FindLaw - Google Technology Sublease Agreement Dated July 9, 2003

GOOGLE TECHNOLOGY INC.

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (the “Sublease”) is entered into as of the 9th day of July, 2003, by and between the Sublandlord and Subtenant hereinafter named. Upon the terms and conditions hereinafter set forth, the Sublandlord and Subtenant agree as follows:

 

1.    DEFINITIONS AND BASIC PROVISIONS. The following definitions and basic provisions shall be used in conjunction with and limited by the reference thereto in the provisions of this Sublease:

 

A.

    “Sublandlord”:    SILICON GRAPHICS, INC.,
         

a Delaware corporation

 

B. 1.

    Address of Sublandlord:    1400 Crittenden Lane
          Mountain View, CA 94043
          Attn: Michael L. Hirahara
         

Telecopy: (650) 932-0504

 

B. 2.

    Address of Sublandlord (for Rent):    United Properties
          3500 West 80th Street, Suite 200
          Minneapolis, Minnesota 55431
          Attn: Anne-Marie Cookson
          Phone: (952) 893-8890
          Fax: (952) 893-8280
         

email: acookson@uproperties.com

 

C.

    “Subtenant”:    GOOGLE TECHNOLOGY, INC.
         

a California corporation

 

D.

    Address of Subtenant:   

Prior to Sublease Rent Commencement Date for

Building 42 Sublease Premises:

 

          2400 Bayshore Parkway
          Mountain View, California 94043
         

Attn: Director of Facilities

 

         

With a copy to:

 

          2400 Bayshore Parkway
          Mountain View, California 94043
         

Attn: Legal Department

 

          Following Sublease Rent Commencement Date
         

for Building 42 Sublease Premises:

 

          1600 Amphitheatre Parkway
          Mountain View, California 94043
         

Attn: Director of Facilities

 

         

With a copy to:

 

          1600 Amphitheatre Parkway
          Mountain View, California 94043
          Attn: Legal Department

E.

    “Master Landlord”:   

WXIII/AMPHITHEATRE REALTY, L.L.C.

 

F.

    Address of Master Landlord:    c/o WHITEHALL PARALLEL REAL ESTATE
          LIMITED PARTNERSHIP XIII
          c/o THE GOLDMAN SACHS GROUP, INC.
          100 Crescent Court
          Dallas, Texas 75201
          Attn: Aaron Wetherill
          Telecopy: (214) 855-6305

 

G.    “Sublease Premises”: Four buildings including 506,317 square feet of Rentable Area, as initially described in Exhibit “A” to the Master Lease and as more fully described in Exhibit A. The Sublease Premises consists of the following (each, a “Sublease Premises Portion”):

 

1.     “Building 40, Floor 1 Premises”: portion of the Sublease Premises comprising the first floor of building commonly known as Building 40, as shown on Exhibit A-1 attached hereto and containing 82,891 rentable square feet.

 

2.     “Building 40, Floor 2 Premises”: portion of the Sublease Premises comprising the second floor of building commonly known as Building 40, as shown on Exhibit A-2 attached hereto and containing 71,610 rentable square feet.

 

3.     “Building 41 Premises”: portion of the Sublease Premises commonly known as Building 41, as shown on Exhibit A-3 attached hereto and containing 98,912 rentable square feet.

 

4.     “Building 42 Premises”: portion of the Sublease Premises commonly known as Building 42, as shown on
Exhibit A-4, and containing 82,742 rentable square feet.

 

5.     “Building 43 East Premises”: portion of the Sublease Premises commonly known as Building 43 East, as shown on Exhibit A-5, and containing 85,081 rentable square feet.

 

6.    “Building 43 West Premises”: portion of the Sublease Premises commonly known as Building 43 West, as shown on Exhibit A-6, and containing 85,081 rentable square feet.

 

H.     “Sublease Commencement Date”: The Actual Delivery Date (defined below) for each Sublease Premises Portion delivered by Sublandlord to Subtenant.

 

I.    “Sublease Expiration Date”: December 31, 2012

 

J.     “Sublease Term”: A period commencing on the Sublease Commencement Date for the Building 42 Premises, and expiring on the Sublease Expiration Date. Notwithstanding the foregoing, if the Master Lease terminates prior to the Sublease Expiration Date by its terms and other than as a consequence of a Lease Termination (as defined in the WH-Google NDA), the Sublease Term shall simultaneously terminate effective on such termination date; the parties acknowledge that the WH-Google NDA provides that if the Master Lease terminates as a consequence of any such Lease Termination, the Sublease and the Sublease Term shall remain in effect pursuant to and in accordance with the terms and conditions of the WH-Google NDA.

 

K.     “Sublease Base Rent”: The Base Rent payable hereunder shall initially be payable at the rate of $1.75 per rentable square foot of the Sublease Premises per month, or $21.00 per rentable square foot of Sublease Premises per annum (which, upon the Sublease Rent Commencement Date of the last Sublease Premises Portion to be delivered by Sublandlord to Subtenant hereunder, equates to $10,632,657 per annum, payable in the amount of $886,054.75 per month), payable in the manner set forth in Paragraph 6 below. As described in Paragraph 6 below and in Exhibit D attached hereto, the Sublease Base Rent rate will escalate by three percent (3%) per annum as of (a) the date that is one (1) year after the date on which the Sublease Rent Commencement Date occurs for that Sublease Premises Portion which, when added to the rentable square

 

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footage of those Sublease Premises Portions for which the Sublease Rent Commencement Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises Portion for which the Sublease Rent Commencement Date has occurred to exceed 225,000 rentable square feet (the “Initial Adjustment Date”), and (b) each anniversary of the Initial Adjustment Date thereafter (each, an “Adjustment Date”). Sublease Base Rent payable with respect to each Sublease Premises Portion shall, from and after the applicable Sublease Rent Commencement Date for such Sublease Premises Portion, initially consist of the following (assuming that the Sublease Rent Commencement Date with respect to all Sublease Premises Portions occurs prior to the Initial Adjustment Date):

 

1.     “Building 40, Floor 1 Sublease Base Rent”: $1,740,711 per annum, payable in the amount of $145,059.25 per month.

 

2.     “Building 40; Floor 2 Sublease Base Rent”: $1,503,810 per annum, payable in the amount of $125,317.50 per month.

 

3.     “Building 41 Sublease Base Rent”: $2,077,152 per annum, payable in the amount of $173,096 per month.

 

4.     “Building 42 Sublease Base Rent”: $1,737,582 per annum, payable in the amount of $144,798.50 per month.

 

5.     “Building 43 East Sublease Base Rent”: $1,786,701 per annum, payable in the amount of $148,891.75 per month.

 

6.     “Building 43 West Sublease Base Rent’: $1.786,701 per annum, payable in the amount of $148,891.75 per month.

 

L.     “Target Sublease Delivery Date’”: with respect to any Sublease Premises Portion, shall be the date by which Sublandlord expects, using reasonably diligent efforts, to deliver such Sublease Premises Portion to Subtenant in accordance with the provisions of this Sublease, and, expressed in chronological order with respect to each Sublease Premises Portion, are the following target dates:

 

1.     “Building 42 Sublease Premises”: August 1, 2003

 

2.     “Building 41 Sublease Premises”: December 15, 2003.

 

3.     “Building 43 West Sublease Premises”: December 31, 2003.

 

4.     “Building 40, Floor 1 Sublease Premises”: January 15, 2004.

 

5.     “Building 40, Floor 2 Sublease Premises”: March 1, 2004.

 

6.     “Building 43 East Sublease Premises”: September 1, 2004.

 

M.     “Actual Delivery Date”: with respect to any Sublease Premises Portion, shall be the actual date on which Sublandlord delivers such Sublease Premises Portion to Subtenant in accordance with the provisions of this Sublease.

 

N.     “Sublease Rent Commencement Date”: with respect to any Sublease Premises Portion, shall be the earlier of (x) the date on which Subtenant commences occupancy and use of such Sublease Premises Portion for the purpose of conducting Tenant’s business operations therein (as opposed to the construction of initial fit-up improvements) (the “Subtenant Actual Occupancy Date”), and (y) sixty (60) days following the Actual Delivery Date for such Sublease Premises Portion, subject to acceleration pursuant to Paragraph 2.D below.

 

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O.     “Subtenant’s Share”: The ratio (expressed as a percentage) that the rentable square footage of the Sublease Premises Portions for which, from time to time, the Rent Commencement Date has occurred bears to 506,317; it being understood that as the Sublease Premises are intended to be occupied by Subtenant in phases, Subtenant’s Share shall increase with each such phase (for example, upon the Building 42 Sublease Rent Commencement Date, Subtenant’s Share shall be 16.34%, assuming the next Sublease Premises Portion occupied by Subtenant is Building 43 East, then upon the Building 43 East Sublease Rent Commencement Date, Subtenant’s Share shall increase to 33.14%).

 

P.     “Letter of Credit”: A Letter of Credit (defined in Paragraph 7 below) in an amount (the “Required Amount”) determined as follows: (a) $9,000,000 during the period from the date such Letter of Credit is delivered pursuant to Paragraph 7 to the last day of the Net Rental Abatement Period (as defined in Paragraph 6.D below) (the “Initial Determination Date”), (b) beginning on the Initial Determination Date and on each anniversary thereof (together with the Initial Determination Date, each, a “Determination Date”) the amount of the Letter of Credit shall be reduced by $500,000 until the Letter of Credit amount equals $6,000,000, and (c) $6,000,000 thereafter during the remainder of the Sublease Term. If an Event of Default shall exist on any Determination Date then, the amount of the Letter of Credit shall not be so reduced and shall instead be reduced in accordance with the above schedule only on the next scheduled Determination Date upon which an Event of Default is not existing. The Required Amount of the Letter of Credit shall be subject to reduction as provided in the last sentence of Paragraph 2.C below.

 

Q.     “Master Lease”: Commercial Lease dated December 29, 2000, by and between Master Landlord, as landlord, and Sublandlord, as tenant, as amended by that certain Amendment dated April 18, 2001, and by the Second Amendment (defined below). A copy of the Master Lease is attached hereto as Exhibit B.

 

R.     “Ground Lease”: Ground Lease dated as of March 7, 1995, by and between the City of Mountain View, a municipal corporation, as landlord (the “Ground Lessor”), and Silicon Graphics Real Estate, Inc., as tenant (the “Original Ground Tenant”), a memorandum of which was recorded March 8, 1995, as instrument number 12826209 in the Original Records of Santa Clara County, California, as assigned by the Original Ground Tenant to The Goldman Sachs Group, Inc., a Delaware corporation (“GS”), by Assignment and Assumption of Ground Lease dated as of December 29, 2000, and recorded January 2, 2001, as instrument number 15514932, as further assigned by GS to Master Landlord by Assignment and Assumption of Ground Lease (Amphitheatre) dated as of May 22, 2001, and recorded June 6, 2001, as instrument number 15713398, and as amended by First Amendment to Ground Lease (Amphitheatre) dated as of May 22, 2001, among Ground Lessor, GS and the Master Landlord.

 

S.     “WH-Google NDA”: Nondisturbance and Attornment Agreement (Amphitheatre) dated as of the date hereof between Master Landlord and Subtenant.

 

T.     “Three-Party Agreement”: Landlord-Subtenant Agreement dated as of the date hereof between Master Landlord and Subtenant, and joined in by Sublandlord.

 

U.     “Second Amendment”: Second Amendment to Commercial Lease (Amphitheatre) dated as of the date hereof among Master Landlord, Sublandlord and Subtenant. The WH-Google NDA, the Three-Party Agreement and the Second Amendment are sometimes collectively referred to as the “VVH-Google Documents.”

 

V.     Each of the following terms are defined in the paragraph referred to for such term.

 

Term

    Paragraph

Adjustment Date

    3.B(iv)(d)

Advanced Delivery Days

    2.C

Affiliated Party

    9.D

Approved Users

    9.E

Arbiter

    19.E

Broker

    30

 

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Cash Collateral Account

    7.A

Casualty Event

    2.C

Construction Allowance

    5.D

DDA

    4.P

Determination Date

    1.P

Early Delivery Notice

    2.C

Effective Date

    5.A

Events of Default by Sublandlord

    14

Events of Force Majeure

    25

Good Working Order and Repair

    19.A

Initial Determination Date

    1.P

Issuing Bank

    7.B

IT Area

    22.B

Laws

    4.G

Letter of Credit

    7.B

Master Landlord Indemnitees

    17.A

Non-Delivered Premises

    2.B

Non-Renewal Notice

    7.B

Operating Expenses

    8.A

PCP

    4.P

Permits

    4.O

Permitted Transfer

    9.D

Punch List

    19.E

Punch List Item

    19.E

Reimbursement Amount

    5.B

Reincorporation

    9.D

Sublandlord Indemnities

    17.A

Sublandlord Reimbursement Amount

    3.A

Sublandlord Representatives

    17.A

Sublandlord’s Expense Statement

    8.B

Sublease Additional Rent

    5.C

Sublease Rent

    6.C

Substantial Occupancy Date

    3.B(iv)(i)

Subtenant Indemnities

    17.B

Subtenant Representatives

    17.B

Tenant’s Work

    5.D

Termination Determination Date

    2.B

Total Occupancy Date

    3.B(iv)(f)

 

W.     Capitalized terms used but not defined herein have the same meanings herein as in the Master Lease. As used herein, unless otherwise specified, (i) singular words include the plural and plural words include the singular, (ii) words importing a gender include the other genders, (iii) the words “include” and “including”, and words of similar import, shall be deemed to be followed by the words “without limitation”, (iv) the words “hereto”, “herein”, “hereof” and “hereunder” and words of similar import, refer to this Sublease in its entirety, including the Incorporated Provisions (as hereinafter defined) of the Master Lease, (v) references to Paragraphs, Subparagraphs, Exhibits and Schedules are to the Paragraphs, Subparagraphs, Exhibits and Schedules of this Sublease, (vi) the Exhibits and Schedules hereto are incorporated herein by reference, and (vii) titles to Paragraphs, Subparagraphs, Exhibits and Schedules are for convenience only and shall not affect the interpretation of this Sublease. Any rule of interpretation to the effect that ambiguities are to be resolved against the drafting party or against a sublandlord or a subtenant shall not be employed in the interpretation of this Sublease.

 

2.     GRANTING CLAUSE.

 

A.     Generally. Sublandlord, in consideration of the covenants and agreements to be performed by Subtenant, and upon the terms and conditions hereinafter stated, does hereby lease, demise and let unto

 

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Subtenant, and Subtenant does hereby take from Sublandlord, the Sublease Premises, to have and to hold for the Sublease Term (unless sooner terminated as hereinafter provided).

 

B.     Phased Delivery. As of the date of this Sublease, the Sublease Premises are fully occupied by Sublandlord. The parties intend that, on or before the applicable Target Sublease Delivery Date for each Sublease Premises Portion, Sublandlord will vacate such Sublease Premises Portion and deliver the same to Subtenant in their “as is” condition, subject to Paragraphs 19.A and 19.B, provided, that Subtenant shall not have the right to refuse the delivery by Sublandlord of any Sublease Premises Portion based on any Building System or Structural Component failing to be in Good Working Order and Repair unless Subtenant’s use or occupancy of such Sublease Premises Portion is materially and adversely impacted thereby. Upon the Sublease Rent Commencement Date for each Sublease Premises Portion, Sublandlord and Subtenant will enter into a letter agreement in the form of Exhibit C attached hereto, memorializing the applicable Actual Delivery Date, and the Sublease Rent Commencement Date, the Sublease Base Rent payable with respect to the applicable Sublease Premises Portion, and also the increase in Subtenant’s Share resulting from the addition of such Sublease Premises Portion to the Sublease Premises; provided, however, that whether or not any such letter agreement shall be executed and delivered, the obligations of the parties under this Sublease shall continue unaffected.

 

C.     Late Delivery. Sublandlord shall use reasonably diligent efforts to so deliver each Sublease Premises Portion to Subtenant on or before the Target Sublease Delivery Date for such Sublease Premises Portion; provided, however, that, other than described in the next succeeding sentence, the failure to do so shall not give rise to any default on the part of Sublandlord or any right of Subtenant to terminate this Sublease, reject delivery of any Sublease Premises Portion or make any claim for losses or damages suffered by Subtenant as a result of such delay. Notwithstanding the foregoing, if Sublandlord shall fail to deliver any Sublease Premises Portion to Subtenant on or before the Target Sublease Delivery Date for such Sublease Premises Portion, and such failure continues for a period of ninety (90) days (or one hundred twenty (120) days if such failure is due to Events of Force Majeure or two hundred seventy (270) days if such failure is due to a Casualty Event), then Subtenant shall have the right, to be exercised within fifteen (15) days following the relevant Termination Determination Date (defined below) by written notice to Sublandlord, to irrevocably elect to terminate this Sublease as to either (x) such Sublease Premises Portion (but such termination shall not relieve Sublandlord of its obligation to deliver any as yet undelivered Sublease Premises Portions), or (y) at Subtenant’s option, the entire Sublease Premises, effective as of a date specified in Subtenant’s notice; provided, however, that such periods shall be one hundred twenty (120) (and one hundred eighty (180) days in the case of Events of Force Majeure and two hundred seventy (270) days in the case of Casualty Events), for the final Sublease Premises Portion to be delivered (either the ninetieth (90th), the one hundred twentieth (120th), the one hundred eightieth (180th) or the two hundred seventieth (270th) day, as applicable, being referred to as a “Termination Determination Date”); provided further, that no right of termination shall be triggered if Sublandlord has tendered possession of such Sublease Premises Portion to Subtenant and Subtenant fails to accept such tender solely due to a dispute as to the condition of such Sublease Premises Portion, such dispute to be settled in accordance with Paragraph 19.E of this Sublease. For the purpose of this Paragraph 2.C, “Casualty Event” means damage to, or destruction of, the Property by reason of fire or any other cause or event (other than the negligent act or omission of Sublandlord or Sublandlord Representatives) that renders the Property unsuitable for occupancy or the conduct of ordinary business or for Subtenant’s tenant improvements or otherwise causes the applicable Sublease Premises Portion to not be in Good Working Order and Repair. Upon a termination of this Sublease as to the entire Sublease Premises, Sublandlord shall return the Letter of Credit delivered to Sublandlord pursuant to Paragraph 7 of this Sublease; and in the event of a termination only as to the Sublease Premises Portion with respect to which an Actual Delivery Date has not occurred (the “Non-Delivered Premises”) but not a termination of this Sublease as a whole, Sublandlord shall return to Subtenant the Letter of Credit upon the delivery by Subtenant to Sublandlord of a replacement Letter of Credit in an amount reduced in the proportion that the rentable square footage of the Non-Delivered Premises bears to 506,317. Time shall be of the essence with respect to each of the time periods set forth in this Paragraph 2.C.

 

D.     Incentive for Early Delivery. The Actual Delivery Date for any Sublease Premises Portion shall not occur prior to the Target Sublease Delivery Date for such Sublease Premises Portion, except as provided in this Paragraph 2.D. Sublandlord shall have the right to provide notice (“Early Delivery Notice”) to Subtenant if Sublandlord is in a position to deliver any Sublease Premises Portion in advance of the Target

 

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Sublease Delivery Date for such Sublease Premises Portion. Any Early Delivery Notice shall indicate the date such Sublease Premises Portion will be ready for delivery. Subtenant shall have five (5) days from receipt of the Early Delivery Notice to indicate to Sublandlord its acceptance or rejection of such early delivery (and Subtenant’s failure to respond to Sublandlord within such five (5) day period shall be deemed a rejection by Subtenant of Sublandlord’s offer of early delivery of such Sublease Premises Portion). In the event Subtenant is willing to accept early delivery and the Actual Delivery Date for such Sublease Premises Portion occurs on the date indicated in the Early Delivery Notice, the Sublease Rent Commencement Date for such Sublease Premises Portion shall be the earlier of (x) the Subtenant Actual Occupancy Date far such Sublease Premises Portion, or (y) (i) sixty (60) days following the Actual Delivery Date for such Sublease Premises Portion minus (ii) the number of days that the Actual Delivery Date for such Sublease Premises Portion is in advance of the Target Sublease Delivery Date for such Sublease Premises Portion (such number of days being referred to as the “Advance Delivery Days”) (provided if the Advance Delivery Days exceeds sixty (60) days, the Sublease Rent Commencement Date for such Sublease Premises Portion shall be the Actual Delivery Date thereof).

 

3.    MASTER LEASE.

 

A.     This Sublease is made subject to all applicable terms and conditions of the Master Lease, which are incorporated into and made a part of this Sublease as if Sublandlord were Master Landlord and Subtenant were Tenant thereunder. Nothing contained in this Sublease shall be construed to (x) create privity of estate or privity of contract between Subtenant and Master Landlord or (y) constitute an undertaking or warranty by Sublandlord of performance by Master Landlord of its obligations under the Master Lease, and Sublandlord shall have no duty to pursue any remedies or actions against Master Landlord in connection therewith. Sublandlord acknowledges, however, that Master Landlord and Subtenant have entered into the WH-Google Documents and pursuant thereto Master Landlord has agreed to deal directly with Subtenant with respect to certain specified activities and matters such as aIterations, assignment and subletting and casualty and condemnation, and to recognize Subtenant’s rights hereunder under certain circumstances in the event of a termination of the Master Lease. To the extent that Master Landlord agrees to permit Subtenant to act or refrain from acting in a manner other than as required by the Master Lease, and Master Landlord has agreed to release Sublandlord from liability as a result of Subtenant being held to a standard that is more favorable to Subtenant than, or otherwise inconsistent with, the requirements of the Master Lease, Sublandlord agrees that Subtenant’s breach of the Incorporated Provisions (defined below) under such circumstances will not constitute a breach or default hereunder. Notwithstanding the foregoing, any failure by Subtenant to comply (giving effect to any relevant notice and cure periods) with the terms of the Master Lease, as incorporated herein, but as modified by any WH-Google Document, shall constitute an Event of Default under this Sublease. In the event that Sublandlord delivers a notice of default to Subtenant under this Sublease and Subtenant has not cured such default within the cure periods allowed under the Master Lease (or this Sublease), Sublandlord shall have the right, but not the obligation, to cure any such default if such default is cured by Sublandlord then Subtenant shall reimburse Sublandlord for amounts spent or incurred by Sublandlord in curing Subtenant’s default, within ten (10) days after notice and demand therefor from Sublandlord to Subtenant, together with interest and a late fee at the interest rate and late fee percentage specified in the Master Lease (the “Sublandlord Reimbursement Amount”). In the event Subtenant fails to pay Sublandlord the Sublandlord Reimbursement Amount as provided above, Sublandlord shall be entitled to draw on the Letter of Credit for such amount and Subtenant shall replenish the Letter of Credit to the applicable Required Amount, as required by Paragraph 7 of this Sublease.

 

B.     Except as otherwise provided herein, as between Sublandlord and Subtenant, all of the agreements, covenants, terms, conditions and provisions of the Master Lease (the “Incorporated Provisions”) are incorporated in this Sublease and are applicable under this Sublease as agreements, covenants, terms, conditions and provisions between Sublandlord and Subtenant; provided, however, that:

 

(i)     the following provisions of the Master Lease are not Incorporated Provisions, to wit: Sections 1.A, (Basic Lease Information), 3.2 (Renewal Option), 4.2 (Base Rent), 4.3 (Rent Adjustment), 4.4 (Additional Rent), 4.7 (Credit Enhancement), 5.1 (Operating Expenses), 5.2 (Payment of Operating Expenses), 5.3 (Proration), 6.2(c) (no termination of Ground Lease), last sentence of 8.1, 8.4 (Special Services), 15.5 (Short-term Subletting), 16.1(b)(ii), 16.1(i) (cross-default), 17.5 (Subordination to Landlord Mortgages), 18.2 (Sale of Property), 18.3 (No Personal Liabilities), 22 (Financial Statements), 26 (Notices), 30 (Brokers) and 32.8 (Relocation) of the Master Lease and Exhibits B and C to the Master Lease; and

 

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(ii)     for avoidance of doubt, the provisions of the Master Lease (other then those identified in clause (i) above are Incorporated Provisions; and

 

(iii)     as incorporated herein and applicable hereunder, the Incorporated Provisions are deemed changed as follows: (x) unless otherwise provided herein, references in the Incorporated Provisions to: (1) ”Lease” are deemed changed to refer to this “Sublease”, (2) ”Landlord” and “Landlord’s” are deemed changed to refer to “Sublandlord” and “Sublandlord’s”, respectively, (3) ”Tenant” and Tenant’s” are deemed changed to refer to “Subtenant” and “Subtenant’s”, respectively, (4) ”Premises” are deemed changed to refer to “Sublease Premises”, (5) ”Commencement Date” are deemed changed to refer to “Sublease Commencement Date” of the first Sublease Premises Portion to be delivered by Sublandlord or to a particular Sublease Premises Portion, as applicable, (6) ”Expiration Date” are deemed changed to refer to “Sublease Expiration Date”, (7) ”Rent” are deemed changed to refer to “Sublease Rent”, (8) ”Base Rent” are deemed changed to refer to “Sublease Base Rent”, (9) ”Additional Rent” are deemed changed to refer to “Sublease Additional Rent”, (10) ”Term” are deemed changed to refer to “Sublease Term”, and (11) ”Tenants Share” are deemed changed to “Subtenant’s Share” and (y) the phrases in the Incorporated Provisions (1) ”Landlord’s consent”, “Landlord’s approval”, and phrases of similar import (including “consent of Landlord” and “approval of Landlord”), are deemed changed to refer to “(A) Landlord’s consent pursuant to the Master Lease and (B) Sublandlord’s consent pursuant to this Sublease”, (2) ”notify Landlord” or “notice to Landlord” and phrases of similar import are deemed changed to refer to “notify the Master Landlord and the Sublandlord” and “notice to the Master Landlord and the Sublandlord” and the like, and (3) ”indemnify Landlord” or “hold Landlord harmless” and phrases of similar import are deemed changed to refer to “indemnify the Master Landlord and the Sublandlord” and “hold the Master Landlord and the Sublandlord harmless” and the like;

 

(iv)    as incorporated herein and applicable hereunder, the Incorporated Provisions are deemed changed as follows:

 

(a)     Exhibit B shall be replaced in full by Exhibit D hereto.

 

(b)     Except to the extent the Master Landlord has agreed in any VVH-Google Document (and has not revoked or repudiated such agreement) to specifically increase any period of time for giving notice (including the increased period of time for giving notice of default pursuant to Section 1.18 of the Second Amendment) or to provide notices directly to, and accept notices directly from, Subtenant, any period in the Incorporated Provisions for giving notice or making demand are deemed changed by adding 5 days if the notice is to be given by Subtenant and subtracting 5 days if the notice is to be given by Sublandlord, provided that if the applicable notice period is less than 10 days, the applicable 5 days in this clause shall instead be one half (1/2) of the applicable notice period.

 

(c)     Except to the extent the Master Landlord has agreed in any WH-Google Document (and has not revoked or repudiated such agreement) to specifically increase any period of time for performing or allowing time to perform (including the increased period of time allowed to cure a default pursuant to Section 1.18 of the Second Amendment) or to accept the performance of Subtenant in lieu of the performance of Sublandlord, any period in the Incorporated Provisions for performing or allowing time to perform are deemed changed by subtracting 5 days if the time is allowed to Subtenant and adding 5 days if the time is allowed to Sublandlord, provided that if the applicable time allowed is less than 10 days, the applicable 5 days in this clause shall instead be one half (1/2) of the applicable time allowed. Without limiting the generality of the foregoing, for purposes of incorporating Section 161(c), the period of one hundred twenty (120) days set forth therein shall be deemed ninety (90) days and Subtenant shall notify Sublandlord from time to time of the status of Subtenant’s cure efforts pursuant to such Section 16.1(c).

 

(d)     Section 4.3 shall be replaced in its entirety by: “Commencing on the Initial Adjustment Date, and on every anniversary of the Initial Adjustment Date

 

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thereafter (each, an “Adjustment Date”), the Sublease Base Rent shall be increased as stated on Exhibit D.”

 

(e)     For purposes of incorporating Section 2.3 of the Master Lease (“Parking”) herein, Sublandlord and Subtenant acknowledge that until such time as Subtenant occupies all of the Sublease Premises, the parking areas serving the Property shall be used both by Subtenant and by Sublandlord, and Sublandlord and Subtenant agree to mutually cooperate in good faith in the shared usage of such parking areas.

 

(f)     For purposes of incorporating Section 7.1 (Permitted Use) of the Master Lease herein, (1) the phrase “the uses specified and permitted in Article 1” shall be deleted and replaced with the phrase “general office, research and development and other legal uses ancillary thereto” and (2) from and after the Sublease Rent Commencement Date immediately following the Actual Delivery Date for that Sublease Premises Portion which when added to the rentable square footage of those Sublease Premises Portions for which the Actual Delivery Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises for which the Actual Delivery Date has occurred to constitute 100% of the Sublease Premises (the “Total Occupancy Date”), references to “Landlord” shall be deemed replaced with “Master Landlord”.

 

(g)     For purposes of incorporating Section 7.2 (Prohibited Uses) of the Master Lease herein, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

 

(h)     The first sentence of Section 8.1 (Landlord’s Obligations) shall apply only after the Total Occupancy Date.

 

(i)     In Section 8.2, Subtenant’s obligation to repair and maintain the Building Systems and Structural Components in any Building shall become effective only on the Sublease Rent Commencement Date immediately following Sublandlord’s delivery to Subtenant of all the rentable area in such Building; provided, however, that Subtenant shall be obligated to repair and maintain the cafe located in the Building 40, Floor 1 Premises from and after the Actual Delivery Date of the Building 40, Floor 1 Premises. Subtenant shall repair and maintain the Common Areas from and after the date on which the Sublease Rent Commencement Date occurs for that Sublease Premises Portion which, when added to the rentable square footage of those Sublease Premises Portions for which the Sublease Rent Commencement Date has previously occurred, shall cause the aggregate rentable square footage of the Sublease Premises Portions for which the Sublease Rent Commencement Date has occurred to exceed 400,000 rentable square feet (the “Substantial Occupancy Date”). From and after the Substantial Occupancy Date until such time as the Sublease Rent Commencement Dates shall have occurred for the remainder of the Sublease Premises, Sublandlord shall pay to Subtenant (x) Sublandlord’s proportionate share, based on the total rentable area of the Sublease Premises for which the Sublease Rent Commencement Date has yet to occur, of costs relating to Subtenant’s repair and maintenance of the Common Areas, and (y) any Operating Expenses incurred by Subtenant that are attributable or allocable to any rentable area of the Sublease Premises for which the Sublease Rent Commencement Date has not yet occurred.

 

(j)     Clause (a) of the penultimate sentence of Section 8.2 shall read as follows: “(a) at Subtenant’s cost and expense (except for capital improvements which are funded by Master Landlord and passed through to Sublandlord under the Master Lease and then to Subtenant under this Sublease)”.

 

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(k)     For purposes of incorporating Section 8.3, Subtenant shall be solely responsible for security of all Sublease Premises Portions fully occupied by Subtenant.

 

(l)     The phrase “Except as may be expressly set forth in this Sublease” shall be added at the beginning of Section 9 and again at the beginning of the fourth (4th), fifth (5th), sixth (6th) and seventh (7th) sentences of Section 9.

 

(m)     Incorporated Article 10 shall be subject to the WH-Google Documents. Specifically, subject to Paragraph 3.A, Sublandlord agrees that (1) Sublandlord shall be deemed to have consented to Alterations approved in writing by Master Landlord, (2) Sublandlord shall not require restoration of Alterations if Master Landlord has waived its right to do so, and (3) Sublandlord shall not require security for any Alteration restoration obligation to the extent Subtenant is providing such security directly to Master Landlord; and, from and after the Sublease Rent Commencement Date immediately following the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

 

(n)     The phase “Except as may be expressly set forth in this Sublease” shall be added to the third sentence of Section 13.2

 

(o)     Section 13.4 is incorporated herein subject to the indemnification clause in Paragraph 17.B below.

 

(p)     In the third sentence of Section 13.7, “Landlord” appearing therein shall be replaced with “Master Landlord”.

 

(q)     The phrase “and except for any Hazardous Materials resulting from the Environmental Activity by Sublandlord and Sublandlord’s Agents during Sublandlord’s occupancy of an Sublease Premises Portion” shall be added to the end of the first sentence of Section 13.8.

 

(r)     Clause (c) of Section 14.1 shall be deleted in its entirety and replaced with the following: “(c) the condition of the Premises, and any occurrence on the Premises from any cause whatsoever, except to the extent caused by (x) the gross negligence or willful misconduct of the Indemnified Parties or (y) any act or omission of Sublandlord prior to the Actual Delivery Date for the relevant Sublease Premises Portion; and”.

 

(s)     Article 15 is incorporated herein subject to Paragraph 9 below.

 

(t)     In Section 16.1(b)(i), “Section 4.7” appearing therein shall be replaced with the phrase “Paragraph 7 of this Sublease”.

 

(u)     in Section 16.6, the phrase “Leasehold Mortgagee or” shall be deleted and the reference to provisions of Article 18” shall be deemed replaced with a reference to “Sections 18.1 and 18.4”.

 

(v)     For purposes of incorporating Section 17.1 references in the first sentence of Section 17.1 to “Landlord” shall be deemed replaced with “Master Landlord” and at such time as the Substantial Occupancy Date shall have occurred, the references to “Landlord” in the penultimate sentence of Section 17.1 shall be deemed replaced with “Master Landlord”.

 

(w)     For purposes of incorporating Section 17.2, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master

 

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Landlord;” provided, however, Sublandlord reserves the right to enter the Sublease Premises as provided in Section 17.2 if such access is necessary for Sublandlord to comply with its obligations under the Master Lease or this Sublease or to verify compliance by Subtenant with the terms of the Master Lease and this Sublease.

 

(x)     The reference to “Landlord” in Section 17.3 shall be deemed replaced with “Master Landlord”.

 

(y)     For purposes of incorporating Section 17.4 of the Master Lease, at such time as the Actual Delivery Date or Dates shall have occurred for 100% of any Building within the Sublease Premises, references to “Landlord” shall be deemed replaced with “Master Landlord” with respect to such Building.

 

(z)     Articles 19 and 20 of the Master Lease are incorporated herein as further modified by Paragraph 21 of this Sublease; and any reference to “Landlord” in connection with any right to terminate the “Lease” shall be deemed to refer to “Master Landlord” and the “Master Lease.”

 

(aa)     In Section 20.5, the phrase “voluntary sale by Landlord” shall be replaced with the phrase “voluntary sale by Master Landlord”.

 

(bb)     The reference to “Landlord” in the first sentence of Section 24.1 shall be deemed replaced with “Master Landlord”.

 

(cc)     For purposes of incorporating Section 24.2, until the Total Occupancy Date, Sublandlord’s approval of any signage shall not be unreasonably withheld, conditioned or delayed. After the Total Occupancy Date, references to “Landlord” in Section 24.2 shall be deemed replaced with “Master Landlord”.

 

(dd)     The phrase “Except as expressly provided in this Sublease,” shall be added at the beginning of Section 28.

 

(ee)     For purposes of incorporating Section 32.1, until such time as the Actual Delivery Date or Dates shall have occurred for 100% of any Building within the Sublease Premises, Sublandlord’s discretion with respect to installation of an antennae on a portion of the rooftop of such Building shall be reasonable, and its consent shall not be unreasonably withheld, conditioned or delayed. After the Total Occupancy Date, references to “Landlord” in Section 32.1 shall be deemed replaced with “Master Landlord”.

 

(ff)     For purposes of incorporating Section 32.2, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

 

(gg)     For purposes of incorporating Section 32.3, from and after the Total Occupancy Date, references to “Landlord” shall be deemed replaced with “Master Landlord”.

 

4.    REPRESENTATIONS AND WARRANTIES BY SUBLANDLORD. Sublandlord warrants and represents to Subtenant:

 

A.     No Modification of Master Lease. The Master Lease has not been amended or modified, except as provided herein.

 

B.     No Default Under Master Lease. No default or breach of any of the provisions of the Master Lease has occurred and is continuing and no notices of default have been sent or received by Sublandlord with

 

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respect to the Master Lease, nor to the present knowledge of Sublandlord has any event or condition occurred which, with the passing of time or the giving of notice, would result in an Event of Default by Sublandlord under the Master Lease.

 

C.     No Restoration Obligations. Other than described on Schedule 4.C to this Sublease, Sublandlord has not performed any Alterations within the Sublease Premises which Master Landlord has, pursuant to the provisions of Section 10.3 of the Master Lease, provided notice to Sublandlord that Sublandlord shall be required to remove such Alterations and restore the Sublease Premises at the expiration or sooner termination of the term of the Master Lease.

 

D.     Due Organization and Ownership. Sublandlord is a Delaware corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of California. Sublandlord has the authority to own and to operate its assets, to conduct its business as now conducted and to sublease the Sublease Premises under the terms and conditions of this Sublease.

 

E.     Full Right to Convey. There we no other parties in possession of the Sublease Premises (or any portion thereof), and no party has been granted any license, lease, profit or other right or interest relating to the use or possession of the Sublease Premises (or any part thereof).

 

F.     Valid, Binding, Enforceable. This Sublease and all documents to be executed by Sublandlord pursuant to this Sublease have been duly authorized, executed and delivered by Sublandlord, and constitute the legal, valid and binding obligations of Sublandlord, enforceable against Sublandlord in accordance with their respective terms subject to the effect of bankruptcy, insolvency, reorganization, moratorium and other laws and procedures affecting the enforcement of creditor’s rights or the collection of debtor’s obligations. Sublandlord’s execution, delivery and performance of this Sublease and the consummation of the transactions contemplated hereby, including, without limitation, the execution of all other documents necessary or desirable to consummate this transaction, will not (either alone, or with notice or the passage of time, or both) result in any material violation or material breach of any of the terms or conditions of, or constitute a material default under, any material agreement to which Sublandlord is a party.

 

G.     Compliance with Laws. To Sublandlord’s actual knowledge and except as set forth on Schedule 4.G to this Sublease, Sublandlord has not received any written notice that the Sublease Premises or Property are currently in violation of any (i) federal, state or local statutes, laws, rules, regulations, codes, ordinances, orders or stipulations relating to the use, occupancy, development or construction of the Property, including, without limitation, building codes, zoning ordinances, fire or safety codes, Environmental Laws, the Americans with Disabilities Act and life safety requirements (collectively, “Laws”), or (ii) any recorded covenants, conditions or restrictions or any material agreements affecting any portion of the Property, or (iii) any governmental permits or development approvals issued in connection with the development of the Property (whether or not recorded). Sublandlord has not received any notice regarding any pending or contemplated change in any Laws applicable to the Property or of any pending, threatened or contemplated judicial, administrative or governmental agency action which could in any way materially adversely affect the Property or its value or Subtenant’s intended use of the Property.

 

H.     No Litigation. Other than described on Schedule 4.H to this Sublease, there is no litigation pending or, to the best of Sublandlord’s knowledge, threatened or contemplated, nor is there any pending or, to the best of Sublandlord’s knowledge, threatened investigation or proceeding by any governmental agency against Sublandlord or the Sublease Premises or Property, which would materially adversely affect Sublandlord’s ability to perform its obligations under this Sublease, or which could in any way materially and adversely affect the Sublease Premises or Property or Subtenant’s intended use of the Sublease Premises or Property.

 

I.     Condemnation/Assessments. To the best of Sublandlord’s actual knowledge, there is no pending or threatened condemnation action seeking to condemn the Sublease Premises or Property (or any portion thereof), nor any pending or, to the best of Sublandlord’s actual knowledge, threatened proceedings to establish any assessments, assessment districts or other districts which could encumber, or have the authority to create or levy assessments or taxes against, the Sublease Premises or Property (or any portion thereof).

 

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J.     Additional Obligations. Other than as disclosed in writing by Sublandlord to Subtenant and except as set forth on Schedule 4.J to this Sublease, there are no third-party contracts or agreements of any kind or nature in connection with the operation of the Sublease Premises or Property that are not terminable on 30 days’ notice.

 

K.     Personal Property. All fixtures, equipment, chattels, machinery and other personal property that are not attached to the Sublease Premises but are needed for the use or operation of the Sublease Premises are owned by Sublandlord free and clear of all Liens other than Liens permitted by the Master Lease.

 

L.     Occupancy Agreements. Except for the Master Lease and the Ground Lease, there are no occupancy agreements affecting all or any portion of the Sublease Premises.

 

M.     Environmental Matters. Except for matters disclosed in any environmental reports delivered to Subtenant by Master Landlord (or any manager for or agent of Master Landlord) or by Sublandlord, to the best knowledge of Sublandlord, no Hazardous Material or underground storage tanks exist on the Sublease Premises (other than Permitted Substances, as defined in, and used in compliance with, the Master Lease), and the Sublease Premises are not in violation of any Environmental Laws or subject to any orders, decrees, injunctions or any other proceedings or requirements imposed by any governmental authority pursuant to any Environmental Laws.

 

N.     Property Condition. Except for matters disclosed on Schedule 4.N to this Sublease, to the best knowledge of Sublandlord, (i) all improvements on the Sublease Premises, as of the date of this Sublease, are, and, on the Actual Delivery Date for each Sublease Premises Portion, will be, in good repair, working order and condition, normal wear and tear excepted, (ii) all improvements on the Sublease Premises (including Structural Components and Building Systems), as of the date of this Sublease, are not, and, on the Actual Delivery Date for each Sublease Premises Portion, will not be, subject to material deferred maintenance, and (iii) subject to, and without relieving Sublandlord of its obligations under Paragraph 19 below, all Building Systems and Structural Components, as of the date of this Sublease, are, and, on the Actual Delivery Date for each Sublease Premises Portion, will be, in Good Working Order and Repair.

 

O.     Licenses. Sublandlord has obtained all material licenses, permits, certificates and similar items (“Permits”) necessary for the use and operation of the Sublease Premises. The uses being made of the Sublease Premises are in conformity in all material respects with the certificate of occupancy and other Permits for the Sublease Premises, and any other Legal Requirements and other recorded restrictions, covenants, or conditions affecting the Sublease Premises.

 

P.     Obligations as Developer. All construction work required to be performed by “Developer” pursuant to that certain Disposition and Development Agreement (the “DDA”) dated March 7, 1995 between the Ground Lessor and the Original Ground Tenant and other obligations of Developer under the Planned Community Permit (“PCP”) have been completed by Developer in accordance with the DDA, the PCP and the Ground Lease.

 

Q.     Representation of Continuing Disclosure. If, prior to the final Delivery Date, Sublandlord shall obtain any knowledge that any of the representations and warranties set forth in Paragraphs 4.A through 4.P inclusive, above, are no longer true and accurate in all material respects, Sublandlord shall promptly notify Subtenant of the applicable change in status or change in condition.

 

5.    EFFECTIVENESS OF SUBLEASE; NOTICE FROM MASTER LANDLORD.

 

A.     Effectiveness. This Sublease shall come into full force and effect upon the satisfaction or waiver (by Sublandlord as to (v), (vi) and (viii), Subtenant as to (ii) and (iv) and both Sublandlord and Subtenant as to (i) and (iii)) of the following: (i) the delivery of a written approval of the Second Amendment by the current holder of the loan made pursuant to that certain Loan Agreement, dated as of July 2, 2002, by and between Master Landlord and German American Capital Corporation, (ii) the delivery by such current holder of such loan to Subtenant of a nondisturbance and attornment agreement in form and substance reasonably satisfactory to Subtenant, (iii) the delivery of Master Landlord’s written consent in the form attached to this Sublease, (iv) the delivery by Master Landlord to Subtenant of the WH-Google NDA, in form and substance

 

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reasonably satisfactory to Subtenant, (v) the execution and delivery of the Commercial Lease for the property known as Crittenden C/D among WXIII/Crittenden Realty C, L.L.C., a Delaware limited liability company, WXIII/Crittenden Realty D, L.L.C., a Delaware limited liability company, and Sublandlord, (vi) the execution and delivery of the Amended and Restated Commercial Lease for the property known as Crittenden A between WXIII/Crittenden Realty A, L.L.C., a Delaware limited liability company, and Sublandlord, (vii) the delivery of a written approval of the Amended and Restated Commercial Lease for Crittenden A by the current holder of the loan made to the landlord under such lease pursuant to loans made on or about August 7, 2001, by and between such landlord and GMAC Commercial Mortgage Corporation, and (viii) the receipt by the parties of a letter from the Broker confirming and agreeing to Paragraph 30 of this Sublease (the latter of all such deliveries, the “Effective Date”). Upon the Effective Date, Sublandlord and Subtenant will enter into a letter agreement memorializing the applicable Target Sublease Delivery Dates, provided, however, that whether or not any such letter agreement shall be executed and delivered, the obligations of the parties under this Sublease shall continue unaffected. If the Effective Date shall have not occurred on or before July 31, 2003, then (1) this Sublease, (2) the WH-Google Documents (to the extent then executed and delivered) and (3) the lease and amended and restated lease described in Clauses (v) and (vi)), shall terminate except for such provisions as by their terms are intended to survive.

 

B.     Notice Under Master Lease. If, at any time during the Sublease Term, Sublandlord receives any notice or demand from Master Landlord under the Master Lease with respect to the Sublease Premises, Sublandlord shall promptly deliver a true and correct copy of same to Subtenant (unless it is clear from the notice that a simultaneous notice has been sent by Master Landlord to Subtenant). In the event that Sublandlord delivers or receives a notice of default under the Master Lease, Sublandlord agrees to deliver to Subtenant a copy of any such notice of default. The parties acknowledge that the WH-Google NDA provides that Subtenant shall have the right, but not the obligation, to cure any monetary default of Sublandlord described in any notice of default within ten (10) days after service of such notice of default on Subtenant. If such default is cured by Subtenant then Sublandlord shall reimburse Subtenant for such amounts, within ten (10) days after notice and demand therefor from Subtenant to Sublandlord, together with interest and a late fee at the interest rate and late fee percentage specified in the Master Lease (the “Reimbursement Amount”). In the event Sublandlord fails to pay Subtenant the Reimbursement Amount as provided above, Subtenant may offset such amount against the rent payable under this Sublease.

 

6.    RENT.

 

A.     Sublease Base Rent. Subtenant agrees to pay monthly installments of Sublease Base Rent at the address indicated in Subparagraph 1.B.2 above, or such other address as Sublandlord may from time to time notify Subtenant. Such monthly installments of Sublease Base Rent shall be payable on or before the first (1st) day of each calendar month (without demand) commencing as of the following dates, expressed in chronological order (based on Target Delivery Dates):

 

  1. the building 42 Sublease Rent Commencement Date, with respect to the Building 42 Sublease Base Rent,

 

  2. the Building 41 Sublease Rent Commencement Date, with respect to the Building 41 Sublease Base Rent,

 

  3. the Building 43 West Sublease Rent Commencement Date, with respect to the Building 43 West Sublease Base Rent,

 

  4. the Building 40, Floor 1 Sublease Rent Commencement Date, with respect to the Building 40, Floor 1 Sublease Base Rent,

 

  5. the Building 40, Floor 2 Sublease Rent Commencement Date, with respect to the Building 40, Floor 2 Sublease Base Rent, and

 

  6. the Building 43 East Sublease Rent Commencement Date, with respect to the Building 43 East Sublease Base Rent.

 

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Sublease Base Rent shall increase, as of the Initial Adjustment Date and each Adjustment Date thereafter, to the rate per rentable square foot per annum described in Exhibit D attached hereto. Sublease Base Rent for any fractional month at the time of the Sublease Rent Commencement Date for any Sublease Premises Portion or at the end of the Sublease Term shall be prorated based upon the actual number of days in such calendar month. The Rentable Area of the Sublease Premises and the Buildings shall be conclusively presumed to be as stated in Paragraph 1.G of this Sublease. Except as otherwise provided herein, additional rent shall include, without limitation, any and all charges, costs or expenses otherwise set forth in the Master Lease other than (w) Base Rent owing under the Master Lease, (x) Monthly Rent (as defined in the Ground Lease) together with any escalations thereof and/or interest or late fees thereon (such amounts described in clause (x) being payable by Sublandlord in accordance with the terms of the Master Lease), (y) any indemnity or similar payments by Sublandlord under the Master Lease or the Ground Lease as a consequence of its act or omission under the Master Lease that is not in turn attributable to any act or omission or Subtenant under this Sublease) and (z) any Operating Expenses in the form of management fees described in clause (xi) of Section 15.1(b) of the Master Lease to the extent not payable by Subtenant pursuant to Paragraph 8.A(iv) of this Sublease.

 

B.     Exclusions from Subtenant’s Obligations. Notwithstanding any other provision of this Sublease to the contrary, Subtenant shall have no obligation for (i) any amount due or liability incurred by Sublandlord under the Master Lease that relates to any portion of the Sublease Premises prior to the Sublease Rent Commencement Date for such portion of the Sublease Premises, or (ii) any amounts described in clauses (w), (x), (y) and (z) of Paragraph 6.A of this Sublease.

 

C.     Sublease Additional Rent. All sums due from Subtenant to Sublandlord or to any third party under the terms of this Sublease shall be additional rent (“Sublease Additional Rent”), including, without limitation, the charges for Operating Expenses (described in Paragraph 8 of this Sublease) and all sums incurred by Master Landlord or Sublandlord doe to Subtenant’s failure to perform its obligations under this Sublease, together with interest and late fees thereon. All Sublease Additional Rent of the type described in Paragraph 8 which is payable to Sublandlord shall be paid at the time and place that Sublease Base Rent is paid. Sublandlord will have the same remedies for a default in the payment of any Sublease Additional Rent as for a default in the payment of Sublease Base Rent. Together, Sublease Base Rent and Sublease Additional Rent are sometimes referred to in this Sublease as “Sublease Rent”. There shall be no abatement of, deduction from, counterclaim or setoff against Sublease Rent except as otherwise specifically provided in this Sublease or the Master Lease.

 

D.     Construction Allowance; Sublease Base Rent & Abatement. Sublandlord agrees to provide to Subtenant, and Subtenant shall be entitled to receive, in connection with Subtenant’s initial build-out of the Sublease Premises (“Tenant’s Work”), an allowance in the aggregate amount of $15,473,048 (the “Construction Allowance”), which Construction Allowance shall be charged and taken as an offset against the Sublease Base Rent owing hereunder. The Construction Allowance shall represent Sublandlord’s sole and total contribution to Tenant’s Work. Subtenant may allocate the Construction Allowance among the various portions of the Sublease Premises as it may desire in its sole and absolute discretion. Notwithstanding anything to the contrary contained herein, whether or not Subtenant uses the Construction Allowance to pay for construction costs, Subtenant shall be entitled to an offset of the Sublease Base Rent until such time as Sublease Base Rent in an aggregate amount of the Construction Allowance would have otherwise been paid to Sublandlord. The “Net Rental Abatement Period” shall be the period commencing on the Sublease Rent Commencement Date for the Building 42 Premises and expiring on the rent payment date on which Sublease Base Rent shall have been abated in an amount equal to the Construction Allowance. From time to time during the construction of Tenant’s Work, Subtenant shall deliver to Sublandlord (with a copy to Master Landlord) executed mechanic’s lien releases from all of Subtenant’s contractors or other agents which shall comply with the appropriate provisions, as reasonably determined by Sublandlord, of California Civil Code Section 3262(d) and such other information regarding the construction of Tenant’s Work as may be reasonably requested by Sublandlord or Master Landlord.

 

E.     Terms of Payment. All Sublease Base Rent, Sublease Additional Rent and other amounts payable by Subtenant under this Sublease shall be paid in lawful money of the United States of America, without any deduction, setoff or abatement whatsoever, except an expressly provided in this Sublease.

 

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7.    SECURITY DEPOSIT.

 

A.     Generally. On or prior to the Sublease Commencement Date for the first Sublease Premises Portion for which an Actual Delivery Date shall have occurred (which is currently the Building 42 Premises). Subtenant shall deliver to Sublandlord (with a duplicate original to Master Landlord) a Letter of Credit (defined in Paragraph 7.B below) as security for the full and punctual performance by Subtenant of all of the terms of this Sublease. If Sublandlord (and/or Master Landlord) shall be entitled to draw the Letter of Credit in whole or in part pursuant to Paragraph 7 B or 7.D below, Sublandlord (and/on Master Landlord, as applicable) shall have the right, at its option, either to deposit the cash proceeds of any such draw upon the Letter of Credit into a cash collateral account (the “Cash Collateral Account”) established in Sublandlord’s (and/or Master Landlord’s) name end maintained by Sublandlord (and/or Master Landlord) or to apply the proceeds to the obligations of Subtenant due or to become due hereunder. The Cash Collateral Account shall be under the sole dominion and control of Sublandlord (and/or Master Landlord) and Sublandlord shall have the sole right to make withdrawals from the Cash Collateral Account and to exercise all rights with respect to the amounts deposited in the Cash Collateral Account.

 

B.     Letter of Credit Requirement. The initial letter of credit and any replacement letter of credit issued in accordance with Paragraph 7.A shall satisfy the requirements set forth in this Paragraph 7 (each, a “Letter of Credit”), Each Letter of Credit shall be a clean, irrevocable, non-documentary and unconditional letter of credit issued by and drawable upon any commercial bank, trust company, national banking association or savings and loan association with offices for banking and drawing purposes in the City of San Francisco or the City of New York (the “Issuing Bank”), which has outstanding, unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for an outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” numerical notation, “A’ or better by Moody’s Investment Service or “A” or better by Standard & Poor’s Ratings Service or “A” or better by Fitch’s Rating Service (and is not on credit-watch or similar credit review with negative implication), and has combined capital, surplus and undivided profits of not less than $1,000,000,000. Each Letter of Credit shall (i) name Sublandlord as beneficiary and Master Landlord as co-beneficiary, (ii) be in the amount of the Required Amount, (iii) have a term of not less than one (1) year, (iv) permit multiple drawings, (v) be fully transferable (including by way of collateral assignment) by Sublandlord (as to Sublandlord’s rights) and Master Landlord (as to Master Landlord’s rights) without payment by any beneficiary of any fees or charges, (vi) otherwise be in form and content satisfactory to Sublandlord and Master Landlord in their reasonable discretion and, (vii) be drawable by Master Landlord only as desc