Imprivata, Inc. Monadnock Building 685 Market Street Table of Contents

1.

BASIC LEASE PROVISIONS

1

2.

PROJECT

2

3.

TERM

4

4.

RENT

5

5.

USE & OCCUPANCY

7

6.

SERVICES & UTILITIES

8

7.

REPAIRS

10

8.

ALTERATIONS

10

9.

INSURANCE

12

10.

DAMAGE OR DESTRUCTION

13

11.

INDEMNITY

14

12.

CONDEMNATION

14

13.

TENANT TRANSFERS

15

14.

LANDLORD TRANSFERS

16

15.

DEFAULT AND REMEDIES

17

16.

LETTER OF CREDIT; FINANCIAL STATEMENTS

19

17.

MISCELLANEOUS

20

18.

BROKERS

22

19.

TENANT’S SECURITY SYSTEM

22

A

L

Additional Construction Allowance

D-4

Land

3

Additional Insured

13

Landlord

1

Additional Rent

5

Landlord Delay

D-2

Affiliates

15

Landlord’s Compliance Work

D-1

Alterations

11

Landlord’s Contractor

D-3

Amortization Rate

7

Landlord’s Representative

D-1

As-Built Drawings

D-3

Landlord’s Security System

24

B

Landlord’s Work

D-1

Bank

20

Late Charge

8

Base Building

3

LC Amount

1

Base Rent

1

LC Expiration Date

21

Base year

1

Lease

1

Bid Summary

D-3

Leasehold Improvements

3

Billing Address

2

Letter of Credit

20

Brokers

2

Liability Limit

2

Building

1

M

Building Standard

4

Mandated Expenses

.

6

Building Structure

3

Mechanical Systems

3

Business Hours

2

Month

4

C

N

Change Order

D-2

NLT

4

Claims

15

Notice Addresses

1

Commencement Date

4

P

Common Areas

3

Permitted Transferee

16

Comparison year

5

Premises

1

Construction Allowance

2

Project

3

Construction Drawings

D-2

Q

Construction Schedule

D-1

Quality Expenses

6

Cost-Saving Expenses

6

R

D

REIT

II

Dale

1

Relocation Notice

22

Default

19

Renovations

12

Default Rate

20

Rent

7

Design Problem

11

Repair Estimate

14

E

Replacement Premises

22

Encumbrance

18

Retention

D-3

Estimated Additional Rent

7

RSF

4

Expenses

5

S

Expiration Date

4

Scheduled Commencement Date

1

F

Scheduled Term

1

Force Majeure

20

Service Provider

11

Force Majeure Delay

D-2

Space Plans

D-2

H

Standard Services

9

Hazardous Materials

8

Substantially Complete

D-5

Holdover

4

Successor Landlord

18

Holidays

2

T

HVAC

9

Taking

16

I

Taxes

5

Interruption Estimate

14

Telecommunication Services

10

Tenant

1

Tenant Delay 

D-1

Transferee

16

Tenant’s Architect

D-2

U

Tenant’s Personal Property

4

Untenantable

14

Tenant’s Personnel

D-3

Use

1

Tenant’s Representative.

D-1

USF

4

Tenant’s Security System

24

W

Tenants Share

1

Work Costs

D-4

Tenant’s Wiring

10

Y

Tenant’s Work

D-3

Year

4

Term

4

Transfer

16

BASIC LEASE PROVISIONS

1.1

Basic Lease Definitions.

In this Lease, the following defined terms have the meanings indicated.

(a)

Date:

March 31, 2016

(b)

Landlord:

BOP 685 Market LLC, a Delaware limited liability company.

(c)

Tenant:

Imprivata, Inc., a Delaware corporation

(d)

Building:

685 Market Street, San Francisco, California, deemed to contain:

203,161 RSF

(e)

Premises:

Suite 500 (identified on Exhibit A), located in the Building and deemed to contain:

5,029 RSF

(f)

Use:

General administrative non-governmental office use consistent with that of a first-class office building.

(g)

Scheduled Term:

85 Months

(h)

Scheduled

June 1, 2016.

Commencement Date:

(i)

Base Rent:

The following amounts, payable in accordance with Article 4:

(j)

Tenant’s Share:

2.48%

(k)

Base Year:

The calendar year 2016

(l)

LC Amount:

$270,623.08. Such LC Amount shall be periodically subject to reduction and subject to conversion in accordance with Article 16 of this Lease.

(m)

Notice Address:

For each party, the following address(es):

To Landlord

To Tenant

BOP 685 Market, LLC

Imprivata, Inc.

685 Market Street, Suite 520

10 Maguire Rd.

San Francisco, California 94105

Lexington, MA 02421

Attn: General Manager

Attn: Kelliann McCabe

with a copy to:

Brookfield Properties Management

601 S. Figueroa Street, Suite 2200

Los Angeles, California 90017

Attn: VP, Regional Counsel

(n)

Billing Address:

For each party, the following address:

For Landlord

For Tenant

Via U.S. Mail

Imprivata, Inc.

BOP 685 Market LLC

10 Maguire Rd.

PO Box 62905

Lexington, MA 02421

Baltimore, MD ###-###-####

Attn: Kelliann McCabe

Email: ***@***

Via Overnight Courier

BOP 685 Market LLC

Box# 62905

1800 Washington Boulevard

Baltimore, MD 21230

Via Electronic Transfer

Bank:

Manufacturers & Traders

Trust Co.

Acct. Name:

BOP 685 Market LLC

Acct. No.:

9859352131

ABA No.:

022000046

Ref:

Invoice #

(o)

Brokers:

Brookfield Properties Management (CA) Inc. and Jones Lang LaSalle Brokerage Inc. (for Landlord); and T3 Advisors (for Tenant).

(p)

Liability Limit

A minimum combined single limit of liability of at least $1,000,000 per occurrence and a general aggregate limit of at least $2,000,000, and in addition, excess liability insurance on a following form basis, with overall limits of at least $5,000,000.

(q)

Construction Allowance:

$377,175.00 (i.e., $75.00 per RSF of the Premises) for the payment of Work Costs in accordance with the Work Letter attached to this Lease as Exhibit D.

.

(r)

Business Hours:

From 7:00 a.m. to 6:00 p.m., Monday through Friday, except for the days observed for: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and, at Landlord’s discretion, other locally or nationally recognized holidays that are observed by other buildings of comparable class in the locale of the Building (“Holidays”).

PROJECT

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

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

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

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

TERM  

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

The date that Tenant first conducts business in any part of the Premises; or

The date that Landlord tenders the Premises to Tenant with Landlord’s Work substantially complete or that earlier date that Landlord would have tendered possession of the Premises to Tenant with Landlord’s Work substantially complete but for Tenant Delay (as defined in the Work Letter attached to this Lease as Exhibit D).

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

Early Occupancy. Except as set forth in the Work Letter, Tenant may not enter the Premises for any purpose until Landlord tenders the Premises to Tenant. If Tenant conducts business in any part of the Premises before the Scheduled Commencement Date, Tenant will pay Base Rent for that period at the rate for the first Month that Base Rent is due, without discount or excuse.

Late Occupancy. If Landlord fails to tender possession of the Premises to Tenant by the Scheduled Commencement Date, Landlord will not be in default of this Lease, but Tenant shall have no obligation to pay Rent until the Commencement Date where such delay is not the result of a Tenant Delay.

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

Return of the Premises. At the end of the Term, Tenant will return possession of the Premises to Landlord vacant, free of Tenant’s Personal Property, in broom-clean condition, and with all Leasehold Improvements in in the condition delivered to Tenant (excepting ordinary wear and tear and casualty), except that Landlord may require Tenant, by notice at least 10 days before the expiration of the Term, to remove (and restore the Premises damaged by removal):

All Tenant’s Wiring; and

Any item of Leasehold Improvements or Alterations (other than Tenant’s Wiring) if either:

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

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

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

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

RENT  

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

Expenses. For each Comparison Year, Tenant shall pay in the manner described below the Tenant’s Share of the amount that Expenses for the Comparison Year exceed Expenses for the Base Year. “Expenses” means the total costs incurred by Landlord to operate, manage, administer, equip, secure, protect, repair, replace, refurbish, clean, maintain, decorate and inspect the Project, including a fee to manage the Project of 3% of the gross revenue of the Project. Expenses that vary with occupancy will be calculated as if the Building is 100% occupied and operating, with all utilities and services being provided to all tenants.

Expenses include:

Standard Services provided under §6.1;

Repairs and maintenance performed under §7.2;

Insurance maintained under §9.2 {including deductibles paid; provided, however, any deductibles in excess of $100,000 shall be amortized over a term of 10 years at an annual interest rate equal to the Amortization Rate (defined below), and the amortized costs thereof, but not in excess of $1.00 per RSF of the Building shall be included in Expenses in any Year);

Wages, salaries, and benefits of personnel of Landlord or its Affiliates to the extent they render services to the Project (including, without limitation, property accounting, technical services, and information technology services);

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

Amortization installments of costs that are required to be capitalized and are incurred:

To comply with insurance requirements or laws enacted after the Commencement Date (“Mandated Expenses”);

With the reasonable expectation of reducing Expenses or the rate of increase in Expenses (“Cost-Saving Expenses”); or

That are reasonably calculated to improve or maintain the safety or health of Project occupants (“Quality Expenses”).

Expenses exclude:

Taxes;

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

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

Costs reimbursed by insurance proceeds;

Depreciation;

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

Collection costs and legal fees paid in disputes with tenants;  

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

In the Base Year, only, installments of costs amortized under subsection (c)(1) and (c)(2) of this §4.2, unless such costs are included in Expenses in Lease Years subsequent to the Base Year,

The costs of utilities and services:

Set forth in subsections (4) and (9) of §6.l (a) that are provided to the Premises and to other tenanted premises in the Building, regardless of whether such Standard Services are subject to direct payment by Tenant or such other tenants of the Building pursuant to §6.2 or any similar lease provision; and

Otherwise reimbursed by Tenant pursuant to §6.3, or by other tenants of the Building pursuant to any similar provision of their respective leases (and not as part of Additional Rent, or any similar lease provision for the sharing of Building costs);

Costs incurred by Landlord to comply with notices of violation of applicable Jaws, including the Americans With Disabilities Act, as amended, when such notices are for conditions existing prior to the Commencement Date that would have been a violation of applicable laws existing as of the Commencement Date; and

Penalties, fines, and associated legal expenses incurred by Landlord due to the violation by Landlord or any other tenant of the Building (other than Tenant) of applicable laws

Amortization and Accounting Principles.

Each item of Mandated Expenses and Quality Expenses will be fully amortized in equal annual installments, with interest on the principal balance at Amortization Rate, over the number of years that Landlord projects the item of Expenses will be productive for its intended use, without replacement, but properly repaired and maintained.

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

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

“Amortization Rate” means the greater of (A) prime rate of Citibank, N.A. (or a comparable financial institution selected by Landlord) in effect as of the last day of the year in which the costs were incurred, plus 3%, or (B) the actual cost incurred by Landlord for financing.

Landlord may allocate Expenses and Taxes for the Project to various components of the Project on an equitable basis, or as required by any reciprocal easement agreement or common interest association agreement affecting the Project.

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

Estimates. Landlord will reasonably estimate Additional Rent for each Comparison Year (“Estimated Additional Rent”). During each Comparison Year, Tenant will pay the Estimated Additional Rent in advance, in equal Monthly installments, on the first day of each Month of the Comparison Year. Landlord may reasonably revise the Estimated Additional Rent during a Comparison Year and the Monthly installments of Estimated Additional Rent for the remainder of the Comparison Year will be increased or decreased accordingly. Until Landlord provides Tenant with the Estimated Additional Rent for a Comparison Year, Tenant will continue to pay the Estimated Additional Rent for the prior Comparison Year.

Settlement. As soon as practical after the end of each Comparison Year, Landlord will give Tenant a statement of the actual Additional Rent for the Comparison Year. Additional Rent for any partial Comparison Year will be prorated based on a 365-day calendar year. The statement of Additional Rent is conclusive, binds Tenant, and Tenant waives all rights to contest the statement, except for items of Additional Rent to which Tenant objects by notice to Landlord given within 90 days after receipt of Landlord’s statement; however, Tenant’s objection will not relieve Tenant from its obligation to pay Additional Rent pending resolution of any objection. If the Additional Rent exceeds the Estimated Additional Rent for the Comparison Year, then Tenant shall pay the underpayment to Landlord in a lump sum as Rent within 30 days after receipt of Landlord’s statement of Additional Rent. If the Estimated Additional Rent exceeds the Additional Rent for the Comparison Year, then Landlord shall credit the overpayment against Rent next due or refund such amount to Tenant concurrently with the delivery of such statement if the Lease is to terminate with the same Year as the final calculation of the Additional Rent for the Comparison Year. 

Tenant notifies Landlord in writing of Tenant’s claim for waiver of the Late Charge within 30 days after Tenant’s receipt of Landlord’s invoice for the Late Charge;

Tenant has neither incurred a Late Charge nor received a waiver of a Late Charge in the 12 consecutive Months before the due date of the late payment;

Tenant is not in Default; and

Tenant has paid Landlord the overdue amount.

USE & OCCUPANCY

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

The Leasehold Improvements and Alterations,

Tenant’s use or occupancy of the Premises,

Tenant’s employer/employee obligations,

A condition created by Tenant, its Affiliates or their contractors or invitees,

Tenant’s failure to comply with this Lease,

The negligence of Tenant or its Affiliates or contractors, or  

Any chemical wastes, contaminants, pollutants or substances that are hazardous, toxic, infectious, flammable or dangerous, or regulated by any local, state or federal statute, rule, regulation or ordinance for the protection of health or the environment (“Hazardous Materials”) that are introduced to the Project, handled or disposed, by Tenant or its Affiliates, or any of their contractors; provided, however, that this Section 5.2(a) shall not require Tenant to correct construction defects in Landlord’s Work or effectuate capital improvements or repairs (other than with respect to the Leasehold Improvements and/or Tenant’s Alterations).

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

SERVICES & UTILITIES

Standard Services Defined. “Standard Services” means:

Condenser water for the operation of heating, ventilation and air-conditioning (“HVAC”) equipment serving the Premises during Business Hours, to the extent reasonably required to comfortably use and occupy the Premises.

HVAC during Business hours to the extent reasonably required to comfortably use and occupy the interior Common Areas;

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

Subject to §6.2, janitorial services to the Premises and interior Common Areas 5 days a week, except Holidays, to the extent customarily provided in office buildings in the San Francisco financial district and SOMA submarkets which are comparable in quality, location and prestige to the Building;

Access to the Premises (by at least 1 passenger elevator if not on the ground floor) 24 hours a day, 365 days per year;

Replacement of, and Labor to replace, fluorescent tubes and ballasts in Building Standard light fixtures in the Premises and in the Common Areas;

Building access control services;

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

Subject to §6.2, electricity from Landlord’s selected provider(s) for the provision of the following in and to the Premises:

Lighting,

Convenience outlets for the operation of customary office equipment, and

The operation of HVAC equipment;

Standard Services Provided. During the Term, Landlord will provide the Standard Services to Tenant subject to Tenant’s obligations under §6.2. Except for those costs directly paid by Tenant pursuant to §6.2, the cost of the Standard Services

will be included in Expenses. Landlord is not responsible for any inability to provide Standard Services due to either: a concentration of personnel or equipment in the Premises in excess of that customary for the general administrative office use; or Tenant’s use of equipment in the Premises that is not customary office equipment or has special cooling requirements.  

Tenant’s total consumption of electricity in the Premises, including lighting, convenience outlets, and HVAC units, will be separately metered with Building Standard meters to be installed and maintained at Tenant’s cost and expense (and which will constitute part of the Leasehold Improvements and may be included as a Work Cost pursuant to the Work Letter). Landlord may, but will not be required to, install an energy management and billing system to read such meters and determine the cost incurred by Landlord of Tenant’s electrical usage (which system will be part of the Mechanical System) based upon any or all of the following, as applicable: (i) the actual cost per kilowatt to which Landlord is subject to charge by the utility providing service to the Building, as determined by Landlord’s energy management and billing system.

The charge to Tenant for janitorial services provided to Tenant as a part of Standard Services will be the product of (i) the USF of the Premises, and (ii) the cost per USF of janitorial services provided to tenanted premises of the Building as part of Standard Services (as opposed to costs incurred with respect to the Common Areas, which will be included in Expenses).

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

Lighting. Landlord may elect to furnish non-Building Standard lamps, bulbs, ballasts, and starters that are part of the Leasehold improvements for purchase by Tenant at Landlord’s cost, plus Landlord’s standard administration fee. Landlord will install such items at Landlord’s scheduled rate for this service.

Other Utilities and Services. Tenant will pay as Rent the actual cost of utilities or services (other than those directly charged pursuant to §6.2, or delineated in subsections (a) and (b) of this §6.1) either used by Tenant or provided at Tenant’s request in excess of that provided as part of the Standard Services, plus Landlord’s standard administration fee. Tenant’s excess consumption may be estimated by Landlord unless either Landlord requires or Tenant elects to install Building Standard meters to measure Tenant’s consumption.

Additional Systems and Metering. Landlord may require Tenant, at Tenant’s expense, to upgrade or modify existing Mechanical Systems serving the Premises or the Leasehold Improvements to the extent necessary to meet Tenant’s excess requirements, including installation of Building Standard meters in addition to those meters required under §6.2(a) to measure the same.

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

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

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

REPAIRS

ALTERATIONS

Consent Required. All Alterations that cost in excess of $20,000.00 or require a building permit from the applicable governmental agency shall require Landlord’s prior written consent; and if Landlord’s consent is not required pursuant to foregoing, then Tenant must submit written notice to Landlord of any such Alteration no less than 10 business days prior to the commencement of such Alteration. If a Design Problem exists, Landlord may withhold its consent in Landlord’s sole discretion; otherwise, Landlord will not unreasonably withhold, condition or delay its consent. Unless Tenant at the time of installation obtains Landlord’s prior written consent to remove the Alterations, then such Alterations will become part of the Premises to be tendered to Landlord on termination of the Lease. Landlord may require Tenant to remove Alterations and restore the Premises under §3.3 upon termination of this Lease if the Alterations are not customary Alterations for the Use and, if consent is required, Landlord requires such removal as a condition of Landlord’s consent.

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

Does not comply with laws;

Does not meet or exceed the Building Standard;

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

Affects the exterior appearance of the Building or Common Areas;

Violates any agreement affecting the Project;  

Costs more to demolish than Building Standard improvements;

Violates any insurance regulations or standards for a fire-resistive office building;

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

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

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

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

Alterations Fee. Tenant shall pay Landlord as Rent 3% of the total construction costs of the Alterations that are not cosmetic Alterations to cover review of Tenant’s plans and construction coordination by Landlord’s employees. In addition, Tenant shall reimburse Landlord for the actual cost that Landlord reasonably incurs to have engineers, architects, or other professional consultants review Tenant’s plans and work in progress, or inspect the completed Alterations.

INSURANCE  

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

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

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

Insurance covering the perils described in (2) for Tenant’s loss of income or insurable gross profits with a limit not less than Tenant’s annual Rent. Each of these policies shall include a provision or endorsement in which the insurer waives its right of subrogation against Landlord and each Additional Insured.

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

Insurance required by law, including workers’ compensation insurance.

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

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

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

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

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

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

Commercial general liability insurance.

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

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

Boiler and machinery insurance.

Other insurance that Landlord elects to maintain.

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

DAMAGE OR DESTRUCTION

Landlord’s Estimates. Landlord will assess the damage to the Project (but not the Leasehold Improvements) and notify Tenant of Landlord’s reasonable estimate of the time required to substantially complete repairs and restoration of the Project (“Repair Estimate”) within 30 days after the date of the casualty. Landlord will also estimate the time that all or a portion of the Premises will be Untenantable (“Interruption Estimate”) within 30 days after the date of the casualty. “Untenantable” means that the Premises are not reasonably accessible or are unfit for the Use. Within 30 days after the later of the casualty, issuance of the Repair Estimate, issuance of the Interruption Estimate, or receipt of any denial of coverage or reservation of rights from Landlord’s insurer, each party may terminate the Lease by written notice to the other on the following conditions:

Landlord may elect to terminate this Lease if either:

The Repair Estimate exceeds 180 days, or

The damage or destruction occurs in the last 12 Months of the Term and the Repair Estimate exceeds 20% of the remaining Term; or

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

Tenant may elect to terminate this Lease if either (i) the Interruption Estimate exceeds 180 days, or (ii) the damage or destruction occurs in the last 12 Months of the Term and the Interruption Estimate exceeds 20% of the remaining Term.

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

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

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

Tenant may not terminate this Lease if the actual time to perform the repairs and restoration exceeds the Repair Estimate, or the actual interruption exceeds the Interruption Estimate. Notwithstanding the foregoing, if(A) either the actual time to perform the repairs and restoration to the Base Building and Leasehold Improvements exceeds the Repair Estimate by more than 60 days, or the actual interruption exceeds the Interruption Estimate by more than 60 days (each such period to be extended by any delay caused by Tenant), and (B) the total time which the Premises will be Untenantable will exceed 180 days, then Tenant may terminate this Lease upon 30 days’ prior written notice to Landlord; provided, however, that if the repairs and restoration are completed within said 30 day period, then this Lease will not be so terminated and will continue in full force and effect.

INDEMNITY  

Landlord’s Waivers. Landlord waives any Claims against Tenant and its Affiliates for perils insured or required to be insured by Landlord under subsections (2) and (3) of §9.2(a), except to the extent caused by the willful misconduct of Tenant or its Affiliates but in no case will Tenant be liable for any special or consequential damages (including interruption of business, loss of income, or loss of opportunity).

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

Any accident or occurrence in the Premises, except to the extent caused by Landlord’s or its Affiliates’ or contractors’ negligent or willful misconduct;

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

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

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

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

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

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

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

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

CONDEMNATION

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

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

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

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

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

TENANT TRANSFERS

Transfer Defined. “Transfer” means any:

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

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

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

Transfer of control of Tenant, subject to §13.3.(a) herein below.

Transferee Defined. “Transferee” means a party to whom a Transfer is proposed to be made or actually made in accordance with the provisions of this Lease.

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

Has a tangible net worth immediately following the Transfer not less than Tenant’s tangible net worth preceding the Transfer;

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

Is not named or listed as a Blocked Person.

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

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

If the proposed Transfer is either an assignment of this Lease a sublease of all of the Premises or any part of the Premises that will be separately demised and have its own entrance from the Common Areas and for substantially all of the remaining Term of the Lease, terminate this Lease as of the proposed Transfer date; provided, however, that there shall be no termination if Tenant rescinds its request within 5 days after receipt of Landlord’s election to terminate; or

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

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

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

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

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

The proposed Transferee is not an agency of any government, a medical facility, or an entity with sovereign immunity;

Tenant is not in Default under this Lease;

The proposed Transferee is not named or listed as a Blocked Person; and

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

LANDLORD TRANSFERS

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

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

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

Obligated to return any security deposit or Letter of Credit (as applicable) not paid over to Successor Landlord, or

Obligated to perform any improvements to the Premises (or provide an allowance therefor).

The Commencement Date and Expiration Date;

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

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

That, to Tenant’s actual knowledge neither Landlord nor Tenant is in Default;

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

That, unless the Premises have been sublet, Tenant solely occupies the Premises; and

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

DEFAULT AND REMEDIES

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

Fails to pay Rent when due, and the failure continues for 7 days after Landlord notifies Tenant of this failure under §17.2 (Tenant waiving any other notice that may be required by law);

Fails to perform a non-monetary Lease obligation of Tenant and the failure continues for 30 days after Landlord notifies Tenant of this failure, but:

In an emergency Landlord may require Tenant to perform this obligation in a reasonable time of less than 30 days, or

If it will reasonably take more than 30 days to perform this obligation, then Tenant will have a reasonable time to perform this obligation, but only if Tenant commences performing this obligation within 30 days after Landlord notifies Tenant of this failure;

Consummates a Transfer that violates Article 13;

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

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

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

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

Landlord has the remedy described in California Civil Code §1951.4. Landlord may continue this Lease in effect after Tenant’s breach and abandonment (until Landlord terminates Tenant’s right to possess the Premises under (2), below) and recover Rent as it becomes due. If Landlord elects this remedy, any Transfer Tenant proposes will be subject only to reasonable limitations.

Landlord has the remedy described in California Civil Code §1951.2. If Tenant breaches the Lease and abandons the Premises before the end of the Term, or Tenant’s right to possession is terminated by Landlord as a result of a Default, then Landlord may recover from Tenant all of the following:

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

The unpaid Rent earned as of termination

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

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

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

For any amounts owed under (1) or (2), recover interest at the greater of the interest rate permitted under law or l0% (“Default Rate”) from the date each amount is due until paid by Tenant.

Landlord will be in “Default” of this Lease if Landlord fails to perform any Lease obligation of Landlord and this failure continues for 20 days after Tenant notifies Landlord of such failure, or such longer period of time as is reasonable if more than 20 days is reasonably required to perform this obligation if performance commences within this 20-day period and is diligently prosecuted to completion.

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

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

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

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

LETTER OF CREDIT; FINANCIAL STATEMENTS  

Tenant shall provide the Letter of Credit to Landlord on or before the date that is 3 business days after full execution and delivery of this Lease to both Landlord and Tenant. Notwithstanding anything to the contrary contained in this Lease, prior to Tenant’s delivery of the Letter of Credit, Landlord shall have no obligation to commence Landlord’s Work, and the failure of Tenant to provide the Letter of Credit to Landlord when required under this subsection (a) shall be a Tenant Delay.

The Letter of Credit shall be issued by a solvent, nationally recognized bank (the “Bank”) with a long term debt rating by Standard & Poors of not less than A, and shall initially be in the LC Amount specified in §1.1 (I), and shall be subject to reduction as follows:

Effective on the first day of Month 25 of the Term, the LC Amount will be reduced to $231,962.64;

Effective on the first day of Month 37 of the Term, the LC Amount will be reduced to $193,302.20;

Effective on the first day of Month 49 of the Term, the LC Amount will be reduced to $154,641.76;

Effective on the first day of Month 61 of the Term, the LC Amount will be reduced to $115,981.32.

Effective on the first day of Month 73 of the Term, the LC Amount will be reduced to $77,320.88.

Effective on the first day of Month 85 of the Term, the LC Amount will be reduced to $38,660.44.

The Letter of Credit shall be maintained in effect, whether through renewal or extension, for the period from the date of Tenant’s execution of this Lease to a date 60 days after the Expiration Date of this Lease (the “LC Expiration Date”). If the Letter of Credit held by Landlord expires prior to the LC Expiration Date, then Tenant shall deliver a new Letter of Credit or certificate of renewal or extension to Landlord at least 60 days prior to the expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the part of Landlord.

The Letter of Credit shall provide that Landlord, and each of its successors and assigns, may at any time and without Tenant’s consent, transfer one or more times all of its interest in and to the Letter of Credit to a successor to Landlord’s interest in this Lease. Landlord will give Tenant notice of any such assignment of the Letter of Credit. In the event of a transfer of Landlord’s interest in the Building by Landlord, or any of its successors and assigns, such party shall transfer the Letter of Credit to the transferee of such interest and thereupon the transferring party shall, without Tenant’s consent, be released by Tenant from all subsequent liability with respect to the Letter of Credit. In connection with any such transfer of the Letter of Credit by Landlord, or any of its successors and assigns, Tenant shall (i) without charge to Landlord execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and (ii) pay the Bank’s transfer and processing fees in connection each such transfer.

The Letter of Credit shall be presentable at sight at a location within a major city in the continental United States, permit partial draws, and permit multiple presentations and draws. The Letter of Credit may not contain any provision or condition (i) that requires the Landlord to make any representations to the Bank as to the basis for draw set forth in §16.2, (ii) under which the Bank may determine whether any condition for draw set forth in §16.2, below, has occurred, or (iii) permits the Bank to dishonor any draw because of the existence of any dispute between Landlord and Tenant.

Subject to the foregoing requirements, the Letter of Credit shall be subject to the Uniform Customs and Practices for Documentary Credits (2007-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590.

Tenant is in Default of any monetary obligation under this Lease; or

A receiver or trustee of Tenant’s assets is appointed, or any voluntary or involuntary bankruptcy is filed by or against Tenant, or Tenant makes any assignment for the benefit of Tenant’s creditor; or

The Bank has notified Landlord that the Letter of Credit will not be renewed or extended through the LC Expiration Date and an acceptable replacement Letter of Credit is not provided by Tenant to Landlord at least 60 days prior to the expiration of the Letter of Credit then held by Landlord.

Tenant may not assign or encumber the Letter of Credit or any part thereof, and neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance.

Landlord shall not be required to segregate the proceeds of the Letter of Credit from Landlord’s other assets.

Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the Letter of Credit on the terms and conditions described in this Article 16, upon the occurrence of any Default on the part of Tenant under this Lease.

The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable law, or limit any recovery under law to which Landlord may be entitled. Landlord is not required to first proceed against the Letter of Credit.

Tenant shall not interfere in any way with the Bank’s obligation to pay to Landlord any proceeds of the Letter of Credit, either prior to or following a “draw” by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw upon the Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the Bank’s failing to honor a drawing upon such Letter of Credit in a timely manner. Notwithstanding the foregoing, nothing herein shall be deemed to prevent Tenant from seeking order for injunctive relief against Landlord (but not the Bank) prohibiting Landlord from presenting the Letter of Credit to the Bank.

The Letter of Credit constitutes a separate and independent contract between Landlord and the Bank, and Tenant is not a third party beneficiary of such contract. Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof. If Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant (or its bankruptcy estate) nor any trustee thereof shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

Neither Landlord nor Tenant intends, and in no event or circumstance shall the Letter of Credit or any renewal thereof or any proceeds thereof constitute a “security deposit” within the meaning of California Civil Code § 1950.7, or otherwise be subject to the terms of such section or any other law, rule or regulations applicable to security deposits in the commercial context, and each party waives any and all rights, duties and obligations that the other party may now or, in the future, relating to or arising from the application of any such laws.

MISCELLANEOUS

BROKERS

T3 Advisors is the agent of the Buyer (i.e., Tenant) exclusively.

Brookfield Properties Management (CA) Inc. and Jones Lang LaSalle are, collectively, the agent of the Seller (i.e., the Landlord) exclusively.

TENANT’S SECURITY SYSTEM

Imprivata, Inc.

BOP 685 Market LLC

By:

/s/ John F. Milton

By:

/s/ John R. Barganski

Print:

John F. Milton

Print:

John R. Barganski

Title:

VP and General Counsel

Title:

Senior Vice President, Leasing

By:

By:

/s/ Mark C. Phillips

Print:

Print:

Mark C. Phillips

Title:

Title:

Senior Vice President, Regional Counsel

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

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

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

Place any objects on windowsills.

The Commencement Date is                     .

The Expiration Date is                     .

CONSTRUCTION REPRESENTATIVES

AS-IS CONDITION

LANDLORD’S WORK

CONSTRUCTION SCHEDULE AND DELAY

Task

Party Responsible

Date Due

Submit Tenant-Approved Construction Drawings and Specify Building Standard Finishes to Landlord

Tenant

28 calendar days after the Date

PLANS & PERMITS

GENERAL CONTRACTOR

TENANT’S ACCESS

Tenant’s Work and Landlord’s Work will be coordinated.

Tenant’s Personnel must comply with all reasonable rules and regulations that Landlord establishes for the performance of work in the Building. Tenant acknowledges receipt of Landlord’s Construction Manual for the Building. Tenant’s Personnel will follow Landlord’s reasonable directions. Tenant’s Personnel shall have, during the hours specified in the Construction Manual and subject to the terms set forth in the Construction Manual, access during normal business hours to the Premises and reasonable use in common with Landlord and other tenants to the loading docks and freight elevators.

If Tenant’s Work unreasonably interferes with Landlord’s Work, Building operations or causes labor unrest at the Building, then Landlord may order Tenant’s Personnel to immediately cease Tenant’s Work and vacate the Premises, Common Areas and Building of personnel, equipment, materials and supplies to the extent reasonably required to eliminate this interference. Landlord’s actions under this (c) shall not constitute a Landlord Delay.

Tenant’s Work will comply with all applicable laws, regulations, permits and other government approvals applicable to entry and work in the Premises.

Before being provided access to the Premises, Tenant’s Personnel must furnish Landlord with:

Certificates or other proof reasonably required by Landlord to establish that Tenant’s Personnel is in compliance with the following insurance requirements:

Tenant’s Personnel shall maintain the coverage types and limits required in the Construction Manual with respect to the particular trade and/or work being performed.

Prior to commencing work, Tenant’s Personnel and each subcontractor shall submit to Landlord certificates of insurance showing the required insurance has been obtained. If the coverage expires prior to completion of the work, then Tenant’s Personnel and each subcontractor shall submit replacement certificates of insurance to

Landlord prior to the expiration of such coverage. All certificates shall provide that there will be no cancellation, material modification, or reduction of coverage without reasonable written notice to Landlord. 

A copy of all required building permits for Tenant’s Work;

A complete list of Tenant’s Personnel;

A copy of the contractor’s license for Tenant’s Personnel; and

A copy of the work schedule for Tenant’s Personnel.

WORK COSTS

All design and engineering fees incurred in connection with the preparation and review of the Space Plans, Construction Drawings, Change Orders, and As-Built Drawings by Tenant’s Architect;

All reasonable out-of-pocket fees incurred by Landlord in having third party engineers or other consultants review, test or inspect the Space Plans, Construction Drawings, Change Orders, or Landlord’s Work;

Governmental agency plan check, permit, and other fees applicable to Landlord’s Work;

The cost of any improvements, modifications, additions or alterations to the Base Building or Common Areas that are required by any government agency or authority having jurisdiction over Landlord’s Work as a condition of performing any item of Landlord’s Work that is required by Tenant and does not constitute normal and customary office improvements;

Sales and use taxes applicable to Landlord’s Work;

Material and labor costs incurred in performing Landlord’s Work;

General conditions and contractor’s fees; and

A supervision fee payable to Landlord in the amount of 3% of the Work Costs defined in subsections (d) through (g), above.

If the contracted Work Costs exceed the Construction Allowance, then Tenant will within 5 business days after receipt of Landlord’s invoice for the same

Deposit with Landlord such excess amount, or

Deliver written notice to Landlord that Tenant elects to receive an “Additional Construction Allowance” of such overage amount from Landlord that will be fully amortized over the Term and repaid by Tenant to Landlord in advance in equal monthly installments (without any such installment being subject to excuse or abatement for any cause whatsoever), with the interest on the unpaid principal balance at the rate of 8% per annum, and computed using beginning of period accounting. The Additional Construction Allowance plus the Construction Allowance shall not exceed the Work Costs.

Out of the Construction Allowance and amounts deposited by Tenant, Landlord will pay all Work Costs on a progress payment basis for Landlord’s Work, withholding the applicable Retention from each progress payment.

Landlord will pay the Retention upon final completion of Landlord’s Work, evidenced by Landlord’s receipt of all of the following:

The permit card with all final inspector sign-offs completed and, if required by law, a certificate of occupancy for the Premises;

A copy of the recorded Notice of Completion of Landlord’s Work (and Tenant’s Work, if applicable);

The As-Built Drawings;

An air balance report evidencing that the HVAC system has been balanced and calibrated to industry and Building Standards;

Completion of all punchlist items; and 

Unconditional lien releases from all contractors and subcontractors for all amounts due in connection with Landlord’s Work and Tenant’s Work (if applicable).

If Tenant has deposited any amount with Landlord in accordance with subsection (a), above, and after payment of all Work Costs and disbursement of the entire Construction Allowance (including the Retention) any portion of such deposit remains, then Landlord will repay such unused portion to Tenant within 10 business days of such determination.

If after payment of the Work Costs and application of Construction Allowance against Base Rent to the extent provided in this §8.2, there remains unused Construction Allowance after December 31, 2016, then such Construction Allowance will be deemed forfeited and no longer available to Tenant.

Tenant shall be solely responsible for all after-hours security, after-hours HVAC, after-hours freight elevator use, and cabling for the Premises. Tenant shall be solely responsible, and not as a Work Cost, for all furniture, fixtures and equipment in the Premises.

SUBSTANTIAL COMPLETION; PUNCHLIST ITEMS