement, the same as though Seller were retaining the Property provided that Seller shall not enter into any new Lease or other agreement affecting the Property, or modify or terminate any existing Lease or other agreement affecting the Property, which will be binding on the Property after Closing, except as required under any Lease and except for agreements which are terminable on no more than thirty (30) days’ notice without payment of any penalty or fee or other cost to Seller or Buyer, without first obtaining Buyer’s approval of the proposed action, which approval, subject to Section 7.1(b) below, shall be granted or withheld in Buyer’s sole and absolute discretion.  In such case, Buyer shall specify in detail the reasons for its disapproval of any such proposed action.  If Buyer fails to give Seller notice of its approval or disapproval of any such proposed action requiring its approval under this Section 7.1 within three (3) business days after Seller notifies Buyer of Seller’s desire to take such action, then Buyer shall be deemed to have given its approval.  Buyer agrees to cooperate with Seller in enabling Seller to complete any such proposed transaction approved by Buyer.

(b)Notwithstanding anything to the contrary contained herein, Buyer hereby acknowledges that Seller is in the process of [***].  Seller shall keep Buyer apprised of the status [***].

(1)Buyer has approved the material business terms of the current [***] provided to Buyer prior to the Effective Date.  Seller shall deliver to Buyer any revised draft [***] prior to its execution and Buyer shall have three (3) business days to review and reasonably approve such revised draft [***] with respect to matters other than the [***] and provide any comments in Buyer’s reasonable discretion.  Buyer shall have the right to make comments that relate to any deviation from the [***].  Seller shall use commercially reasonable efforts to incorporate Buyer’s reasonable comments into any draft [***] prior to executing the [***].  Seller will not execute the [***] unless it has been approved by Buyer pursuant to this Section.

(2)The [***] Amendment must include a provision that [***] (such provision is referred to herein as the “Required Provision”).  The [***] Amendment may include a provision that states that [***].  Buyer approves the Required Provision [***].  Buyer shall have the right to reasonably approve the other provisions of the [***] Amendment.  Seller shall deliver to Buyer any revised draft [***] Amendment prior to its execution and Buyer shall have three (3) business days to review and reasonably approve such revised draft with respect to matters other than the Required Provision [***] and provide any comments in Buyer’s reasonable discretion. Buyer shall have the right to make comments that relate to any deviation from the Required Provision or the [***]. Seller shall use commercially reasonable efforts to incorporate Buyer’s reasonable comments into any draft [***] Amendment prior to executing the [***] Amendment.  Seller has the right to (i) execute the [***] Amendment which contains the Required Provision and

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other provisions reasonably approved by Buyer, or (ii) [***].  Seller will not be in default hereunder if Seller and [***] do not execute the [***] Amendment as described in clause (i) above.

Section 7.2Tenant Improvement Costs, Leasing Commissions and Concessions.

With respect to any new Lease or Lease modification entered into by Seller between the Effective Date and the Closing Date, and with respect to any renewal, extension or expansion of any Lease, whether through the exercise of an option or otherwise, occurring between such date and the Closing Date (collectively with any new Lease or Lease modification entered into by Seller between the Effective Date and the Closing Date, “New Leases”), and subject to Buyer’s approval rights under Section 7.1, all tenant improvement work, tenant improvement allowances, leasing commissions, legal fees or other expenses or grants of any free rent period or other concessions (collectively, “Leasing Costs”) relating to the New Leases shall be borne by Buyer.  Furthermore, except as described in this Section 7.2 with respect to the costs shown on Exhibit M-1, Buyer shall be responsible for all Leasing Costs relating to any existing Leases.  At Closing, Buyer shall provide a credit to Seller’s prorations for any of the Leasing Costs described on Exhibit M, that are paid by Seller prior to Closing, subject to Seller’s providing reasonable documentation of such payment to Buyer and Buyer’s approval of such documentation, such approval not to be unreasonably withheld.  Seller shall provide a credit to Buyer’s prorations at Closing for certain Leasing Costs relating to reimbursements [***], as such reimbursements are described on Exhibit M-1, provided that such reimbursement shall be subject to adjustment after Closing as provided in Exhibit M-1 attached hereto and made a part hereof.  Pursuant to the Assignment of Leases, Buyer shall assume any then-outstanding obligations with respect to the Leasing Costs, both with respect to the New Leases, subject to Buyer’s approval rights under Section 7.1, and the existing Leases in effect as of the Effective Date.  The provisions of this Section shall survive the Closing.

Section 7.3Tenant Notices.

(a)At the Closing, Seller shall furnish Buyer with a signed notice to be given to each tenant of the Property.  The notice shall disclose that the Property has been sold to Buyer, that, after the Closing, all rents should be paid to Buyer and that Buyer shall be responsible for all the tenant’s security deposit.  The form of the notice shall be otherwise reasonably acceptable to the parties.  Buyer covenants to deliver said notices to each tenant as soon as reasonably possible after Closing.  This provision shall expressly survive Closing.

(b)Between the Effective Date and the Closing Date, Seller shall promptly, within three (3) business days of receipt or delivery of same, deliver to Buyer copies of any written notices of default (i) received by Seller from tenants under the Leases and (ii) delivered by Seller to tenants under the Leases.

 

Section 7.4

Maintenance of Improvements and Operation of Property; Removal of Tangible Personal Property.

Seller agrees to keep its customary property insurance covering the Property in effect until the Closing (provided, however, that the terms of any such coverage maintained in blanket form may be modified as Seller deems necessary).  Seller shall maintain all Improvements substantially in their present condition (ordinary wear and tear, casualty and condemnation excepted), and shall

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operate and manage the Property in a manner consistent with Sellers practices in effect prior to the Effective Date, provided that Seller shall in no event be obligated to make any capital expenditures or repairs (except for emergency repairs necessary to protect persons from physical harm or the Property from material damage).  Seller shall not remove any Tangible Personal Property, except as may be required for necessary repair or replacement, and replacement shall be of approximately equal quality and quantity as the removed item of Tangible Personal Property.

Section 7.5Service Contracts.

Seller shall have no obligation to terminate, and Buyer shall be obligated to assume, any Service Contracts (except for any Excluded Service Contracts) which by their terms cannot be terminated in less than thirty (30) days or without penalty or payment of a fee or other cost to Seller. In addition, Buyer shall assume the Service Contracts set forth on Exhibit N attached hereto and made a part hereof. Seller shall maintain or terminate the Excluded Service Contracts in its sole and absolute discretion.  Seller shall deliver at Closing notices of termination of all Service Contracts that are not so assumed and Buyer shall be responsible for any charges applicable to periods commencing with the Closing.  Notwithstanding the foregoing, Seller shall terminate, as of the Closing Date, all existing management and leasing agreements with respect to the Property and provide Buyer with reasonable documentation of such termination or notice letter.

Section 7.6Buyer’s Approval of the Construction of Certain Improvements.

Buyer approves (i) the construction [***], (b) improvements in [***], and (c) improvements in [***], and (ii) the construction [***].  Buyer approves the construction by Seller or Zynga of certain improvements within the Zynga Lease Premises in connection with Zynga’s re-stacking project as more particularly described in the Zynga Lease.

Section 7.7Zynga Lease Form.

Within thirty (30) days of the Effective Date, Buyer shall provide to Zynga rooftop rules that are customary with respect to Comparable Buildings (as defined in the Zynga Lease Form) (the “Rooftop Rules”), to be attached as Exhibit B-2 of the Zynga Lease. Such Rooftop Rules shall become a part of the Zynga Lease Form.  At Closing, Buyer shall provide to Zynga its title insurance policy to be attached as Exhibit H of the Zynga Lease. Such title insurance policy shall become a part of the Zynga Lease Form.  

Section 7.8SNDA.

Buyer shall use commercially reasonable efforts to cause its mortgage lender (the “Security Holder”) to promptly negotiate a subordination, nondisturbance and attornment agreement (the “SNDA”) in form and substance reasonably approved by Zynga, Buyer (if Buyer is to execute the same) and the Security Holder within thirty (30) days of the Effective Date, to be executed by Zynga, the Security Holder and Buyer, if applicable, at Closing.  Buyer shall pay all costs and expenses charged by the Security Holder in connection with obtaining the SNDA.

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ARTICLE VIII

CLOSING AND ESCROW

Section 8.1Escrow Instructions.

Upon execution of this Agreement, the parties hereto shall deposit an executed counterpart of this Agreement with the Title Company, and this instrument shall serve as the instructions to the Title Company as the escrow holder for consummation of the purchase and sale contemplated hereby.  Seller and Buyer agree to execute such reasonable additional and supplementary escrow instructions as may be appropriate to enable the Title Company to comply with the terms of this Agreement; provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of this Agreement shall control.

Section 8.2Closing.

The Closing hereunder shall be held and delivery of all items to be made at the Closing under the terms of this Agreement shall be made at the offices of the Title Company or as otherwise mutually agreed on July 5, 2019, and before 11:00 a.m. local time, or such other earlier date and time as Buyer and Seller may mutually agree upon in writing (the “Closing Date”). Except as expressly provided herein, such date and time may not be extended without the prior written approval of both Seller and Buyer.  

Section 8.3Deposit of Documents.

(a)At or before the Closing, Seller shall deposit into escrow the following items:  

(1)the duly executed and acknowledged Deed in the form attached hereto as Exhibit C conveying the Real Property to Buyer subject to the Conditions of Title;

(2)two (2) duly executed counterparts of the Zynga Lease in the form attached hereto as Exhibit L;

(3)two (2) duly executed counterparts of the Bill of Sale in the form attached hereto as Exhibit D (the “Bill of Sale”);

(4)two (2) duly executed counterparts of an Assignment and Assumption of Leases, Service Contracts, Warranties and Other Intangible Property in the form attached hereto as Exhibit E pursuant to the terms of which Buyer shall assume all of Seller’s obligations under the Leases, Service Contracts, and other documents and agreements affecting the Property (the “Assignment of Leases”);

(5)an affidavit pursuant to Section 1445(b)(2) of the Code, and on which Buyer is entitled to rely, that Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code;

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(6)an owner’s declaration in the form attached hereto as Exhibit O (the “Owner’s Declaration”);

(7)fully executed, assignment of any Letters of Credit (as defined in Section 8.5(a) below), including any required bank guaranties or approvals;

(8)California 593-C Certificate; and

(9)two (2) original versions of Form 8875 (as defined in Section 9.22 below), duly executed by Zynga.

(b)At or before Closing, Buyer shall deposit into escrow the following items:  

(1)immediately available funds necessary to close this transaction, including, without limitation, the Purchase Price (less the Deposit and interest thereon net of investment fees, if any) and funds sufficient to pay Buyer’s closing costs and share of prorations hereunder;

(2)two (2) duly executed counterparts of the Zynga Lease;

(3)two (2) duly executed counterparts of the Bill of Sale; and

(4)two (2) duly executed counterparts of the Assignment of Leases.

(c)Seller and Buyer shall each execute and deposit a closing statement, such transfer tax declarations and such other instruments as are reasonably required by the Title Company or otherwise required to close the escrow and consummate the acquisition of the Property in accordance with the terms hereof.  Seller and Buyer hereby designate Title Company as the “Reporting Person” for the transaction pursuant to Section 6045(e) of the Code and the regulations promulgated thereunder and agree to execute such documentation as is reasonably necessary to effectuate such designation.

(d)Within five (5) business days after the Closing Date, Seller shall deliver or make available at the Property to Buyer:  originals of the Leases to the extent in Seller’s possession, or copies of any Leases not in Seller’s possession, copies of the tenant correspondence files (for the three (3) most recent years of Seller’s ownership of the Property only and the current year), and originals of any other items which Seller was required to furnish Buyer copies of or make available at the Property pursuant to Sections 2.1(b) or (e) above, to the extent in Seller’s possession, except for Seller’s general ledger and other internal books or records which shall be retained by Seller.  Seller shall deliver possession of the Property to Buyer as required hereunder and shall deliver to Buyer or make available at the Property a set of keys to the Property on the Closing Date.  

Section 8.4Estoppel Certificates.  

(a)Seller shall use commercially reasonable efforts to obtain estoppel certificates from each tenant of the Property substantially in the form attached hereto as Exhibit F or, if a tenant’s lease requires a different form, in the form required by the tenant’s lease, or as

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otherwise provided in this paragraph below (each, an “Estoppel Certificate”).  Buyer shall have the right to review and reasonably approve the forms of Estoppel Certificates before delivery to each applicable tenant, provided that Buyer shall respond to any request for approval within three (3) days after the receipt of the applicable estoppel.  It shall be a condition to Buyers obligation to close the sale and purchase of the Property that on or before the Closing Date, Buyer is able to obtain [***].  If this condition is not satisfied, then Buyer shall have the right to terminate this Agreement in which case the Deposit shall be returned to Buyer, and neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9.   All estoppel certificates shall be dated no more than forty-five (45) days prior to the Closing Date.  An estoppel certificate, even though not in the required estoppel form, will be deemed reasonably acceptable to Buyer if it does not conflict in any material respect with this Agreement or the applicable Lease and (i) contains the following information: confirming rent, security deposit, and termination date; that no rent has been paid more than one (1) month in advance; that the Lease is in full force and effect and that the tenant has no knowledge of any landlord default, (ii) is on the form required by the Lease, or (iii) is on the standard form of a tenant which customarily issues its own form and contains the information in subclause (i) above.  

(b)If Seller is unable to obtain and deliver the Required Estoppels as required under Section 8.4(a), or if the certificates received contain a statement that Seller is in default under a Lease and Buyer objects thereto by written notice to Seller within two (2) business days after receipt by Buyer of the objectionable estoppel, but in any event on or before the Closing Date, then Seller will not be in default by reason thereof, and either Buyer or Seller may elect to extend the Closing Date by up to thirty (30) days in order to satisfy the requirement.  If Seller still cannot satisfy the requirement at the end of such extended period, then Buyer may, by written notice given to Seller before the Closing, elect to terminate this Agreement and receive a refund of the Deposit or waive said condition.  If Buyer so elects to terminate this Agreement, the Deposit shall be promptly returned to Buyer, and neither party shall have any further rights or obligations hereunder except as provided in Sections 6.1, 9.3, 9.5 and 9.9.  If no such notice is delivered by Buyer, Buyer shall be deemed to have waived such condition.  

Section 8.5Prorations.

(a)Rents, including, without limitation, percentage rents, if any, and any additional charges and expenses payable by tenants under Leases, all as and when actually collected; real property taxes and assessments; all other income from the Property; water, sewer and utility charges; amounts payable under any Service Contracts or other agreements or documents; annual permits and/or inspection fees (calculated on the basis of the period covered); and any other expenses of the operation and maintenance of the Property (including, without limitation, expenses prepaid by Seller and expenses already paid by Seller but which are being amortized over time by Seller and with respect to which Seller shall receive a credit at Closing in the amount of the prepaid or unamortized portion thereof), shall all be prorated as of 11:59 p.m. on the day immediately prior to Closing (i.e., Buyer is entitled to the income and responsible for the expenses of the day of Closing), on the basis of a 365-day year.  Buyer shall reimburse Seller for tenant improvement costs, tenant improvement allowances, leasing commissions, legal fees and other expenses, and free rent and other concessions, to the extent specified in Section 7.2.

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All rents collected after the Closing shall be applied and paid as provided in this Section 8.5(a).  If a tenant shall specifically designate a payment as being attributable to, or if it is readily ascertainable that a payment received from a tenant is attributable to a specific period of time or for a specific purpose, including, without limitation, for operating expenses or real estate tax payments which were not paid or were underpaid by such tenant or for reimbursement for work performed by Seller on the tenants premises, such payment shall be so applied.  If there is no such designation or if not so readily ascertainable, any payment received from a tenant after Closing shall be deemed a payment of rent due after the Closing until the tenant is current on rents and sums due under the applicable Lease on or after the Closing, and then such payments shall be paid to Seller to the extent of any rent or other sums owing to Seller for periods prior to Closing.  Buyer shall use reasonable efforts to collect such rents and other sums owing to Seller for a period of twelve (12) months after Closing.  Seller retains the right to collect any such rents and other sums from tenants after Closing; provided, however, that Seller shall have no right to cause any such tenant to be evicted or to exercise any other landlord remedy against such tenant other than to sue for collection.

Reconciliations of taxes, insurance charges and other expenses owed by tenants under Leases for the calendar year (or fiscal year if different from the calendar year) in which the Closing occurs (the “CAM Charges”) shall be prepared within one hundred twenty (120) days following the end of the year in which the Closing Date occurs. In connection with such reconciliation, if requested by Buyer in writing Seller shall provide to Buyer a copy of its general ledger of operating expenses and real estate taxes and such other information as Buyer reasonably requests (excluding any Confidential Information) in connection with the preparation of such tenant reconciliations. For those Leases in which tenants pay a proportionate share of taxes, insurance charges or other expenses over a base year amount or expense stop, the proration between the parties of the income received from tenants over such base year amount or expense stop shall be calculated based on the total amount of such expenses for the Property incurred by both Seller and Buyer for the entire calendar (or, if applicable, fiscal) year, rather than on the amount of such expenses actually incurred by each party for such year, in order to enable the parties to determine if the base year amount or expense stop for such year is exceeded.  Such income as so calculated shall be prorated between the parties based on the number of days each party owned the Property during such year and otherwise in accordance with this Section 8.5(a).  For Leases which do not have a base year amount or expense stop, the proration between the parties of income received from tenants from reconciliations of expenses under the Leases shall be calculated based on the expenses actually incurred by each party for such year and each party’s period of ownership of the Property, and otherwise in accordance with this Section 8.5(a).  

The amount of any cash security deposits held by Seller under Leases shall be credited against the Purchase Price (and Seller shall be entitled to retain such cash security deposits).  Seller shall receive credits at Closing for the amount of any utility or other deposits with respect to the Property to the extent the same are transferred to Buyer.  Buyer shall cause all utilities to be transferred into Buyer’s name and account at the time of Closing.  Notwithstanding the foregoing to the contrary, if Seller is holding letters of credit as security under any of the Leases (“Letters of Credit”):  (i) Buyer shall not be credited and Seller shall not be debited with the amount of such Letters of Credit; and (ii) Seller, at Buyer’s expense, unless payable by the applicable tenant under its Lease, shall either (A) if the same are assignable, assign Seller’s interest in such Letters of Credit to Buyer (which assignment shall be without representation or warranty by, or recourse

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against, Seller) and reasonably cooperate with Buyer to cause the issuing bank to recognize and consummate such assignment, or (B) if not assignable, cause such Letters of Credit to be reissued (at no cost to Seller) in favor of Buyer at Closing.

The Title Company will prepare a draft proration statement setting forth the prorations and adjustments provided for in this Section 8.5(a) and deliver the same along with supporting documentation to Buyer and Seller for review at least five (5) days prior to Closing.  Seller and Buyer will then deliver a joint proration statement to the Title Company at least two (2) business days prior to Closing.  Seller and Buyer hereby agree that if any of the aforesaid prorations and credits cannot be calculated accurately on the Closing Date or in the case of rents or other charges received from tenants, such amounts have not been collected, then the same shall be calculated as soon as reasonably practicable after the Closing Date, provided that, notwithstanding anything to the contrary contained herein, all final prorations between the parties shall be made no later than December 1, 2019, except for CAM Charges, which prorations shall be made no later than May 1, 2020.  Upon request of either party, the parties shall provide a detailed and accurate written statement signed by such party certifying as to the payments received by such party from tenants from and after Closing and to the manner in which such payments were applied, and shall make their books and records available for inspection by the other party during ordinary business hours upon reasonable advance notice.

Seller retains the right to pursue and control any tax appeals applicable to periods prior to the tax year of the Closing, and Buyer shall cooperate with Seller with respect to such appeals at no material cost or expense to Buyer. Each of Seller and Buyer shall reasonably approve any tax appeal applicable to the tax year in which the Closing occurs. Any refund of real property taxes or special assessments relating to the period prior to Closing shall be for the account of Seller, after the return of any amounts owed to tenants under the Leases in effect as of the Closing Date.  To the extent Buyer receives any such refund, Buyer shall remit such refund to Seller within five (5) business days of receipt thereof.  Notwithstanding the foregoing, Buyer and Seller shall reasonably and jointly pursue and control any tax appeals applicable to the current tax year, and the parties shall prorate all costs incurred and recovered in connection therewith based on the portion of the proceeds of any tax appeal recovery allocable to each party’s respective period of ownership of the Property.

(b)Buyer shall pay (i) all premiums and cost for the Title Policy, including, without limitation, costs for endorsements to the Title Policy, (ii) fifty percent (50%) of the escrow fees and recording fees, (iii) Buyer’s brokerage fees, if any, and (iv) all costs of Buyer’s due diligence, including, without limitation, Buyer’s legal fees.  Seller shall pay (a) all City and County of San Francisco transfer taxes, and (b) fifty percent (50%) of the escrow and recording fees.  All other title charges (including any reinsurance charges) and sales taxes shall be paid by Buyer at Closing.  The parties will execute and deliver any required transfer or other similar tax declarations to the appropriate governmental entity at Closing.

(c)The provisions of this Section 8.5 shall survive the Closing.

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ARTICLE IX

MISCELLANEOUS

Section 9.1Notices.

Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) in person, (b) by certified mail, postage prepaid, return receipt requested, or (c) by a commercial overnight courier that guarantees next day delivery and provides a receipt, or (d) by electronic mail (provided one other method of approved delivery also occurs), with confirmation of receipt and such notices shall be addressed as follows:

To Buyer:

BCP-CG 650 Property LLC

c/o Beacon Capital Partners, LLC

200 State Street, 5th Floor

Boston, MA  02109

Attention:  General Counsel

E-mail:  [***]

Telephone: [***]

 

with a copy to:

Reuben, Junius & Rose, LLP

One Bush Street, Suite 600

San Francisco, CA 94104

Attention:  Kevin Rose

E-mail:  krose@reubenlaw.com

Telephone: (415) 567-9000

 

To Seller:

Big Dog Holdings LLC

c/o Zynga Inc.

699 Eighth Street

San Francisco, CA  94103

Attention:  VP, Real Estate and Workplace Services

E-mail:  [***]

Telephone: [***]

 

and

 

Big Dog Holdings LLC

c/o Zynga Inc.

699 Eighth Street

San Francisco, CA  94103

Attention:  Matt Lubniewski, Senior Commercial Counsel

E-mail:  [***]

Telephone: [***]

 

and

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[***] (by electronic mail only)

 

with a copy to:

Orrick, Herrington & Sutcliffe LLP

405 Howard Street

San Francisco, CA  94105

Attention:  Michael H. Liever

E-mail:  mliever@orrick.com

Telephone: (415) 773-5808

 

or to such other address as either party may from time to time specify in writing to the other party.  Any notice or other communication sent as hereinabove provided shall be deemed effectively given (i) on the date of delivery, if delivered in person; (ii) on the date mailed if sent by certified mail, postage prepaid, return receipt requested or by a commercial overnight courier; or (iii) on the date of transmission, if sent by email and otherwise sent in accordance with this provision.  Such notices shall be deemed received (x) on the date of delivery, if delivered by hand or overnight express delivery service; (y) on the date indicated on the return receipt if mailed; or (z) on the date actually received, if sent by electronic mail.  If any notice mailed is properly addressed but returned for any reason, such notice shall be deemed to be effective notice and to be given on the date of mailing.  Any notice sent by the attorney representing a party, shall qualify as notice under this Agreement.

Section 9.2Entire Agreement.

This Agreement, together with the Exhibits and schedules hereto, contains all representations, warranties and covenants made by Buyer and Seller and constitutes the entire understanding between the parties hereto with respect to the subject matter hereof.  Any prior correspondence, memoranda or agreements are replaced in total by this Agreement together with the Exhibits and schedules hereto.  

Section 9.3Entry and Indemnity.

In connection with any entry by Buyer, or its agents, employees or contractors onto the Property, Buyer shall give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith (a) during normal business hours, (b) so as to minimize, to the greatest extent possible, interference with Seller’s business and the business of Seller’s tenants, (c) in compliance with all applicable laws, and (d) otherwise in a manner reasonably acceptable to Seller.  Without limiting the foregoing, prior to any entry to perform any on-site testing, including but not limited to any air sampling, borings, drillings or other samplings, Buyer shall give Seller written notice thereof, including the identity of the company or persons who will perform such testing and the proposed scope and methodology of the testing.  Seller shall approve or disapprove, in Seller’s sole and absolute discretion, the proposed testing within three (3) business days after receipt of such notice.  If Seller fails to respond within such three (3) business day period, Seller shall be deemed to have disapproved the proposed testing.  If Buyer or its agents, employees or contractors take any sample from the Property in connection with any such approved testing, Buyer shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing.  Buyer shall permit Seller or its representative

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to be present to observe any testing or other inspection or due diligence review performed on or at the Property.  Upon the request of Seller, if this Agreement has been terminated, Buyer shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Buyer or its agents, representatives, employees, contractors or consultants without representation, warranty or any right of reliance.   Notwithstanding anything to the contrary contained herein, Buyer shall not contact any governmental authority (except for routine due diligence inquiries) or any tenant without first obtaining the prior written consent of Seller thereto in Sellers sole and absolute discretion, and Seller, at Sellers election, shall be entitled to have a representative participate in any telephone or other contact made by Buyer to a governmental authority or tenant and present at any meeting by Buyer with a governmental authority or tenant.  Buyer shall maintain, and shall assure that its contractors maintain, public liability and property damage insurance in amounts (but in no event less than Two Million Dollars ($2,000,000) with respect to any liability insurance) and in form and substance adequate to insure against all liability of Buyer and its agents, employees or contractors, arising out of any entry or inspections of the Property pursuant to the provisions hereof, and Seller, Zynga and Seller’s property manager, Cushman & Wakefield, shall be named as additional insureds on such insurance.  Buyer shall provide Seller with evidence of such insurance coverage prior to any entry on the Property.  Buyer shall indemnify and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, court costs and reasonable attorneys fees and disbursements) arising out of or relating to any entry on the Property by Buyer, its agents, employees or contractors in the course of performing the inspections, testings or inquiries provided for in this Agreement, including, without limitation, any release of Hazardous Materials or any damage to the Property; provided that Buyer shall not be liable to Seller solely as a result of the discovery by Buyer of a pre-existing condition on the Property to the extent the activities of Buyer, its agents, representatives, employees, contractors or consultants do not exacerbate the condition.  The provisions of this Section 9.3 shall be in addition to any access or indemnity agreement previously executed by Buyer in connection with the Property; provided that in the event of any inconsistency between this Section 9.3 and such other agreement, the provisions of this Section 9.3 shall govern. The foregoing indemnity shall survive beyond the Closing, or, if the sale is not consummated, beyond the termination of this Agreement.  Buyers right of entry, as provided in this Section 9.3, shall continue up through the date of Closing.

Section 9.4Time.

Time is of the essence in the performance of each of the parties’ respective obligations contained herein.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regularly scheduled business day.

Section 9.5Attorneys’ Fees.

If either party hereto fails to perform any of its obligations under this Agreement or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Agreement, whether prior to or after Closing, or if any party defaults in payment of its post-Closing financial obligations under this Agreement, then the defaulting party or the party not

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prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys fees and disbursements.  

Section 9.6Assignment.

Buyer’s rights and obligations hereunder shall not be assignable without the prior written consent of Seller, which may be given or withheld in Seller’s sole and absolute discretion, provided that Buyer may assign this Agreement to an entity owned and controlled by [***] and/or Beacon Capital Partners, LLC or under common control with [***] and/or Beacon Capital Partners, LLC, with written notice to Seller at least five (5) business days prior to Closing. Buyer shall in no event be released from any of its obligations or liabilities hereunder in connection with any assignment.  Without limiting and notwithstanding the above, in no event shall Buyer have the right to assign its rights or obligations hereunder to any party which could not make the representation and warranty contained in subsections 3.5(e) and (g) above, and in connection with any assignment pursuant to the terms hereof, the assignee shall reconfirm in a written instrument acceptable to Seller and delivered to Seller prior to the effective date of the assignment said representation and warranty as applied to the assignee and that all other terms and conditions of this Agreement shall apply to such assignee and are being assumed by assignee.  Subject to the provisions of this Section, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.  

Section 9.7Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  

Section 9.8Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 9.9Confidentiality and Return of Documents.

Except as may be required by law, including without limitation any securities laws, Buyer and Seller shall each maintain as confidential any and all material obtained about the other or, in the case of Buyer, about the Property, this Agreement or the transactions contemplated hereby, and shall not disclose such information to any third party.  Except as may be required by law, Buyer will not divulge any such information to other persons or entities including, without limitation, appraisers, real estate brokers, or competitors of Seller.  Notwithstanding the foregoing, Buyer shall have the right to disclose information with respect to this Agreement and the Property to its officers, directors, employees, attorneys, accountants, environmental auditors, engineers, partners, investors, potential lenders, and permitted assignees under this Agreement and other consultants to the extent necessary for Buyer to evaluate its acquisition of the Property provided that all such persons are told that such information is confidential and agree (in writing for any third party engineers, environmental auditors or other consultants) to keep such information confidential. Seller shall have the right to disclose information with respect to this Agreement and

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the Property without Buyer’s prior consent thereto in connection with any disclosures required by applicable securities laws. If Buyer acquires the Property from Seller, any press release or other public disclosure regarding this Agreement or the transactions contemplated herein, and the wording of same, must be reasonably approved in advance by both parties.  Except as required by applicable law, including without limitation disclosures required by applicable securities laws and the United States Securities and Exchange Commission filings, (i) any public announcement, press release or other public disclosure by Seller or Buyer regarding this Agreement or the transactions contemplated herein after Closing, and the wording of same, must be reasonably approved in advance by the other party and (ii) such press release or public disclosure shall not contain any specific economics of the transaction. The provisions of this paragraph shall survive the Closing or any termination of this Agreement for one (1) year. In the event the transaction contemplated by this Agreement does not close as provided herein, upon the request of Seller, Buyer shall promptly return to Seller all Due Diligence Materials and other documents and copies obtained by Buyer in connection with the purchase of the Property hereunder.

Section 9.10Interpretation of Agreement.

The article, section and other headings of this Agreement are for convenience of reference only and shall not be construed to affect the meaning of any provision contained herein.  Where the context so requires, the use of the singular shall include the plural and vice versa and the use of the masculine shall include the feminine and the neuter.  The term “person” shall include any individual, partnership, joint venture, corporation, trust, unincorporated association, any other entity and any government or any department or agency thereof, whether acting in an individual, fiduciary or other capacity.  

Section 9.11Limited Liability.

The obligations of Seller under this Agreement and under all of the Other Documents are intended to be binding only on the property of Seller and shall not be personally binding upon, nor shall any resort be had to, the private properties of any Seller Related Parties.  

Section 9.12Amendments.

This Agreement may be amended or modified only by a written instrument signed by Buyer and Seller.

Section 9.13No Recording.

Neither this Agreement or any memorandum or short form thereof may be recorded by Buyer.

Section 9.14Drafts Not an Offer to Enter Into a Legally Binding Contract.

The parties hereto agree that the submission of a draft of this Agreement by one party to another is not intended by either party to be an offer to enter into a legally binding contract with respect to the purchase and sale of the Property.  The parties shall be legally bound with respect to the purchase and sale of the Property pursuant to the terms of this Agreement only if and when the parties have been able to negotiate all of the terms and provisions of this Agreement in a manner

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acceptable to each of the parties in their respective sole and absolute discretion, and both Seller and Buyer have fully executed and delivered to each other a counterpart of this Agreement (or a copy by facsimile transmission) (the Effective Date).

Section 9.15No Partnership.

The relationship of the parties hereto is solely that of Seller and Buyer with respect to the Property and no joint venture or other partnership exists between the parties hereto.  Neither party has any fiduciary relationship hereunder to the other.

Section 9.16No Third Party Beneficiary.

The provisions of this Agreement are not intended to benefit any third parties, except the Seller Related Parties.

Section 9.17Intentionally Omitted.

Section 9.18Limitation on Liability.

Notwithstanding anything to the contrary contained herein, after the Closing: (a) the maximum aggregate liability of Seller, and the maximum aggregate amount which may be awarded to and collected by Buyer (including, without limitation, for any breach of any representation, warranty and/or covenant by Seller) in connection with the Property and/or the sale thereof to Buyer including, without limitation, under this Agreement or any documents executed pursuant hereto or in connection herewith, including, without limitation, the Deed, the Bill of Sale, and the Assignment of Leases (collectively, the “Other Documents”, shall under no circumstances whatsoever exceed one percent (1%) of the Purchase Price; and (b) no claim by Buyer alleging a breach by Seller of any representation, warranty and/or covenant of Seller contained herein or in any of the Other Documents may be made, and Seller shall not be liable for any judgment in any action based upon any such claim, unless and until such claim, either alone or together with any other claims by Buyer alleging a breach by Seller of any such representation, warranty and/or covenant is for an aggregate amount in excess of Five Hundred Thousand Dollars ($500,000) (the “Floor Amount”), in which event Seller’s liability respecting any final judgment concerning such claim or claims shall be for the entire amount thereof, subject to the limitation set forth in clause (a) above; provided, however, that if any such final judgment is for an amount that is less than or equal to the Floor Amount, then Seller shall have no liability with respect thereto.  

Section 9.19Survival.

Except as expressly set forth to the contrary herein, no representations, warranties, covenants or agreements of Seller contained herein shall survive the Closing.

Section 9.20Survival of Article IX.

The provisions of this Article IX shall survive the Closing.

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Section 9.21Know Your Counterparty.

Without limiting Buyer’s representation and warranty in Section 3.5(g) above, within ten (10) days after the Effective Date, Buyer shall furnish to Seller all information regarding Buyer, its affiliates and the shareholders, members, investors or partners of each of them and any permitted assignees of Buyer hereunder (collectively, the “Buyer Related Parties”) as Seller reasonably requests in order to enable Seller to determine that Buyer’s representation and warranty contained in Section 3.5(g) of this Agreement is true and correct.  Buyer represents and warrants and covenants to Seller that there will not be any change in any such information regarding Buyer or the Buyer Related Parties prior to or on the Closing.  

Section 9.22Taxable REIT Subsidiary Election.

Before the Closing, Buyer shall provide Seller two (2) original versions of IRS Form 8875, Taxable REIT Subsidiary Election (“Form 8875”), that shall be executed by an appropriate officer of [***] (the “REIT”) so that an appropriate officer of Zynga may execute the Form 8875, which shall be deposited into escrow at Closing pursuant to Section 8.3(a)(9) above.  The Form 8875 shall be filed by the REIT to effectuate the joint election of Zynga and the REIT for Zynga to be a taxable REIT subsidiary (within the meaning of Section 856(l) of the Internal Revenue Code of 1986, as amended) of the REIT, and shall have an effective date no later than the Closing Date.

[signature page follows]

 

31


 

The parties hereto have executed this Agreement as of the date set forth in the first paragraph of this Agreement.

Seller:

 

BIG DOG HOLDINGS LLC,
a Delaware limited liability company

 

 

By: Zynga Inc.,
a Delaware corporation,
its sole member

 

 

By:

/s/ James G. Griffin

 

 

Name:

James G. Griffin

 

 

Its:

CFO

 

 

 

 

Buyer:

 

BCP-CG 650 PROPERTY LLC,
a Delaware limited liability company

 

 

By: BCG-CG 650 Holdings, LLC,
a Delaware limited liability company
its sole member

 

 

By: BCP-CG 650 REIT LLC,
a Delaware limited liability company
its sole member

 

 

By: BCP JV Manager II LLC,
a Delaware limited liability company
its manager

 

 

 

 

 

By:

/s/ Catherine Mossman

 

 

Name:

Catherine Mossman

 

 

Title:

Managing Director

 

 

32


 

COUNTERPART SIGNATURE PAGE TO

AGREEMENT OF PURCHASE AND SALE

DATED AS OF MAY 24, 2019

(TITLE COMPANY)

Title Company agrees to act as Title Company in accordance with the terms of this Agreement and to act as the Reporting Person in accordance with Section 6045(e) of the Internal Revenue Code and the regulations promulgated thereunder.

 

TITLE COMPANY:

FIRST AMERICAN TITLE INSURANCE COMPANY

By:

/s/ Vanessa R. Almanza

Name:

Vanessa R. Almanza

Its:

Escrow Officer

 

 

 


 

 

LIST OF EXHIBITS AND SCHEDULES

Exhibits

Exhibit A        Real Property Description

Exhibit B        List of Tenant Leases

Exhibit C        Deed

Exhibit D        Bill of Sale

Exhibit E        Assignment of Leases, Service Contracts, Warranties and Other Intangible Property

Exhibit F        Estoppel Certificate

Exhibit G        List of Service Contracts

Exhibit H        Reserved

Exhibit I        Reserved

Exhibit J        List of Excluded Personal Property

Exhibit K        List of Excluded Service Contracts

Exhibit L        Zynga Lease

Exhibit M        Outstanding Leasing Costs

Exhibit M-1        Leasing Costs Credits in Favor of Buyer

Exhibit N        Buyer Assumed Service Contracts

Exhibit O        Owner’s Declaration

Schedules

Schedule 1        Disclosure Items

These schedules, exhibits and other attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.  The registrant undertakes to provide such information to the Commission upon request.

 

znga-ex102_25.htm

 

Exhibit 10.2

OFFICE LEASE


699 Eighth Street
San Francisco, California

 

LANDLORD:

BCP-CG 650 Property LLC

 

TENANT:

Zynga Inc.

 

Certain portions of this document have been omitted pursuant to Item 601(b)(10) of Regulation S‑K and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The marked information has been omitted because it is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. The registrant hereby undertakes to provide further information regarding such marked information to the Commission upon request.

 

 


 

 

TABLE OF CONTENTS

 

 

 

Page

1

 

DEFINITIONS

11

1.1

 

Terms Defined

11

1.2

 

Basic Lease Information

22

2

 

PREMISES

22

2.1

 

Lease of Premises

22

2.2

 

Acceptance of the Premises

22

2.3

 

License and Indemnification

23

2.4

 

Swing Space

23

3

 

TERM

24

3.1

 

Term of Lease

24

3.2

 

Options to Extend

24

4

 

RENT

28

4.1

 

Obligation to Pay Base Rent; Annual Adjustment Tied to CPI Index

28

4.2

 

Manner of Rent Payment

29

4.3

 

Additional Rent

29

4.4

 

Cap on Controllable Expense Increases

33

4.5

 

Late Payment of Rent; Interest

33

5

 

CALCULATION AND PAYMENTS OF ADDITIONAL RENT

34

5.1

 

Payment of Estimated Additional Rent

34

5.2

 

Additional Rent Statement and Adjustment

34

5.3

 

Adjustments to Common Area Operating Expenses

35

5.4

 

Adjustments to Tenant’s Percentage Share

35

5.5

 

Payment of Real Property Taxes in Installments

36

5.6

 

Proration for Partial Year

36

5.7

 

Inspection of Landlord’s Records

36

6

 

PAYMENTS BY TENANT

37

6.1

 

Impositions

37

6.2

 

Electricity Paid by Tenant

38

7

 

USE OF PREMISES

38

7.1

 

Permitted Use; Tenant’s Right to Use Atrium

38

7.2

 

Ancillary Uses

38

7.3

 

Landlord Cooperation

38

7.4

 

Compliance with Requirements

39

7.5

 

Compliance With Environmental Laws; Use of Hazardous Materials

39

7.6

 

Sustainable Building Operations

40

7.7

 

Recycling and Waste Management

41

7.8

 

Landlord Covenants

41

7.9

 

No Third Party Beneficiary

41

7.10

 

Generators

41

8

 

BUILDING SERVICES

43

8.1

 

Building-Standard Services

43

(i)


 

 

TABLE OF CONTENTS

 

 

 

Page

8.2

 

No Representation

43

8.3

 

Building Security Services and Access

43

8.4

 

Interruption or Unavailability of Services

45

8.5

 

Tenant’s Use of Excess Electricity and Water; Premises Occupancy Load

46

8.6

 

Provision of Additional Services; After-Hours HVAC Services

46

8.7

 

Tenant’s Supplemental Air Conditioning

46

8.8

 

Janitorial Service

47

8.9

 

Controls

47

8.10

 

Service Providers

47

8.11

 

Property Management

47

8.12

 

Building Amenities

47

8.13

 

Tenant’s Right to Use Reception Desk

48

9

 

MAINTENANCE AND REPAIR

49

9.1

 

Landlord’s Maintenance Obligations

49

9.2

 

Operable Building Systems upon Lease Commencement

49

9.3

 

Tenant’s Obligations

49

10

 

ALTERATIONS TO PREMISES

49

10.1

 

Landlord Consent; Procedure

50

10.2

 

Permitted Alterations

50

10.3

 

Minor Alterations

51

10.4

 

General Requirements

51

10.5

 

Landlord’s Right to Inspect

52

10.6

 

Tenant’s Obligations Upon Completion

52

10.7

 

Ownership and Removal of Alterations

52

10.8

 

No Landlord’s Supervision Fee

53

10.9

 

Landlord’s Required Alterations of Common Areas

53

11

 

NO LIENS

53

12

 

DAMAGE OR DESTRUCTION

53

12.1

 

Repair Obligations

53

12.2

 

Termination Rights

54

12.3

 

Completion of Repairs

55

12.4

 

Rent Abatement

55

12.5

 

Waiver of Statutory Provisions

55

13

 

EMINENT DOMAIN

55

13.1

 

Lease Termination

55

13.2

 

Partial Taking

55

13.3

 

Landlord’s Termination Right

56

13.4

 

Compensation

56

13.5

 

Waiver

56

14

 

INSURANCE

56

(ii)


 

 

TABLE OF CONTENTS

 

 

 

Page

14.1

 

Liability Insurance

56

14.2

 

Form of Policies

57

14.3

 

Landlord’s Insurance

57

15

 

WAIVER OF SUBROGATION RIGHTS

58

16

 

WAIVER OF LIABILITY AND INDEMNIFICATION

58

16.1

 

Indemnification

58

16.2

 

Duty to Defend

59

16.3

 

Survival

59

17

 

ASSIGNMENT AND SUBLETTING

59

17.1

 

Restriction on Transfers

59

17.2

 

Notice of Proposed Transfer

60

17.3

 

Reasonable Conditions

60

17.4

 

Transfer Premium; Recapture Right

61

17.5

 

Terms of Consent

62

17.6

 

Subsequent Consents

62

17.7

 

Permitted Transfers

62

17.8

 

Permitted Occupancy by Certain Business Affiliates

63

17.9

 

Arbitration

63

18

 

RULES AND REGULATIONS

63

19

 

ENTRY OF PREMISES BY LANDLORD; [***]; MODIFICATION TO COMMON AREAS

63

19.1

 

Entry of Premises

64

19.2

 

[***]

64

19.3

 

Modifications to Common Areas

65

19.4

 

Waiver of Claims

65

20

 

DEFAULT AND REMEDIES

65

20.1

 

Events of Default

65

20.2

 

Landlord’s Remedies Upon Occurrence of Event of Default

66

20.3

 

Damages Upon Termination

67

20.4

 

Computation of Certain Rent for Purposes of Default

67

20.5

 

Landlord’s Right to Cure Defaults

67

20.6

 

Remedies Cumulative

67

20.7

 

Landlord’s Default

67

21

 

SUBORDINATION, ATTORNMENT AND NONDISTURBANCE

69

21.1

 

Subordination and Attornment

69

21.2

 

Mortgage Subordination

69

21.3

 

Notice to Encumbrancer

69

21.4

 

Rent Payment Direction

69

21.5

 

SNDA

70

22

 

SALE OR TRANSFER BY LANDLORD; LEASE NON-RECOURSE

70

22.1

 

Release of Landlord on Transfer

70

(iii)


 

 

TABLE OF CONTENTS

 

 

 

Page

22.2

 

Lease Nonrecourse to Landlord; Limitation of Liability

70

23

 

ESTOPPEL CERTIFICATE

70

23.1

 

Tenant Estoppel

70

23.2

 

Landlord Estoppel

71

24

 

NO LIGHT, AIR, OR VIEW EASEMENT

71

25

 

HOLDING OVER

71

26

 

NO RIGHTS TO RELOCATE TENANT

71

27

 

WAIVER

71

28

 

NOTICES; TENANT’S AGENT FOR SERVICE

72

29

 

AUTHORITY

72

30

 

PARKING; TRANSPORTATION

72

30.1

 

Lease of Parking Spaces

72

30.2

 

Tenant’s Right to Secure Parking

73

30.3

 

Use of the Parking Spaces

73

30.4

 

Management of Parking Garage

73

30.5

 

Abatement

74

31

 

COMMUNICATIONS AND COMPUTER LINES

74

31.1

 

Tenant’s Rights

74

31.2

 

Landlord’s Rights

75

31.3

 

Removal; Line Problems

75

32

 

MISCELLANEOUS

75

32.1

 

No Joint Venture

75

32.2

 

Successors and Assigns

75

32.3

 

Construction and Interpretation

75

32.4

 

Severability

76

32.5

 

Entire Agreement

76

32.6

 

Governing Law

76

32.7

 

Costs and Expenses

76

32.8

 

Standards of Performance and Approvals

76

32.9

 

Brokers

77

32.10

 

Memorandum of Lease

77

32.11

 

Quiet Enjoyment

77

32.12

 

Force Majeure

77

32.13

 

Surrender of Premises

77

32.14

 

Exhibits

78

32.15

 

Survival of Obligations

78

32.16

 

Time of the Essence

78

32.17

 

Waiver of Trial by Jury; Waiver of Counterclaim

78

32.18

 

Consent to Venue

79

32.19

 

Financial Statements

79

32.20

 

Subdivision: Future Ownership

79

(iv)


 

 

TABLE OF CONTENTS

 

 

 

Page

32.21

 

Modification of Lease

80

32.22

 

No Option

80

32.23

 

Compliance with Anti-Terrorism Law

80

32.24

 

First Source Hiring Program

80

32.25

 

Landlord Lien Waiver

80

32.26

 

Rent Not Based on Income

80

32.27

 

Counterparts

81

32.28

 

Required Disclosure

81

33

 

EXPANSION PREMISES; RIGHT OF FIRST OFFER TO LEASE

81

33.1

 

First Offer to Lease Space

81

33.2

 

Offering Notice

81

33.3

 

Lease of First Offer Space

81

33.4

 

Conditions of Exercise

82

33.5

 

Amendment to Lease

82

33.6

 

Rights Personal to Original Tenant and Permitted Assignee

82

34

 

RIGHT OF FIRST OFFER TO PURCHASE

82

34.1

 

One Time Right of First Offer to Purchase

82

34.2

 

Offer Procedure

82

34.3

 

Purchase Agreement

83

34.4

 

Rejection of Offer

83

34.5

 

Excluded Transfers

84

34.6

 

Condition of Title

84

34.7

 

Right to Effect a Like Kind Exchange

85

34.8

 

Broker’s Commission

85

34.9

 

No Implied Obligation

85

34.10

 

Personal to Original Tenant and Permitted Assignees

85

34.11

 

Time of Essence

85

35

 

ROOFTOP PARKING AREA; TERRACE AND DOG RUN

85

35.1

 

Use

85

35.2

 

Improvements to Parking Garage Roof Space

86

35.3

 

Protection of Project

86

35.4

 

Use and Maintenance

86

35.5

 

Costs

86

35.6

 

Conditions to Continued Use

87

35.7

 

Lease Provisions

87

36

 

TENANT’S ROOFTOP AND OTHER EQUIPMENT

87

36.1

 

Grant of License

87

36.2

 

Interference

87

36.3

 

Roof Repairs

88

36.4

 

Rules and Regulations

88

36.5

 

Transfer of Rights

88

(v)


 

 

TABLE OF CONTENTS

 

 

 

Page

37

 

SIDEWALK AREAS

88

38

 

CAFETERIA AND BREW PUB

89

38.1

 

Use

89

38.2

 

Operation

90

38.3

 

[***]

92

38.4

 

Concourse Floor Leasing Restriction

92

38.5

 

REIT Considerations

93

39

 

TENANT COMPETITORS

94

40

 

DOGS

94

40.1

 

General Conditions

95

40.2

 

Costs and Expenses

95

40.3

 

Insurance; Indemnity

95

40.4

 

Rights Not Personal to Original Tenant

95

41

 

INTENTIONALLY OMITTED

95

42

 

SIGNS; BIRD NETTING

95

42.1

 

Building Directory

95

42.2

 

Interior Signage

96

42.3

 

Exterior Signs

96

42.4

 

Approvals

98

42.5

 

Maintenance and Removal

98

42.6

 

Assignment and Subleasing

98

43

 

JAMS ARBITRATION

98

43.1

 

General Submittals to Arbitration

98

43.2

 

JAMS

98

43.3

 

Provisional Remedies

99

43.4

 

Waiver of Rights to Litigate in a Court or Jury Trial

99

44

 

REPRESENTATIONS AND WARRANTIES

100

44.1

 

No Other Third Party Rights

100

44.2

 

Encumbrances

100

45

 

ELEVATORS

100

45.1

 

Current Elevators

100

45.2

 

[***]

100

 

 

(vi)


 

Exhibits

Exhibit A-1:       Floor Plans of Premises

Exhibit A-2:       Superior Rights

Exhibit A-3:       Description of Sidewalk Area

Exhibit A-4:       Description of License Area

Exhibit A-5:       Description of Rooftop License Area

Exhibit A-6:       Description of Swing Space

Exhibit A-7:       Description of Concourse Swing Space

Exhibit A-8:       Description of Continuous Concourse Area

Exhibit B-1:       Rules and Regulations

Exhibit B-2:       Rooftop Rules

Exhibit C:       Janitorial Specifications

Exhibit D:       Security Deposit and Letter of Credit

Exhibit E:       Landlord Security Program

Exhibit F:       Location of Parking Spaces

Exhibit G:       Memorandum of Lease

Exhibit H:       Existing Encumbrances

Exhibit I:       Form of Estoppel Certificate

Exhibit J:       Form of Confidentiality Agreement

Exhibit K-1:       Description of Tenant’s Re-Stacking Project

Exhibit K-2:       Description of Landlord’s Common Area Improvements

Exhibit K-3:       Description of [***]

Exhibit L:       Common Area Construction Terms

 

These schedules, exhibits and other attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.  The registrant undertakes to provide such information to the Commission upon request.

 

-7-


 

OFFICE LEASE
699 Eighth Street
San Francisco, California

BASIC LEASE INFORMATION

Lease Date:

[July 5, 2019].

Landlord:

BCP-CG 650 Property LLC,
a Delaware limited liability company

Tenant:

Zynga Inc.,
a Delaware corporation

Premises:

The Premises contain a total of approximately 185,118 Rentable Square Feet (as defined in Section 1.1) at the Building (as defined in Section 1.1) comprised of the following, all in the locations as shown on Exhibit A-1, attached hereto:  

(i)The Cafeteria area (Suite CW-100) located on the concourse of the west side of the Building, containing approximately [***] Rentable Square Feet (the “Concourse Premises”);

(ii)Suite W-100 located on the first floor of the west side of the Building, containing approximately [***] Rentable Square Feet (the “First Floor Premises”);

(iii)Suite W-200 located on the second floor of the west side of the Building, containing approximately [***] Rentable Square Feet (the “Second Floor Premises”);

(iv)   Suite W-300 located on the third floor of the west side of the Building, containing approximately [***] Rentable Square Feet (“Third Floor Premises”);

(vi)Suite W-400 located on the fourth floor of the west side of the Building, containing approximately [***] Rentable Square Feet (“Fourth Floor Premises”); and

(v)     The Sidewalk Area as described in Article 37.

Term:

Commencing on the Commencement Date (as defined below) and expiring on the Expiration Date (as defined below), except as may be earlier terminated or extended in accordance with the provisions of this Lease.

-8-


 

Commencement Date:

Rent Commencement Date:

[______________ __], 2019.

The Commencement Date.

Expiration Date:

The final calendar day of the one hundred forty-fourth (144th) month following the Commencement Date (e.g., if the Commencement Date is [__________, 2019], then [_____________], 2031).

Security Deposit:

See Section 17.7.1 and Exhibit D.

Base Rent:

Tenant shall pay Landlord the following amounts for annual Base Rent at the Premises during the first Lease Year:

Concourse Premises: $[***] per Rentable Square Foot, for a total of $649,350.00 per year, or $54,112.50 per month

First Floor Premises: $[***] per Rentable Square Foot, for a total of $1,162,850.00 per year, or $96,904.17 per month

Second Floor Premises: $[***] per Rentable Square Foot, for a total of $1,735,030.00 per year, or $144,585.83 per month

Third Floor Premises: $[***] per Rentable Square Foot, for a total of $3,162,995.00 per year, or $263,582.92 per month

Fourth Floor Premises: $[***] per Rentable Square Foot, for a total of $3,589,140.00 per year, or $299,095.00 per month

Sidewalk Area: $0 per Rentable Square Foot  

Annual Base Rent shall be increased each Lease Year as provided in Section 4.1 below, provided that in no event shall the annual Base Rent decrease, nor increase by more than three and one quarter of one percent (3.25%) of the preceding Lease Year’s annual Base Rent. The first such increase in annual Base Rent shall be effective on the first day of the second (2nd) Lease Year.

[***]

 

Tenant’s Percentage Share:

27.0248%

Number of Parking Spaces:

Tenant has the right, in its sole and absolute discretion, to rent up to a maximum of (i) one hundred ninety (190) parking passes for the Building’s rooftop parking area and (ii) five (5) parking passes for the “helix” portion of the Building’s parking facility, as described in Article 30.

 

 

-9-


 

Tenants Address for Notices:

Zynga Inc.
699 Eighth Street
San Francisco, California 94103
Attention: VP, Real Estate and Workplace Services
Email: [***]

with a copy to:

 

Zynga Inc.
699 Eighth Street
San Francisco, California 94103

Attention: Chief Legal Officer
Email: [***]

with a copy to:

Email: [***]

Landlord’s Address for Notices:

[______________________]

Landlord’s Address for Payments:

[______________________]

 

 

-10-


 

OFFICE LEASE

This Office Lease (this “Lease”) is made and entered into by and between Landlord and Tenant as of the Lease Date.

Landlord and Tenant hereby agree as follows:

1.Definitions.

1.1Terms Defined

. The following terms have the meanings set forth below. Certain other terms have the meanings set forth elsewhere in this Lease.

8th Street Signage” shall have the meaning set forth in Section 42.3.3 below.

AAA” shall have the meaning set forth in Section 43.2 below.

Abatement Event” shall have the meaning set forth in Section 8.4 below.

Abatement Period” shall have the meaning set forth in Section 8.4 below.

Acceptance Notice” shall have the meaning set forth in Section 34.2.2 below.

Acceptance Period” shall have the meaning set forth in Section 34.2.2 below.

Additional Generator” shall have the meaning set forth in Section 7.10.2 below.

Additional Rent” shall have the meaning set forth in Section 4.3 below.

Adjustment Date” shall have the meaning set forth in Section 4.1 below.

Affiliate REIT” shall have the meaning set forth in Section 38.5 below.

Alterations” means alterations, additions or other improvements to the Premises or Common Areas made by or on behalf of Tenant after the Commencement Date.

Amortization Rate” means the applicable Interest Rate at the time a capital improvement or capital asset is installed, constructed or acquired (whichever is earliest), but not more than the maximum rate permitted by Applicable Laws at the time such capital improvements or capital assets are installed, constructed or acquired (whichever is earliest).

Ancillary Uses” means fitness/health facility (including showers for users of such facility), ATM facility, travel agency, concessions and franchises related specifically to office services functions that may be outsourced by a tenant (such as food service, reproduction services, mail room services, cleaning, security, IT services, MEP services and/or engineering services), childcare facility, auditorium, board rooms, libraries, training rooms and facilities, audiovisual and closed circuit television facilities, messenger and mailroom facilities, reproduction and copying facilities, word processing centers, computer and communications facilities, pantries (including vending machines), file rooms (including condensed file rooms with reinforced flooring if required), meeting and conference centers and rooms, storage space and kitchens, serveries, cafeterias and dining rooms, brew pubs (not open to the public and only if the alcohol is provided at no cost and is served only to Tenant’s employees and guests), and bicycle servicing and storage, in all cases as a use ancillary to Tenant’s use of the Premises for general office and administrative

-11-


 

use, and in compliance with all applicable laws and zoning requirements.  The foregoing Ancillary Uses shall not be made available for use by the general public by Tenant, except to the extent required to comply with Tenants obligations under this Lease, including without limitation Sections 7.4 and 38.1 below.

“Annual Statement” shall have the meaning set forth in Section 5.2 below.

Annual Earthquake Deductible Cap” shall have the meaning set forth in Section 4.3.2 below.

Anti-Terrorism Law” means any Applicable Laws relating to terrorism, anti-terrorism, money-laundering or anti-money laundering activities, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, Executive Order No. 13224, and Title 3 of the USA Patriot Act, and any regulations promulgated under any of them.

Applicable Laws” means all applicable laws, statutes, ordinances, orders, judgments, decrees, regulations, permit conditions, and requirements of all courts and all federal, state, county, municipal or other governmental or quasi-governmental authorities, departments, commissions, agencies and boards now or hereafter in effect, including, but not limited to, the Americans With Disabilities Act (42 U.S.C. § 12101 et seq.) and Title 24 of the California Code of Regulations and all regulations and guidelines promulgated thereunder.

approval” shall have the meaning set forth in Section 32.8 below.

Arbitration of Disputes Provision” shall have the meaning set forth in Section 43.1 below.

Arbitration Notice” shall have the meaning set forth in Section 43.2 below.

Arbitration Panel” shall have the meaning set forth in Section 3.2.6(d) below.

Arbitration Rules” shall have the meaning set forth in Section 43.2 below.

Arbitrator” shall have the meaning set forth in Section 43.2 below.

Available Expansion Premises” shall mean any portion of the Expansion Premises that first becomes and remains Available for Lease during any applicable period in which an Expansion Option may be exercised.

Available for Lease” shall mean an applicable space is vacant or, if occupied, when Landlord has reasonably determined that it will place the applicable space on the market for lease.

Bank” shall have the meaning set forth in Section 26.1 below.

Bankruptcy Code” means the United States Bankruptcy Code or any state bankruptcy code.

Bird Netting” shall have the meaning set forth in Section 42.3.4 below.

Brew Pub” shall have the meaning set forth in Section 38.1 below.

Brew Pub License” shall have the meaning set forth in Section 38.1(a) below.

 

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Building means the six-story office building located within the Project, including related Common Areas and the Parking Garage.

Building Amenities” shall have the meaning set forth in Section 8.12 below.

Building Generators means the 350 KW Kohler generator and the 1,100 KW Cummins generator, both of which are located in the Building basement, and the related fuel tanks and lines.

Building Holidays” means New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Building Rules” shall have the meaning set forth in Article 18 below.

“Building Standard Hours” means 8:00 a.m. to 6:00 p.m. on weekdays (except Building Holidays).

Building Systems” means all systems serving the Building in general, including, but not limited to, the fire/life safety, electrical, plumbing, HVAC, security and telecommunications systems, including all components thereof and related equipment, including the existing [***] security system and the other security equipment located outside the Premises to be abandoned by Tenant pursuant to Section 8.3.4(b) below, but excluding any equipment that is separately installed by or on behalf of Tenant and any distribution systems or equipment existing within the Premises as of the Lease Date.

Business Affiliates” shall have the meaning set forth in Section 17.8 below.

Cable Path” shall have the meaning set forth in Section 36.1 below.

Cafeteria” shall have the meaning set forth in Section 38.1 below.

Cafeteria Agreement” shall have the meaning set forth in Section 38.4 below.

[***]

Cafeteria Enforcement Measures” shall have the meaning set forth in Section 38.4 below.

[***]

Cafeteria Restriction” shall have the meaning set forth in Section 38.4 below.

Cafeteria Use Agreement” shall have the meaning set forth in Section 38.5(c) below.

Capital Improvement Expenses” shall have the meaning set forth in Section 4.3.3(d) below.

Casualty” means fire, earthquake, or other event of a sudden, unexpected, or unusual nature.

Change of Ownership Transaction” shall have the meaning set forth in Section 17.1 below.

Claims” means any and all actual, out-of-pocket obligations, losses, claims, actions (including remedial or enforcement actions of any kind and administrative or judicial proceedings, suits, orders or judgments), causes of action, liabilities, penalties, damages (excluding, except with respect to third party claims, foreseeable and unforeseeable consequential damages and punitive damages), costs and expenses (including reasonable attorneys’ and consultants’ fees and expenses).

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Common Area Construction Terms shall have the meaning set forth in Section 10.9 below.

Common Area Improvements” shall have the meaning set forth in Section 10.9 below.

Common Area Operating Expenses” shall have the meaning set forth in Section 4.3.3 below.

Common Areas” means all areas of the Project designated by Landlord from time to time for the common use or benefit of occupants of the Building, and their employees and invitees, or the public.

Comparable Buildings” means the other office buildings located in the South of Market and Showplace Square sub-market areas of San Francisco, California, that are comparable in terms of age, current condition, size, location, quality of construction and quality of common area improvements to the Building.

Comparison Leases” shall have the meaning set forth in Section 3.2.4 below.

Concourse Swing Space” shall have the meaning set forth in Section 2.4 below.

“Concourse Swing Space Termination Date” shall have the meaning set forth in Section 2.4 below.

Connections” shall have the meaning set forth in Section 36.1 below.

Consumer Price Indexmeans the United States Department of Labor’s Bureau of Labor Statistics’ Consumer Price Index, Urban Wage Earners and Clerical Workers, All Items, published for the San Francisco-Oakland-Hayward Area (1982-84 = 100), or the successor to such index.  If such index is discontinued entirely, Landlord and Tenant shall agree to another mutually acceptable index used to track changes in the cost of living in the San Francisco Bay Area.

Contest Deadline” shall have the meaning set forth in Section 7.10.3 below.

Continuous Concourse Area” shall have the meaning set forth in Section 3.2.1 below.

Control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of more than fifty percent (50%) of the voting interest in, any person or entity.

Controllables” shall have the meaning set forth in Section 4.4 below.

CPI Adjuster” shall have the meaning set forth in Section 4.1 below.

CPI Percentage Change” shall have the meaning set forth in Section 4.1 below.

Deed” shall have the meaning set forth in Section 34.6 below.

Deposit” shall have the meaning set forth in Section 26.5 below.

Determination” shall have the meaning set forth in Section 3.2.6(a) below.

Earthquake Insurance Expenses” shall have the meaning set forth in Section 4.3.2 below.

[***]

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[***]

[***]

Eligibility Period” shall have the meaning set forth in Section 8.4 below.

Encumbrance” means any ground lease or underlying lease, or the lien of any mortgage, deed of trust, and other encumbrances now or hereafter placed on or against the Building or the Project, or both, and all renewals, extensions, modifications, consolidations and replacements thereof.

Encumbrancer” means the holder of the beneficial interest under an Encumbrance.

Environmental Laws” means all Applicable Laws in any way relating to or regulating the use, generation. handling, emission, release, discharge, storage or disposal of Hazardous Materials, now or hereafter in force, as amended from time to time.

Equipment” shall have the meaning set forth in Section 36.1 below.

Estimated Restoration Period” shall have the meaning set forth in Section 12.1 below.

Estoppel Reminder Notice” shall have the meaning set forth in Section 23.1 below.

Event of Default” shall have the meaning set forth in Section 20.1 below.

Excess Cooling Problem” shall have the meaning set forth in Section 8.5 below.

Excluded Transaction Transfers” shall have the meaning set forth in Section 17.1 below.

Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing effective September 24, 2001, and relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism,” as may be amended from time to time.

Expansion Premises” means any space located on the west side of the Building that is contiguous to the Premises if such space becomes Available for Lease during the Term.

Expense Claim” shall have the meaning set Forth in Section 5.2 below.

Expense Resolution Period” shall have the meaning set forth in Section 5.2 below.

Extension Option” shall have the meaning set forth in Section 3.2.1 below.

Extension Term” shall have the meaning set forth in Section 3.2.1 below.

Fair Market Rent” shall have the meaning set forth in Section 3.2.4 below.

First Office Space” shall have the meaning set forth in Section 33.1 below.

Force Majeure Event” shall have the meaning set forth in Section 32.1.2 below.

FSHP” shall have the meaning set forth in Section 32.24 below.

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Green Rating Systems means the U.S. EPAs Energy Star® rating system, the U.S. Green Building Councils Leadership in Energy and Environmental Design (LEED) rating system and other third party rating systems.

Hazardous Materials” means any substance or material that is described as a toxic or hazardous substance, waste or material or a pollutant or contaminant, or words of similar import, in any Environmental Laws, and includes asbestos, petroleum, petroleum products, polychlorinated biphenyls, radon gas, and radioactive matter.

HVAC” means the heating, ventilation and air conditioning system serving the Building in general.

Impasse Date” shall have the meaning set forth in Section 3.2.6(a) below.

Impositions” means any and all taxes, excluding Real Property Taxes, payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties hereto imposed upon, measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant after the Commencement Date other than standard office improvements, regardless of whether title to such improvements shall be in Tenant or Landlord. Impositions do not include income, franchise, transfer, inheritance or capital stock taxes, unless any such taxes are levied or assessed against Landlord as a substitute for, in whole or in part, any Imposition.

Indemnitees” shall have the meaning set forth in Section 16.1.1 below.

Independent Arbitrator” shall have the meaning set forth in Section 3.2.6(c) below.

Independent CPA” shall have the meaning set forth in Section 5.7.2 below.

Initial Deposit” shall have the meaning set forth in Section 34.2.2 below.

Insurance Expenses” shall have the meaning set forth in Section 4.3.2 below.

Interest Rate” means the greater of (a) six percent (6%) per annum and (b) the Prime Rate plus four percent (4%); provided, however, that if such rate of interest shall exceed the maximum rate allowed by law, the Interest Rate shall be automatically reduced to the maximum rate of interest permitted by applicable law.

[***]

[***]

[***]

[***]

Issuer” shall have the meaning set forth in Exhibit D.

Janitorial Credit” shall have the meaning set forth in Section 8.8 below.

Land” means the parcel of land shown as Lot 9, Assessor’s Block 3783, on that certain map entitled “Parcel Map of a Portion of 100 VARA Block No. 412, Also Being a Portion of Assessor’s Block

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3783, which map was filed November 29, 1988, at Page 36, in Book 38, of Parcel Maps, of the Official Records of the City and County of San Francisco, California.

Landlord Affiliate” means any corporation, limited liability company, limited partnership or other entity which Controls, is Controlled by or is under common Control with Landlord.

Landlord Overruns” shall have the meaning set forth on Exhibit L attached hereto and made a part hereof.

Landlord Parties” means Landlord and its employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, and members and each of the foregoing is a “Landlord Party.

Landlord’s Casualty Notice” shall have the meaning set forth in Section 12.1 below.

Landlord’s Dispute Period” shall have the meaning set forth in Section 5.7.2 below.

Landlord’s Initial Proposal” shall have the meaning set forth in Section 3.2.5(a) below.

Landlord’s Market Rent Proposal” shall have the meaning set forth in Section 3.2.5(b) below.

Landlord’s Records” shall have the meaning set forth in Section 5.7.1 below.

Lease Year” means each consecutive twelve (12) month period during the Term, commencing on the first day of the first full month following the Commencement Date, except that the first Lease Year shall include any partial month between the Commencement Date and the first day of the following month. For example, if the Commencement Date occurs on January 15, the first Lease Year will commence on January 15 and end on January 31 of the immediately succeeding calendar year, and each subsequent Lease Year shall commence on February 1 and end on January 31 of the immediately succeeding calendar year.

LED Signs” shall have the meaning set forth in Section 42.3.1 below.

Letter of Credit” shall have the meaning set forth in Exhibit D.

License” shall have the meaning set forth in Section 2.3 below.

License Area” shall have the meaning set forth in Section 2.3 below.

Line Problems” shall have the meaning set forth in Section 31.3 below.

Lines” shall have the meaning set forth in Section 31.1 below.

LOC Funds” shall have the meaning set forth in Exhibit D.

Mandatory Controls” shall have the meaning set forth in Section 8.9 below.

Mandatory Cure Items” shall have the meaning set forth in Section 34.6 below.

Material ROFO Economic Terms” shall have the meaning set forth in Section 33.2 below.

Memorandum of Lease” shall have the meaning set forth in Section 32.10 below.

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Minor Alterations shall mean Alterations that both (i) do not affect the structural portions of the Building or Building Systems, and (ii) do not cost in excess of Five Hundred Thousand Dollars ($500,000) with respect to any one (1) project.

Net Effective Purchase Price” shall have the meaning set forth in Section 34.4 below.

Net Worth” shall have the meaning set forth in Section 17.7.1 below.

Net Worth Condition” shall have the meaning set forth in Section 17.7.1 below.

“Notice of Concourse Swing Space Termination” shall have the meaning set forth in Section 2.4 below.

Notice of Proposed Transfer” shall have the meaning set forth in Section 17.2 below.

Occupancy Agreement” shall have the meaning set forth in Article 39 below.

Offering Notice” shall have the meaning set forth in Section 33.2 below.

Parking Charge” shall have the meaning, set forth in Section 30.1 below.

Parking Garage” means the parking structure within the Building and the parking spaces located on the roof of the Building.

Parking Garage Roof Space” shall have the meaning set forth in Section 35.1 below.

Parking Spaces” shall have the meaning set forth in Section 30.1 below.

Permitted Alterations” means Alterations that do not affect the structural portions of the Building and do not materially and adversely affect Building Systems.

Permitted Assignee” shall have the meaning set forth in Section 17.7.1 below.

Permitted Transfer” means a Transfer described in, and in compliance with, Section 17.7 which, pursuant to such Section, does not require Landlord’s consent.

Permitted Transfer Costs” shall have the meaning set forth in Section 17.4 below.

Permitted Transferee” shall have the meaning set forth in Section 17.7.1 below, and collectively as “Permitted Transferees”.

Permitted Use” means general, administrative, and executive office use, and any other use permitted by law which is consistent with a first-class office building, and any Ancillary Uses.

Permitted Users” shall have the meaning set forth in Section 8.12(a) below.

Preexisting Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

Premises” shall have the meaning set forth in the Basic Lease Information.

Prime Rate” means the latest U.S. prime rate reported in the Money Rates column of The Wall Street Journal on the first day on which The Wall Street Journal is published in the month in which the

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applicable sums are payable or incurred. If the Wall Street Journal is no longer published, the Prime Rate shall mean the publicly announced prime rate or reference rate charged by the San Francisco Main Office of Bank of America, N.A. (or any successor bank) on the first day of the month in which the applicable sums are payable or incurred (or if there is no such publicly announced rate, the rate quoted by such bank in pricing ninety (90) day commercial loans to substantial commercial borrowers on said date).

Prohibited Person” means (a) a person or entity that is listed in the Annex to Executive Order No. 13224, or a person or entity owned or controlled by an entity that is listed in the Annex to Executive Order No. 13224; (b) a person or entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or (c) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofachllsdn.pdf or at any replacement website or other official publication of such list.

Project” means the Land, the Building and other improvements at any time located on the Land, and all appurtenances related thereto, including the loading dock area.

Project Transfer” shall have the meaning set forth in Section 34.2.1 below.

Protection Period” shall have the meaning set forth in Section 4.3.1 below.

PSA Assignment Party” shall mean (a) any Tenant Affiliate or (b) Mark Pincus or (c) any corporation, limited liability company, limited partnership or other entity which is Controlled by Mark Pincus.

PSA Negotiation Period” shall have the meaning set forth in Section 34.3 below.

Purchase Agreement” shall have the meaning set forth in Section 34.3 below.

Purchase Offer Notice” shall have the meaning set forth in Section 34.2.1 below.

Qualified Arbitrator” shall have the meaning set forth in Section 3.2.6(b) below.

Real Property Taxes” shall have the meaning set forth in Section 4.3.1 below.

Reassessment” shall have the meaning set forth in Section 4.3.1 below

Recorded Documents” means all easement agreements, cost sharing agreements, covenants, conditions, and restrictions and all similar agreements affecting the Project, whether now or hereafter recorded against the Project.

REIT” shall have the meaning set forth in Section 38.5 below.

Renewal Premises” shall have the meaning set forth in Section 3.2.2 below.

Rent” means the Base Rent, Parking Charges, and all other Additional Rent payable by Tenant in accordance with this Lease.

Rentable Square Foot” and “Rentable Square Feet” means the rentable square footage of the Premises or the Building, as the case may be, determined by Tenant’s architect in general accordance with a modified American National Standard Method of Measuring Area in Office Buildings of the Buildings Owners Association International’s Standard Method of Measuring Floor Area in Office Buildings

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(ANSI/BOMA Z65.1-2010) and adjusted based on a load factor of thirty-three and one-half of one percent (33.5%), which measurement shall not be changed except in connection with a change in the physical size of the Premises or Building in accordance with this Lease.

Rent Payment Notice” shall have the meaning set forth in Section 21.4 below.

Repairs to Tenant’s Generator Area” shall have the meaning set forth in Section 7.10.3 below.

Replacement Leases” shall have the meaning set forth in Section 38.1(c) below.

Replacement Lease Cost Cap” shall have the meaning set forth in Section 38.1(c) below.

Re-Stacking Project” shall have the meaning set forth in Section 10.2 below.

Restore” or “Restoration” shall have the meaning set forth in Section 12.1 below.

Right of First Offer” shall have the meaning set forth in Section 33.1 below.

Right of First Offer to Purchase” shall have the meaning set forth in Section 34.1 below.

ROFO Exercise Notice” shall have the meaning set forth in Section 33.3.3 below.

ROFO Exercise Period” shall have the meaning set forth in Section 33.3.1 below.

ROFO Target Date” shall have the meaning set forth in Section 33.2 below.

Roof License” shall have the meaning set forth in Section 36.1 below.

Roof License Area” shall have the meaning set forth in Section 36.1 below.

Roof Repairs” shall have the meaning set forth in Section 38.3 below.

Rooftop Equipment” shall have the meaning set forth in Section 36.1 below.

Security Holder” shall have the meaning set forth in Section 21.5 below.

Security System Transfer” shall have the meaning set forth in Section 8.3.4(b) below

[***]

[***]

Sidewalk Area” shall have the meaning set forth in Article 37 below.

SNDA” shall have the meaning set forth in Section 21.5 below.

Standard Janitorial Services” shall have the meaning set forth in Section 8.8 below.

Subject Space” shall have the meaning set forth in Section 17.2 below.

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Superior Rights means the rights of the tenants of spaces within the Building, under the existing leases as of the Lease Date shown on Exhibit A-2, if any, pursuant to an express written provision in such lease.

Supplemental Cooling Equipment” shall have the meaning set forth in Section 8.5 below.

Swing Space” shall have the meaning set forth in Section 2.4 below.

Swing Space License” shall have the meaning set forth in Section 2.4 below.

Taken” shall have the meaning set forth in Section 13.1 below.

Taking” shall have the meaning set forth in Section 13.1 below.

Tax Increase” shall have the meaning set forth in Section 4.3.1 below.

Tenant Affiliate” shall have the meaning set forth in Section 17.7.1 below.

Tenant Competitor” shall have the meaning set forth in Article 39 below.

Tenant Fuel Tank” means the approximately [***] gallon fuel tank located in the Building basement.

Tenant Parties” means Tenant and Tenant’s Transferees and Business Affiliates, and their respective employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, members, and each of the foregoing is a “Tenant Party”.

Tenant’s Additional Signs” shall have the meaning set forth in Section 42.3.4 below.

Tenant’s Address Sign” shall have the meaning set forth in Section 42.3.2 below.

Tenant’s Exterior Signs” shall have the meaning set forth in Section 42.4 below.

Tenant’s CPA” shall have the meaning set forth in Section 5.7.1 below.

Tenant’s Percentage Share” means the percentage stated in the Basic Lease Information as Tenant’s Percentage Share, which may be adjusted pursuant to the terms of this Lease.

Tenant’s Review” shall have the meaning set forth in Section 5.7.1 below.

Tenant’s ROFO Rejection” shall have the meaning set forth in Section 33.3.3 below.

Tenant’s Security Equipment” shall have the meaning set forth in Section 8.3.4 below.

Term” shall have the meaning set forth in the Basic Lease Information.

Third Part Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

Third Party Purchaser” shall have the meaning set forth in Section 34.4 below.

Townsend Street Signage” shall have the meaning set forth in Section 42.3.4 below.

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Transfer shall have the meaning set forth in Section 17.1 below.

Transfer Premium” shall have the meaning set forth in Section 17.4 below.

Transferee” shall have the meaning set forth in Section 17.1 below.

TRS” shall have the meaning set forth in Section 38.5 below.

USA Patriot Act” means the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as may be amended from time to time.

Wattage Allowance” for electricity (maximum demand load for general office, light and convenience power and for office equipment and air conditioning) means, for each floor of the Premises, the product obtained by multiplying the Rentable Square Feet of such floor by six (6) watts.

Zynga DRE” shall have the meaning set forth in Section 38.5(b) below.

Zynga Generators” shall mean the following generators, tanks and related lines currently located in the Building: (a) the 155 KW Generac generator located on the Building roof and any associated fuel tank; and (b) the 200 KW Cummins generator and associated [***] gallon belly tank located on the Building roof.

Zynga Subsidiary TRS” shall have the meaning set forth in Section 38.5(b) below.

1.2Basic Lease Information

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

2.Premises.

2.1Lease of Premises

. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises as described in the Basic Lease Information. The parties acknowledge that Exhibit A-1 is intended only to show the approximate location of the Premises in the Building, and not to constitute an agreement, representation or warranty as to the construction or precise area of the Premises or as to the specific location or elements of the Common Areas or of the accessways to the Premises or the Project. The parties hereby stipulate that the Premises and the Project contain the number of Rentable Square Feet calculated by Tenant’s architect pursuant to the definition of Premises as set forth in the Basic Lease Information. The Rentable Square Feet of the Building shall not be changed except in connection with a change in the physical size of the Premises or Building in accordance with this Lease. If the Premises include an entire floor, all elevator lobbies, corridors and restroom facilities located on such floor shall be considered part of the Premises. All the outside walls and windows of the Premises and any space in the Premises used for shafts, stacks, pipes, conduits, ducts, electric or other utilities, or other Building facilities or equipment, and the use thereof and, subject to the restrictions set forth in Section 19.1 below, access thereto through the Premises for the purposes of operation, maintenance, improvements and repairs, are reserved to Landlord.

2.2Acceptance of the Premises

. Tenant agrees to accept possession of the Premises upon the Commencement Date, without representation or warranty by Landlord, except as expressly provided in this Lease, and with no obligation of Landlord to repaint, remodel, repair, improve or alter the Premises, or to

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perform any construction, remodeling or other work of improvement upon the Premises, or contribute to the cost of any of the foregoing, except as expressly set forth in this Lease. Without limiting the generality of the foregoing, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building, or the Project, or the suitability of the Premises for Tenants use, except as expressly set forth in this Lease.

2.3License and Indemnification

. Subject to the applicable terms and conditions contained in this Lease, the Landlord Parties shall have a non-exclusive license (the “License”), at no charge to Landlord, to enter on to that portion of the Premises shown on Exhibit A-4 (the “License Area”). The License is limited in scope to the purpose of accessing (i) the other areas of the Building outside of the Premises by that certain walkway over the License Area, and (ii) the Cafeteria solely to the extent such Landlord Parties have access to use the Cafeteria under a separate agreement with Tenant. All costs associated with causing the structure of the License Area to comply with all Applicable Laws shall be borne solely by Landlord except to the extent such compliance is required due to changes or modifications to the License Area made by or approved by Tenant and not initiated by Landlord. Tenant shall reasonably cooperate with Landlord to ensure the License Area is accessible to the Landlord Parties, as applicable, and in compliance with all Applicable Laws. Landlord shall maintain in full force and effect the insurance required under Section 14.3 of this Lease covering the License Area. Landlord shall provide Tenant and all additional insureds with a certificate of insurance and an “Additional Insured Endorsement” for such License Area insurance coverage. Said insurance shall be primary insurance with respect to any claims, losses or liability arising directly or indirectly from Landlord’s entry and presence upon the Premises. Insurance maintained by the additional insureds shall be excess and non-contributory.  Landlord shall indemnify, defend and hold Tenant harmless from and against any Claims, which result from or arise out of the use of the License Area by Landlord or any other Landlord Parties except to the extent such Claims are caused by the negligence or willful misconduct of Tenant. Landlord’s obligations under this Section shall survive the expiration or earlier termination of this Lease until all Claims within the scope of this Section are fully, finally, and absolutely barred by the applicable statutes of limitations.

2.4Swing Space

. Subject to the applicable terms and conditions contained in this Lease, Tenant shall have a license (the “Swing Space License”), to use (i) at no charge to Tenant, that portion of the Building shown on Exhibit A-6 (the “Swing Space”) from the date surrendered by the current tenant of such space through February 29, 2020, provided that upon Tenant’s vacating such Swing Space on or prior to February 29, 2020, Tenant leaves the same in “broom clean” condition, and (ii) for a total annual fee of $[***] per Rentable Square Foot of the Concourse Swing Space payable to Landlord as Additional Rent (which totals [***] Dollars ($[***]) per month), and no other amounts payable or reimbursable by Tenant to Landlord for such license, including without limitation any Rent or any amounts for Common Area Operating Expenses in connection with the Concourse Swing Space, that portion of the Building shown on Exhibit A-7 (the “Concourse Swing Space”) from the Commencement Date through December 31, 2019, in each case solely for the Permitted Use and, in the case of the Concourse Swing Space for construction staging relating to the Re-Stacking Project. The Swing Space License as it relates to the Concourse Swing Space shall be conditioned upon Tenant delivering written notice to Landlord no later than August 1, 2019, that Tenant elects to use the Concourse Swing Space and if Tenant does not provide notice to Landlord of such election, Tenant shall have no obligation to pay any fee, Rent or Additional Rent for the Concourse Swing Space to Landlord other than for the period from the Commencement Date to the date Tenant vacates such space in “broom-clean” condition. Notwithstanding the foregoing, Tenant shall have the option in its sole and absolute discretion, which option may be exercised by delivering at least thirty (30) days’ written notice to Landlord (a “Notice of Concourse Swing Space Termination”) to terminate the Swing Space License with respect to the Concourse Swing Space on a date specified by Tenant in the Notice of Concourse Swing Space Termination (the “Concourse Swing Space Termination Date”). Effective on the Concourse Swing Space Termination Date, the Swing Space License shall terminate as to the Concourse Swing Space and Tenant shall have no further obligation to pay to Landlord

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any fee, Rent or Additional Rent for use of the Concourse Swing Space after the Concourse Swing Space Termination Date.  Tenant shall provide Landlord and all additional insureds with a certificate of insurance and an Additional Insured Endorsement for such Swing Space and Concourse Swing Space insurance coverage. Said insurance shall be primary insurance with respect to any claims, losses or liability arising directly or indirectly from Tenants entry and presence upon the Swing Space and/or Concourse Swing Space. Tenant shall indemnify, defend and hold Landlord harmless from and against any Claims, which result from or arise out of the use of the Swing Space or the Concourse Swing Space by Tenant or any other Tenant Parties except to the extent such Claims are caused by the negligence or willful misconduct of Landlord. Tenants obligations under this Section shall survive for a period of eighteen (18) months after February 29, 2020.

3.Term.

3.1Term of Lease

. The Term of this Lease shall commence as of the Commencement Date and shall expire on the Expiration Date, unless sooner terminated or extended pursuant to the provisions of this Lease.  This Lease shall be a binding contractual obligation effective upon execution and delivery hereof by Landlord and Tenant.

3.2Options to Extend

.

3.2.1Option to Extend Term

. Landlord hereby grants to Tenant three (3) successive options (each a “Extension Option” and collectively, the “Extension Options” ) to extend the initial Term for two (2) additional periods of eight (8) years each and a third (3rd) additional period of six (6) years (each an “Extension Term” and collectively, the “Extension Terms”) commencing on the first day following the Expiration Date on the terms and subject to the conditions set forth in this Section 3.2; provided, however, that (a) Tenant may exercise each Extension Option with respect to all of the Premises or to any contiguous full floors of the Premises then leased by Tenant hereunder (provided that so long as Tenant continues to lease the First Floor, Tenant shall also be required to continue to lease the Concourse Premises), including any Expansion Premises, (b) subsequent Extension Options may be exercised only if the immediately prior Extension Option has been duly exercised, and (c) Tenant may elect in its sole and absolute discretion which signage rights, if any, Tenant elects to continue during any Extension Term.  Notwithstanding anything to the contrary contained in this Lease, in the event Tenant elects to not extend the Term of this Lease with respect to the First Floor and the Concourse Premises, Tenant shall have the option to extend the Term of the Lease with respect to that portion of the Concourse Premises shown on Exhibit A-8 (the “Continuous Concourse Area”). Tenant shall be deemed to have elected to extend the Term of the Lease with respect to the Continuous Concourse Area unless Tenant delivers written notice to Landlord simultaneously with Tenant’s exercise of the applicable Extension Option pursuant to which Tenant elects not to extend the Term with respect to the Continuous Concourse Area. Tenant shall cause all work that is reasonably required in order to separate the Continuous Concourse Area from the balance of the Concourse Premises, if any, in a manner reasonably acceptable to Landlord and Tenant, to be performed at Tenant’s sole cost and expense, in compliance with all Applicable Laws, and with such work to be done pursuant to plans and specifications prepared by Tenant and approved by Landlord in Landlord’s reasonable discretion.  In the event Tenant exercises an Extension Option for less than the entirety of the then-current Premises as permitted in clause (a) above, the number of Tenant’s Parking Spaces (as defined in Section 30.1 below) shall be automatically reduced on a proportional basis in connection therewith.

3.2.2Exercise

. Tenant shall exercise an Extension Option, if at all, by giving Landlord written notice of such election no earlier than eighteen (18) months and no later than twelve (12) months prior to the scheduled Expiration Date, the time of such exercise being of the essence. Tenant’s notice shall specify (i) the portions of the Premises which Tenant intends to exercise the Extension Option (the “Renewal Premises”) and (ii) the signage rights which Tenant intends to renew. Subject to the provisions

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of this Section 3.2, upon the giving of such notice (which must specify the portion of the Premises to which the Extension Option shall apply), this Lease and the Term shall be extended without execution or delivery of any other or further documents, with the same force and effect as if the applicable Extension Term had originally been included in the initial Term.

3.2.3Conditions

. If Tenant exercises an Extension Option pursuant to Section 3.2.2 above, all of the terms, covenants and conditions of this Lease shall continue in full force and effect during the applicable Extension Term, except that: (a) the Base Rent during the applicable Extension Term shall be determined as set forth below; (b) Tenant shall continue to possess and occupy the Renewal Premises in their existing condition, “as is”, as of the commencement of the applicable Extension Term, and Landlord shall have no obligation to repair, remodel, improve or alter the Renewal Premises, to perform any other construction or other work of improvement upon the Renewal Premises, or to provide Tenant with any construction or refurbishing allowance whatsoever; (c) Tenant shall have no further rights to extend the Lease Term after the expiration of the third (3rd) Extension Term unless agreed to in writing by Landlord and Tenant; (d) the Parking Charge per Parking Space shall be determined as provided in Section 3.2.4 below; (e) the term “Premises” as used in this Lease shall refer to the Renewal Premises; and (f) the term “Tenant’s Percentage Share” shall mean the ratio of the Rentable Square Feet of the Renewal Premises to the Rentable Square Feet of the Project.

3.2.4Fair Market Rent

. The Base Rent payable by Tenant for the Renewal Premises during each Extension Term shall be [***] percent ([***]%) of the Fair Market Rent (as defined below) for the Renewal Premises, valued as of the commencement of the relevant Extension Term, determined in the manner set forth below.  The Parking Charge payable by Tenant for the Parking Spaces during the first Extension Term shall be the lesser of [***] Dollars ($[***]) per Parking Space per month and [***] percent ([***]%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the first Extension Term, determined in the manner set forth below. The Parking Charges payable by Tenant for the Parking Spaces during each subsequent Extension Term shall be [***] percent ([***]%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the relevant Extension Term, determined in the manner set forth below. As used herein, the term “Fair Market Rent” means the annual Base Rent and Parking Charges that a willing tenant would pay, and that a willing landlord would accept, at arm’s length, as of the commencement of the applicable Extension Term, for space comparable to the Renewal Premises in Comparable Buildings and the Building, and parking comparable to the Parking Spaces in Comparable Buildings, respectively, based upon binding lease transactions for tenants in the Building and Comparable Buildings that, where possible, commence or are to commence within six (6) months prior to or within six (6) months after the commencement of the applicable Extension Term (“Comparison Leases”) excluding the rental value attributable to any Alterations made after the Commencement Date and paid for by Tenant. Comparison Leases shall include renewal tenancies exercised at fair market rent, but shall exclude subleases and leases of space subject to another tenant’s expansion rights. Rent rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to, among other things: (a) the length of the applicable Extension Term compared to the lease term of the Comparison Leases; (b) rental structure, including, without limitation, rental rates per rentable square foot (including type, gross or net, and if gross, adjusting for the base year or expense stop), and escalation provisions, (c) the size of the Renewal Premises compared to the size of the premises of the Comparison Leases; (d) location, floor levels, efficiencies and outlook of the floor(s) of the Renewal Premises compared to the premises of the Comparison Leases; (e) free rent, moving allowances and other cash payments affecting the rental rate; (f) the age and quality of construction of the Building (including compliance with applicable codes on the applicable floors) compared to the Comparable Buildings; (g) leasehold improvements and/or allowances, including the amounts thereof in renewal leases, and taking into account, in the case of renewal leases (including this Lease), the value of existing leasehold improvements to the renewal tenant; (h) access to public transit and the availability of parking; (i) the amenities available to tenants in the Building compared to amenities available to tenants in Comparable

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Buildings; (j) the energy efficiencies and environmental elements of the Building compared to Comparable Buildings, including current LEED certification; (k) the uses of the Comparison Leases as compared to the use of the Renewal Premises; (l) the type and quality of any base building work in the Comparable Buildings compared to the Building; (m) the type and quality of tenant improvements in the Renewal Premises as compared to Comparable Buildings; and (n) the fact that landlords are or are not paying real estate brokerage commissions in connection with such Comparison Leases. In determining the Fair Market Rent, the most weight shall be given to Comparison Leases in the Building. The Fair Market Rent may include annual or other periodic increases and may be less or may be more than the Base Rent existing as of the exercise of the applicable Extension Option. The Fair Market Rent for (i) the Renewal Premises and (ii) the Parking Charge per Parking Space (as defined below) shall be determined separately.

3.2.5Determination of Base Rent and Parking Charges

.

(a)Without limiting any provision of Section 3.2.2 above, within thirty (30) days following Tenant’s written request, which may be given no earlier than seventeen (17) months and no later than thirteen (13) months prior to the then-scheduled Expiration Date, Landlord shall provide Tenant in writing with a good faith written proposal of the Fair Market Rent for the Renewal Premises and the Parking Spaces for the applicable Extension Term (“Landlord’s Initial Proposal”). Provided that Tenant subsequently gives valid notice of exercise of the applicable Extension Option, Landlord agrees that Landlord’s Market Rent Proposal given pursuant to Section 3.2.5(b) below shall not be higher than Landlord’s Initial Proposal. Tenant acknowledges that Landlord’s Determination of the Fair Market Rent for the applicable Extension Term pursuant to Section 3.2.6(a), below, may be higher or lower than Landlord’s Initial Proposal and/or Landlord’s Market Rent Proposal.

(b)Not later than six (6) months prior to the commencement of the applicable Extension Term, provided Tenant has given valid notice of exercise of the Extension Option, Landlord shall deliver to Tenant a good faith written proposal of the Fair Market Rent for the Renewal Premises and for the Parking Spaces for the applicable Extension Term (“Landlord’s Market Rent Proposal”), provided that in no event shall Landlord’s Market Rent Proposal be higher than Landlord’s Initial Proposal given pursuant to Section 3.2.5(a) above. Within sixty (60) days after receipt of Landlord’s Market Rent Proposal, Tenant shall notify Landlord in writing that Tenant accepts Landlord’s Market Rent Proposal or disputes Landlord’s Market Rent Proposal. If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s Market Rent Proposal shall be deemed accepted by Tenant and the Base Rent for the applicable Extension Term shall be equal to ninety-five percent (95%) of Landlord’s Market Rent Proposal.

3.2.6Arbitration

.

(a)If Tenant timely disputes Landlord’s Market Rent Proposal, the parties shall first negotiate in good faith to reach agreement upon the Fair Market Rent for the applicable Extension Term. If Landlord and Tenant are able to agree upon the Fair Market Rent within thirty (30) days after Tenant’s notice to Landlord disputing Landlord’s Market Rent Proposal (“Impasse Date”), then such agreement shall constitute a final determination of Fair Market Rent and the Base Rent for the applicable Extension Term shall be equal to ninety-five percent (95%) of such amount. If Landlord and Tenant are unable to agree upon the Fair Market Rent on or prior to the Impasse Date, then within fifteen (15) days after the Impasse Date, the parties shall meet and concurrently deliver to each other their respective written estimates of the Fair Market Rent for the applicable Extension Term, supported by the reasons therefor (each, a “Determination”). Landlord’s Determination may be more or less than Landlord’s Market Rent Proposal or Landlord’s Initial Proposal. If either party fails to deliver its Determination in a timely manner, then the Fair Market Rent shall be the Determination delivered by the other party and the Base Rent for the applicable Extension Term shall be equal to ninety-five percent (95%) of such amount.  If the higher

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Determination is no more than one hundred five percent (105%) of the lower Determination, then the Fair Market Rent shall be the average of the two Determinations, and the Base Rent for the applicable Extension Term shall be equal to the amount thereof. In every other case, the Fair Market Rent shall be determined as set forth below.

(b)Within ten (10) days after the parties exchange their respective Determinations, the parties shall each appoint an arbitrator who shall (i) be a licensed California real estate broker with at least ten (10) years’ experience in leasing commercial office space similar to the Building in the San Francisco market immediately prior to his or her appointment, (ii) be familiar with the rentals then being charged in the Building and in Comparable Buildings, and (iii) not have been employed by Landlord or Tenant or their respective Affiliates within the previous two (2) years or have been engaged to have provided services in connection with this Lease (each, a “Qualified Arbitrator”). The parties may appoint the real estate brokers who assisted them in making their Determinations as their respective arbitrators if such real estate brokers are Qualified Arbitrators. If either Landlord or Tenant fails to timely appoint a Qualified Arbitrator, then the Fair Market Rent for the applicable Extension Term shall be the Determination of the other party, and the Base Rent for the applicable Extension Term shall be equal to ninety-five percent (95%) of such amount.

(c)Within twenty (20) days following appointment of the second Qualified Arbitrator to be appointed, the two (2) Qualified Arbitrators appointed by the parties shall appoint a third, independent arbitrator who is a Qualified Arbitrator (the “Independent Arbitrator”) and notify Landlord and Tenant of the identity of the Independent Arbitrator. If an Independent Arbitrator has not been so appointed by the end of such twenty (20) day period, then either party, on behalf of both, may request such appointment by the San Francisco office of the American Arbitration Association (or any successor thereto), or in the absence, failure, refusal or inability of such entity to act, then either party may apply to the presiding judge of the San Francisco Superior Court, for the appointment of such an Independent Arbitrator, and the other party shall not raise any question as to the court’s full power and jurisdiction to make the appointment.  

(d)Within five (5) days following notification of the identity of the Independent Arbitrator, Landlord and Tenant shall submit copies of Landlord’s Determination and Tenant’s Determination to the three (3) Qualified Arbitrators (the “Arbitration Panel”). The Arbitration Panel, by majority vote, shall select either Landlord’s Determination or Tenant’s Determination and the Base Rent for the applicable Extension Term shall be equal to ninety-five percent (95%) of the selected determination. The Arbitration Panel shall have no right to propose a middle ground or to modify either of the two (2) Determinations or the provisions of this Lease. The Arbitration Panel shall attempt to render a decision within thirty (30) days after appointment of the Independent Arbitrator. In any case, the Arbitration Panel shall render a decision within forty-five (45) days after appointment of the Independent Arbitrator.

(e)The decision of the Arbitration Panel shall be final and binding upon the parties and may be enforced in accordance with the provisions of California law. In the event of the failure, refusal or inability of any member of the Arbitration Panel to act, a successor Qualified Arbitrator shall be appointed in the manner that applied to the selection of the member being replaced. Each party shall pay the fees and expenses of the Qualified Arbitrator designated by such party, and one half (½) of the fees and expenses of the Independent Arbitrator and the expenses incident to the proceedings (excluding attorneys’ fees and similar expenses of the parties which shall be borne separately by each of the parties).

(f)Each party may submit any written materials to the Arbitration Panel within five (5) business days of selection of the Independent Arbitrator. No witnesses or oral testimony (i.e. no hearing) shall be permitted in connection with the Arbitration Panel’s decision unless agreed to by both parties in writing. No ex parte communications shall be permitted between any member of the Arbitration

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Panel and either Landlord or Tenant following appointment of the Arbitrator Panel until conclusion of the arbitration process. The members of the Arbitration Panel are authorized to access the Renewal Premises and any comparable space (to the extent access to any comparable space is made available), subject to reasonable written notice to Tenant.

3.2.7Rent Payment Pending Resolution

. Until the matter is resolved by agreement between the parties or a decision is rendered in any arbitration commenced pursuant to this Section 3.2, Tenant’s monthly payments of Base Rent for the Renewal Premises and the Parking Charge for the Parking Spaces as of the commencement of the Extension Term shall be in an amount equal to [***] percent ([***]%) of the monthly Base Rent and Parking Charge payable by Tenant immediately prior to the then-scheduled Expiration Date on an adjusted basis per Rentable Square Foot of the Renewal Premises.  Within thirty (30) business days following the final determination of the Fair Market Rent by agreement by the parties or the decision of the Arbitration Panel, as applicable, Tenant shall pay to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or excess, as the case may be, in the Base Rent and Parking Charges previously paid by Tenant.

3.2.8General Provisions

. The following general provisions shall apply to each Extension Option:

(a)Assignment. Tenant’s right to exercise each Extension Option is personal to the original named Tenant under this Lease and any Permitted Assignee. If Tenant shall assign this Lease to a Permitted Assignee then such Permitted Assignee shall be entitled to exercise each Extension Option. No subtenant shall have any right to exercise the Extension Options granted herein.

(b)Amendment to Lease. After the Base Rent payable during the applicable Extension Term is determined, the parties shall promptly execute an amendment to this Lease in a form reasonably acceptable to both parties stating that the Term has been extended and the amount of the Base Rent payable during the applicable Extension Term.

(c)References to Term. Subject to the provisions of this Section 3.2, after exercise of an Extension Option, all references in this Lease to the Term shall be deemed to refer to the Term as extended, unless the context clearly provides to the contrary.

(d)Additional Condition. Notwithstanding anything to the contrary contained herein, Tenant’s exercise of an Extension Option shall, at Landlord’s election, be null and void if an Event of Default exists at the time of exercise of the applicable Extension Option.

(e)Impact of Lease Termination. If Tenant shall fail to properly exercise an Extension Option, the Extension Option shall terminate and be of no further force and effect. If this Lease shall terminate for any reason, then immediately upon such termination, the Extension Options shall automatically terminate and become null and void.

4.Rent

.

4.1Obligation to Pay Base Rent; Annual Adjustment Tied to CPI Index

. Tenant agrees to pay to Landlord as Base Rent for the Premises, the sums specified in the Basic Lease Information. Base Rent shall be paid to Landlord, in advance, on or before the first day of each calendar month during the Term. If the Rent Commencement Date is other than the first day of a calendar month, Base Rent for the first month of the Term for which Base Rent is payable shall be prorated on the basis of a three hundred sixty-five (365) day year. If the Expiration Date is other than the last day of a calendar month, or if this Lease shall be terminated as of a day other than the last day of a calendar month, the installment of Base

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Rent for the last fractional month of the Term shall be prorated on the basis of a three hundred sixty-five (365) day year.  For the purposes hereof, Adjustment Date means the first day of the second (2nd) Lease Year and each anniversary thereafter (other than the first day of any Extension Term).  On each Adjustment Date, the monthly Base Rent payable for the twelve (12) calendar months following such Adjustment Date shall be determined as follows:  (i) divide the monthly Consumer Price Index published most recently prior to the Adjustment Date by the Consumer Price Index for the same calendar month in the previous year and then subtract one (1) (such result, the CPI Percentage Change), then (ii)  multiply the CPI Percentage Change by three (3) and add one (1) (such result, the CPI Adjuster), then (iii) multiply the monthly Base Rent in effect immediately prior to such Adjustment Date by the CPI Adjuster.  Notwithstanding the foregoing, in no event shall the Base Rent in effect after any adjustment decrease, nor increase by more than three and one quarter of one percent (3.25%) of the Base Rent payable in the preceding Lease Year.

4.2Manner of Rent Payment

. All Rent shall be paid by Tenant without notice, demand, abatement, deduction or offset (except as expressly set forth in this Lease), in lawful money of the United States of America, that at the time of payment shall be legal tender for the payment of all obligations, in immediately available funds or by good check as described below, and if payable to Landlord, at Landlord’s Address for Payments in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate by notice to Tenant.

4.3Additional Rent

. All Rent not characterized as Base Rent or Parking Charges shall constitute Additional Rent (as defined below), and if payable to Landlord shall, unless otherwise specified in this Lease, be due and payable thirty (30) days after Tenant’s receipt of Landlord’s invoice therefor. Subject to the provisions and exclusions of this Lease, the Base Rent owing hereunder is to be paid by Tenant net of all costs and expenses relating to Landlord’s ownership and operation of the Project, the Building and the Premises.  Subject to the provisions and exclusions of this Lease, the provisions of this Section 4.3 for the payment of Tenant’s Percentage Share of Expenses (as hereinafter defined) are intended to pass on to Tenant its share of all such costs and expenses.  In addition to the Base Rent, Tenant shall pay to Landlord, in accordance with this Section 4.3, Tenant’s Percentage Share of all costs and expenses reasonably paid or incurred by Landlord in connection with the operation, maintenance, management and repair of the Premises, the Building and/or the Project or any part thereof, including, without limitation, all the following items (collectively, the “Additional Rent”).  

4.3.1Real Property Taxes and Assessments

. All real property taxes, assessments, excises, transit charges, or other housing charges, levies or fees, ordinary or extraordinary, unforeseen as well as foreseen, of any kind, which are assessed, levied, charged or imposed (1) on the Project or any part thereof, (2) on Landlord with respect to the Project, (3) on the act of entering into this Lease, (4) on the use or occupancy of the Project or any part thereof, (5) with respect to services or utilities consumed in the use, occupancy or operation of the Project, (6) on or attributable to personal property used in connection with the Building, including the Common Areas, (7) related to any governmentally-mandated transportation plan, fund or system affecting the Building, and (8) relating to or on or measured by the rent payable under this Lease or in connection with the business of renting space in the Project, including, without limitation, any gross income tax, gross receipts tax or excise tax levied with respect to the receipt of such rent, by the United States of America, the State of California, the City and County of San Francisco, any political subdivision, public corporation, district or other political or public entity or public authority, and shall also include any other tax, fee or other excise, however described, which may be levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes (collectively, “Real Property Taxes”). Real Property Taxes shall include reasonable attorneys’, accountants’, and consultants’ fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Property Taxes. Landlord shall have the right, but not the obligation, to contest by appropriate legal proceedings the amount or validity of any taxes. In the event Landlord elects not to contest the real property taxes and assessments levied against the Project, the Building or the Premises with respect to any calendar year during

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the Term, then Tenant shall have the right to retain a consultant to prosecute such contest, subject to Landlords reasonable approval of the identity of such consultant.  Such contest shall be conducted at Tenants sole cost and expense, provided that if Tenant prevails in such contest, the reasonable fees and costs of Tenants consultants shall, to the extent of any actual savings resulting from such contest, be equitably shared by Tenant and other tenant(s) who receive the benefit of such savings.  Notwithstanding any other provision of this Lease to the contrary, Real Property Taxes shall not include (i) income, franchise, transfer, inheritance or capital stock taxes, unless levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes; (ii) any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority; and (iii) during the period commencing upon the Commencement Date and ending on the seventh (7th) annual anniversary of the Commencement Date (the Protection Period) any Tax Increase (as defined below). If during the Protection Period, (a) there is any sale or transfer of all or a portion of the Project or of direct or indirect interests in Landlord, a refinancing or securitization of any direct or indirect interest in the Project, any ground or master lease of the Project or a change of ownership (as defined in California Revenue and Taxation Code Sections 60-62 or any amendments or successors to those sections) of the Project and/or (b) there are capital improvements made to the Project, and, as a result, the Project is reassessed (a Reassessment) for real estate tax purposes by the appropriate government authority higher than the previous amount of Real Property Taxes, then the term Tax Increase (Tax Increase) shall mean that portion of the Real Property Taxes allocable to the Project that is attributable to the Reassessment (including, without limitation, subsequent increases in such Tax Increase). Accordingly, a Tax Increase shall not include any portion of the Real Property Taxes that is or would be attributable to (v) the initial assessment of the value of the Project or any portion thereof; (w) assessments pending immediately before the Reassessment that were conducted during, and included in, that Reassessment or that were otherwise rendered unnecessary following the Reassessment; (x) the annual inflationary increase in real estate taxes actually permitted under Proposition 13 (as adopted by the voters of the State of California in the June 1978 election) and not applicable to a Tax Increase; (y) a repeal or modification of Proposition 13; or (z) a change in the state of law affecting Real Property Taxes due to Applicable Law which is first enacted into law after the Commencement Date, modification of Applicable Law after the Commencement Date or a change in interpretation of Applicable Law after the Commencement Date. If a Reassessment results from any event described in subclauses (a) or (b) above, that occurs during the Protection Period, the Tax Increase (including, without limitation, subsequent increases in such Tax Increase) shall not be included in Additional Rent during the remainder of the Protection Period and the Tax Increase shall be paid by Landlord and not recouped from Tenant in any manner during the Protection Period.  From and after the expiration of the Protection Period, Landlord may include all such Tax Increases in the Real Property Taxes.

4.3.2Insurance Expenses

.  All insurance premiums for the Building, Premises and/or the Project or any part thereof, including premiums for “all risk” fire and extended coverage insurance, commercial general liability insurance, rent loss or abatement insurance, flood or surface water coverage, with such deductibles and other insurance as Landlord deems necessary in its reasonable discretion (collectively, “Insurance Expenses”).  To the extent that Landlord pays any sums with respect to insurance deductibles, and provided that such insurance deductibles for any insurance carried by Landlord (including, subject to the Annual Earthquake Deductible Cap, earthquake insurance deductibles) are commercially reasonable, all such sums shall be included in Additional Rent to be paid by Tenant (provided that, with respect to any insurance deductibles that are not commercially reasonable, a commercially reasonable amount nevertheless shall be included in Additional Rent to be paid by Tenant), except as provided in this Section below with respect to earthquake insurance deductibles in excess of the Annual Earthquake Deductible Cap.  Notwithstanding any other provision of this Lease to the contrary, if Tenant’s Percentage Share of any earthquake deductible will exceed an amount equal to [***] Dollars ($[***]) per square foot of the rentable area in the Premises in a particular calendar year (the “Annual Earthquake Deductible Cap”) then only an amount up to such Annual Earthquake Deductible Cap shall be paid by Tenant in any calendar year, but Tenant’s Percentage Share of the excess amount of such deductible may be billed to

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Tenant in subsequent calendar years from the date the excess was incurred) as long as in any such subsequent calendar year any earthquake deductible billed to Tenant is not in excess of the then-applicable Annual Earthquake Deductible Cap. In order to bill any such excess to Tenant in a future year, Landlord shall (i) show a calculation of the excess in the Annual Statement for the year in which the expenses are incurred (and Landlord acknowledges that Tenant may inspect Landlords books and records relating to such amounts as described in this Lease even though they are not charged in such year), and (ii) show any such amount carried forward on the statement of Additional Rent for each subsequent year until such amounts are billed to Tenant if permitted as described above.

4.3.3Common Area Operating Expenses

. All costs incurred by Landlord relating to the ownership and operation of the Project, including, but not limited to, the following (collectively, the “Common Area Operating Expenses”):

(a)The operation, repair and maintenance, in neat, clean, good order and condition, of the following:  

(i)The Common Areas, including the Parking Garage, loading and unloading docks and areas, trash and recycling areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators and roof, and roof drainage systems.

(ii)Exterior signs and any tenant directories for which Landlord is responsible under this Lease.

(iii)The Building Systems.

(b)The cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered.

(c)Trash and recycling disposal, pest control services, property management and security services and the costs of any environmental inspections’ provided that Tenant’s Percentage Share of Common Area Operating Expenses for any calendar year shall include a property management fee equal to [***] percent ([***]%) of the Building’s revenues plus expenses.

(d)The cost of any capital improvements (as determined by generally accepted accounting principles) made by Landlord to the Building or the Project after the Commencement Date that are (i) reasonably anticipated by Landlord to reduce other Common Area Operating Expenses, and only to the extent of such reasonably anticipated savings, (ii) made to the Premises and/or Common Areas or any portion thereof that are required under any Applicable Law which is first enacted into law after the Commencement Date, or (iii) required by this Lease to be made to the Premises and/or Common Areas by Landlord in order to replace any item that has worn out, become obsolete, or otherwise requires replacement (collectively, the “Capital Improvement Expenses”). Any Capital Improvement Expenses shall be amortized over the useful life of such capital improvements at the Amortization Rate as reasonably determined by Landlord in accordance with industry standard practices (commencing on completion of such capital improvement), and only the amortized portion of such cost shall be included in Common Area Operating Expenses in any one Lease Year.

(e)Any other services to be provided by Landlord that are stated elsewhere in this Lease to be a Common Area Operating Expense.

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Notwithstanding any other provision of this Lease to the contrary, Common Area Operating Expenses shall not include the following: (1) depreciation on the Building; (2) debt service, interest, principal, points, attorneys fees, environmental investigations or reports, and fees and other lender costs and closing costs incurred by Landlord on any loan secured by a deed of trust or any other debt instrument encumbering the Project or any part thereof or on any unsecured loan obtained by Landlord; (3) any payments or rental by Landlord under a ground lease or master lease relating to the Project; (4) attorneys fees and expenses, brokerage commissions, or other related expenses incurred in connection with leasing of the Project including lease concessions, rental abatements and construction allowances; (5) the cost of any improvements or equipment that would be properly classified as capital expenditures (except for any capital expenditures expressly included in Section 4.3.3(e)); (6) the cost of decorating, improving for tenant occupancy, painting or redecorating portions of the Building to be demised to tenants; (7) marketing and promotional costs with respect to the Project and leasing of space, including advertising expenses relating to vacant space; (8) real estate brokers or other leasing commissions; (9) rentals incurred in leasing HVAC systems, elevators or other equipment that if purchased rather than rented, would constitute a capital item that is excluded, except for (i) rental costs incurred in making repairs or in keeping Building Systems in operation while repairs are being made and (ii) rental costs of equipment not affixed to the Building that is used in providing janitorial or similar services; (10) costs for which Landlord is reimbursed by (i) insurance carried by, or required to be carried by, Landlord, (ii) condemnation proceeds, or (iii) other tenants or any other source, and Landlord shall use commercially reasonable efforts to pursue claims under insurance policies, existing warranties and/or guaranties or against other third parties, as applicable, to pay such costs; provided, that, the reasonable cost of pursuing such claims shall be included in Common Area Operating Expenses; (11) any bad debt loss, rent loss, or reserves for bad debt loss or rent loss; (12) costs incurred in connection with the operation of the business of the entity constituting Landlord, as distinguished from the costs of operating the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlords interest in the Building; (13) overhead and profit increment paid to Landlord or its affiliates for goods and/or services in the Building to the extent the same exceed the cost of such goods and/or services of comparable quality rendered by unaffiliated third parties of similar skill, competence and experience in Comparable Buildings; (14) costs for which Landlord has been compensated by a management fee to the extent that the inclusion of such costs in Common Area Operating Expenses would result in a double charge; (15) Landlords political or charitable contributions; (16) the cost of any tenant relations parties, events or promotions; (17) costs attributable to an increase in the size of the Project management office or rent attributable to any such increase; (18) any costs, fees, dues, contributions or similar expenses for industry associations or similar organizations to which Landlord is a member; (19) costs to repair or replace the Project resulting from any casualty; (20) repairs, alterations, additions, improvements or replacements made to rectify or correct any defect in the design, materials or workmanship of the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable construction materials and equipment) or to comply with any Applicable Laws in effect as of the Commencement Date; (21) repairs, alterations, additions, improvements or replacements made to rectify or correct damage caused by the negligence or willful misconduct of Landlord or any Landlord Party; (22) costs incurred in installing, operating and maintaining any specialty improvement not normally installed, operated and maintained in projects comparable to the Project, including, without limitation, an observatory, luncheon club, or athletic or recreational facilities, if not generally available to all office tenants of the Project, including Tenant; (23) salaries, wages, bonuses and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare and other fringe benefits, and vacation, holidays and other paid absence benefits) relating to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (24) fines, penalties or interest incurred due to violation by Landlord of the terms and conditions of any lease or any Applicable Laws or due to violation by any other tenant in the Project of the terms and conditions of any lease or any Applicable Laws; (25) interest, penalties or other costs arising out of Landlords failure to make timely payment of its obligations; (26) property management fees in excess of the amount set forth in Section 4.3.3(c); (27) costs incurred to test, survey, cleanup, contain, abate, remove, remediate, mitigate, monitor or otherwise remedy Hazardous Materials or mold from the Project (except that Common Area Operating Expenses shall include costs incurred in connection with the prudent operation and maintenance of the Project, such as monitoring air quality); (28) costs incurred to correct defective equipment installed in the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable equipment); (29) sale or financing costs incurred in connection with any sale, financing or refinancing of the Project; (30) any reserves other than those expressly set forth in Section 4.3.3(d); (31) costs for sculpture, paintings or other objects of art installed by Landlord in the Project; (32) the cost of operation, repair, maintenance and other expenses relating to the portions of the Building used for retail and restaurant use, to the extent that, in Landlords reasonable judgment, such costs exceed the costs that which would have been incurred by Landlord if the entirety of the Building had been office space (rather than a mixture of office and retail and restaurant space); (33) costs and expenses of providing HVAC service to other tenant spaces in the Building outside of Building Standard Hours; (34) costs and expenses of providing electricity to areas of the Building outside of the Common Areas; (35) costs and expenses to provide water, gas, fuel, steam, lights, sewer service and other utilities to other tenants or occupants of the Building in excess of amounts typically used in connection with ordinary office use; (36) costs relating to the repair of structural portions of the roof, foundations, floors and exterior walls; (37) costs incurred in connection with re-certification pursuant to one or more Green Rating Systems or to support achieving any energy and carbon reduction targets (except costs incurred pursuant to Section 7.6.2 below); (38) the cost of labor and employees with respect to personnel not located at the Building on a full-time basis unless such costs are appropriately allocated between the Building and the other responsibilities of such personnel; (39) any of the amounts set forth in above to the extent paid to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (40) costs for janitorial services for any rentable area in the Project to the extent Tenant continues to provide such services to the Premises as set forth herein; (41) travel expenses of Landlord, its employees, agents, partners and affiliates, (42) costs of any parties, ceremonies or other events for third parties conducted by Landlord, (43) Landlord Overruns, (44) any hard or soft costs associated with the [***], (45) any hard or soft costs associated with the [***], (46) any hard or soft costs associated with the Security System Transfer, and (47) any hard and soft costs in connection with the Cafeteria Enforcement Measures, which shall be paid solely by Landlord and not reimbursed by Tenant.

4.4Cap on Controllable Expense Increases

.  Notwithstanding any other provision of this Lease to the contrary, Landlord agrees that the total dollar amount of Tenant’s Percentage Share of Insurance Expenses and Common Area Operating Expenses which are “controllable” (collectively “Controllables”) shall not increase in any Lease Year by more than [***] percent ([***]%) on a cumulative, compound basis over the total dollar amount of Controllables for the prior Lease Year. For purposes of this Lease, “Controllables” shall mean (i) any and all Common Area Operating Expenses other than (a) the cost of water, gas, electricity, and telephone to service the Common Areas and any utilities not separately metered, (b) trash and recycling disposal, and (c) Capital Improvement Expenses to the extent permitted pursuant to the terms of this Lease and (ii) any premium for any environmental insurance on the Property.

4.5Late Payment of Rent; Interest

. All amounts of Rent, if not paid within five (5) business days after the due date, shall bear interest from the due date until paid at the Interest Rate. In addition, Tenant acknowledges that late payment by Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord under the terms of its loan documents. Therefore, if any installment of Rent is not received within five (5) business days after the due date, Tenant shall pay to Landlord an additional one (1) time sum of

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two percent (2%) of the delinquent Rent as a late charge. A late charge shall not be imposed more than once with respect to any particular payment not paid by Tenant when due. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment of Rent by Tenant. Acceptance of any late charge shall not constitute a waiver of Tenants default with respect to the overdue amount or prevent Landlord from exercising any of the other rights and remedies available to Landlord. Notwithstanding anything to the contrary set forth herein, Tenant shall not be liable for the late charge set forth in this Section 4.5 with respect to the first delinquency by Tenant in any calendar year, provided that Tenant shall pay any such delinquent amount within five (5) business days after receipt of notice of such delinquency from Landlord.

5.Calculation and Payments of Additional Rent

. Tenant shall pay to Landlord Additional Rent in accordance with the following procedures:

5.1Payment of Estimated Additional Rent

. During December of each calendar year, Landlord shall give Tenant notice of its commercially reasonable estimate of Additional Rent due for the succeeding calendar year. On or before the first day of each month during the succeeding calendar year, Tenant shall pay to Landlord, as Additional Rent, one twelfth (1/12) of such estimated amounts. If Landlord fails to deliver such notice to Tenant in December, Tenant shall continue to pay Additional Rent on the basis of the prior year’s estimate until the first day of the next calendar month after such notice is given, provided that within thirty (30) days after receipt of Landlord’s estimate, Tenant shall pay to Landlord the amount of such estimated adjustment payable to Landlord for prior months during the year in question, less any portion thereof previously paid by Tenant. If it reasonably appears to Landlord that the amounts payable under this Section 5.1 for the current calendar year will vary from Landlord’s estimate, Landlord may, by giving written notice to Tenant, but not more than two (2) times in any calendar year, revise Landlord’s estimate for such year, and subsequent payments by Tenant for such year shall be based on such revised estimate. Landlord’s failure or delay in providing Tenant with Landlord’s estimate of Additional Rent for any calendar year shall not constitute a default by Landlord hereunder, or a waiver by Landlord of Tenant’s obligation to pay Additional Rent for such calendar year or of Landlord’s right to send such an estimate to Tenant on a later date. Notwithstanding anything to the contrary set forth in this Lease, Landlord shall operate the Building in a cost-conscious manner and shall use reasonable efforts to minimize increases in Insurance Expenses and Common Area Operating Expenses on an ongoing basis.

5.2Additional Rent Statement and Adjustment

. On or before April 30 of each calendar year, Landlord shall deliver to Tenant a statement of the actual Additional Rent for such calendar year, showing in reasonable detail (a) the Real Property Taxes, Insurance Expenses and Common Area Operating Expenses comprising the actual Additional Rent, and (b) payments made by Tenant on account of the Real Property Taxes, Insurance Expenses and Common Area Operating Expenses for such calendar year (an “Annual Statement”).  Landlord’s failure or delay in providing Tenant with an Annual Statement for any calendar year shall not constitute a default by Landlord hereunder, or a waiver by Landlord of Tenant’s obligation to pay Additional Rent for such calendar year or of Landlord’s right to send such Annual Statement on a later date. If Landlord fails to deliver the Annual Statement on or before March 31 of a given calendar year and Tenant has paid to Landlord an amount in excess of the Additional Rent paid for the preceding calendar year, then Tenant shall be entitled to interest on such overpayment at the Interest Rate after March 31 until such amount is refunded or credited in accordance with this Section 5.2. If the Annual Statement shows that Tenant owes an amount that is more than the payments previously made by Tenant for such calendar year, Tenant shall pay the difference to Landlord within thirty (30) days after delivery of the Annual Statement. If the Annual Statement shows that Tenant owes an amount that is less than the payments previously made by Tenant for such calendar year, Landlord shall credit the difference first against any sums then owed by Tenant to Landlord and then against the next payment or payments of Rent due Landlord, except that if a credit amount is due to Tenant after the termination of this Lease, Landlord shall pay to Tenant any excess remaining after Landlord credits such amount against any sums

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owed by Tenant to Landlord.  Tenant shall have two hundred seventy (270) days after receipt of an Annual Statement to notify Landlord in writing that Tenant disputes the correctness of the Annual Statement (an Expense Claim). If Tenant does not object in writing to an Annual Statement within such two hundred seventy (270) day period, such Annual Statement shall be deemed final and binding upon Tenant. If Tenant delivers an Expense Claim to Landlord within said two hundred seventy (270) day period, the parties shall promptly meet and attempt in good faith to resolve the matters set forth in the Expense Claim. If the parties are unable to resolve the matters set forth in the Expense Claim within thirty (30) days after Landlords receipt of the Expense Claim (the Expense Resolution Period), then Tenant shall have the right to examine Landlords records, subject to the terms and conditions set forth in Section 5.7 below. This Section 5.2 shall survive the expiration or earlier termination of this Lease.

5.3Adjustments to Common Area Operating Expenses.

5.3.1If the Building is less than ninety-five percent (95%) occupied during any calendar year of the Term, Insurance Expenses and Common Area Operating Expenses for such calendar year shall be adjusted to the amount of Insurance Expenses and Common Area Operating Expenses that would have been incurred if the Building had been ninety-five percent (95%) occupied. In no event shall any adjustments to Insurance Expenses or Common Area Operating Expenses in any calendar year result in Landlord receiving from Tenant and other tenants more than one hundred percent (100%) of the cost of the actual Insurance Expenses and Common Area Operating Expenses incurred by Landlord in any such calendar year.  

5.3.2Landlord shall pay, without being entitled to reimbursement from Tenant under this or any other Section of this Lease, any and all one (1) time assessments, impositions, costs of mitigation, impact fees, connection fees, tap-in fees and similar one (1) time charges imposed as a condition of or in connection with any expansion of the Project. Landlord shall pay when due all assessments for municipal improvements levied against the Project during the Term, which shall be paid in the maximum number of installments permitted by Applicable Law and any such assessments are to be included in Common Area Operating Expenses. Landlord shall pay subsequent special assessments for which it is entitled to obtain reimbursement from Tenant in the maximum number of installments permitted by Applicable Law.

5.3.3Landlord may revise the Annual Statement for any calendar year if Landlord first receives invoices from third parties, tax bills or other information relating to adjustments to Common Area Operating Expenses allocable to such calendar year after the initial issuance of such Annual Statement. Notwithstanding the foregoing, in no event shall Tenant be obligated to pay for any Real Property Taxes, Insurance Expenses or Common Area Operating Expenses that are not billed by Landlord within eighteen (18) months of the date on which such Operating Expenses were incurred by Landlord and the recovery thereof shall be deemed waived by Landlord; provided that, the foregoing eighteen (18) month limitation shall not apply to any Real Property Taxes, Insurance Expenses or Common Area Operating Expenses as to which Landlord, operating in a commercially reasonable manner with respect to its management of the Project: (i) did not receive an invoice, bill or other notice thereof (except to the extent such Real Property Taxes, Insurance Expenses or Common Area Operating Expense amount was available to Landlord on an “on-line” electronic basis unless the Operation Expense was not posted thereon); and (ii) had no knowledge thereof, in each case prior to expiration of said eighteen (18) month period, as reasonably demonstrated to Tenant’s satisfaction, including by provision of invoices, bills or notices evidencing the date upon which such Operating Expense was first billed (or notice thereof provided) to Landlord.

5.4Adjustments to Tenant’s Percentage Share

. Landlord shall reasonably adjust Tenant’s Percentage Share to account for changes in the physical size of the Premises or the Project. Notwithstanding anything to the contrary contained in this Lease, Landlord shall equitably allocate Real Property Taxes, Insurance Expenses and Common Area Operating Expenses among the office and retail/restaurant portions

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or occupants of the Building or among the west portions or occupants of the Building and the east portions or occupants of the Building, in Landlords reasonable discretion, if and to the extent such Real Property Taxes, Insurance Expenses or Common Area Operating Expenses are incurred exclusively for the benefit of the office or retail/restaurant portions or occupants of the Building, or the east or west portions or occupants of the Building. With respect to any Real Property Taxes, Insurance Expenses or Common Area Operating Expenses item that Landlord allocates to only a portion of the Building, Tenants Percentage Share (assuming Tenant benefits from such item) shall be a percentage, the numerator of which is the Rentable Square Feet of the Premises (or applicable portion thereof), and the denominator of which is the total Rentable Square Feet of the space in the Building that benefits from the particular item, as determined by Landlord in its reasonable discretion. Notwithstanding the foregoing or anything to the contrary contained elsewhere in this Lease, Tenant shall pay one hundred percent (100%) of any Real Property Taxes assessed on the Rents payable by Tenant under this Lease, including any gross receipts tax attributable to Tenants payments under this Lease but excluding income taxes payable by Landlord.

5.5Payment of Real Property Taxes in Installments

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

5.6Proration for Partial Year

. If this Lease terminates on a day other than the last day of a calendar year, the amounts of Additional Rent payable by Tenant with respect to the calendar year in which such termination occurs shall be prorated on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months.

5.7Inspection of Landlord’s Records.

5.7.1Tenant’s Review

. Provided that Tenant has timely delivered an Expense Claim to Landlord, Tenant or a certified public accountant engaged by Tenant (“Tenant’s CPA”) (which Tenant’s CPA shall not be engaged on a contingent fee basis) shall have the right, at Tenant’s cost and expense, to examine, inspect, and copy the records of Landlord concerning the components of Real Property Taxes, Insurance Expenses and Common Area Operating Expenses (“Landlord’s Records”) for the calendar year in question that are disputed in the Expense Claim (“Tenant’s Review”). Any examination of Landlord’s Records shall take place upon reasonable prior written notice, at the offices of Landlord or Landlord’s property manager, during normal business hours. Tenant agrees to keep, and to cause Tenant’s CPA to keep, all information obtained by Tenant or Tenant’s CPA confidential, (except as required under Applicable Laws or disclosure to persons or entities who, because of their involvement with Tenant’s Review, need to know such information; provided, that, such parties shall be informed by Tenant of the confidential nature of such information and shall be directed by Tenant to keep all such information confidential), and Landlord may require all persons inspecting Landlord’s records to sign a commercially reasonable confidentiality agreement prior to making Landlord’s Records available to them. In no event shall Tenant be permitted to examine Landlord’s Records or dispute any Annual Statement unless Tenant has paid and continues to pay all Rent (excluding the amount disputed in the Expense Claim).

5.7.2Landlord’s Dispute

. If Landlord disputes the results of any Tenant’s Review, Landlord shall provide written notice of such dispute and Landlord and Tenant shall promptly thereafter work in good faith in an attempt to address Landlord’s dispute for a period of thirty (30) days after completion of Tenant’s Review (the “Landlord’s Dispute Period”). If Landlord and Tenant are unable to resolve Landlord’s dispute within Landlord’s Dispute Period, Landlord may provide Tenant written notice within fifteen (15) days after the Landlord’s Dispute Period of its election to seek resolution of the dispute by an Independent CPA (as defined below) together with a list of five (5) independent, certified public accounting firms that are not currently providing, and have not within the three (3) previous years provided, services to Landlord or Tenant or any entity

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Controlling, Controlled by or under common Control of Landlord or Tenant. All of the firms shall be nationally or regionally recognized firms with annual revenues in excess of Twenty Million Dollars ($20,000,000.00) during the preceding two (2) fiscal years and have experience in accounting related to commercial office buildings. In order to accommodate the foregoing, Tenant shall provide Landlord, within ten (10) business days after request, a complete list of all certified public accounting firms that are currently providing, or have within the three (3) previous years provided, services to Tenant or any entity Controlling, Controlled by or under common Control of Tenant. Landlords failure to deliver a notice of dispute and such list of accounting firms within thirty (30) days after Landlords Dispute Period shall be deemed to be Landlords acceptance of the results of Tenants Review.  Within thirty (30) days after receipt of the list of accounting firms from Landlord, Tenant shall choose one (1) of the five (5) firms by written notice to Landlord, which firm is referred to herein as the Independent CPA. The Independent CPA shall examine and inspect the records of Landlord concerning the components of Real Property Taxes, Insurance Expenses and Common Area Operating Expenses for the calendar year in question and the results of Tenants Review and make a determination regarding the accuracy of Tenants Review. If the Independent CPAs determination shows that Tenant has overpaid with respect to Additional Rent (i) by two percent (2%) or more then Landlord shall pay all costs associated with the Independent CPAs review, and (ii) by less than two percent (2%) then such costs shall be borne by Tenant. The determination of the Independent CPA shall be final and binding upon Landlord and Tenant. If the Independent CPA (or, if Landlord does not dispute Tenants Review as provided in this Section, Tenants Review) shows that Tenant has overpaid with respect to Additional Rent by two percent (2%) or more, then Landlord shall reimburse Tenant for all costs incurred by Tenant for Tenants Review.

5.7.3Adjustments

. If the Independent CPA (or, if Landlord does not dispute Tenant’s Review as provided in Section 5.7.2 above, Tenant’s Review) shows that the payments actually made by Tenant with respect to Additional Rent for the calendar year in question exceeded Tenant’s Percentage Share of Real Property Taxes, Insurance Expenses or Common Area Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (a) credit the excess amount to the next succeeding installments of estimated Additional Rent or (b) pay the excess to Tenant within thirty (30) days after delivery of the determination of the Independent CPA (or, if Landlord does not dispute Tenant’s Review, within thirty (30) days after delivery of Tenant’s Review), except that after the expiration or earlier termination of this Lease, Landlord shall pay the excess to Tenant. If the Independent CPA (or, if Landlord does not dispute Tenant’s Review as provided in Section 5.7.2 above, Tenant’s Review) shows that Tenant’s payment of Additional Rent was less than Tenant’s Percentage Share of Real Property Taxes, Insurance Expenses or Common Area Operating Expenses for such calendar year, Tenant shall pay the deficiency to Landlord within thirty (30) days after delivery of the determination of the Independent CPA (or, if Landlord does not dispute Tenant Review, after delivery of Tenant’s Review).  

5.7.4Records

. Landlord shall retain Landlord Records for the greater of (x) two (2) years after the expiration of the applicable calendar year to which such Landlord Records relate and (y) the resolution of any dispute between Landlord and Tenant regarding Real Property Taxes, Insurance Expenses or Common Area Operating Expenses for the applicable calendar year.  This Section 5.7 shall survive the expiration or earlier termination of this Lease.

6.Payments by Tenant.

6.1Impositions

. Tenant shall pay all Impositions prior to delinquency. If billed directly, Tenant shall pay such Impositions and concurrently present to Landlord satisfactory evidence of such payments. If any Impositions are billed to Landlord or included in bills to Landlord for Real Property Taxes, then Tenant shall pay to Landlord all such amounts within thirty (30) days after receipt of Landlord’s invoice therefor. If Applicable Law prohibits Tenant from reimbursing Landlord for an Imposition, but Landlord may lawfully increase the Base Rent to account for Landlord’s payment of such Imposition, the

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Base Rent payable to Landlord shall be increased to net to Landlord the same return without reimbursement of such Imposition as would have been received by Landlord with reimbursement of such Imposition.

6.2Electricity Paid by Tenant

. Tenant acknowledges that in addition to the Base Rent and Additional Rent, and other charges payable under this Lease, commencing on the Commencement Date, Tenant is responsible for paying for all electricity supplied to the Premises during the Term. Tenant, at Tenant’s expense, shall submeter the Premises in a manner reasonably satisfactory to Landlord and Tenant. Landlord at Landlord’s expense shall submeter any Expansion Premises in a manner reasonably satisfactory to Landlord and Tenant, prior to the respective date any such space is added to the Premises.  Tenant shall pay Landlord for all electricity supplied to the Premises, as Additional Rent, on a monthly basis, within thirty (30) days after Landlord delivers an invoice and reasonable supporting documentation to Tenant.  Landlord shall not impose any administrative fee or other similar mark-up on such costs.  Landlord acknowledges that certain of Tenant’s Permitted Uses may utilize more than six (6) watts per Rentable Square Foot per floor of electrical capacity and agrees that Tenant shall be permitted to install additional bus duct switches and other electrical systems in the Premises in order to allocate electricity among the various portions of the Premises in a fashion reasonably determined by Tenant and approved by Landlord prior to installation; provided that this right of Tenant shall not expand Landlord’s obligation to provide electricity hereunder in an amount not less than the Wattage Allowance.

7.Use of Premises.

7.1Permitted Use; Tenant’s Right to Use Atrium

. The Premises shall be used solely for the Permitted Use, subject to Tenant’s compliance with the terms and conditions set forth in this Article 7 and in Article 38. At no cost to Tenant, Tenant may use the atrium in the Common Area for up to four (4) employee events per year, subject to Superior Rights and compliance with Landlord’s reasonable rules and scheduling procedures.  Landlord shall not, and, subject to Superior Rights, shall not allow other occupants of the Project or any third parties to, host events in the atrium.  Tenant shall not do anything in or about the Premises or the Building that (i) violates any Applicable Laws, any provision of the Recorded Documents, or any of the Building Rules; (ii) is prohibited by a standard form of fire insurance policy or that materially increases the rate of fire or other insurance on the Building or any of its contents (provided that this clause (ii) shall not prohibit the operation of the Cafeteria); or (iii) constitutes intentional, physical waste.  The provisions of this Section 7.1 are for the benefit of Landlord only and shall not be construed to be for the benefit of any tenant or occupant of the Building, any lender of Landlord’s, or any other third party.

7.2Ancillary Uses

.  Tenant agrees that neither Landlord nor any agent or consultant of Landlord shall be responsible for obtaining any approvals or permits for or on behalf of Tenant with respect to the use of the Premises for the Ancillary Uses. Tenant also acknowledges that neither Landlord nor any agent or consultant of Landlord has made any representation or warranty regarding the ability to use the Premises for any of the Ancillary Uses, the likelihood of obtaining the required approvals or permits for any of the Ancillary Uses or the condition or suitability of the Premises for any Ancillary Uses.

7.3Landlord Cooperation

. Landlord, in its capacity as the owner of the Project, shall use diligent efforts to assist and cooperate with Tenant in Tenant’s efforts to apply for, receive and implement any permits, licenses or other approvals required by any governmental or quasi-governmental authority, department, agency, commission or board in order for Tenant to use the Premises and other areas of the Project as described in this Lease and in accordance with this Lease, including, without limitation, for the (i) use of the Premises for the Permitted Uses, (ii) installation of signage as set forth in Article 42, (iii) bringing of dogs onto the Premises as set forth in Article 40, (iv) operation of the Cafeteria, (v) use of the Sidewalk Area as set forth in Article 37, (vi) use of the Parking Garage Roof Space as set forth in Article 35 (vii) segregation of the Parking Spaces and/or using a valet service as set forth in Article 30, and (viii) construction of improvements as permitted or consented to in accordance with the provisions of this

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Lease. Landlord shall use commercially reasonable efforts to ensure that other occupants of the Project do not create any nuisance.  

7.4Compliance with Requirements.

7.4.1Tenant’s Obligations

. Tenant, at its expense, shall comply with all Applicable Laws, the occupancy certificate issued for the Premises, and the provisions of all Recorded Documents relating to (a) the operation of its business at the Project, or (b) the use, condition, configuration or occupancy of the Premises. In addition, if a change to the structural portions of the Building, the Building Systems or the Common Areas becomes required under any Applicable Laws after the Commencement Date as a result of any Alteration or use of the Premises other than for general office use, Tenant, at Landlord’s option, shall either (i) make such change pursuant to the provisions of Article 10 at Tenant’s cost or (ii) reimburse Landlord for the reasonable, out-of-pocket costs incurred by Landlord in making such change plus a supervision fee equal to [***].  The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of such Applicable Laws shall be conclusive of that fact as between Landlord and Tenant. Tenant shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws.

7.4.2Landlord’s Obligation

. Subject to reimbursement as Additional Rent to the extent permitted pursuant to Article 5 and Tenant’s obligations under Section 7.4.1 above, Landlord shall be responsible for (a) operating the Building in accordance with all Applicable Laws, the occupancy certificate issued for the Project, and the provisions of all Recorded Documents relating to (1) the operation of its business at the Project, or (2) the use, condition, configuration or occupancy of the Project and (b) causing the structure of the Building, the Building Systems, and the Common Areas to comply with all Applicable Laws. Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws.

7.5Compliance With Environmental Laws; Use of Hazardous Materials.

7.5.1Tenant shall not: (i) bring or keep, or permit to be brought or kept, in the Premises or in or on the Project any Hazardous Materials in violation of Environmental Laws; (ii) manufacture, generate, treat, handle, store or dispose of any Hazardous Materials in the Premises or in or on the Project in violation of Environmental Laws; or (iii) emit, release or discharge any Hazardous Materials into any air, soil, surface water or groundwater comprising the Premises or the Project in violation of Environmental Laws, or permit any person using or occupying the Premises to do any of the foregoing.  Tenant shall have the right, without providing notice to or obtaining the consent of Landlord, to store reasonable quantities of and use standard cleaning products and office supplies commonly found in offices, and fuel for any Additional Generators in accordance with this Lease, provided that Tenant complies with all Applicable Laws and prudent industry practice in connection with such use.

7.5.2Tenant shall comply, and shall cause all persons using or occupying the Premises to comply, with all Environmental Laws applicable to the Premises, the use or occupancy of the Premises or any operation or activity therein. Tenant shall promptly furnish Landlord with any (i) written notices received from any insurance company or governmental authority or inspection bureau regarding any unsafe or unlawful conditions within the Premises, and (ii) written notices sent by or on behalf of Tenant to any person relating to Environmental Laws applicable to the Project or to Tenant’s use, handling, storage,

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treatment, transportation, discharge or disposal of Hazardous Materials in connection with the Project. If, as a result of Tenants use, handling, storage, treatment, transportation, discharge or disposal of Hazardous Materials, any governmental agency shall require testing for Hazardous Materials in the Premises, Tenant shall pay for such testing.  Tenant shall indemnify, defend and hold Landlord harmless from and against any Claims, which result from or arise out of the use, storage, treatment, transportation, release, or disposal of any Hazardous Materials in violation of Environmental Laws on or about the Project by Tenant or any other Tenant Parties. Tenants obligations under this Section shall survive the expiration or earlier termination of this Lease until all Claims within the scope of this Section are fully, finally, and absolutely barred by the applicable statutes of limitations.

7.5.3If any remedial work is required under any Environmental Laws as a result of any act or omission of Tenant or any other Tenant Parties at the Project, then Tenant shall perform or cause the remedial work to be performed in compliance with Environmental Laws. All remedial work performed by Tenant shall be performed by one or more contractors, selected by Tenant and reasonably approved in advance in writing by Landlord, and under the supervision of a consulting engineer selected by Tenant and reasonably approved in advance in writing by Landlord. All costs and expenses of such remedial work shall be paid by Tenant, including, but not limited to, the charges of such contractor(s), the consulting engineer and Landlord’s reasonable attorneys’ and experts’ fees and actual, out-of-pocket costs incurred in connection with the monitoring or review of such remedial work.

7.5.4In no event shall Tenant be required to abate, remediate and/or clean up any Hazardous Materials in, on, or about the Premises, that were not brought upon, produced, treated, stored, used, discharged or disposed of by Tenant or Tenant Parties (collectively, “Third Party Hazardous Materials”), except to the extent that any hazard posed by such Third Party Hazardous Materials is exacerbated by the negligent acts or willful misconduct of Tenant or Tenant Parties. For purposes hereof, Third Party Hazardous Materials shall include Hazardous Materials in, on, or about the Premises that were brought upon, produced, treated, stored, used, discharged or disposed of by Landlord. Landlord, at Landlord’s expense (without pass through as Additional Rent), shall remove or otherwise remediate any Third Party Hazardous Materials, as required by Environmental Laws.

7.6Sustainable Building Operations.

7.6.1Operation of Building

. The Building is or may in the future become certified under any one or more Green Rating Systems or operated pursuant to Landlord’s sustainable building practices.  Landlord’s sustainability practices address whole-building operations and maintenance issues, including, but not limited to, chemical use, indoor air quality, energy efficiency, water efficiency, recycling programs, exterior maintenance programs, and systems upgrades to meet green building energy, water, indoor air quality, and lighting performance standards. All construction and maintenance methods and procedures, material purchases, and disposal of waste must be in compliance with minimum standards and specifications so as to conform with all Applicable Laws.  Tenant shall cooperate, at no cost to Tenant, with Landlord in causing recertification of the Building from time to time under one or more Green Rating Systems.

7.6.2Rating of Premises

. Upon Tenant’s request but not more often than once every twelve (12) months, Landlord shall use commercially reasonable efforts to provide to Tenant the data required to calculate benchmarks for the energy efficiency of the Premises using the ENERGY STAR® Portfolio Manager and, at Tenant’s cost and expense, cause a professional engineer to analyze the energy efficiency of the Premises and issue a Statement of Energy Performance as required by the ENERGY STAR® Portfolio Manager.

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7.7Recycling and Waste Management

. Tenant agrees, at its sole cost and expense:  (a) to comply with all Applicable Laws regarding the collection, sorting, separation, and recycling of garbage, trash, rubbish and other refuse; (b) to endeavor to comply with Landlord’s recycling policy as part of Landlord’s sustainability practices where it may be more stringent than Applicable Laws, at no additional cost to Tenant; and (c) to sort and separate its trash and recycling into such categories as are required by Applicable Laws and to place each separately sorted category of trash and recycling in separate receptacles as reasonably directed by Landlord. Landlord reserves the right to refuse to collect or accept from Tenant any trash that is not separated and sorted as required by clause (c) above, and to require Tenant to arrange for such collection at Tenant’s sole cost and expense, utilizing a contractor reasonably satisfactory to Landlord. In addition, Tenant shall pay all actual, out-of-pocket costs, expenses, fines, penalties or damages that may be imposed on Landlord or Tenant by reason of Tenant’s failure to comply with the provisions of clause (c) above.

7.8Landlord Covenants

. Landlord will not use, generate, manufacture, produce, store, release, discharge or dispose of on, under or about the Premises and/or Project (or off-site of the Premises and/or Project that might affect the Premises and/or Project), or transport to or from the Premises, any Hazardous Material, except in compliance with Environmental Laws. Landlord will give prompt written notice to Tenant of (a) any proceeding or inquiry by any governmental authority known to Landlord with respect to the presence of any Hazardous Material on the Premises or Project (or off-site of the Premises and/or the Project that might affect the Premises and/or the Project) or relating to any loss or injury resulting from any Hazardous Material not caused by Tenant; and (b) all Claims made or threatened by any third party against Landlord or the Project relating to any loss or injury resulting from any Hazardous Material; and (c) Landlord’s discovery of any occurrence or condition on the Premises and/or Project (or off-site of the Premises and/or the Project that might affect the Premises and/or the Project) that could cause the Premises and/or the Project or any part thereof to be subject to any restrictions on occupancy or use of the Premises and/or the Project under any Environmental Laws.

7.9No Third Party Beneficiary

. The provisions of this Article 7 are for the benefit of Landlord only and shall not be construed to be for the benefit of any tenant or occupant of the Building, any lender of Landlord’s, or any other third party.

7.10Generators.

7.10.1Existing Generators

.  Landlord shall be responsible for the repair, maintenance and replacement of the Building Generators, and Tenant shall be responsible for the repair, maintenance and replacement of the Zynga Generators.  Tenant acknowledges that Landlord makes no representation or warranty regarding the condition, suitability, capacity or cost to operate, supply, maintain or repair the Building Generators or of the condition of the Building’s fuel tank(s). Landlord shall maintain any and all permits, licenses or other approvals required by any governmental or quasi-governmental authority, department, agency, commission or board required for use of the Building Generators, and any fuel tank at the Building necessary for the operation of the Building Generators.  Tenant shall remove the Zynga Generators at the end of the Term but shall, prior to commencing any work in connection with such removal, provide written notice to Landlord at least ninety (90) days before the end of the Term of Tenant’s intent to do so.  Landlord shall then have the right, for a period of thirty (30) days after receipt of such notice from Tenant, to elect to have one or more of the Zynga Generators remain, in which case Tenant shall not remove those so designated by Landlord and they shall become the personal property of Landlord.

7.10.2Right to Install New Generator

. Tenant shall, at no additional cost to Landlord, have the right but not the obligation to install, use, operate, maintain, and repair, at Tenant’s sole cost and expense, one (1) back-up generator of up to five hundred (500) KWH and required conduit and related equipment, including without limitation, uninterruptible power supply batteries, fuel tank and fuel lines

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(collectively, the Additional Generator), at a mutually agreeable location, and shall be permitted to connect such Additional Generator to the electrical power distribution system within the Premises (as described below) for the benefit of equipment located within the Premises (as the same may be expanded or modified in accordance with this Lease), and subject to the terms and conditions of this Section 7.10.  Such Additional Generator shall comply with Applicable Laws and shall be installed subject to and in accordance with Article 10 (and, if the Additional Generator is also Rooftop Equipment, subject to and in accordance with Article 36). If the Additional Generator is also Rooftop Equipment located on the rooftop parking area of the Building and, as a result of such location any parking spaces are eliminated, Tenant shall pay all Parking Charges attributable to any such eliminated parking spaces, such Parking Charges shall constitute Rent hereunder and such Parking Charges shall be payable in advance, at the same time and in the same manner as provided in Section 30.1. The Additional Generator, if installed, shall be connected to electrical power distribution system within the Premises, and shall not be connected to the main electrical room of the Building or Building Systems. Tenant shall be permitted, but shall not be required, to remove the Additional Generator from time to time at its own expense, for any reason or no reason, including, without limitation, for purposes of replacing or upgrading such Additional Generator. Tenant shall repair any damage caused by such removal, including the patching of any holes to match, as closely as reasonably possible, the color surrounding the area where the equipment and appurtenances were attached.  Tenant shall remove the Additional Generator at the end of the Term unless Landlord elects to have it remain, in which case such Additional Generator shall become the personal property of Landlord.

7.10.3Generally

. Tenant, at Tenant’s sole cost and expense, shall maintain and repair (or replace, at Tenant’s election) the Zynga Generators and any Additional Generator in accordance with the requirements and recommendations prescribed by the manufacturer. Landlord, as part of Common Area Operating Expenses, shall maintain, repair and replace the Building Generators and the Tenant Fuel Tank in accordance with the requirements and recommendations prescribed by the manufacturer.  However, notwithstanding any inconsistent or contrary provision of this Lease, all costs (including but not limited to maintenance, repair, testing, and fuel) relating to the Tenant Fuel Tank shall be passed through to and paid by only those tenants of the Building who are then utilizing it, in an amount equal to their respective proportionate share (i.e., calculated on a proportional basis in accordance with the kilowattage of their respective generators connected to the Tenant Fuel Tank), with the result that all such tenants together shall be responsible for 100% of such costs).  In the event the Regional Water Quality Control Board, or the San Francisco fire department, or any other Federal, State, or local governmental or quasi-governmental agency with jurisdiction require(s) changes to or removal of the Tenant Fuel Tank, (i) Tenant shall have the right for a period of thirty (30) days after notice of such requirement(s) (the “Contest Deadline”), to contest any alleged violation in good faith and shall have the right to diligently pursue such contest, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Applicable Laws, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Applicable Laws and (ii) in the event Tenant so contests and it is finally determined that changes to or removal of the Tenant Fuel Tank are required by the Regional Water Quality Control Board, or the San Francisco fire department, or any other Federal, State, or local governmental or quasi-governmental agency with jurisdiction, or if Tenant does not elect to contest such requirement to remove or change the Tenant Fuel Tank by the Contest Deadline, Landlord is authorized to take such actions as are required in order to comply with such requirement(s) and Tenant hereby agrees to indemnify, defend, and hold harmless Landlord with respect to any third party Claims arising therefrom, but only to the extent of Tenant’s proportionate share as described above.  Each party shall cause any generators for which it has repair and maintenance responsibility under this Lease to be periodically inspected in accordance with the requirements and recommendations prescribed by the manufacturers of each generator and Applicable Laws, and promptly following each inspection, such party shall provide to the other party copies of all inspection reports. If Tenant fails to perform such periodic inspections, Landlord, at Tenant’s cost, shall have the right, but not the obligation, to conduct any such inspections but only at such times and in such a manner as to reasonably minimize the impact on Tenant.  Each party may utilize such security protocols,

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cameras, onsite surveillance and security patrolling as it deems reasonably necessary to monitor and secure any generator for which it is responsible. If Landlord desires to perform repairs, maintenance or other work in or about the space occupied by any Zynga Generator or Additional Generator (Repairs to Tenants Generator Area), Landlord shall give Tenant at least ten (10) business days prior written notice of the date Landlord intends to commence such Repairs to Tenants Generator Area (except in the case of emergency or an imminent threat to the health or safety of persons or damage to property, in which case reasonable advance notice given the circumstances shall be provided), along with a description of the work scheduled to be performed and an estimate of the time frame required for that performance. Any of Tenants maintenance obligations in connection with the Zynga Generators and any Additional Generator shall not include the obligation to maintain and repair the Building Generators fuel tanks.  

8.Building Services.

8.1Building-Standard Services

. Subject to the terms of this Article 8, Applicable Laws and Force Majeure Events, Landlord shall furnish (or cause to be furnished) the following services to the Premises (twenty-four (24) hours a day, seven (7) days a week, unless indicated otherwise): (a) cold water in the Premises and hot water in bathrooms only; (b) electricity up to the Wattage Allowance for Tenant’s usage, which usage shall be subject to all Applicable Laws; (c) HVAC in sufficient amounts to cause the portions of the Premises used for ordinary business office purposes (excluding, by way of example, the Cafeteria, computer server rooms or other “hot spots” resulting from the use of machines or equipment) to be heated and/or cooled to a temperature compliant with ANSI/ASHRAE Standard 55 during Building Standard Hours, subject to temporary interruptions due to repairs and maintenance; (d) passenger elevator service; (e) use of loading dock, service and freight elevator, and recycling area, all subject to the Building Rules; (f) lighting replacement, as necessary, for lights, fluorescent tubes, bulbs and ballasts, excluding any art or other specialty lighting; (g) window washing as reasonably determined by Landlord consistent with Comparable Buildings; (h) garbage removal from the Project on a weekly basis; and (i) use of the Building Amenities (as defined in Section 8.12). Subject to reimbursement as Additional Rent to the extent permitted pursuant to Article 5, and Landlord’s ability to collect fees from individual uses as provided in Section 8.12, below, Landlord shall operate the Building Amenities at Landlord’s sole cost and expense using qualified service providers.  Tenant shall have the right to reasonably approve such qualified service providers to the extent such qualified service providers change during the first Lease Year.  In addition, Landlord shall furnish to the Common Areas (twenty-four (24) hours a day, seven (7) days a week, unless indicated otherwise):  (1) tepid and cold water to restrooms; (2) lighting; (3) HVAC during Building Standard Hours; (4) security service; (5) restroom supplies on a daily basis Monday through Friday; and (6) janitorial service Monday through Friday (excluding Building Holidays) for the Common Areas only (and not for the Premises, the Parking Garage Roof Space or the Sidewalk Area) in a manner consistent with Comparable Buildings.

8.2No Representation

. Except as expressly set forth herein, Landlord makes no representation to Tenant regarding the adequacy or fitness of Building Systems for the Permitted Use.

8.3Building Security Services and Access.

8.3.1Security

.

(a)Landlord shall have the right from time to time to adopt such reasonable policies, procedures and programs as Landlord shall, in its reasonable discretion, deem necessary or appropriate for the security of the Building, and Tenant shall cooperate with Landlord in the enforcement of, and shall comply with, the policies, procedures and programs adopted by Landlord. Landlord shall provide security services for the Project (but not individually for Tenant or the Premises, the Parking Garage Roof Space or the Sidewalk Area) as more particularly described on Exhibit E.  Notwithstanding the

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foregoing, Landlord shall cause a lobby attendant to be in the Buildings 8th Street entrance lobby twenty-four (24) hours a day, seven (7) days a week.  Such lobby attendant shall be responsible for providing security and access to the Building and shall be able to be contacted twenty-four (24) hours a day, seven (7) days a week via intercom at the front door.  

(b)Tenant acknowledges that the safety and security devices, services and programs provided by Landlord from time to time, if any, may not prevent theft or other criminal acts, or insure the safety of persons or property, and Tenant expressly assumes the risk that any safety device, service or program may not be effective or may malfunction or be circumvented. In all events and notwithstanding any provision of this Lease to the contrary, Landlord and the other Landlord Parties shall not be liable to Tenant, and to the maximum extent permitted by law, Tenant hereby waives any claim against the Landlord Parties for any unauthorized or criminal entry of third parties into the Premises or the Building, any injury to or death of persons, or any loss of property in and about the Premises or the Building caused by or resulting from any unauthorized or criminal acts of third parties, regardless of any action, inaction, failure, breakdown, malfunction and/or insufficiency of the security services provided by Landlord, except to the extent caused by the gross negligence or willful misconduct of Landlord and/or any Landlord Parties.  Tenant shall obtain insurance coverage to the extent Tenant desires protection against criminal acts and other losses. Upon learning of any material incident of Casualty, crime, theft, burglary, robbery, assault, trespass, unauthorized entry or vandalism occurring in the Premises or the Building and after notifying the police, fire department and/or emergency service providers, as appropriate, Landlord shall endeavor to provide notice to Tenant via email to the Tenant’s Address for Notices, or such other number(s) and/or email address(es) as Tenant shall from time to time notify Landlord in writing.

8.3.2Access Control

. In the case of invasion, mob, riot, public demonstration or other circumstances rendering such action advisable in Landlord’s reasonable opinion, Landlord reserves the right to temporarily prevent access to the Building during the continuance of the same by such action as Landlord may reasonably deem appropriate.

8.3.3Tenant’s Access

. After the Commencement Date, subject to requirements of law and the provisions of this Section 8.3, Tenant shall have access to the Premises and the Common Areas twenty-four (24) hours per day, seven (7) days a week. The Building currently has a card key system for access to the Building and Tenant shall have access to the Building via Building access card keys. Elevators of the Building are programmed to require use of a card key to cause the elevators to stop on those floors of the Building in which the Premises are located, and Landlord and Tenant shall reasonably cooperate to coordinate such programming.

8.3.4Tenant’s Right to Use the Existing Security System

8.3.5.

(a)Tenant shall have the right to (a) institute such security measures entirely within the Premises as it may determine in its sole and absolute discretion, at Tenant’s sole cost and expense and at no cost to Landlord, including, without limitation, the installation of key-card systems, access gates, security lighting and video monitoring equipment and (b) install video monitoring equipment in the ceilings and on the walls of the Common Areas adjacent to the Premises subject to Landlord’s reasonable approval of the locations of such monitoring equipment (collectively, “Tenant’s Security Equipment”); provided, that, Landlord hereby approves the installation of video monitoring equipment in the ceilings and on the walls (1) adjacent to [***], (2) adjacent to [***], (3) at [***] and (4) adjacent to [***]. At Tenant’s sole cost, Tenant shall be permitted to tie Tenant’s Security Equipment into the Building Systems if requested by Tenant provided that (i) Tenant’s Security Equipment is compatible with the Building Systems and (ii) Tenant’s Security System does not materially and adversely interfere with the Building Systems. In addition, Tenant shall have the right to contract directly with Landlord’s security contractor to patrol the Premises, control access to the Premises, and other activities Tenants desires between the security provider

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and Tenant in set(s) of instructions (i.e. Post Orders) created, approved and maintained by Tenant.  Landlord will not have any responsibility in supervising, directing or providing oversight of the Tenants security staff.  Tenant may utilize its own employees or third parties to perform security services within the Premises. In no event shall Tenant be entitled to any credit against Rent (including Additional Rent) or to any exclusions from Common Area Operating Expenses in the determination of Additional Rent as a result of Tenants election to provide security services to its Premises.

(b)Tenant and Landlord acknowledge that existing systems of [***], have been installed to monitor and control the flow of traffic in and through the Building and the Premises.  Both parties acknowledge the need to bifurcate the existing systems to allow Tenant to control and manage this flow and activity for the Premises and Landlord to control and manage this flow and activity for the Building.  As such Tenant agrees that on or prior to the date which is six (6) months after the Lease Date, it shall: (1) abandon the existing [***] security system and the security equipment located outside of the Premises to the ownership and control of Landlord and (ii) continue its use of the existing [***] security system as a standalone system within its demised Premises to monitor the devices it requires to control [***] within its Premises and agreed upon points of entry described within this Article and other facilities located throughout the world. Landlord and Tenant shall reasonably cooperate during this six (6) month period to complete the bifurcation of the existing security systems at Landlord’s sole cost.  In addition, Landlord and Tenant agree to work together during this six (6) month period to jointly manage the existing security systems until so bifurcated. The process of bifurcating the security systems and establishing a separate base Building security system is defined herein as the “Security System Transfer.” Notwithstanding any other provision of this Lease to the contrary, Landlord shall be solely responsible for all hard and soft costs in connection with the Security System Transfer, and the same shall not be reimbursed by Tenant as Additional Rent or otherwise. With respect to certain cameras located outside the Premises at the agreed upon points of entry, Tenant may desire to have Landlord and Tenant share feeds to such cameras so that Tenant can avoid the cost of installing new cameras for its use.  Landlord agrees that such feeds may be shared if it is feasible to do so and if Tenant pays the costs relating thereto; otherwise, Tenant shall not be permitted to share feeds, the existing cameras shall be solely for Landlord’s use. If Tenant installs new cameras for its use, it shall be responsible to pay the costs relating thereto.

8.4Interruption or Unavailability of Services

. Notwithstanding anything to the contrary set forth herein, if Tenant is prevented from using, and does not use, the Premises or any portion thereof as a result of any failure of Landlord to provide utilities and services in accordance with this Article 8, then Tenant shall give Landlord written notice of such failure.  If such failure continues for three (3) consecutive days after Landlord’s receipt of any such notice (the “Eligibility Period”) and is due to Landlord’s or any Landlord Party’s acts or omissions (an “Abatement Event”), then Base Rent and Additional Rent shall be abated or reduced, as the case may be, beginning on the day Landlord received Tenant’s notice of the Abatement Event, for such time that such Abatement Event continues (the “Abatement Period”), either (i) in the proportion that the Rentable Square Feet of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total Rentable Square Feet of the Premises or (ii) if Tenant is prevented from using a portion of the Premises that makes use of the remaining Premises impractical, and if Tenant ceases using the entire Premises, then Base Rent and Additional Rent shall be abated in its entirety. Landlord shall use its diligent efforts to promptly restore utilities and services to the extent the cause of such interruption or the means to restore same is within the reasonable control of Landlord. To the extent Tenant is entitled to abatement without regard to the Eligibility Period, because of an event covered by Article 12 or Article 13 of this Lease, then the Eligibility Period shall not be applicable.

8.5Tenant’s Use of Excess Electricity and Water; Premises Occupancy Load

. Tenant shall not, without Landlord’s prior consent, install in the Premises (i) equipment, and/or machines which require a voltage other than one hundred ten (110) volts single-phase (provided that Tenant may, without Landlord’s prior consent, install copiers, Cafeteria equipment, supplemental HVAC equipment and other

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typical office machines which require a voltage in excess of one hundred ten (110)  volts-single phase), or (ii) heat-generating or heat-sensitive lighting other than Building-standard lights. Tenant, at Tenants expense, shall install a water submeter reasonably acceptable to Landlord, to measure water usage by the Cafeteria, for which Tenant shall be solely responsible.  If Tenant permits occupancy levels in excess of one (1) person per one hundred fifty (150) Rentable Square Feet in the Premises, and such occupancy levels cause Landlord to be unable to cause the portions of the Premises used for ordinary business office purposes (excluding, by way of example, the Cafeteria, computer server rooms or other hot spots resulting from the use of machines or equipment) to be cooled to a temperature compliant with ANSI/ASHRAE Standard 55 during Building Standard Hours (an Excess Cooling Problem), then Landlord shall notify Tenant. Upon receipt of such notice, Tenant may elect, in its sole and absolute discretion, to either (A) reduce occupancy levels in the Premises to one (1) person per one hundred fifty (150) Rentable Square Feet in the Premises (or such lesser density as Tenant may elect) or (B) install supplementary air conditioning facilities in the Premises (Supplemental Cooling Equipment) in order to remedy the Excess Cooling Problem to Landlords reasonable satisfaction. Tenant shall pay the cost of any transformers, additional risers, panel boards, and all other facilities if required to furnish power for any Supplemental Cooling Equipment, and all costs of supplying and maintaining, any Supplemental Cooling Equipment. The capital, maintenance and service costs of installing, supplying, and maintaining any Supplemental Cooling Equipment and modifications shall be paid by Tenant as Additional Rent.

8.6Provision of Additional Services; After-Hours HVAC Services

. If Tenant desires services in amounts additional to or at times different from those set forth in Section 8.1 above, or any other services that are not provided for in this Lease, Tenant shall make a request for such services to Landlord with such advance notice as Landlord may reasonably require. Landlord shall use commercially reasonable efforts to accommodate Tenant’s request for such services. If Landlord provides such services to Tenant, Tenant shall pay Landlord’s actual costs and expenses incurred in providing such services within thirty (30) days after Tenant’s receipt of Landlord’s invoice as Additional Rent. Notwithstanding the foregoing, upon Tenant’s giving reasonable advance notice in making any request for air circulation, cooling and/or heating required outside of Building Standard Hours, Landlord shall provide the same. Tenant agrees to pay, as Additional Rent, within thirty (30) days after demand therefor, Landlord’s then standard charge for providing after-hours HVAC and fans, which charge shall be based on Landlord’s actual direct and indirect costs of providing such services (including utility costs, taxes, engineers’ costs, and a reasonable charge for wear and tear on the applicable Building System), provided that in no event shall Landlord impose any administrative fee or other similar mark-up on such costs. As of the date hereof, Landlord’s standard charge for providing after-hours HVAC and/or air circulation is One Hundred Ten Dollars ($110) per hour, per zone, per floor.

8.7Tenant’s Supplemental Air Conditioning

. Notwithstanding anything to the contrary contained in this Lease, at any time during the Term, Tenant shall have the right but not the obligation to install in the Premises, at Tenant’s sole cost and expense, Supplemental Cooling Equipment in order to provide Tenant’s computer rooms, data center and/or other area(s) in the Premises with additional heating and cooling capacity. The manner of Tenant’s installation of any such Supplemental Cooling Equipment shall be governed by Article 10 hereof.  Tenant shall have access to and use of the Building’s condenser water up to and not to exceed fifty (50) tons for such Supplemental Cooling Equipment. Landlord shall have the right to install, at Landlord’s cost and expense, meters to measure Tenant’s usage hereunder for purposes of calculating the charges payable by Tenant for such condenser water. At the end of the Term, at Tenant’s option, Tenant shall either: (1) remove, at Tenant’s sole cost and expense, any Supplemental Cooling Equipment and restore all portions of the Premises and the Building affected by such removal to their condition immediately prior to the installation of such equipment, ordinary wear and tear excepted; or (2) leave any such Supplemental Cooling Equipment in place, in which event the Supplemental Cooling Equipment shall be owned by Landlord.

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8.8Janitorial Service

. Tenant shall have the right, in its sole and absolute discretion, to provide janitorial service to the Premises, which at minimum shall meet the standards set forth on Exhibit C attached hereto (“Standard Janitorial Services”). Landlord shall have no obligation to provide janitorial services to the Premises during any periods of the Term that Tenant elects to provide such Standard Janitorial Services.  Provided that Tenant performs the Standard Janitorial Services, Common Area Operating Expenses shall exclude the cost of providing Standard Janitorial Services to portions of the Building leased to or intended for lease by tenants or occupants. Tenant shall, at its option, use a janitorial contractor selected by Tenant (or its own employees) or shall contract directly with Landlord’s janitorial contractor for the Standard Janitorial Services to be provided to the Premises. If Tenant elects not to provide Standard Janitorial Services to all or a portion of the Premises, Tenant shall notify Landlord and Landlord shall provide such Standard Janitorial Services to all or such portion of the Premises as Tenant elects.

8.9Controls

. In the event any governmental authority having jurisdiction over the Project or the Building promulgates or revises any law, ordinance or regulation or building, fire or other code or imposes mandatory controls or guidelines on Landlord or the Project or the Building relating to the use or conservation of energy or utilities or the reduction of automobile or other emissions (collectively “Mandatory Controls”) or in the event Landlord is required to make alterations to the Project or the Building in order to comply with such Mandatory Controls, Landlord may, in its sole and absolute discretion, comply with such Mandatory Controls or make such alterations to the Project or the Building related thereto upon reasonable prior notice to Tenant if affecting the Premises. Such compliance and the making of such alterations shall not constitute an eviction of Tenant, constructive or otherwise, or impose upon Landlord any liability whatsoever, including, but not limited to, liability for consequential damages or loss of business by Tenant.

8.10Service Providers

. Tenant acknowledges that Landlord may, at Landlord’s sole option, to the extent permitted by Applicable Laws, elect to change, from time to time, the company or companies which provide services (including electrical service, gas service, water, telephone and technical services) to the Building, the Premises and/or its occupants, including, but not limited to, the right to purchase green or renewable energy. Further, Tenant acknowledges that Landlord has not and does not make any representations or warranties concerning the identity or identities of the company or companies which provide services to the Project and the Premises or its occupants, and that the choice of service providers and matters concerning the engagement and termination thereof shall be in Landlord’s sole and absolute discretion. The foregoing provision is not intended to modify, amend, change or otherwise derogate any provision of this Lease concerning the nature or type of service to be provided or any specific information concerning the amount thereof to be provided. Tenant agrees to cooperate, at no cost to Tenant, with Landlord and each of its service providers in connection with any change in service or service provider.

8.11Property Management

. Landlord shall provide on-site building management services during the Building Hours. During hours outside the Building Hours, Tenant may alert Landlord of any emergencies by contacting Landlord’s designated representative by calling [(___) ___ -_____] or other telephone number provided by Landlord for such purpose.

8.12Building Amenities

. Subject to this Section 8.12, Landlord shall continue to offer the following amenities which are currently being offered in the Building: fitness center, showers, theatre conference or meeting facilities, all-hands space, dry cleaning service, and bicycle parking (collectively, the “Building Amenities”).  Tenant shall have the non-exclusive right to use the Building Amenities, subject to the following terms and conditions:

(a)

Only tenants and their designated employees (whether classified as employees or independent contractors) and, to the extent expressly provided herein, invitees (collectively, the “Permitted Users”) shall use the Building Amenities; provided, however, Permitted Users may include a tenant’s

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invitees and licensees when accompanied by such tenant, in the theater, conference rooms, and all-hands space areas.

(b)

Use of the Building Amenities shall be subject to compliance with such policies and procedures as Landlord may establish in its reasonable discretion from time to time regarding such use, including without limitation, policies relating to use of equipment located therein, hours of operation, conduct and dress requirements.

(c)

Landlord, in its reasonable discretion, may elect to: (i) require a written agreement and/or release from Permitted Users prior to their use of the Building Amenities, (ii) charge a reasonable fee for the Permitted Users’ use of certain of the Building Amenities (which fee, if any, shall be determined on a non-discriminatory basis as to all occupants of the Project), (iii) provide reasonable access controls to the Building Amenities, (iv) determine the hours of operation of the Building Amenities, and (v) include the costs and expenses to operate, clean, maintain, and manage the Building Amenities in Operating Expenses.

(d)

Tenant acknowledges and agrees that use of the Building Amenities by its Permitted Users is voluntary and, in consideration of the use of the Building Amenities, shall be undertaken at such Permitted Users’ sole risk, and that any Claims arising out of or connected with such Permitted Users’ use of the Building Amenities shall be subject to Sections 16.1 and 16.2 of this Lease.

(e)

Building Amenities consisting of any fitness center and/or showers shall be provided on a strictly “first come, first served” basis along with other occupants of the Building.  For the Building Amenities consisting of the theatre conference or meeting facilities and all-hands space, Tenant shall have a first priority right to use such Building Amenities, subject, however, to Superior Rights, if any, and if such Building Amenities are not scheduled to be used by Tenant, the Building Amenities shall be provided on a “first come, first served” basis to Tenant along with other occupants of the Building.  To exercise Tenant’s first priority right to use such Building Amenities, Tenant shall have the option to reserve (i) the all-hands space for a total of twelve (12) days in any calendar year by delivering written notice to Landlord by January 15th of such year, and (ii) the all-hands space and the theater conference facilities for three (3) days in any calendar quarter by delivering written notice to Landlord within ten (10) days of the start of such calendar quarter.  To the extent Tenant exercises its first priority right to schedule use of the Building Amenities in excess of thirty (30) days prior to such use, Tenant shall provide confirmation of its intended use of such Building Amenities to Landlord within thirty (30) days of such use.

(f)

Any interruption of Building Amenities shall not entitle Tenant to any reduction or abatement of rent, constitute an actual or constructive eviction of Tenant, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder.

(g)

Landlord shall be permitted, but in no events required, to expand the square footage allocated for use of the Building Amenities as of the Lease Date.

8.13Tenant’s Right to Use Reception Desk

. Tenant shall have the right in its sole and absolute discretion to operate a portion of the reception desk at the 8th Street lobby entrance of the Building with its own employee receptionist (“Tenant’s Receptionist”) at Tenant’s sole cost and expense.  

8.14

Labor Harmony.  Tenant shall not use (and upon notice from Landlord shall cease using) contractors, subcontractors, services, workmen, labor, materials or equipment that, in Landlord’s reasonable judgment, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Project, Building or the Common Areas and/or that otherwise results in picketing or other labor disturbances at the Project and/or on property adjacent thereto. Notwithstanding the foregoing, Tenant shall be permitted to use non-union labor in or about the Premises

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for all work not involving construction trades and/or building service trades, provided that Tenant shall be responsible for maintaining harmonious labor relations and shall take all reasonable steps as may be required in order to remediate and resolve, as promptly as commercially reasonable, any labor dispute arising out of Tenants use of non-union labor.

9.Maintenance and Repair.

9.1Landlord’s Maintenance Obligations

. Landlord shall be responsible for repairs to and maintenance of: (a) the Common Areas, including any Alterations in the Common Areas, (b) all exterior landscaping, (c) the exterior doors, walls and windows in the Building, (d) the windows within those walls demising the Premises from any Common Areas, (e) subject to Tenant’s obligations in Section 9.3, below, the Building Systems, including, but not limited to (i) the HVAC system, including the main distribution loop and portions of the system located throughout the Premises, (ii) the electrical systems until the point of connection with electrical panels exclusively serving the Premises and (iii) all plumbing systems until the point of connection with any specialized plumbing exclusively serving the Cafeteria (i.e., kitchen equipment and supporting items, including the grease trap serving the Cafeteria), (f) the structural elements of the Building (including the structural elements located in the Premises), (g) the foundation and roof of the Building (except for improvements to the surface of the Parking Garage Roof Space made by or for Tenant) and (h) the elevators serving the Building, in a manner consistent with Comparable Buildings.  The cost of performing such repairs and maintenance shall be included in Common Area Operating Expenses, to the extent permitted pursuant to Article 5. Notwithstanding the foregoing, if any such repair or maintenance is necessary due to the negligence or willful misconduct of Tenant or any Tenant Party, Tenant shall pay the cost of such work.

9.2Operable Building Systems upon Lease Commencement

. Tenant hereby accepts the Building Systems as being in operable and good working condition as of the Commencement Date.

9.3Tenant’s Obligations

. Tenant shall, at Tenant’s cost and expense, perform all maintenance and repairs (including replacement) within the Premises that are not Landlord’s express responsibility hereunder, to keep the Premises in good condition and repair, reasonable wear and tear and damage by Casualty or condemnation excepted. Tenant’s repair and maintenance obligations shall include repairs to and replacement of: (a) supplemental HVAC equipment installed in any server room by Tenant or other specialty HVAC installations; (b) the electrical systems from the point of interconnection with those electrical panels exclusively serving the Premises; (c) any specialized plumbing exclusively serving the Cafeteria (until the point of connection with the Building’s general plumbing systems); (d) raised flooring and floor coverings within the Premises; (e) ceiling tiles within the Premises; (f) interior partitions within the Premises; (g) interior doors within the Premises; (h) the interior side of demising walls within the Premises; and (i) Alterations (except to the extent such Alterations are Landlord’s responsibility under Section 9.1 above). Except as specifically set forth in this Lease, Landlord (i) has no obligation to alter, remodel, improve, repair, decorate or paint the Premises, or any part thereof, and (ii) has no obligation respecting the condition, maintenance and repair of the Premises or any other portion of the Project. Except as expressly set forth in Section 20.7 hereof, Tenant hereby waives all rights, including under Sections 1941 and 1942 of the California Civil Code and under any similar law now or hereafter in effect, to make repairs which are Landlord’s obligation under this Lease at the expense of Landlord or to receive any setoff or abatement of Rent.  

10.Alterations to Premises.

10.1Landlord Consent; Procedure

.  Except to the extent set forth herein, Tenant shall not make any Alterations, without Landlord’s written consent, which shall not be unreasonably withheld, conditioned or delayed. Except in connection with Minor Alterations, Tenant shall submit complete and

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detailed architectural, mechanical and engineering plans and specifications for the proposed Alterations (to the extent that such plans and specifications would customarily be prepared given the nature of the proposed Alterations) to Landlord at least ten (10) business days prior to the commencement of the work. Landlord shall not unreasonably withhold, condition or delay its consent to the proposed Alterations, provided that by way of example and without limitation, it shall be reasonable for Landlord to withhold its consent to any proposed Alteration that (i) would materially adversely affect the structural portions of the Building or Building Systems, (ii) require work to be performed in portions of the Building outside the Premises in order to comply with Applicable Laws (unless Tenant agrees to pay for such work) or (iii) would materially adversely affect the cooling of the Premises. Landlord shall grant or withhold its approval of any Alterations within ten (10) business days from receipt of Tenants request accompanied by all documentation reasonably necessary to evaluate the proposed Alterations, provided that Landlord must notify Tenant of any additional information Landlord deems reasonably necessary to evaluate the proposed Alterations within eight (8) business days after receipt of Tenants submittal, or the information submitted by Tenant shall be deemed sufficient. If Landlord fails to respond to Tenants request within such ten (10) business day period, Tenant may provide a second request for approval to Landlord, and if Landlord fails to respond within two (2) business days after receipt of Tenants second request, then Landlords approval shall be deemed given. If Landlord reasonably disapproves of proposed Alterations, or requests additional information regarding such Alterations, Tenant shall revise the plans and specifications for those Alterations reasonably disapproved by Landlord and resubmit such plans to Landlord or otherwise provide such additional information to Landlord. Landlord shall, within five (5) business days after receipt of Tenants revised plans and specifications for proposed Alterations, approve or reasonably disapprove such Alterations, and if reasonably disapproved, Landlord shall advise Tenant of any additional changes which may be required to obtain Landlords approval. If Landlord fails to respond within such five (5) business day period, then such revised plans and specifications shall be deemed approved. This process shall continue until Landlord has approved (or been deemed to have approved) the applicable Alterations or Tenant has withdrawn its request for Landlords approval. Notwithstanding the anything to the contrary contained herein, Landlord may not subsequently disapprove of proposed Alterations or any portion thereof that it has previously approved. No review or approval by Landlord of such plans and specifications shall be deemed to create any liability of any kind on the part of Landlord or to constitute a representation on the part of Landlord or any professional consulted by Landlord in connection with such review and approval, that such plans and specifications are correct or accurate, or comply with Applicable Laws.

10.2Permitted Alterations

.

(a)Notwithstanding anything to the contrary contained in this Lease, subject to the terms and conditions of this Article 10, Tenant shall have the right to do the following Alterations (subject only to Landlord’s review and approval or disapproval in its reasonable discretion within ten (10) business days of receipt of the of the construction drawings therefor, and at Tenant’s request when seeking such approval, Landlord will, when transmitting such approval, confirm whether removal or restoration shall be required): (a) Permitted Alterations and Minor Alterations; (b) install supplemental HVAC units within the Premises; and (c) separately meter utilities in locations chosen at Tenant’s discretion. In addition, notwithstanding anything to the contrary contained in this Lease, subject to the terms and conditions of this Article 10, (i) Tenant shall have the right to complete Tenant’s re-stacking project in the Premises and the Common Areas as described on Exhibit K-1 (the “Re-Stacking Project”), and (ii) Landlord hereby approves the current plans and specifications for the Re-Stacking Project and agrees that upon its approval of the final construction drawings, no removal or restoration shall be required upon expiration or earlier termination of the Lease.

(b)With respect to the Re-Stacking Project, subject to the applicable terms and conditions contained in this Lease, the Tenant Parties shall have a non-exclusive license (the “Re-Stacking License”), at no charge to Tenant, to enter on to the Common Areas for the purpose of constructing the Re-

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Stacking Project within the Premises and the Common Areas. To the extent the Re-Stacking Project will impact the Common Areas, it shall be subject to the reasonable approval of Landlord taking into account that the same will affect the main entrance to the Building, and the parties shall reasonably cooperate with each other to minimize to the extent reasonably practical any negative impacts on other tenants.  Tenant shall indemnify, defend and hold Landlord harmless from and against any Claims, which result from or arise out of the use of the Re-Stacking License by Tenant or any other Tenant Parties except to the extent such Claims are caused by the negligence or willful misconduct of Landlord. Tenants obligations under this Section shall survive the expiration or earlier termination of this Lease until all Claims within the scope of this Section are fully, finally, and absolutely barred by the applicable statutes of limitations.

10.3Minor Alterations

.  Notwithstanding anything to the contrary contained in this Lease, Tenant may construct Minor Alterations without Landlord’s prior review of the plans and specifications for such Minor Alterations, but with prior notification to Landlord. Tenant shall provide Landlord with at least ten (10) business days’ notice prior to commencing any Minor Alterations, which notice shall include a general description of the nature and estimated cost of the proposed Minor Alteration, and the anticipated completion dates for such work.  The provisions of this Article 10 shall apply to the performance of Minor Alterations, except for the requirements to (i) obtain Landlord’s prior written consent or (ii) submit plans and specifications to Landlord.  No removal or restoration of Minor Alterations shall be required upon expiration or earlier termination of the Lease. All references in this Lease to Alterations shall include Minor Alterations, unless specified to the contrary.

10.4General Requirements

.

(a)All Alterations shall be constructed or installed by Tenant, at Tenant’s expense (including all expenses incurred in complying with Applicable Laws).

(b)All Alterations shall be designed and performed by Tenant at Tenant’s cost and expense. All Alterations shall be performed by contractors or mechanics selected by Tenant, and may include non-union contractors.  

(c)All contractors, subcontractors, and materialmen of Tenant shall, while in the Premises or elsewhere in the Project, be subject to and under the control and direction of the Building manager (but not as an agent of the Building manager or Landlord) and shall comply with Landlord’s then-current reasonable construction rules and regulations, provided that Tenant shall have the right to oversee and manage the construction process of any Alterations in its reasonable discretion (subject to compliance with Landlord’s then-current reasonable construction rules and regulations).

(d)Tenant shall carry “Builder’s All Risk” insurance in a commercially reasonable amount reasonably approved by Landlord covering the construction of any Alteration except for any Minor Alterations, and require its general contractor and subcontractors to carry such insurance as Landlord may reasonably require.

(e)Prior to commencement of any Alteration (other than Minor Alterations), Tenant shall deliver to Landlord: (i) any building or other permit required by Applicable Laws in connection with the Alteration, (ii) a construction schedule, which shall be delivered for informational purposes only, and (iii) satisfactory evidence of required insurance.

(f)All Alterations shall be diligently constructed in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord (except where such approval is not required as described in Section 10.3 above relating to Permitted Alterations), all Applicable Laws, and the Building’s reasonable construction rules and regulations, as may be revised from time to time. Tenant

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shall cause all Alterations to be made in such a manner and at such times so that any such work shall not unreasonably disrupt or interfere with the use or occupancy of other tenants or occupants of the Building. All trash that may accumulate in connection with Tenants construction activities shall be stored within the Premises and removed by Tenant, at its expense, from the Premises and the Building. If any part of the Building Systems or Common Areas shall be damaged during the performance of any Alteration, Tenant shall promptly notify Landlord, and Landlord may elect either to repair such damage at Tenants expense or to require Tenant to repair such damage at Tenants expense, using contractors reasonably approved by Landlord.

(g)Tenant acknowledges that the San Francisco Green Building Ordinance applies to certain Alterations involving significant upgrades to structural and mechanical, electrical and/or plumbing systems. Landlord makes no representation or warranty as to the interpretation or application of the San Francisco Green Building Ordinance, and Tenant shall be responsible for determining and satisfying all requirements that may be imposed by the San Francisco Green Building Ordinance in connection with Alterations undertaken by Tenant.

10.5Landlord’s Right to Inspect

. Subject to the restrictions set forth in Section 19.1 below, Landlord may, at its election, inspect any Alteration during construction, and require corrections of faulty construction or any material deviation from the plans and specifications submitted to Landlord, provided that no such inspection shall be deemed to create any liability on the part of Landlord, or constitute a representation by Landlord or any person hired to perform such inspection that the work so inspected conforms with such plans and specifications or complies with any Applicable Laws, and no such inspection shall give rise to a waiver of, or estoppel with respect to, Landlord’s continuing right at any time or from time to time to require the correction of any faulty work or any material deviation from such plans and specifications.

10.6Tenant’s Obligations Upon Completion

. Upon completion of any Alteration (including Minor Alterations), Tenant shall (a) cause a timely notice of completion to be recorded in the Office of the Recorder of the City and County of San Francisco in accordance with Civil Code Section 3093 or any successor statute, if applicable and (b) deliver to Landlord the following documentation relating to such Alteration: (i) evidence of full payment and unconditional final waivers of all liens for labor, services, or materials; (ii) all governmental permits and approvals, if applicable; and (iii) if plans were initially prepared for such Alteration, “as built” plans prepared on an AutoCAD Computer Assisted Drafting and Design System.

10.7Ownership and Removal of Alterations

.

10.7.1Alterations made by Tenant shall remain the property of Tenant during the Term, and upon expiration or earlier termination of this Lease, shall become a part of the Building and belong to Landlord; provided, however, that all equipment, trade fixtures and movable furniture shall remain the property of Tenant without incurring any charge to Tenant.

10.7.2Only if Landlord notifies Tenant, concurrently with granting its approval to installation (if such approval is required) that removal of any portion of any Alterations will be required at the end of the Term, Tenant, prior to the expiration or earlier termination of this Lease, shall, at Tenant’s sole cost and expense: (i) remove any or all Alterations as set forth in such Landlord’s notice, (ii) restore the Premises to the condition existing prior to the installation of such Alterations, reasonable wear and tear and damage by Casualty or condemnation excepted, and (iii) repair all damage to the Premises, the Building, or the Project caused by the removal of such Alterations, reasonable wear and tear and damage by Casualty or condemnation excepted.  If Tenant fails to remove such Alterations and perform such restoration and repair, then Landlord may perform such work, and Tenant shall reimburse Landlord for

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reasonable costs and expenses incurred by Landlord in performing such removal, restoration and repair. Notwithstanding anything to the contrary contained in this Lease, Tenant shall have no obligation to remove or restore any (i) Permitted Alteration constructed in accordance with the provisions of this Lease, or (ii) any Alterations that are customary for general office use, which shall not be subject to removal or restoration.  

10.7.3Landlord agrees to identify, at the time it approves any Alteration requiring Landlord’s consent in accordance with this Lease, whether Landlord intends to require Tenant to remove all or any portion of such Alteration on the expiration or earlier termination of this Lease. Tenant shall have no obligation to remove any Alteration on the expiration or earlier termination of this Lease not so identified by Landlord to be removed.

10.8No Landlord’s Supervision Fee

.  Tenant shall not be obligated to pay Landlord any fee in connection with Landlord’s review, or supervision or oversight of the construction, of any Alterations,  but shall reimburse Landlord, within thirty (30) days after receipt of invoice and reasonable supporting documentation, for Landlord’s reasonable, actual third party out-of-pocket expenses incurred in reviewing the plans and specifications for any proposed Alteration for which consent is required or approval of the plans and specifications are required.

10.9Landlord’s Required Alterations of Common Areas

. Landlord shall diligently construct those certain renovations to the Common Areas in the west side of the Building as described on Exhibit K‑2 (the “Common Area Improvements”) in accordance with the terms and conditions described in Exhibit L attached hereto and made a part hereof (the “Common Area Construction Terms”).

11.No Liens

. Tenant agrees to keep the Premises and the Project free from any liens or encumbrances arising out of any work performed, materials furnished or obligations incurred by Tenant. Tenant shall remove any such lien or encumbrance by bond or otherwise within thirty (30) days after notice by Landlord, and if Tenant fails to do so, Landlord may cause the lien to be released by any means it deems proper upon written notice to Tenant, including by payment of the amount necessary to remove such lien or encumbrance, without responsibility for investigating the validity thereof. All sums paid by Landlord for such purpose, and all expenses incurred by it in connection therewith, shall be payable to Landlord by Tenant, as Additional Rent, within thirty (30) days after receipt of invoice.

12.Damage or Destruction.

12.1Repair Obligations

. If the Premises or any portions of the Project affecting Tenant’s access, use and enjoyment of the Premises are damaged by Casualty following the Lease Date, then (a) Landlord shall notify Tenant in writing (a “Landlord’s Casualty Notice”) within sixty (60) days after discovery of such damage as to the amount of time Landlord reasonably estimates it will take to restore the Project and/or the Premises (the “Estimated Restoration Period”) and (b) Landlord shall, subject to the provisions of Sections 12.2 and 12.3 below, proceed with reasonable promptness to repair such damage and restore the Premises (including Alterations (to the extent Landlord receives insurance proceeds pursuant to Section 12.3 below to repair and restore such Alterations)) and such portions of the Project to substantially the same condition as existed before the Casualty (collectively, “Restore” or “Restoration”); provided, however, that any such Restoration shall be subject to (i) modifications required by zoning or building codes and other Applicable Laws; and (ii) delays resulting from a failure to promptly receive insurance proceeds despite using commercially reasonable efforts to obtain such insurance proceeds or Force Majeure Events.  Notwithstanding the foregoing, Landlord shall have no obligation with respect to, and if Landlord elects or is required to perform any Restoration hereunder, Tenant shall be responsible for and shall, repair and replace at its sole cost all of Tenant’s equipment, furniture, fixtures and other personal property in the Premises, including, without limitation, any telecommunication cables and related devices located in or serving the Premises.

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12.2Termination Rights.

12.2.1Landlord’s Termination Rights

. In any of the following circumstances, Landlord may elect to terminate this Lease by delivering to Tenant written notice of such termination concurrently with Landlord’s Casualty Notice:

(a)The Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two hundred seventy (270) days following the date of the Casualty (when such Restoration is made without the payment of overtime or other premiums);

(b)If the Casualty occurs in the Premises during the last twelve (12) months of the Term, and the Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two (2) months following the date of the Casualty and the estimate cost of repair is in excess of One Million Dollars ($1,000,000); or

(c)If insurance proceeds sufficient to complete the Restoration in excess of Ten Million Dollars ($10,000,000) are not available, and Landlord does not actually proceed to Restore the Building.

Notwithstanding the foregoing, if Landlord elects to terminate this Lease pursuant to Section 12.2.1(b) and Tenant has one (1) or more unexercised Extension Options remaining, then Tenant may elect within thirty (30) after Landlord terminates this Lease, to immediately exercise its next available Extension Option, in which case Landlord’s termination of this Lease pursuant to Section 12.2.1(b) shall be rendered null and void and of no further force and effect and Landlord shall proceed to Restore the Premises and/or the Project, subject to the other provisions of this Section 12.2.1.  Notwithstanding anything to the contrary contained in this Lease, Landlord shall only have the right to terminate this Lease pursuant to Sections 12.2.1(a) or 12.2.1(c) if Landlord elects to terminate the other leases at the Property, as applicable, due to such Casualty.

12.2.2Tenant’s Termination Rights

. In any of the following circumstances, Tenant may elect to terminate this Lease by delivering written notice to Landlord within thirty (30) days after receipt of Landlord’s Casualty Notice:

(a)The Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two hundred seventy (270) days following the date of the Casualty (when such Restoration is made without the payment of overtime or other premiums); or

(b)If the Casualty occurs during the last twelve (12) months of the Term and the Estimated Restoration Period set forth in Landlord’s Casualty Notice exceeds two (2) months following the date of the Casualty.

12.2.3Late Delivery

. If Restoration of the Premises and/or the Project is not substantially complete in Tenant’s reasonable satisfaction as of the end of the later of (i) two hundred seventy (270) days following the date of the Casualty or (ii) the Estimated Restoration Period, as extended for delays resulting from a failure to promptly receive insurance proceeds despite using commercially reasonable efforts to obtain such insurance proceeds or Force Majeure Events up to thirty (30) days in length, then Tenant may deliver written notice to Landlord that Landlord has thirty (30) days to complete the Restoration of the Premises and/or the Project. If after the expiration of such thirty (30) day period Landlord has not completed Restoration of the Premises and/or the Project, then Tenant may, in its sole and absolute discretion, elect to terminate this Lease by delivering written notice to Landlord at any time thereafter until repair or restoration of the Premises is substantially completed in Tenant’s reasonable satisfaction.

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12.2.4Consequences of Termination

. If Landlord or Tenant elects to terminate this Lease as provided above, this Lease and all interest of Tenant in the Premises shall terminate thirty (30) days after (i) delivery of Landlord’s termination notice given concurrently with Landlord’s Casualty Notice or (ii) delivery of Tenant’s termination notice given pursuant to Section 12.2.2 above, and the Base Rent and Additional Rent (reduced to the extent set forth in Section 12.4 below) shall be paid up to the date of such termination.

12.3Completion of Repairs

. If neither party elects to terminate this Lease, then Landlord shall diligently complete the Restoration. If Landlord is required to or elects to perform the Restoration, Tenant shall assign or otherwise make available to Landlord all proceeds of insurance carried by Tenant with respect to the Alterations to the extent actually received by Tenant.  Landlord shall have no liability to Tenant, if the Restoration is not in fact completed within the Estimated Restoration Period set forth in Landlord’s Casualty Notice, so long as Landlord proceeds with reasonable diligence to complete the Restoration.

12.4Rent Abatement

.  If neither party elects to terminate this Lease under Section 12.2 above, this Lease shall remain in full force and effect, provided that Tenant shall be entitled to a reduction of Base Rent and Additional Rent in the proportion that the area of the Premises rendered untenantable or inaccessible (and not occupied by Tenant) by such damage bears to the total area of the Premises.  Tenant shall be entitled to such rent abatement from the date of the Casualty for as long as any portion of the Premises remains untenantable or inaccessible (and not occupied by Tenant) due to the Casualty.

12.5Waiver of Statutory Provisions

. The provisions of this Lease, including this Article 12, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises or the Building resulting from a Casualty, and any common law or statute of the State of California, including, without limitation, subsection 2 of Section 1932, subsection 4 of Section 1933, and Sections 1941 and 1942 of the California Civil Code, with respect to any rights or obligations concerning damage or destruction resulting from a Casualty in the absence of an express agreement between the parties, and common law or any other statute, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises or the Building resulting from a Casualty.

13.Eminent Domain.

13.1Lease Termination

. If all or part of the Premises shall be taken or rendered inaccessible by any public or quasi-public authority under the power of eminent domain or conveyance in lieu thereof (“Taken” or “Taking”), this Lease shall terminate as to any portion of the Premises so Taken or conveyed on the date when title or the right to possession vests in the condemnor.

13.2Partial Taking

. If (a) a part of the Premises or the Project shall be Taken and (b) in Tenant’s reasonable business judgment such Taking would neither prevent nor materially interfere with Tenant’s use of the Premises, then subject to Landlord’s termination right pursuant to Section 13.3 below, this Lease shall remain in effect as to the portion of the Premises remaining, and Landlord, at Landlord’s cost, shall restore the Building to an architectural whole and the Base Rent and Additional Rent payable from the date of the Taking shall be reduced in the same proportion as the area of the Premises Taken bears to the total area of the Premises. If, in Tenant’s reasonable business judgment, such Taking would prevent or materially interfere with Tenant’s use of the Premises, this Lease may be terminated by Tenant by giving written notice to Landlord within thirty (30) days of the date of the Taking. Such notice shall specify the date of termination which shall be not more than ninety (90) days after the date of said notice.

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13.3Landlords Termination Right

. If twenty percent (20%) or more of the Building is Taken, whether or not any portion of the Premises is Taken, and in Landlord’s reasonable business judgment it is not economically feasible to continue operating the portion of the Building remaining, then Landlord shall have the option for a period of thirty (30) days after such determination to terminate this Lease. If in Landlord’s reasonable business judgment it is economically feasible to continue operating the portion of the Building remaining after such Taking, then this Lease shall remain in effect, and Landlord, at Landlord’s cost, shall restore the Building to an architectural whole, and the Base Rent and Additional Rent payable from the date of the Taking shall be reduced in the same proportion as the area of the Premises Taken bears to the total area of the Premises.

13.4Compensation

. All compensation awarded or received in connection with a Taking or conveyance described in this Article 13 shall be the property of Landlord, and Tenant hereby assigns to Landlord any and all elements of said compensation which Tenant would, in the absence of said assignment, have been entitled to receive. Specifically, and without limiting the generality of the foregoing, said assignment is intended to include: (a) the “bonus value” represented by the difference, if any, between Rent under this Lease and market rent for the unexpired Term, (b) the value of improvements to the Premises, (c) the value of any trade fixtures paid for by Landlord, and (d) the value of any and all other items and categories of property for which payment of compensation may be made in any such proceeding. Notwithstanding the foregoing, Tenant shall be entitled to receive any award of compensation for loss of or damage to the goodwill of Tenant’s business (but only to the extent the same does not constitute “bonus value”), Tenant’s trade fixtures, the value of improvements to the Premises paid for by Tenant, and for any moving or relocation expenses which Tenant is entitled under Applicable Laws to recover directly from the public agency which acquires the Premises.

13.5Waiver

. Tenant hereby waives Sections 1265.110 through 1265.160 of the California Code of Civil Procedure.

14.Insurance.  

14.1Liability Insurance

. Tenant, at its cost and expense, shall procure and maintain, from the Commencement Date and throughout the Term, the following insurance:

(a)Commercial General Liability Insurance.  Tenant shall maintain a policy(ies) of commercial general liability insurance written on an “occurrence” basis, with limits of liability, in the aggregate, of not less than Fifteen Million Dollars ($15,000,000). Such policy(ies) shall cover bodily injury, property damage arising out of or relating directly to Tenant’s business operations, conduct, assumed liabilities, or use or occupancy of the Premises or the Project, and shall include all the coverages typically provided by the Commercial General Liability Endorsement CG0001 (10/04), including property damage coverage and completed operations. Tenant’s liability coverage shall further include premises-operations coverage, products liability coverage (if applicable), products-completed operations coverage, and, to the extent Tenant is manufacturing alcohol at the Premises, Liquor Liability coverage.

(b)Tenant’s Workers’ Compensation and Employer Liability Coverage. Tenant shall maintain workers’ compensation insurance as required by law and employer’s liability insurance with limits of no less than One Million Dollars ($1,000,000) per occurrence.

(c)Tenant’s Property Insurance. Tenant shall maintain property insurance coverage, extended coverage and special extended coverage insurance for all office furniture, trade fixtures, office equipment, merchandise, and all other items of Tenant’s personal property in, on, at, or about the Premises and the Project. Such policy shall (i) be written on the broadest available (special-causes-of-loss) policy form or an equivalent form acceptable to Landlord, (ii) be for no less than the full replacement cost

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(new without deduction for depreciation) of the covered items and property, and (iii) include vandalism and malicious mischief coverage.

(d)Business Interruption, Loss of Income, and Extra Expense Coverage. Tenant shall maintain business interruption, loss of income, and extra expense insurance covering all direct loss of income and charges and costs incurred arising out of all perils, failures, or interruptions, including any failure or interruption of Tenant’s business equipment (including, without limitation, telecommunications equipment), and the prevention of, or denial of use of or access to, all or part of the Premises or the Project, as a result of those perils, failures, or interruptions. The business interruption, loss of income, and extra expense coverage shall provide coverage for no less than twelve (12) months and shall be carried in amounts necessary to avoid any coinsurance penalty that applies.  The business interruption, loss of income and extra expense coverage shall be issued by the insurer that issues Tenant’s property insurance under Section 14.1(c) above.

14.2Form of Policies

. The minimum limits of policies and Tenant’s procurement and maintenance of such policies described in Section 14.1 above shall in no event limit the liability of Tenant under this Lease. All insurance required by this Article 14 shall be issued on an occurrence basis by solvent companies qualified to do business in the State of California, and with a Best & Company rating of A-:VIII or better. Any insurance policy under this Article 14 may be maintained under a “blanket policy” insuring other parties and other locations, so long as the amount and coverage required to be provided hereunder is not thereby diminished. No policy maintained by Tenant under this Article 14 shall contain a deductible which is not commercially reasonable. Tenant shall provide Landlord a certificate of each policy of insurance required hereunder upon reasonable written demand by Landlord evidencing that the policies contain the provisions required. Tenant shall deliver such certificates to Landlord within thirty (30) days after the Commencement Date. All of Tenant’s liability insurance shall provide (i) that Landlord, Landlord’s managing agent and any Encumbrancer designated in writing by Tenant or Landlord, or any other entity with an interest in the Project as reasonably requested by Landlord, is designated as an additional insured as to coverage afforded under such policy pursuant to an endorsement providing coverage at least as broad as ISO form CG 20 26 10 01 or its equivalent; (ii) for severability of interests or that acts or omissions of one of the insureds or additional insureds shall not reduce or affect coverage available to any other insured or additional insured (if available); and (iii) that Tenant’s insurance is primary and noncontributory with any insurance carried by Landlord. Tenant shall use commercially reasonable efforts to endeavor to cause all of Tenant’s insurance to provide that the insurer agrees not to cancel the policy without at least thirty (30) days’ prior written notice to all additional insureds (except in the event of a cancellation as a result of nonpayment, in which event the insurer shall give all additional insureds at least ten (10) days’ prior notice). Tenant shall notify Landlord within ten (10) days after any material modification of any policy of insurance required under this Article. Any self insurance or self insured retention provisions under, or with respect to, any insurance policies maintained by Tenant hereunder shall be subject to Landlord’s prior written approval, not to be unreasonably withheld, conditioned or delayed.

14.3Landlord’s Insurance

. Landlord shall procure and maintain in effect throughout the Term, property insurance at least as broad as the most commonly available ISO Special Form Causes of Loss (“all risk”) policy form CP 1030 with an agreed amount endorsement, and including coverage for vandalism and malicious mischief, in an amount equal to one hundred percent (100%) of the replacement cost of the Building (excluding any Alterations), which shall include loss of rent coverage.  Landlord shall maintain a policy(ies) of commercial general liability insurance written on an “occurrence” basis, with limits of liability, in the aggregate, of not less than Twenty-Five Million Dollars ($25,000,000). Limits may be obtained as a combination of General Liability and Umbrella Liability Coverage. Such policy(ies) shall cover bodily injury, property damage arising out of or relating directly to Landlord’s business operations, conduct, assumed liabilities, or use or occupancy of the Premises or the Project, and shall include all the coverages typically provided by the Commercial General Liability Endorsement CG0001 (10/04), including

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property damage coverage and completed operations. Landlords liability coverage shall further include premises-operations coverage, products liability coverage (if applicable), and products-completed operations coverage. Notwithstanding the foregoing provisions of this Section 14.3, the coverage and amounts of insurance carried by Landlord in connection with the Project shall, at a minimum, be comparable to the coverage and amounts of insurance which are carried by reasonably prudent landlords of Comparable Buildings.  The premiums for all such insurance shall be included as Insurance Expenses to the extent permitted pursuant to Article 5. If such insurance policies cover other assets owned by Landlord or its affiliate in addition to the Project, the cost of such insurance shall be equitably allocated. Upon request, Landlord shall deliver to Tenant certificates of insurance evidencing compliance with the insurance requirements hereunder.

15.Waiver of Subrogation Rights

. Each party, for itself and, without affecting any insurance maintained by such party, on behalf of its insurer, releases and waives any right to recover against the other party, including officers, employees, agents and authorized representatives (whether in contract or tort) of such other party, that arise or result from any and all loss of or damage to any property of the waiving party located within or constituting part of the Project, including the Premises, to the extent of amounts payable under a standard ISO Commercial Property insurance policy, or such additional property coverage as the waiving party may carry (with a commercially reasonable deductible), whether or not the party suffering the loss or damage actually carries any insurance, recovers under any insurance or self-insures the loss or damage. Each party shall have their property insurance policies issued in such form as to waive any right of subrogation as might otherwise exist. This mutual waiver is in addition to any other waiver or release contained in this Lease.

16.Waiver of Liability and Indemnification.

16.1Indemnification.

16.1.1By Tenant

. Subject to Article 15, Tenant agrees to indemnify and hold Landlord, any of Landlord’s Encumbrancers, and the Landlord Parties (together, the “Indemnitees”) harmless from and to protect and defend the Indemnitees against any and all Claims, incurred in connection with or arising from any of the following: (i) the use or occupancy or manner of use or occupancy of the Premises, the Sidewalk Area and the Parking Garage Roof Space by Tenant or any Tenant Party; (ii) any injury or death of any person or damage to or destruction of property occurring in the Premises from any cause whatsoever; (iii) any injury or death of any person or damage to or destruction of property occurring in, on or about any Common Areas, or elsewhere in or about the Project or in the vicinity of the Project, including the Parking Garage, to the extent such injury, death or damage is caused by the negligence or willful misconduct of Tenant or any Tenant Parties; (iv) Tenant’s use of the roof of the Building pursuant to Article 35; or (v) the presence of dogs brought into the Project by Tenant or Tenant Parties, including, but not limited to, any Claims arising in or about the Parking Garage. Tenant’s obligations under this Section 16.1.1 shall be inapplicable to the extent such Claims arise from the negligence or willful misconduct of any Indemnitee or to the extent such obligations are limited or prohibited by App