Exhibit 10.1

LEASE

BETWEEN

1035 MARKET STREET, LLC (LANDLORD)

AND

ZENDESK, INC.

June 22, 2016

San Francisco, California

 

 

 

 

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LEASE

ARTICLE 1—BASIC LEASE PROVISIONS

1.1

BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other
Lease provision, such other Lease provision shall control.

 

(1)

BUILDING AND ADDRESS:

1035 Market Street, San Francisco, California

 

(2)

LANDLORD ADDRESS FOR NOTICES AND RENT PAYMENTS:

 

1035 MARKET STREET, LLC

c/o Seligman Western Enterprises Ltd.

600 Montgomery Street, 40th Fl.

San Francisco, CA 94111

Attn.: Justin Shapiro

with a copy to:

 

c/o Seligman Western Enterprises II, Ltd.

One Towne Square, Ste. 1913

Southfield, MI 48076

Attn.: Property Manager

 

Rent shall be payable to “1035 MARKET STREET, LLC” at the following address:

 

1035 MARKET STREET, LLC

c/o Seligman Western Enterprises II, Ltd.

One Towne Square, Ste. 1913

Southfield, MI 48076

Attn.: Property Manager

 

(3)

TENANT AND TENANT ADDRESS FOR NOTICES:

 

(a)

Name:

Zendesk, Inc.

 

 

 

(b)

State of Formation:

Delaware

 

Notices to Tenant shall be addressed:

 

Prior to the 5th Floor Commencement Date:

1019 Market Street

San Francisco, CA 94103

 

From and after the 5th Floor Commencement Date:

 

At the Premises

Attention: Legal Department

 

 

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With a copy to:

 

SHARTIS FRIESE LLP

One Maritime Plaza, 18th Floor

San Francisco, CA 94111

Attention:  Jonathan M. Kennedy, Esq.  

 

(4)

DATE OF THIS LEASE:  June 22, 2016

 

(5)LEASE TERM: Commencing on the 5th Floor Commencement Date and ending on
January 31, 2021 (the “Expiration Date”), except as may be terminated or
extended pursuant hereto.

 

(6)MONTHLY BASE RENT:  “Base Rent” as that term is used in the Lease, as to each
of the 5th Floor Space and 6th and 7th Floor Space, shall mean the following
amount:

 

PERIOD

MONTHLY BASE RENT

ANNUAL RATE PER RENTABLE SQUARE FOOT OF PREMISES

5th Floor Space

(9,321 RSF)

 

 

5th Floor Rent Commencement Date (as hereinafter defined)- Month Twelve (12)

$43,270.01

$55.71

Month Thirteen (13) - Twenty Four (24)

$44,551.65

$57.36

Month Twenty Five (25) – Thirty Six (36)

$45,871.73

$59.06

Month Thirty Seven (37) – Forty Eight (48)

$47,231.42

$60.81

Month Forty Nine (49) – End of Initial Term

$48,631.90

$62.61

6th and 7th Floor Space

(8,745 RSF)

 

 

6th and 7th Floor Rent Commencement Date (as hereinafter defined)- Month Twelve
(12)

$41,538.75

$57.00

Month Thirteen (13) – Twenty Four (24)

$42,784.91

$58.71

Month Twenty Five (25) – Thirty Six (36)

$44,068.46

$60.47

Month Thirty Seven (37) – Forty Eight (48)

$45,390.51

$62.29

Month Forty Nine (49) – End of Initial Term

$46,752.23

$64.15

 

“Month 1” will include any partial calendar month following 5th Floor Rent
Commencement Date or the 6th and 7th  Floor Rent Commencement Date, as
applicable, if such Rent Commencement Date is other than the first (1st) day of
a calendar month, and in the event Month 1 includes any partial calendar month,
Tenant shall pay the prorated amount of Monthly Base Rent (prorated on the basis
of a thirty (30) day month) for such partial calendar month pursuant to Article
3 in addition to the Monthly Base Rent for the first full calendar month of the
Term.

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(7)RENTABLE AREA OF THE PREMISES: 9321 RSF (5th Floor Space) and 8,745 RSF (6th
and 7th Floor Space), totaling 18,066 RSF. 

(8)RENTABLE AREA OF BUILDING:  98,028 rentable square feet

 

(9)     TENANT’S SHARE:  

5th Floor Space:  9.51%

 

6th and 7th Floor Space:  8.92%

(10)BASE YEAR: 2017

(11)SECURITY DEPOSIT: $284,506.1, reduced to $142,253.10 on the first day of the
37th month following the 6th and 7th Floor Commencement Date.  

(12)SUITE NUMBER OF PREMISES:  Suite 500, and the entire 6th and 7th floors.

(13)TENANT’S USE OF PREMISES: General office use

(14)BROKERS:

 

Landlord’s Broker:

Jones Lang LaSalle

Tenant’s Broker:

Newmarket, Cornish & Carey

 

(15)TENANT IMPROVEMENT ALLOWANCE:  As to the 5th Floor Space, $15.00 per
rentable square foot, or $139,815, and as to the 6th and 7th Floor Space, $50.00
per rentable square foot, 0r $437,250 (collectively, the “Allowance”).

(16)DEFINITIONS:  Set forth in Exhibit E

ARTICLE 2—PREMISES, TERM, FAILURE TO GIVE POSSESSION

2.1

LEASE OF PREMISES. Landlord leases the Premises to Tenant during the Term, upon
the terms and conditions provided in this Lease. During the Term, Tenant shall
have the right to use the Common Areas of the Building; subject to the terms and
conditions provided in this Lease.

2.2

COMMENCEMENT OF TERM. The “5th Floor Commencement Date” shall be the Delivery
Date of the 5th Floor Space. The “6th and 7th Floor Commencement Date” shall be
the Delivery Date of the 6th and 7th Floor Space. Within thirty (30) days
following the 6th and 7th Floor Commencement Date, Landlord and Tenant shall
enter into a Commencement Date Agreement in the form attached hereto as Exhibit
B. If Tenant does not execute such agreement, the Commencement Date shall be the
date designated by Landlord in the Commencement Date Agreement.

As to each of the 5th Floor Space and 6th and 7th Floor Space, Tenant shall be
permitted to enter into the Premises at any time prior to the 5th Floor
Commencement Date or the 6th and 7th Floor Commencement Date, as applicable, at
Tenant’s sole risk, solely for the purpose of installing fixtures, furniture,
equipment and leasehold improvements in the Premises, provided that, as to each
of the 5th Floor Space and 6th and 7th Floor Space, as applicable, Tenant has
delivered to Landlord (i) evidence of the insurance coverages required under
Article 16, (ii) the first installment of Monthly Base Rent pursuant to Section
3.1. Tenant shall also deliver the entire Security Deposit prior any entry by
Tenant upon the Premises pursuant to this Section 2.2. Tenant further agrees
that any such early access shall not interfere with the quiet enjoyment of other
tenants in the Building. Such early entry shall be subject to all the terms and
provisions of this Lease, except that Tenant shall have no obligation to pay
Monthly Base Rent or other charges during such early access period.

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2.3

FAILURE TO DELIVER POSSESSION. Landlord shall not be subject to any liability
for failing to deliver the Premises by any projected or anticipated date, which
failure shall not affect the validity of this Lease or the obligations of the
parties hereunder. For purposes of this Lease, the Delivery Date shall occur on
the date that Landlord delivers the Premises to Tenant in its “AS-IS” ,
“AS-BUILT” configuration with the roof, HVAC, electrical, plumbing and lighting
systems in good working order and condition. Tenant shall be conclusively deemed
to have accepted the Premises “AS-IS” , “AS-BUILT”, in the condition existing as
of the Delivery Date, and to have waived all claims relating to the condition of
the Premises. Landlord agrees to use commercially reasonable efforts to recover
possession of the Premises from any holdover tenant(s).Notwithstanding the
foregoing, if the Delivery Date has not occurred for all of the Premises on or
before April 1, 2017, Tenant may terminate the Lease. 

 

ARTICLE 3—RENT

 

3.1

5TH FLOOR PREMISES. As to the 5th Floor Premises, commencing on the date that is
the earlier of (i) the date that is the ninety (90) days following the 5th Floor
Commencement Date, (ii) the date upon which Tenant occupies the 5th Floor
Premises for the operation of its business thereupon and (iii) the date upon
which Tenant substantially completes that portion of the Tenant Work applicable
to the 5th Floor Premises (the “5th Floor Rent Commencement Date”), Tenant shall
pay to Landlord at the address for Rent payments specified in Section 1.1(2), or
to such other persons, or at such other places designated by Landlord, without
any prior demand therefor in immediately available funds and without any
deduction or offset whatsoever, Rent, including Monthly Base Rent and Rent
Adjustments in accordance with Article Four.

3.2

6TH AND 7TH FLOOR PREMISES. As to the 6th and 7th Floor Premises, commencing on
the date that is the earlier of (i) the date that is the ninety (90) days
following the 6th and 7th Floor Commencement Date, (ii) the date upon which
Tenant occupies the 6th an 7th Floor Premises for the operation of its business
thereupon and (iii) the date upon which Tenant substantially completes that
portion of the Tenant Work applicable to the 6th and 7th Floor Premises (the
“6th and 7th Floor Rent Commencement Date”), Tenant shall pay to Landlord at the
address for Rent payments specified in Section 1.1(2), or to such other persons,
or at such other places designated by Landlord, without any prior demand
therefor in immediately available funds and without any deduction or offset
whatsoever, Rent, including Monthly Base Rent and Rent Adjustments in accordance
with Article Four.

3.3

GENERAL TERMS. Monthly Base Rent shall be paid monthly in advance on the first
day of each month of the Term, except that Tenant shall pay the first
installment of Monthly Base Rent concurrently with execution and delivery of
this Lease. Monthly Base Rent shall be prorated for partial months within the
Term on the basis of a thirty (30) day month. Tenant’s covenant to pay Rent
shall be independent of every other covenant in this Lease.

 

ARTICLE 4—RENT ADJUSTMENTS AND PAYMENTS

 

4.1

RENT ADJUSTMENTS

Commencing on each of the 5th Floor Rent Commencement Date as to the 5th Floor
Premises and the 6th and 7th Floor Rent Commencement Date as to the 6th and 7th
Floor Premises, Tenant shall pay to Landlord Rent Adjustments with respect to
each Adjustment Year as follows:

(a)    The Rent Adjustment Deposit representing Tenant’s Share (as set forth in
Section 1.1(14) as to each of the 5th Floor Space and 6th and 7th Floor Space)
of increases in Operating Expenses for the applicable Adjustment Year over the
Operating Expenses for the Base Year, monthly during the Term with the payment
of Monthly Base Rent;

 

(b)    The Rent Adjustment Deposit representing Tenant’s Share of increases in
Taxes for the applicable Adjustment Year over the Taxes for the Base Year,
monthly during the Term with the payment of Monthly Base Rent; and

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(c)    Any Rent Adjustments due in excess of the Rent Adjustment Deposits in
accordance with Section 4.2.  Rent Adjustments due from Tenant to Landlord for
any Adjustment Year shall be Tenant’s Share of Operating Expenses for such year
in excess of the Base Year Operating Expenses and Tenant’s Share of Taxes for
such year in excess of the Base Year Taxes.  If Operating Expenses and/or Taxes
in any Adjustment Year decrease below the amount of Operating Expenses and/or
Taxes for the Base Year for any reason, the Rent Adjustment Deposit for
Operating Expenses and/or Taxes, as the case may be, for that Adjustment Year
shall be $0.

(d)    For purposes of determining Rent Adjustments, if the Building is not
fully occupied during all or any portion of the Base Year or any Adjustment Year
during the Term, an adjustment shall be made by Landlord in computing Operating
Expenses for such year so that the Operating Expenses shall be computed for such
year as though the Building been ninety-five percent (95%) occupied.  In the
event that the Property is not fully assessed for all or a portion of the Base
Year or any Adjustment Year, then Taxes shall be adjusted to an amount which
would have been payable in the Base Year or such Adjustment Year if the Property
had been fully assessed.  Tenant acknowledges that certain uncontrollable and
extraordinary expenses can result in creating artificially high expenses during
the Base Year.  For the purpose of determining the amount of Operating Expenses
included in the Base Year, the (i) amounts paid or incurred by Landlord for
utilities or insurance shall be calculated as though there were no utility rate
and or insurance premium increases imposed on Landlord during or prior to the
Base Year due to extraordinary circumstances, including conservation surcharges,
boycotts, embargoes or shortages or unavailability of customary insurance
coverages at historic commercially reasonable rates; (ii) Landlord may disregard
amounts paid or incurred by Landlord with respect to any extraordinary Operating
Expenses directly related to responding to incidents of civil unrest, terrorism
or area-wide closures attributable to releases of airborne toxic agents, or any
threats with respect to any of the foregoing, in determining the amount to be
included in the Base Year, and (iii) for the purpose of determining the amount
of insurance expenses, deductibles shall not be included (or be deemed to have
been included) in the Base Year.  Rent Adjustments for any Adjustment Year that
is a partial calendar year shall be appropriately prorated. Landlord's
determination of any adjustments hereunder shall be made in good faith, but
otherwise in its reasonable discretion.

 

4.2

STATEMENT OF LANDLORD

 

As soon as practicable after the expiration of the Base Year, and each
Adjustment Year thereafter, Landlord will furnish to Tenant a statement
(“Landlord’s Statement”) showing the following:

 

(a)    The amount of actual Operating Expenses and Taxes for the Base Year and
thereafter for the most recent Adjustment Year;

 

(b)    The amount of Rent Adjustments due Landlord for the most recent
Adjustment Year, less credit for Rent Adjustment Deposits or other amounts paid,
if any, toward Operating Expenses and Taxes for such Adjustment Year; and

 

(c)    Any change in the Rent Adjustment Deposit due monthly in the current
Adjustment Year, including the amount or revised amount due for months preceding
any such change pursuant to Landlord’s Statement.

 

Tenant shall pay to Landlord within thirty (30) days after receipt of each
Landlord’s Statement any amounts for Rent Adjustments then due in accordance
with such Landlord’s Statement.  Any amounts due from Landlord to Tenant
pursuant to this Section shall be credited to the Rent Adjustment Deposit next
coming due, or refunded to Tenant if the Term has already expired provided
Tenant is not in default hereunder and no further Rent is due.  No interest or
penalties shall accrue on any amounts that Landlord is obligated to credit or
refund to Tenant by reason of this Section 4.2.  Landlord’s failure to deliver
Landlord’s Statement or to compute the amount of the Rent Adjustments shall not
constitute a waiver by Landlord of its right to deliver such items nor
constitute a waiver or release of Tenant’s obligations to pay such amounts.  The
Rent Adjustment Deposit shall be credited against Rent Adjustments due for the
applicable Adjustment Year.  During the last complete Adjustment Year or during
any partial Adjustment Year in which the Lease terminates, Landlord may include
in the Rent Adjustment Deposit its

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estimate of Rent Adjustments which may not be finally determined until after the
termination or expiration of this Lease.  Tenant’s obligation to pay Rent
Adjustments survives the expiration or termination of the Lease.

 

4.3

TENANT SPECIFIC TAXES. In addition to Monthly Base Rent, Rent Adjustments, Rent
Adjustment Deposits and other charges to be paid by Tenant, Tenant shall pay to
Landlord, within thirty (30) days following demand, any and all taxes payable by
Landlord (other than federal or state inheritance, general income, gift or
estate taxes) whether or not now customary or within the contemplation of the
parties hereto: (a) upon, allocable to, or measured by the Rent payable
hereunder, including any gross receipts tax or excise tax levied by any
governmental or taxing body with respect to the receipt of such rent; or (b)
upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (c) upon the measured value of Tenant’s personal
property located in the Premises or in any storeroom or any other place in the
Premises or the Property, or the areas used in connection with the operation of
the Property, it being the intention of Landlord and Tenant that, to the extent
possible, such personal property taxes shall be billed to and paid directly by
Tenant; or (d) upon this transaction. Taxes paid by Tenant pursuant to this
Section 4.3 shall not be included in any computation of Taxes payable pursuant
to Sections 4.1 and 4.2.

 

ARTICLE 5—SECURITY DEPOSIT

 

Concurrently with the execution and delivery of this Lease, Tenant shall pay to
Landlord in immediately available funds the Security Deposit.  The Security
Deposit may be applied by Landlord to cure any Default of Tenant, and Tenant
shall replenish the Security Deposit in full by paying to Landlord within ten
(10) days of demand the amount so applied.  Landlord’s application of the
Security Deposit shall not constitute a waiver of Tenant’s default if the
Security Deposit does not fully compensate Landlord for all losses and expenses
incurred in connection with such Default and shall not prejudice any other
rights or remedies available to Landlord under this Lease.  Landlord shall not
pay any interest on the Security Deposit and shall not keep the Security Deposit
separate from its general accounts. In the absence of evidence satisfactory to
Landlord of an assignment of the right to receive the Security Deposit, Landlord
may return the Security Deposit to the original Tenant, regardless of an
assignment of this Lease.  Upon the transfer of Landlord’s interest under this
Lease, Landlord’s obligation to Tenant with respect to the Security Deposit
shall terminate upon transfer to the transferee of the balance of the Security
Deposit.  Except to the extent of damages arising from a Default or termination
of this Lease, the Security Deposit shall be returned to Tenant within thirty
(30) days after Landlord recovers possession of the Premises.  Tenant hereby
waives any and all rights of Tenant under Section 1950.7 (excepting subsection
(b)) of the California Civil Code or other Law regarding security deposits.

 

ARTICLE 6—SERVICES

 

6.1

GENERAL SERVICES. During the Term, so long as Tenant is not in Default of this
Lease, Landlord shall furnish the following services, which services shall be
included in Operating Expenses: (i) HVAC to the Premises during Standard
Operating Hours, for the comfortable occupancy of the Premises under normal
business office operations, subject to compliance with all applicable voluntary
and mandatory regulations and Laws; (ii) lobby attendant service from 8:00 AM to
9:00 PM Monday through Thursday and 8:00 AM to 6:00 PM on Friday, subject to
change, in each case, at Landlord’s reasonable discretion; (iii) washing of the
outside windows in the Premises weather permitting at intervals reasonably
determined by Landlord; and (iv) automatic passenger and swing/freight elevator
service in common with other tenants of the Building (with freight elevator
service subject to scheduling by Landlord).. Tenant shall have access to the
Premises on a 24/7 basis, subject to the terms and conditions of this Lease and
the Rules and Regulations in effect from time to time. If Tenant uses heat
generating machines or equipment in the Premises to an extent which adversely
affects the temperature otherwise maintained by the air cooling system, Landlord
reserves the right, at Tenant’s cost, to install supplementary air conditioning
units in the Premises. All telephone, and communication connections which Tenant
may desire shall be subject to Landlord’s prior written approval, in Landlord’s
reasonable discretion, and the location of all wires and the work in connection
therewith shall be performed by contractors reasonably approved by Landlord.
Landlord has approved Novo Construction as contractors for such purpose. If
Tenant desires to use HVAC for the Premises during hours other than Standard
Operating Hours, Landlord shall supply such HVAC to the Premises on not less
than twenty four (24) hours’ notice. Tenant expressly agrees that Tenant

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shall pay, upon demand and as Additional Rent, all actual cost to Landlord of
supplying such after-hours HVAC to the Premises, including without limitation,
the cost of running the cooling tower servicing the Building and the Premises
during such after-hours period. 

6.2

UTILITY AND SERVICE PAYMENTS. On the first day of each calendar month during the
Term concurrently with Tenant’s payment of each Monthly Base Rent, Tenant shall
pay Tenant’s Share of the actual water, janitorial and trash collection charges
for the Building (collectively, the “Landlord Services”) based on an estimate
provided by Landlord, without regard to any Base Year charges (i.e., Tenant
shall pay for Tenant’s Share of actual water, janitorial and trash collection
charges for the Building, and not any increase above the Base Year amount under
the provisions of Section 4.1). Landlord may revise the charge estimates for
Landlord Services at any time, and shall have the right to reconcile actual
charges for Landlord Services for the applicable year after such year. If, based
on Landlord’s reconciliation, it is determined that (i) Tenant underpaid
Tenant’s Share of the applicable charges for Landlord Services, Tenant shall pay
the shortfall within ten (10) days following demand therefor by Landlord, or
(ii) Tenant overpaid Tenant’s Share of the applicable charges for Landlord
Services, then Landlord shall apply the overpaid amount to the next installment
of Rent due from Tenant. Notwithstanding any provision of the Lease to the
contrary, without, in each instance, the prior written approval of Landlord, in
Landlord’s prudent business judgment, Tenant shall not: (i) make any alterations
or additions to the any equipment or systems in the Building; or (ii) install or
use or permit the installation or use of any computer or electronic data
processing equipment in the Premises other than personal computers, laptop
computers and ancillary equipment. The Premises are currently metered for gas
and electricity, and Tenant shall pay gas and electricity charges directly to
the applicable utility provider (currently, Pacific Gas & Electric). Tenant’s
use of electric current shall at no time exceed the capacity of the wiring,
feeders and risers providing electric current to the Premises or the Building.
The consent of Landlord to the installation of electric equipment shall not
relieve Tenant from the obligation to limit usage of electricity to no more than
such capacity. At any time and from time to time, Landlord may in its sole
discretion install one or more meters or submeters to measure any utility
furnished to the Premises. At Tenant’s written request, Landlord shall furnish
additional quantities of any of the services or utilities provided by Landlord,
if Landlord can reasonably do so. Tenant shall pay Landlord’s prevailing rates
charged from time to time for such additional services and utilities (which
rates shall be reasonable).

6.3

INTERRUPTION OF SERVICES. Tenant agrees that Landlord shall not be liable to
Tenant for any damages, losses, or claims because of any interruption, delay or
discontinuance of any telephone or other communication service to the Premises.
Landlord shall not be in breach of this Lease nor be liable to Tenant for
damages or otherwise, for any failure to furnish, or a delay in furnishing, or a
change in the quantity or character of any service when such failure, delay or
change is occasioned, in whole or in part, by repairs, improvements or
mechanical breakdowns, by the act or default of Tenant or other parties or by an
event of Force Majeure. No failure, delay or change shall be deemed an eviction
or disturbance of Tenant’s use of the Premises, or relieve Tenant from paying
Rent or from performing any other obligations under this Lease.Should any
equipment or machinery furnished by Landlord cease to function properly,
Landlord shall use reasonable diligence to repair same, but Tenant shall have no
claim for abatement of Rent or damages on account of any interruption of service
occasioned thereby or resulting therefrom.  Tenant hereby waives the provisions
of California Civil Code Section 1932(1) or any other applicable existing or
future law, ordinance or governmental regulation permitting the termination of
this Lease due to an interruption, failure or inability to provide any
services.  Notwithstanding anything contained herein to the contrary, if Tenant
is prevented from using, and does not use, a portion of the Premises for a
period of time in excess of ten (10) consecutive business days due to an
interruption of utility services to the Premises caused by Landlord’s gross
negligence or willful misconduct, and the remaining portion of the Premises is
not reasonably sufficient to allow Tenant to conduct its business in the
Premises, all Rent due under this Lease for the entire Premises shall be abated
for the time until such interruption of utility services has ended.  If,
however, Tenant reoccupies any portion of the Premises during this period of
interruption, the Rent allocable to the reoccupied portion (based on the
proportion that the rentable area of the reoccupied portion of the Premises
bears to the total rentable area of the Premises) shall be payable by Tenant
from the date on which Tenant reoccupies such portion of the Premises

 

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ARTICLE 7—POSSESSION, USE AND CONDITION OF PREMISES

 

7.1

POSSESSION AND USE OF PREMISES. Tenant shall occupy the Premises only for the
use specified in Section 1.1(13). Tenant shall not occupy or use the Premises
for any purpose or in any manner which: (1) is unlawful or in violation of any
Law or Environmental Law; (2) may be dangerous to persons or property or which
may increase the cost of, or invalidate, any policy of insurance carried on the
Building; or (3) is contrary to or prohibited by the terms and conditions of
this Lease. Tenant shall comply with all Laws governing the use, storage,
disposal or generation of any substances, material and wastes which are or
become regulated under any Environmental Law; or which are classified as
hazardous or toxic under any Environmental Law; and explosives and firearms,
radioactive material, asbestos, polychlorinated biphenyls, and petroleum
products including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Resource
Conservation and Recovery Act of 1976, as amended pertaining to Tenant’s
occupancy and use of the Premises and concerning the proper storage, handling
and disposal of any Hazardous Material introduced to the Premises, the Building
or the Property by Tenant or other occupants of the Premises acting by or
through Tenant. Tenant shall not generate, store, handle or dispose of any
Hazardous Material above legally permitted amounts in, on, or about the Property
without the prior written consent of Landlord, which may be withheld in
Landlord’s sole discretion.In the event that Tenant is notified of any
investigation or violation of any Environmental Law arising from Tenant’s
release or emission of Hazardous Materials at the Premises or other violations
of this Section 7.1, Tenant shall immediately deliver to Landlord a copy of such
notice. Landlord may conduct such tests and studies relating to compliance by
Tenant with Environmental Laws as Landlord reasonably deems desirable, all of
which shall be completed at Tenant’s expense. Tenant hereby indemnifies, and
agrees to defend, protect and hold harmless, the Indemnitees from any and all
loss, claim, demand, action, expense, liability and cost (including attorneys’
fees and expenses), including, without limitation, any removal, remediation,
cleanup or restoration costs, arising out of or in any way related to the
presence of any Hazardous Material released or emitted at the Premises or
Property by Tenant or anyone acting by or through Tenant. In case of any action
or proceeding brought against the Indemnitees, Tenant covenants to defend such
action or proceeding by counsel reasonably chosen by Landlord. Landlord reserves
the right to settle, compromise or dispose of any and all actions, claims and
demands related to the foregoing indemnity. Tenant’s obligations under this
paragraph shall survive the expiration or early termination of this Lease.

7.2

AMERICANS WITH DISABILITIES ACT. Landlord and Tenant acknowledge that the
Americans With Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and
regulations and guidelines promulgated thereunder, as all of the same may be
amended and supplemented from time to time (collectively referred to herein as
the “ADA”) establish requirements for business operations, accessibility and
barrier removal, and that such requirements may or may not apply to the
Premises, the Building and the Property depending on, among other things: (1)
whether Tenant’s business is deemed a “public accommodation” or “commercial
facility”, (2) whether such requirements are “readily achievable”, and (3)
whether a given alteration affects a “primary function area”or triggers “path of
travel” requirements. The parties hereby agree that: (a) Landlord shall be
responsible for ADA Title III compliance in the Common Areas including ADA Title
III “path of travel” requirements, except to the extent such compliance is
triggered by (i) Tenant's particular use of the Premises as opposed to office
use, or (ii) Tenant's construction of tenant improvements or Alterations upon
the Premises, (b) Tenant shall be responsible for ADA Title III compliance in
the Premises to the extent that such compliance requirement arises from Tenant’s
particular use of the Premises for other than office use or from the Tenant
Additions, Alterations or other work performed by or for Tenant in the Premises
(it being understood that placing the Premises in compliance with ADA Title III
shall be Landlord’s responsibility (at Landlord’s cost and in Landlord’s
discretion as to the manner of compliance) other than in the foregoing
circumstances), and (c) Landlord may perform, or require Tenant to perform, and
Tenant shall be responsible for the cost of, ADA Title III compliance in the
Common Areas necessitated by the Building being deemed to be a “public
accommodation” instead of a “commercial facility” as a result of Tenant’s
particular use of the Premises as opposed to office use. Tenant shall be solely
responsible for requirements of the ADA relating specifically to Tenant’s
requirements relating to individual employees and not to generally applicable
requirements.

7.3

LANDLORD ACCESS TO PREMISES; APPROVALS. Tenant shall permit Landlord to erect
and maintain pipes, ducts, wiring and conduits in and through existing chases
and ductways through the Premises or replacements reasonably required therefor,
so long as Tenant’s use, layout or design of the Premises is not

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materially affected or altered. Except in the event of an emergency, in which
case no notice shall be required, Landlord shall have the right upon reasonable
notice to Tenant (which may be oral notice) to enter upon the Premises to
inspect the Premises, to perform services, to conduct safety and other testing
in the Premises, including with respect to Tenant’s compliance with Laws and
Environmental Laws and to make such repairs, alterations, improvements or
additions to the Premises or the Building or other parts of the Property as
Landlord reasonably may deem necessary. Any entry or work by Landlord may be
during Standard Operating Hours and Landlord shall use reasonable efforts to
ensure that any entry or work shall not materially interfere with Tenant’s
occupancy of the Premises. Landlord may do any of the foregoing without such
action constituting an actual or constructive eviction of Tenant, in whole or in
part, or giving rise to an abatement of Rent by reason of loss or interruption
of business of the Tenant, or otherwise. 

 

ARTICLE 8—MAINTENANCE

 

Landlord shall, as an Operating Expense, maintain and make necessary repairs to
the Building and the Common Areas, except that:  (a) Landlord shall not be
responsible for the maintenance or repair of any systems located within the
Premises that are supplemental to the Building’s standard systems; and (b) the
cost of performing any repairs caused by the negligence or misconduct of Tenant
shall be paid by Tenant immediately upon demand by Landlord. Tenant shall
periodically inspect the Premises to identify any conditions that are in need of
maintenance or repair.  Tenant shall, at its sole cost and expense, perform all
maintenance and repairs to the Premises that are not Landlord’s express
responsibility under this Lease, and keep the Premises in good condition and
repair, reasonable wear and tear and damage from casualty excepted.  If Tenant
fails to make any repairs to the Premises for more than fifteen (15) days after
notice from Landlord (although notice shall not be required in an emergency),
Landlord may make the repairs, and Tenant shall pay the reasonable cost of the
repairs, together with an administrative charge in an amount equal to ten
percent (10%) of the cost of the repairs. Tenant hereby waives all right to make
repairs at the expense of Landlord or in lieu thereof to vacate the Premises and
its other similar rights as provided in California Civil Code Sections 1932(1),
1941 and 1942 or any other Laws (whether now or hereafter in effect).  Landlord
shall perform and construct, and Tenant shall have no responsibility to perform,
construct or pay for, any repair, maintenance or improvement (i) to the Premises
to the extent necessitated by the gross negligence or willful misconduct of
Landlord, its agents, employees or contractors; (ii) to the structural portions
of the Premises (including the foundation, floors (other than floor coverings),
walls (other than interior wall coverings), roof and roof membrane), except to
the extent that such repair is necessitated by Tenant’s gross negligence or
willful misconduct (in which case such repair shall be performed by Landlord at
Tenant’s cost); (iii)  windows, mechanical and electrical systems, including,
but not limited to, the HVAC, electrical and plumbing systems servicing the
Premises, except to the extent that such repair is necessitated by Tenant’s
gross negligence or willful misconduct (in which case such repair shall be
performed by Landlord at Tenant’s cost).  

 

ARTICLE 9—ALTERATIONS AND IMPROVEMENTS

 

Tenant shall not, except as provided herein, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed, make or cause to be made any Tenant Alterations in or to the
Premises.  All Tenant Alterations shall be completed by contractors approved by
Landlord in Landlord’s reasonable discretion; provided, however, Landlord may,
in its sole discretion, specify the engineers and contractors to perform all
work relating to the Building’s systems (including the mechanical, heating,
plumbing, security, ventilating, air-conditioning, electrical, communication and
the fire and life safety systems in the Building).  Landlord has approved of
Tenant’s preferred general contractor, Nova Construction.  Landlord may further
condition its consent upon receipt of:  architectural plans and specifications,
opinions from Landlord’s engineers stating that the Tenant Alterations will not
in any way adversely affect the Building’s systems, necessary permits and
licenses, certificates of insurance, and such other documents in such form
reasonably requested by Landlord.  Landlord may, in the exercise of reasonable
judgment, request that Tenant provide Landlord with evidence of Tenant’s ability
to pay for the Tenant Alterations and may require a payment and performance bond
or other security acceptable to Landlord prior to consenting to such
alterations.  Tenant shall have the right from time to time to make
non-structural Tenant Alterations without Landlord's consent so long as the cost
thereof does not exceed $10,000 in any one instance.  Upon request, Landlord
shall advise Tenant in writing whether it reserves the right to require Tenant
to remove any Tenant Alterations from the Premises upon termination of the
Lease.  Tenant shall deliver to Landlord an as-built mylar and digitized (if
available) set of plans and specifications for the Tenant Alterations. Tenant
agrees to complete all Tenant

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Alterations (i) in accordance with all Laws and in accordance with Landlord’s
standard construction rules and regulations, and (ii) in a good and workmanlike
manner with the use of good grades of materials.  In connection with any Tenant
Alteration, Landlord shall be entitled to collect a construction management fee
equal to three percent (3%) of the cost of such Tenant Alteration in connection
with Landlord’s services in supervising and review of such Tenant
Alteration.  All Tenant Alterations shall, without compensation to Tenant,
become part of the Premises and shall remain in the Premises, unless pursuant to
the terms of the Lease, Tenant may remove them or is required to remove them at
Landlord’s request.  Tenant shall not permit any lien of any mechanic, laborer
or supplier or any other lien to be filed against the Property.  If any such
lien or claim for lien is filed, Tenant shall within ten (10) days of receiving
notice (a) release such lien or claim of record or (b) deliver a bond in form
and amount, and issued by surety, satisfactory to Landlord, indemnifying
Landlord against all costs and liabilities resulting therefrom and the
foreclosure or attempted foreclosure thereof. If Landlord pays or discharges the
same Tenant shall reimburse Landlord for such amount, including expenses and
attorneys’ fees.

 

ARTICLE 10—ASSIGNMENT AND SUBLETTING

 

10.1

ASSIGNMENT AND SUBLETTING.

 

(a)    Tenant may not sublease, assign, mortgage, pledge, or otherwise transfer
or permit the transfer of this Lease or the encumbering of Tenant’s interest
therein in whole or in part, or permit the use or occupancy of the Premises, or
any part thereof, by anyone other than Tenant without the prior written consent
of Landlord in Landlord’s sole discretion; provided, however, if Landlord
chooses not to recapture the space proposed to be subleased or assigned as
provided in subsection (c) below, Landlord shall not unreasonably withhold,
delay or condition its consent to a subletting, assignment or other transfer
under this Section.  An assignment shall be deemed to include a change in the
majority control of Tenant, resulting from any transfer, sale or assignment of
shares or interests of Tenant occurring by operation of Law or otherwise if
Tenant is not traded publicly.  If Tenant desires to assign or sublease any
portion of the Premises or assign this Lease, then at least thirty (30) days
prior to the commencement date of the term of the proposed sublease or
assignment, Tenant shall deliver notice of such request (“Tenant’s Notice”) to
Landlord accompanied by a fully executed sublease agreement or assignment
agreement, as the case may be, and other information reasonably required for
Landlord to make an informed judgment with respect to such proposed subtenant or
assignee.  Landlord shall notify Tenant in writing of its approval or
disapproval of the proposed sublease or assignment or its decision to exercise
its rights under subsection (c) below within twenty (20) days after receipt of
Tenant’s Notice (and all required information).  Tenant shall submit for
Landlord’s approval any advertising which Tenant or its agents intend to use
with respect to the space proposed to be sublet. Notwithstanding the foregoing,
Tenant may sublease the Premises or assign the Lease, without Landlord’s consent
and without the right of recapture or any participation by Landlord in
assignment or subletting proceeds, to any business entity into or with which
Tenant is merged, with which Tenant is consolidated, of which Tenant becomes an
Affiliate or by which Tenant is acquired (a “Permitted Transfer”).

(b)    With respect to Landlord’s consent to an assignment or sublease, Landlord
may take into consideration any factors that Landlord may reasonably deem
relevant, and the reasons for which Landlord’s denial shall be deemed to be
reasonable shall include, without limitation, the following: (i) the business
reputation or creditworthiness of any proposed subtenant or assignee is not
acceptable to Landlord; or (ii) any proposed assignee’s or sublease’s use of the
Premises would violate any other leases of tenants in the Building; or  (iii)
the proposed sublessee or assignee is an occupant of the Building as of the
delivery date of Tenant’s Notice or a bona fide prospective tenant of Landlord
in the Building.  Any sublease or assignment shall be expressly subject to the
terms and conditions of this Lease.  Any assignee shall execute such documents
as Landlord may reasonably require to evidence such assignee’s assumption of the
obligations and liabilities of Tenant under this Lease.  Tenant shall deliver to
Landlord a copy of all agreements executed by Tenant and the proposed subtenant
and assignee with respect to the Premises.

(c)    Landlord shall have the option to exclude from the Premises covered by
this Lease (“recapture”) the space proposed to be sublet or subject to an
assignment, effective as of the proposed

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commencement date of such sublease or assignment, or if the proposed
commencement date is not a date certain specified in such sublease or
assignment, on the date that is sixty (60) days following the delivery date of
Tenant’s Notice,  in which case, the Lease shall terminate with respect to such
recaptured space and the Monthly Base Rent, Rentable Area of the Premises and
Tenant’s Share shall be adjusted accordingly.

10.2

EXCESS RENT. Tenant shall pay Landlord on the first day of each month during the
term of the sublease or assignment, fifty percent (50%) of the amount by which
the sum of rent and other consideration due from the subtenant or assignee for
such month exceeds: (i) that portion of the Monthly Base Rent and Rent
Adjustments due under this Lease which is allocable to the space sublet or
assigned; and (ii) the following costs for the subletting or assignment: (1)
brokerage commissions and (2) the actual costs of making any improvements or
substitutions in the Premises required by any sublease or assignment. All such
costs and expenses for the subletting or assignment shall be amortized on a
straightline basis over the term of the sublease or assignment pursuant to sound
accounting principles.

10.3

TENANT LIABILITY. In the event of any sublease or assignment, whether or not
with Landlord’s consent, Tenant shall not be released or discharged from any
liability, whether past, present or future. Tenant’s liability shall remain
primary, and in the event of default by any subtenant, assignee or successor of
Tenant in performance or observance of any of the covenants or conditions of
this Lease, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against said subtenant, assignee or successor. A consent
by Landlord to any assignment or subletting shall not be deemed to be a consent
to any future assignment or subletting, or to any modification of this lease or
an existing sublease. If Tenant shall assign this Lease as permitted herein, the
assignee shall expressly assume all of the obligations of Tenant hereunder in a
written instrument satisfactory to Landlord in its reasonable discretion and
furnished to Landlord not later than three (3) days prior to the effective date
of the assignment. If Tenant shall sublease the Premises as permitted herein,
Tenant shall, as a condition to Landlord’s consent, obtain and furnish to
Landlord a written attornment agreement satisfactory to the Landlord in its
reasonable discretion.

10.4

PROCESSING EXPENSES. Concurrently with the delivery of Tenant’s Notice, Tenant
shall pay to Landlord, as Landlord’s cost of processing each proposed assignment
or subletting, whether or not consummated, an amount equal to the sum of (i)
Landlord’s reasonable estimate of attorneys’ and other professional fees, plus
(ii) the sum of $1,000.00 for the cost of Landlord’s administrative, accounting
and clerical time.

ARTICLE 11—DEFAULT AND REMEDIES

11.1

EVENTS OF DEFAULT. The occurrence or existence of any one or more of the
following shall constitute a “Default” by Tenant under this Lease: (i) Tenant
fails to pay when due any installment or other payment of Rent including Rent
Adjustment Deposits or Rent Adjustments and such failure continues for five (5)
days following written notice thereof from Landlord; (ii) Tenant fails to
observe or perform any of the other covenants, conditions or provisions of this
Lease and except as may be specified in other provisions of this Lease, fails to
cure such default within thirty (30) days following written notice thereof from
Landlord; provided, however, that, if the nature of Tenant’s default is such
that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant shall commence such cure
within said thirty (30) day period and thereafter diligently prosecute such cure
to completion within ninety (90) days of receipt of the above referenced notice
from Landlord; (iii) Tenant is dissolved, declared insolvent or an assignment is
made for the benefit of creditors or a petition is filed by or against Tenant to
declare Tenant bankrupt or seeking a plan of reorganization or arrangement under
the Bankruptcy Act, or any amendment or substitution therefor, or to delay
payment of, reduce or modify Tenant’s debts, which in the case of an involuntary
action is not discharged within thirty (30) days of such filing; or (iv) upon
the third (3rd) occurrence during any twelve (12)-month period during the Term
that Tenant fails to pay Rent when due.

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11.2

LANDLORD’S REMEDIES. 

(a)    Following a Default, Landlord shall have the rights and remedies set
forth in this Section 11.2 and all other rights and remedies set forth in this
Lease or now or hereafter allowed by Law, whether legal or equitable, and all
rights and remedies of Landlord shall be cumulative and none shall exclude any
other right or remedy now or hereafter permitted by Law.

(b)    With respect to a Default, at any time Landlord may terminate Tenant’s
right to possession by written notice to Tenant stating such election.  Except
as may be required under Code of Civil Procedure Section 1161, any written
notice required pursuant to Section 11.1 shall constitute notice of unlawful
detainer if, at Landlord’s sole discretion, it states Landlord’s election that
Tenant’s right to possession is terminated after expiration of any period
required by Law or any longer period required by Section 11.1.  Upon the
expiration of the period stated in Landlord’s written notice of termination (and
unless such notice provides an option to cure within such period and Tenant
cures the Default within such period), Tenant’s right to possession shall
terminate and this Lease shall terminate, and Tenant shall remain liable as
hereinafter provided.  Upon such termination in writing of Tenant’s right to
possession, Landlord shall have the right, subject to applicable Law, to
re-enter the Premises and dispossess Tenant and the legal representatives of
Tenant and all other occupants of the Premises by unlawful detainer or other
summary proceedings, or as otherwise  permitted by Law, regain possession of the
Premises and remove their property (including their trade fixtures, personal
property and Required Removables pursuant to Section 12.1), but Landlord shall
not be obligated to effect such removal, and such property may, at Landlord’s
option, be stored elsewhere, sold or otherwise dealt with as permitted by Law,
at the risk of, expense of and for the account of Tenant, and the proceeds of
any sale shall be applied pursuant to Law.  Landlord shall in no event be
responsible for the value, preservation or safekeeping of any such
property.  Tenant hereby waives all claims for damages that may be caused by
Landlord’s removing or storing Tenant’s personal property pursuant to this
Section or Section 12.1, and Tenant hereby indemnifies, and agrees to defend,
protect and hold harmless, the Indemnitees from any and all loss, claims,
demands, actions, expenses, liability and cost (including attorneys’ fees and
expenses) arising out of or in any way related to such removal or storage.  Upon
such written termination of Tenant’s right to possession and this Lease,
Landlord shall have the right to recover damages for Tenant’s Default as
provided herein or by Law, including the following damages provided by
California Civil Code Section 1951.2:

(1)    the worth at the time of award of the unpaid Rent which had been earned
at the time of termination;

(2)    the worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such Rent loss that Tenant proves could reasonably have been
avoided;

(3)    the worth at the time of award of the amount by which the unpaid Rent for
the balance of the term of this Lease after the time of award exceeds the amount
of such Rent loss that Tenant proves could be reasonably avoided; and

(4)    any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including, without limitation, Landlord’s unamortized costs of tenant
improvements, leasing commissions and legal fees incurred in connection with
entering into this Lease.  The word “rent” as used in this Section 11.2 shall
have the same meaning as the defined term Rent in this Lease.  The “worth at the
time of award” of the amount referred to in clauses (1) and (2) above is
computed by allowing interest at the Default Rate.  The worth at the time of
award of the amount referred to in clause (3) above is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%).  For the purpose of determining unpaid
Rent under clause (3) above, the monthly Rent reserved in this Lease shall be
deemed to be the sum of the Monthly Base Rent, monthly storage space rent, if
any, and the amounts last payable by Tenant as Rent Adjustments for the calendar
year in which Landlord terminated this Lease as provided hereinabove.

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(c)    Even if Tenant is in Default and/or has abandoned the Premises, this
Lease shall continue in effect for so long as Landlord does not terminate
Tenant’s right to possession by written notice as provided in Section 11.2(b)
above, and Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Rent as it becomes due under this Lease.  In such
event, Landlord shall have all of the rights and remedies of a landlord under
California Civil Code Section 1951.4 (lessor may continue Lease in effect after
Tenant’s Default and abandonment and recover Rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations), or
any successor statute.  During such time as Tenant is in Default, if Landlord
has not terminated this Lease by written notice and if Tenant requests
Landlord’s consent to an assignment of this Lease or a sublease of the Premises,
subject to Landlord’s option to recapture, Landlord shall not unreasonably
withhold its consent to such assignment or sublease.  Tenant acknowledges and
agrees that the provisions of Article Ten shall be deemed to constitute
reasonable limitations of Tenant’s right to assign or sublet.  Tenant
acknowledges and agrees that in the absence of written notice pursuant to
Section 11.2(b) above terminating Tenant’s right to possession, no other act of
Landlord shall constitute a termination of Tenant’s right to possession or an
acceptance of Tenant’s surrender of the Premises, including acts of maintenance
or preservation or efforts to relet the Premises or the appointment of a
receiver upon initiative of Landlord to protect Landlord’s interest under this
Lease or the withholding of consent to a subletting or assignment, or
terminating a subletting or assignment, if in accordance with other provisions
of this Lease.

(d)    In the event that Landlord seeks an injunction with respect to a breach
or threatened breach by Tenant of any of the covenants, conditions or provisions
of this Lease, Tenant agrees to pay the premium for any bond required in
connection with such injunction.

(e)    Tenant hereby waives any and all rights to relief from forfeiture,
redemption or reinstatement granted by Law (including California Civil Code of
Procedure Sections 1174 and 1179) in the event of Tenant being evicted or
dispossessed for any cause or in the event of Landlord obtaining possession of
the Premises by reason of Tenant’s Default or otherwise;

(f)    Notwithstanding any other provision of this Lease, a notice to Tenant
given under this Article or given pursuant to California Code of Civil Procedure
Section 1161, and any notice served by mail shall be deemed served, and the
requisite waiting period deemed to begin under said Code of Civil Procedure
Section upon mailing, without any additional waiting requirement under Code of
Civil Procedure Section 1011 et seq. or by other Law.  For purposes of Code of
Civil Procedure Section 1162, Tenant’s “place of residence”, “usual place of
business”, “the property” and “the place where the property is situated” shall
mean and be the Premises, whether or not Tenant has vacated same at the time of
service.

(g)    The voluntary or other surrender or termination of this Lease, or a
mutual termination or cancellation thereof, shall not work a merger and shall
terminate all or any existing assignments, subleases, subtenancies or
occupancies permitted by Tenant, except if and as otherwise specified in writing
by Landlord.

(h)    No delay or omission in the exercise of any right or remedy of Landlord
upon any Default by Tenant, and no exercise by Landlord of its rights hereunder
to perform any duty which Tenant fails timely to perform, shall impair any right
or remedy or be construed as a waiver.  No provision of this Lease shall be
deemed waived by Landlord unless such waiver is in writing signed by
Landlord.  The waiver by Landlord or Tenant of any breach of any provision of
this Lease shall not be deemed a waiver of any subsequent breach of the same or
any other provision of this Lease.

11.3

ABANDONMENT. In the event Tenant vacates or abandons the Premises, Landlord
shall have the right to enter into the Premises in order to show the space to
prospective tenants and to reduce the services provided to Tenant to such levels
as Landlord determines to be adequate services for an unoccupied premises and to
prepare the Premises for occupancy by another tenant. In the absence of written
notice pursuant to California Civil Code Section 1951.3, none of the foregoing
acts shall constitute a termination of Tenant’s right to possession, and the
Lease shall continue in effect.

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11.4

BANKRUPTCY. Any election to assume this Lease under Chapter 11 or 13 of the
Bankruptcy Code by Tenant as debtor-in-possession or by Tenant’s trustee (the
“Electing Party”) must provide for: (i) the Electing Party to cure or provide to
Landlord adequate assurance that it will cure all monetary defaults under this
Lease within fifteen (15) days from the date of assumption and it will cure all
nonmonetary defaults under this Lease within thirty (30) days from the date of
assumption. Landlord and Tenant acknowledge such condition to be commercially
reasonable; (ii) If the Electing Party has assumed this Lease or elects to
assign Tenant’s interest under this Lease to any other person, such interest may
be assigned only if the intended assignee has provided adequate assurance of
future performance (as herein defined), of all of the obligations imposed on
Tenant under this Lease. For the purposes hereof, “adequate assurance of future
performance” means that Landlord has ascertained that each of the following
conditions has been satisfied: The assignee has submitted a current financial
statement, certified by its chief financial officer, which shows a net worth and
working capital in amounts sufficient to assure the future performance by the
assignee of Tenant’s obligations under this Lease. 

11.5

LANDLORD’S DEFAULT. Landlord shall be in default hereunder if Landlord has not
commenced and pursued with reasonable diligence the cure of any failure of
Landlord to meet its obligations hereunder within thirty (30) days after the
receipt by Landlord of written notice from Tenant of the alleged failure to
perform. Tenant hereby waives such remedies of termination and rescission and
hereby agrees that Tenant’s remedies for default hereunder and for breach of any
promise or inducement shall be limited to a suit for damages and/or injunction.

ARTICLE 12—SURRENDER OF PREMISES; HOLDING OVER

12.1

IN GENERAL. Upon the Termination Date, Tenant shall surrender and vacate the
Premises immediately and deliver possession thereof to Landlord in a clean, good
and tenantable condition casualty and ordinary wear and tear excepted. Tenant
shall deliver to Landlord all keys to the Premises. All Tenant Additions shall
remain on the Premises at the end of the Term without compensation to Tenant.
Landlord, however, by written notice to Tenant at least thirty (30) days prior
to the Termination Date, may require Tenant, at its expense, to remove (a) any
cable(s) installed by or for the benefit of Tenant, and (b) any Tenant
Alterations that, in Landlord’s reasonable judgment, are of a nature that would
require removal and repair costs that are in excess of the removal and repair
costs associated with standard office improvements (collectively referred to as
“Required Removables”). Tenant shall repair damage caused by the installation or
removal of Required Removables. If Tenant fails to perform its obligations in a
timely manner, Landlord may perform such work at Tenant’s expense. In the event
Tenant shall fail to remove those items described above, Landlord may (but shall
not be obligated to), at Tenant’s expense, remove and store, sell or otherwise
deal with such property, and undertake, at Tenant’s expense, such restoration
work as Landlord deems necessary.

12.2

HOLDING OVER. In the event that Tenant holds over in possession of the Premises
after the Termination Date, for each month or partial month Tenant holds over
possession of the Premises, Tenant shall pay Landlord 150% of the Monthly Base
Rent that is payable for the month immediately preceding the holding over and
100% of the Rent Adjustments which Landlord may reasonably estimate. Tenant
shall also pay all damages, including consequential damages, sustained by
Landlord by reason of such holding over. Tenant’s continued occupancy of the
Premises shall be as a tenancy in sufferance only.

ARTICLE 13—DAMAGE BY FIRE OR OTHER CASUALTY; EMINENT DOMAIN

13.1

CASUALTY. If any fire or other casualty (whether insured or uninsured) renders
all or a substantial portion of the Premises or the Building untenantable,
Landlord shall, with reasonable promptness after the occurrence of such damage,
estimate the length of time that will be required to substantially complete the
repair and restoration and shall by notice advise Tenant of (i) its election to
terminate this Lease or (ii) the period of time required to substantially
complete such repair and restoration. If such period of repair and restoration
will exceed one hundred and eighty (180) days from the date such damage occurred
(or, during the final six (6) months of the Term, sixty (60) days from the date
such damage occurred), and if all or a substantial portion of the Premises is
rendered untenantable, then Tenant shall have the right to terminate this Lease
by delivering written notice to Landlord within twenty (20) days after delivery
of Landlord’s

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Notice, and the termination date shall be the date designated in Tenant’s
notice, but in no event shall such date be earlier than thirty (30) days
following the delivery date of Tenant’s notice. If this Lease is not terminated,
Landlord shall proceed with reasonable promptness to repair and restore the
Premises to its condition as existed prior to such casualty (excluding Tenant
Alterations), subject to reasonable delays for insurance adjustments and any
event of Force Majeure and also subject to zoning Laws and building codes then
in effect. Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage, whether carried by Landlord or Tenant, for
damages to the Premises, except for those proceeds of Tenant’s insurance of its
own personal property and equipment which would be removable by Tenant at the
Termination Date. All such insurance proceeds shall be payable to Landlord
whether or not the Premises are to be repaired and restored, provided, however,
if this Lease is not terminated and the parties proceed to repair and restore
the Tenant Alterations at Tenant’s cost, to the extent Landlord received
proceeds of Tenant’s insurance covering Tenant Alterations, such proceeds shall
be applied to reimburse Tenant for its cost of repairing and restoring Tenant
Alterations. Unless caused by the negligence or wrongful act of Tenant or its
agents, employees, contractors or invitees, if all or any part of the Premises
are rendered untenantable by fire or other casualty and this Lease is not
terminated, Monthly Base Rent and Rent Adjustment Deposits shall abate pro rata
for that portion of the Premises which is untenantable on a per diem basis from
the date of the casualty until Landlord has substantially completed the repair
and restoration work in the Premises which it is required to perform, provided,
that as a result of such casualty, Tenant does not occupy the portion of the
Premises which is untenantable during such period. In no event shall Tenant be
entitled to any compensation or damages for loss of the use of the whole or any
part of the Premises or for any inconvenience or annoyance occasioned by any
such damage, destruction, rebuilding or restoration of the Premises or the
Building or access thereto. The provisions of this Lease constitute an express
agreement with respect to any and all damage to, or destruction of, the Premises
or the Property, and any Law, including Sections 1932(2), 1933(4), 1941 and 1942
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction shall have no application to this Lease or to
any damage to or destruction of the Premises or the Property and are hereby
waived. Notwithstanding the foregoing, in no event shall Landlord have any
obligation to restore the Building or the Premises except as and to the extent
Landlord receives insurance proceeds to apply to such restoration. 

13.2

EMINENT DOMAIN. Unless otherwise agreed by Landlord or Tenant, in the event the
whole or any part of the Premises or a substantial portion of the Building is
taken or condemned for any public use or purpose (including a deed given in lieu
of condemnation), this Lease shall terminate as of the date title vests in such
authority, and Monthly Base Rent and Rent Adjustments shall be apportioned as of
the Termination Date. Landlord shall be entitled to receive the entire award (or
sale proceeds) from any such taking, condemnation or sale without any payment to
Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such
award; provided, however, Tenant shall have the right separately to pursue
against the condemning authority a separate award in respect of the loss, if
any, to Tenant Alterations paid for by Tenant, Tenant’s goodwill, and moving
expenses, so long as there is no diminution of Landlord’s award as a result.

ARTICLE 14—INSURANCE

14.1

TENANT’S INSURANCE. Tenant, at Tenant’s expense, agrees to maintain in force,
with a company or companies reasonably acceptable to Landlord, during the Term:
(a) Commercial General Liability Insurance on a primary basis and without any
right of contribution from any insurance carried by Landlord covering the
Premises on an occurrence basis against all claims for personal injury, bodily
injury, death and property damage, including contractual liability covering the
indemnification provisions in this Lease, and such insurance shall be for such
limits that are reasonably required by Landlord from time to time but not less
than a combined single limit of Two Million and No/100 Dollars ($2,000,000.00);
(b) Workers’ Compensation and Employers’ Liability Insurance to the extent
required by and in accordance with the Laws of the State of California; (c) “All
Risks” property insurance in an amount adequate to cover the full replacement
cost of all Tenant Additions, equipment, installations, fixtures and contents of
the Premises in the event of loss; (d) in the event a motor vehicle is to be
used by Tenant in connection with its business operation from the Premises,
Comprehensive Automobile Liability Insurance coverage with limits of not less
than One Million and No/100 Dollars ($1,000,000.00)

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combined single limit coverage against bodily injury liability and property
damage liability arising out of the use by or on behalf of Tenant, its agents
and employees in connection with this Lease, of any owned, non-owned or hired
motor vehicles; (e) Business Interruption Insurance; and (f) such other
insurance or coverages as Landlord reasonably requires. Each policy shall (i)
name Landlord and the Indemnitees as additional insureds (except Workers’
Compensation and Employers’ Liability Insurance), (ii) be issued by one or more
responsible insurance companies licensed to do business in the State of
California reasonably satisfactory to Landlord, (iii) where applicable, provide
for deductible amounts and co-insurance provisions reasonably satisfactory to
Landlord, (iv) shall provide that such insurance may not be canceled or amended
without thirty (30) days’ prior written notice to the Landlord and any Mortgagee
or other party reasonably designated by Landlord, and (v) each policy of
“All-Risks” property insurance shall provide that the policy shall not be
invalidated should the insured waive in writing prior to a loss, any or all
rights of recovery against any other party for losses covered by such policies.
Tenant shall deliver to Landlord, certificates of insurance and at Landlord’s
request, copies of all policies and renewals thereof to be maintained by Tenant
hereunder, not less than ten (10) days prior to the Commencement Date and not
less than thirty (30) days prior to the expiration date of each policy. 

14.2

LANDLORD’S INSURANCE. Landlord agrees to purchase and keep in full force and
effect during the Term, insurance under policies issued by insurers of
recognized responsibility, qualified to do business in the State of California
on the Building in amounts not less than the then full replacement cost (without
depreciation) of the Building (above foundations and excluding Tenant
Alterations), against fire and such other risks as may be included in standard
forms of all risk coverage insurance reasonably available from time to time and
commercial general liability insurance. Without obligation to do so, Landlord
may, in its reasonable discretion from time to time during the Term and as an
Operating Expense carry insurance in amounts greater and/or for coverage
additional to the coverage and amounts set forth above, including without
limitation earthquake and flood insurance, in an amount up to one hundred
percent (100%) of the full replacement cost (including debris removal and
demolition) of the Building; provided that it shall be deemed to be reasonable
if such greater and/or additional coverages are required by Landlord’s lender(s)
or are customarily maintained as of the date of the change by prudent property
owners of comparable properties in the vicinity of the Building.

14.3

WAIVER OF SUBROGATION. Any policy or policies of fire, extended coverage or
similar casualty insurance which either party obtains in connection with the
Building, the Premises, or Tenant’s personal property shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party (and the other parties named as additional insureds pursuant to this
Article). Landlord and Tenant each waives any rights of recovery against the
other (and the other parties named as additional insureds) for injury or loss
due to hazards insurable by policies of fire, extended coverage or similar
casualty insurance, regardless of whether such insurance policies or coverage
shall actually have been obtained by the party granting such waiver, and
regardless of the cause of such fire or casualty, including the negligence of
the party benefiting from such waiver. Because this Section will preclude the
assignment of any claim mentioned in it by way of subrogation or otherwise to an
insurance company or any other person, each party to this Lease agrees
immediately to give to each of its insurance companies written notice of the
terms of the mutual waivers contained in this Section and to have the insurance
policies properly endorsed, if necessary, to prevent the invalidation of the
insurance coverages by reason of the mutual waivers contained herein.

ARTICLE 15—WAIVER OF CLAIMS AND INDEMNITY

To the extent permitted by Law, Tenant hereby releases the Indemnitees from, and
waives all claims for, damage to person or property sustained by the Tenant or
any occupant of the Premises or the Property resulting directly or indirectly
from any existing or future condition, defect, matter or thing in and about the
Premises or the Property or any part of either or any equipment or appurtenance
therein, or resulting from any accident in or about the Premises or the
Property, or resulting directly or indirectly from any act or neglect of any
tenant or occupant of the Property or of any other person, including Landlord’s
agents and servants, except to the extent caused by the gross negligence or
willful and wrongful act of any of the Indemnitees.  Tenant hereby fully waives
any consequential damages, compensation or claims for inconvenience or loss of
business, rents, or profits as a result of such injury or damage, whether or not
caused by the gross negligence or willful and wrongful act of any of the
Indemnitees.  To the

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extent permitted by Law, Tenant hereby indemnifies, and agrees to protect,
defend and hold the Indemnitees harmless, against any and all actions, claims,
demands, liability, costs and expenses, including attorneys’ fees and expenses
for the defense thereof, arising from Tenant’s occupancy of the Premises, from
the undertaking of any Tenant Alterations or repairs to the Premises by Tenant,
from the conduct of Tenant’s business on the Premises, or from any breach or
default on the part of Tenant in the performance of any covenant or agreement on
the part of Tenant to be performed pursuant to the terms of this Lease, or from
any wrongful act or negligence of Tenant, its agents, contractors, servants,
employees, customers or invitees, in or about the Premises or the
Property.  Tenant covenants to defend such action or proceeding by counsel
reasonably chosen by Landlord.  Landlord reserves the right to settle,
compromise or dispose of any and all actions, claims and demands related to the
foregoing indemnity.  The foregoing indemnity shall not operate to relieve
Indemnitees of liability to the extent such liability is caused by the willful
and wrongful act of Indemnitees.  Further, the indemnity is subject to the
amounts, if any, paid to Landlord under its “All-Risks” property
insurance.  This Article Fifteen shall survive the expiration or earlier
termination of this Lease.

ARTICLE 16—RULES AND REGULATIONS; LANDLORD’S RESERVED RIGHTS

16.1

RULES AND REGULATIONS. Tenant agrees for itself and for its subtenants,
employees, agents, and invitees to comply with the Rules and Regulations.
Landlord does not have any duty or obligation to enforce the Rules and
Regulations, or the terms of any other lease as against any other tenant, and
Landlord shall not be liable to Tenant for violation of the same by any other
tenant. In any instance where a rule or regulation requires that Landlord’s
consent be obtained, Landlord may grant or withhold such consent in its
reasonable discretion. Landlord shall use reasonable efforts to enforce the
Rules and Regulations in a uniform, non-discriminatory manner.

16.2

RESERVED RIGHTS. Landlord shall have the following rights exercisable without
notice to Tenant and without liability to Tenant for damage or injury to
persons, property or business and without being deemed an eviction or
disturbance of or giving rise to any claim for offset or abatement of Rent: (1)
to change the Building’s name or street address upon thirty (30) days’ prior
written notice to Tenant; (2) to install all signs on the exterior and/or
interior of the Building; (3) to approve prior to installation, signs, window
shades, awnings or other similar items, and all internal lighting that may be
visible from the exterior of the Premises or the Building; (4) upon reasonable
notice to Tenant, to display the Premises to prospective purchasers, tenants and
lenders at any time during the Term; (5) to grant exclusive rights to conduct
any business in or to the Building; (6) to change the arrangement and/or
location of entrances or passageways, doors and doorways, corridors, elevators,
stairs, washrooms or public portions of the Building, and to close entrances,
doors, corridors, elevators or other facilities, provided that such action shall
not materially and adversely interfere with Tenant’s access to the Premises or
the Building. Landlord and Landlord's agents, except in the case of emergency,
shall provide Tenant with twenty-four (24) hours' notice prior to entry of the
Premises. Except in case of an emergency, any such entry by Landlord and
Landlord's agents shall comply with all reasonable security measures of Tenant,
including accompaniment by a representative of Tenant, and shall not impair
Tenant's operations more than reasonably necessary

ARTICLE 17—ESTOPPEL CERTIFICATE

Within ten (10) business days after request by Landlord or any prospective
Mortgagee or purchaser of the Building, Tenant agrees to execute an Estoppel
Certificate certifying (i) that this Lease is unmodified and in full force and
effect (or if there have been modifications, a description of such modifications
and that this Lease as modified is in full force and effect); (ii) the dates to
which Rent has been paid; (iii) that Tenant is in the possession of the Premises
if that is the case; (iv) that Landlord is not in default under this Lease, or,
if Tenant believes Landlord is in default, the nature thereof in detail; (v)
that Tenant has no offsets or defenses to the performance of its obligations
under this Lease (or if Tenant believes there are any offsets or defenses, a
full and complete explanation thereof); (vi) that the Premises have been
completed and Tenant has accepted the Premises and all improvements thereto and
has no claims against Landlord with respect thereto; (vii) that Tenant will give
to any Mortgagee copies of all notices required or permitted to be given by
Tenant to Landlord; and (viii) to any other information reasonably
requested.  If Tenant fails to deliver an Estoppel Certificate within such ten
(10) business day period, Landlord shall provide Tenant with a second written
request for the execution of the Estoppel Certificate (a “Second Request”) that
contains the following statement in bold and capital letters:  “THIS IS A SECOND
REQUEST FOR EXECUTION OF AN ESTOPPEL

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CERTIFICATE PURSUANT TO THE PROVISIONS OF ARTICLE 17 OF THE LEASE. IF TENANT
FAILS TO RESPOND WITHIN TWO (2) BUSINESS DAYS AFTER THIS REQUEST BY LANDLORD,
THEN TENANT SHALL (I) BE DEEMED IN DEFAULT OF THIS LEASE BEYOND ANY APPLICABLE
NOTICE AND CURE PERIOD AND (II) CHARGED THE SUM OF $250 FOR EACH DAY BY THAT
TENANT FAILS TO EXECUTE AND DELIVER THE ESTOPPEL CERTIFICATE DESCRIBED
HEREIN.”  If Tenant fails to respond to such Second Request within two (2)
business days after such Second Request, Tenant shall (i) be deemed to be in
Default of this Lease beyond any applicable cure or grace period provided for
herein and (ii) be charged, as Additional Rent, the sum of $250 for each day
that Tenant fails to execute and deliver such Estoppel Certificate.

ARTICLE 18—REAL ESTATE BROKERS

Tenant represents that, except for the broker(s) listed in Section 1.1(14),
Tenant has not dealt with any real estate broker or finder in connection with
this Lease, and no such person initiated or participated in the negotiation of
this Lease.  Tenant hereby agrees to indemnify, protect, defend and hold
Landlord harmless from and against any and all liabilities and claims for
commissions and fees arising out of a breach of the foregoing representation.
Landlord agrees to pay any commission to which the brokers listed in Section
1.1(14) are entitled pursuant to Landlord’s written agreement with such broker.

ARTICLE 19—MORTGAGEE PROTECTION

19.1

This Lease is and shall be expressly subject and subordinate at all times to (i)
any ground or underlying lease of the Real Property, now or hereafter existing,
and all amendments, extensions, renewals and modifications to any such lease,
and (ii) the lien of any mortgage or trust deed now or hereafter encumbering fee
title to the Property and/or the leasehold estate under any such lease, and all
amendments, extensions, renewals, replacements and modifications of such
mortgage or trust deed and/or the obligation secured thereby, unless such ground
lease or ground lessor, or mortgage, trust deed or Mortgagee, expressly provides
or elects that the Lease shall be superior to such lease or mortgage or trust
deed, upon the condition that Tenant shall have the right to remain in
possession of the Premises under the terms of this Lease and Tenant’s use and
enjoyment of the Premises shall not be disturbed, notwithstanding any default in
any or all such mortgages or trust deeds, or after foreclosure thereof, so long
as no Default shall have occurred under this Lease and be continuing after the
expiration of the notice and cure provided to Tenant hereunder. If any such
mortgage or trust deed is foreclosed (including any sale of the Property
pursuant to a power of sale), or if any ground lease is terminated, upon request
of the Mortgagee or ground lessor, as the case may be, Tenant shall attorn to
the purchaser at the foreclosure sale or to the ground lessor under such lease,
as the case may be, provided, however, that such purchaser or ground lessor
shall not be (i) bound by any payment of Rent for more than one month in advance
except payments in the nature of security for the performance by Tenant of its
obligations under this Lease; (ii) subject to any offset, defense or damages
arising out of a default of any obligations of any preceding Landlord; or (iii)
bound by any amendment or modification of this Lease made without the written
consent of the Mortgagee or ground lessor; or (iv) liable for any security
deposits not actually received in cash by such purchaser or ground lessor. This
subordination shall be self-operative and no further certificate or instrument
of subordination need be required by any such Mortgagee or ground lessor. In
confirmation of such subordination, however, Tenant shall execute promptly any
reasonable certificate or instrument that Landlord, Mortgagee or ground lessor
may request. If Tenant fails to execute and deliver such SNDA within ten (10)
business days after Landlord’s written request, Landlord shall provide Tenant
with a second written request for the execution of the SNDA (a “Second SNDA
Request”) that contains the following statement in bold and capital letters:
“THIS IS A SECOND REQUEST FOR EXECUTION OF AN SNDA PURSUANT TO THE PROVISIONS OF
ARTICLE 19.1 OF THE LEASE. IF TENANT FAILS TO RESPOND WITHIN TWO (2) BUSINESS
DAYS AFTER THIS REQUEST BY LANDLORD, THEN TENANT SHALL (I) BE DEEMED IN DEFAULT
OF THIS LEASE BEYOND ANY APPLICABLE NOTICE AND CURE PERIOD AND (II) CHARGED THE
SUM OF $250 FOR EACH DAY BY THAT TENANT FAILS TO EXECUTE AND DELIVER THE SNDA.”
If Tenant fails to respond to such Second SNDA Request within two (2) business
days after such Second SNDA Request, Tenant shall (i) be deemed to be in Default
of this Lease beyond any applicable cure or grace period provided for herein and
(ii) be charged, as Additional Rent, the

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sum of $250 for each day that Tenant fails to execute and deliver such SNDA.
Upon request by such successor in interest, Tenant shall execute and deliver
reasonable instruments confirming the attornment provided for herein. 

19.2

Tenant agrees to give any Mortgagee, by registered or certified mail, a copy of
any notice of default served upon the Landlord by Tenant, provided that prior to
such notice Tenant has received notice of the address of such Mortgagee. Tenant
further agrees that if Landlord shall have failed to cure such default within
the time provided for in this Lease, then the Mortgagee shall have an additional
thirty (30) days after receipt of notice thereof within which to cure such
default or if such default cannot be cured within that time, then such
additional notice time as may be necessary, if, within such thirty (30) days,
any Mortgagee has commenced and is diligently pursuing the remedies necessary to
cure such default (including commencement of foreclosure proceedings or other
proceedings to acquire possession of the Real Property, if necessary to effect
such cure). Such period of time shall be extended by any period within which
such Mortgagee is prevented from commencing or pursuing such foreclosure
proceedings or other proceedings to acquire possession of the Real Property by
reason of Landlord’s bankruptcy. Until the time allowed as aforesaid for
Mortgagee to cure such defaults has expired without cure, Tenant shall have no
right to, and shall not, terminate this Lease on account of default. This Lease
may not be modified or amended so as to reduce the Rent or shorten the Term, or
so as to adversely affect in any other respect to any material extent the rights
of the Landlord, nor shall this Lease be canceled or surrendered, without the
prior written consent, in each instance, of the Mortgagee.

19.3

If any Mortgagee requires a modification of this Lease which shall not result in
any increased cost or expense to Tenant or in any other material change in the
rights and obligations of Tenant hereunder, then Tenant agrees that this Lease
may be so modified.

ARTICLE 20—EXTENSION OPTIONS

20.1

Subject to the terms and conditions set forth in this Article 20, Landlord
hereby grants to Tenant an option extend the term (the “Extension Option”) of
this Lease for one (1) additional five (5) year term (the “Extension Term”). If
Tenant exercises the Extension Option hereunder, all of the terms, covenants and
conditions of this Lease shall continue in full force and effect during the
Extension Term, including provisions regarding payment of Rent Adjustments,
which shall remain payable on the terms herein set forth, except that (i) the
Monthly Base Rent payable by Tenant during the applicable Extension Term for the
Premises shall be as calculated in accordance with Sections 20.2 and 20.3 below
and Landlord shall have no obligation to make or to pay for any improvements,
alterations or additions to the Premises. To exercise the Extension Option,
Tenant must deliver notice to Landlord no sooner than nine (9) months nor later
than twelve (12) months prior to the expiration of the Term of this Lease.

20.2

The Monthly Base Rent for the Premises during the Extension Term shall be the
prevailing market rental rate for Comparable Space (as defined below) for a term
commencing on or about the commencement date of the applicable Extension Term
(the “Market Rate”). For this purpose, “Comparable Space” shall mean commercial
office space comparable to the Premises that is (i) comparable in size,
location, and quality to the Premises; (ii) leased for a term comparable to the
applicable Extension Term; and (iii) located in comparable projects in the
vicinity of the Project.

20.3

The Monthly Base Rent shall be determined as follows:

20.3.1    If Tenant provides Landlord with its notice of exercise pursuant to
subparagraph (a) above, then, prior to the commencement of the Extension Term,
Landlord shall deliver to Tenant a good faith written proposal of the Market
Rate.  Within twenty-one (21) days after receipt of Landlord’s proposal, Tenant
shall notify Landlord in writing (A) that Tenant accepts Landlord’s proposal or
(B) that Tenant elects to submit the determination of Market Rate to arbitration
in accordance with Subparagraphs (ii) through (iv) below.  If Tenant does not
give Landlord a timely notice in response to Landlord’s proposal, Landlord’s
proposal of Market Rate shall be binding upon Tenant.

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20.3.2    If Landlord and Tenant shall first negotiate in good faith in an
attempt to determine the Market Rate.  If Landlord and Tenant are able to agree
within thirty (30) days following the delivery of Tenant’s notice to Landlord
electing arbitration, then such agreement shall constitute a determination of
Market Rate for purposes of this Paragraph, and the parties shall immediately
execute an amendment to this Lease stating the Monthly Minimum Rent for the
Extension Term.  If Landlord and Tenant are unable to agree on the Market Rate
within such negotiating period, then within fifteen (15) days after the
expiration of such negotiating period, the parties shall meet and concurrently
deliver to each other in envelopes their respective good faith estimates of the
Market Rate.  If the higher of such estimates is not more than one hundred five
percent (105%) of the lower, then the Market Rate shall be the average of the
two.  Otherwise, the dispute shall be resolved by arbitration in accordance with
Subparagraphs (iii) and (iv) below.

20.3.3    Within seven (7) days after the exchange of estimates, the parties
shall select as an arbitrator an independent real estate broker with at least
ten (10) years of experience in leasing commercial space in the metropolitan
area in which the Property is located (a “Qualified Appraiser”).  If the parties
cannot agree on a Qualified Appraiser, then within a second period of seven (7)
days, each shall select a Qualified Appraiser and within ten (10) days
thereafter the two appointed Qualified Appraisers shall select an independent
Qualified Appraiser and the independent Qualified Appraiser shall be the sole
arbitrator.  If one party shall fail to select a Qualified Appraiser within the
second seven (7) day period, then the Qualified Appraiser chosen by the other
party shall be the sole arbitrator

20.3.4    Within seven business days (7) days after submission of the matter to
the arbitrator, the arbitrator shall determine the Market Rate by choosing
whichever of the estimates submitted by Landlord and Tenant the arbitrator
judges to be more accurate.  The arbitrator shall notify Landlord and Tenant of
its decision, which shall be final and binding.  If the arbitrator believes that
expert advice would materially assist him, the arbitrator may retain one or more
qualified persons to provide expert advice.  The fees of the arbitrator and of
the arbitration proceeding shall be split by the parties 50/50.  The fees of any
expert witnesses retained by the arbitrator shall be paid by the party whose
estimate is not selected.  Each party shall pay the fees of its respective
counsel and the fees of any witness called by that party.

20.3.5    Until the matter is resolved by agreement between the parties or a
decision is rendered in any arbitration commenced pursuant to this Paragraph 52,
Tenant’s monthly payments of Monthly Base Rent shall be in an amount equal to
the average of Landlord’s and Tenant’s determinations of the Market
Rate.  Within ten (10) business days following the resolution of such dispute by
the parties or the decision of the arbitrator, as applicable, Tenant shall pay
to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or
excess, as the case may be, in the Monthly Base Rent theretofore paid

20.4

Notwithstanding anything to the contrary in this Lease, at Landlord’s election
the Extension Option provided herein shall be null and void and Tenant shall
have no right to renew this Lease pursuant thereto if, on the date Tenant
exercises the applicable Extension Option or on the date immediately preceding
the commencement of the Extension Term (i) the Tenant originally named in this
Lease (or a Permitted Transferee) is not in occupancy of at least seventy five
percent (75%) of the Premises then demised hereunder or such Tenant does not
intend to continue to occupy seventy five (75%) of the Premises then demised
hereunder, or (ii) Tenant is in Default of any of its obligations under this
Lease or there exist facts or circumstances that, with the giving of notice or
passage of time, would constitute a Default.

ARTICLE 21—ALLOWANCE

As to each of the 5th Floor Space and 6th and 7th Floor Space, Landlord shall
pay the Allowance applicable to such portion of the Premises within thirty (30)
days after Tenant’s prior written request and verification that the following
has occurred: 1) The 5th Floor Rent Commencement Date or the 6th and 7th Floor
Rent Commencement Date, as applicable, has occurred as to such portion of the
Premises and 2) Tenant has provided final lien waivers for all of the Tenant
Work applicable to such portion of the Premises, including from Tenant’s general
contractor, sub-contractors and material suppliers, a certificate of insurance
for such portion of the Premises and a final certificate of occupancy

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for such portion of the Premises.  Notwithstanding any contrary provision of
this Lease, as to each of the 5th Floor Space and the 6th and 7th Floor Space,
if Tenant fails to use the entire Allowance allocated to such portion of the
Premises herein within nine (9) months of the Commencement Date as to such
portion of the Premises, the unused amount of the Allowance shall revert to
Landlord and Tenant shall have no further rights with respect thereto.  

ARTICLE 22—NOTICES

All notices provided for or permitted to be given pursuant to this Lease must be
in writing and shall be personally delivered or sent by Federal Express or other
reputable overnight courier service. All notices shall be deemed to have been
properly served by sending the same in accordance with this Section, addressed
to the parties hereto at their respective addresses listed in Sections
1.1(2).The time period in which a response to any notice must be given shall
commence to run from the date of acceptance of delivery by Landlord or Tenant,
or the date a notice pursuant to Code of Civil Procedure Section 1161 et seq. is
deemed served.  Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given, shall be deemed to be
receipt of notice. By giving to the other party at least ten (10) days written
notice thereof, either party shall have the right to change their respective
addresses for notices.

ARTICLE 23--MISCELLANEOUS

23.1

EXCLUSIVE USE OF OUTDOOR SPACE. Tenant shall have the exclusive use of the
outdoor area on the Western side of the Building.

23.2

LATE CHARGES; DEFAULT INTEREST. All payments required hereunder (other than the
Monthly Base Rent, Rent Adjustments, and Rent Adjustment Deposits, which shall
be due as hereinbefore provided) shall be paid within thirty (30) days after
Landlord’s demand. All such amounts (including Monthly Base Rent, Rent
Adjustments, and Rent Adjustment Deposits) not paid within 5 days of when the
same are due shall bear interest from the date due until the date paid at the
Default Rate. In the event Tenant is more than five (5) days late in paying any
installment of Rent due under this Lease, Tenant shall pay Landlord a late
charge equal to five percent (5%) of the delinquent installment of Rent. Tenant
agrees such delinquency will cause Landlord to incur costs not contemplated
herein, the exact amount of which will be difficult to calculate, including the
cost and expense that will be incurred by Landlord in processing delinquent
payments, the amount of such late charge represents a reasonable estimate of
such costs and expenses and that such late charge shall be paid to Landlord for
each delinquent payment in addition to all Rent otherwise due hereunder. The
parties further agree that the payment of late charges and the payment of
interest provided for herein are distinct and separate from one another. Payment
of interest at the Default Rate and/or of late charges shall not excuse or cure
any breach or Default by Tenant under this Lease, nor shall any such payments
prevent Landlord from exercising any right or remedy available to Landlord upon
Tenant’s failure to pay Rent when due, including the right to terminate this
Lease. If Tenant is delinquent in the payment of rent or any other charge and is
subject to a late charge or interest on late charges, Landlord agrees to waive
the late charges if Tenant has not previously been delinquent in its payment of
rent owed under this Lease.

23.3

ATTORNEY’S FEES. In the event either party brings an action or other proceeding
with respect to this Lease, the prevailing party (as determined by the court,
agency or other authority before which such action or proceeding is commenced)
shall be entitled to recover its attorneys’ fees, expenses and costs incurred in
connection with such action or proceeding.

23.4

NO JURY TRIAL; VENUE; JURISDICTION. To the fullest extent permitted by law,
including laws enacted after the Commencement Date, each party hereto shall not
seek a jury trial, hereby waives trial by jury, and agrees and consents to
personal jurisdiction of the courts of California, in any action or proceeding
or counterclaim brought by any party hereto against the other on any matter
whatsoever arising out of or connected with this Lease, or any claim of injury,
whether based on this Lease or on tort law.

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23.5

AUTHORITY. Tenant represents and warrants to Landlord that it has full authority
and power to enter into and perform its obligations hereunder, that the person
executing this Lease is fully empowered to do so, and that no consent or
authorization is necessary from any third party. Landlord represents and
warrants to Tenant that it has full authority and power to enter into and
perform its obligations hereunder, that the person executing this Lease is fully
empowered to do so, and that no consent or authorization is necessary from any
third party 

23.6

ENTIRE AGREEMENT; SURVIVAL; BINDING EFFECT. This Lease contains the entire
agreement and there are no other agreements, either oral or written. The
exhibits are incorporated into this Lease and made a part hereof. This Lease
shall only be modified by a writing executed by Landlord and Tenant. Neither
this Lease, nor any notice nor memorandum thereof shall be recorded by Tenant
(provided that Landlord acknowledges that no such prohibition on recording shall
apply to Tenant’s disclosure of this Lease and its terms for purposes of
complying with securities regulations). All provisions which by their terms
survive expiration or termination of this Lease and the waivers of the right of
jury trial, and the releases and the indemnities shall survive the expiration or
termination of this Lease. This Lease shall be binding upon and inure to the
benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns.

23.7

EXCULPATION. Tenant agrees, on its behalf and on behalf of its successors and
assigns, that any liability or obligation under this Lease shall only be
enforced against Landlord’s equity interest in the Building; provided that in no
event shall such liability extend to any insurance proceeds received by
Landlord, or any other assets of the Landlord, or Landlord’s officers or
members, and Tenant shall not be entitled to any judgment in excess of such
amount. In the event of any sale or transfer of the Building, Landlord shall be
entirely freed and relieved of all agreements and obligations of Landlord
hereunder accruing or to be performed after the date of such sale or transfer,
and any remaining liability of Landlord with respect to this Lease shall be
limited to the amount specified in this Section and Tenant shall not be entitled
to any judgment in excess of such amount.

23.8

ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a lesser
amount than any installment or payment of Rent due shall be deemed to be other
than on account of the amount due, and no endorsement or statement on any check
or any letter accompanying any payment of Rent shall be deemed an accord and
satisfaction, and acceptance shall be without prejudice to Landlord’s right to
recover the balance of such payment or pursue any other remedies available to
Landlord. No receipt of money by Landlord from Tenant after the termination of
this Lease or Tenant’s right of possession of the Premises shall reinstate,
continue or extend the Term. Receipt of payment from anyone other than Tenant,
is not a waiver of any breach of Article Eleven, and Landlord may accept such
payment on account of the amount due without prejudice to landlord’s right to
pursue any remedies available to Landlord.

23.9

TIME; APPLICABLE LAW; CONSTRUCTION. Time is of the essence of this Lease and
each and all of its provisions. This Lease shall be construed in accordance with
the Laws of the State of California. If more than one person signs this Lease as
Tenant, the obligations hereunder imposed shall be joint and several. If any
term of this Lease or the application shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and this Lease shall be valid and
be enforced to the fullest extent permitted by Law.

23.10

OFAC. Tenant hereby represents, certifies and warrants to Landlord as follows:
(i) Tenant is not named and is not acting, directly or indirectly, for or on
behalf of any person, group, entity or nation named by any Executive Order,
including without limitation Executive Order 13224, or the United States
Treasury Department as a terrorist, “Specially Designated National and Blocked
Person,” or other banned or blocked person, entity, nation or transaction
pursuant to any law, order, rule or regulation that is enacted, enforced or
administered by the Office of Foreign Assets Control (“OFAC”); (ii) Tenant is
not engaged in this transaction, directly or indirectly, for or on behalf of, or
instigating or facilitating this transaction, directly or indirectly on behalf
of, any such person, group, entity or nation; and (iii) none of the proceeds

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used to pay rent have been or will be derived from a “specified unlawful
activity” as defined in, and Tenant is not otherwise in violation of, the Money
Laundering Control Act of 1986, as amended, or any other applicable laws
regarding money laundering activities. Furthermore, Tenant agrees to immediately
notify Landlord if Tenant was, is, or in the future becomes, a “senior foreign
political figure” or an immediate family member or close associate of a “senior
foreign political figure,” within the meaning of Section 312 of the USA PATRIOT
Act of 2001. Notwithstanding anything in this Lease to the contrary, Tenant
understands that this Lease is a continuing transaction and that the foregoing
representations, certifications and warranties are ongoing and shall be and
remain true and in force on the date hereof and throughout the Term of this
Lease and that any breach thereof shall be a Default under this Lease (not
subject to any notice or cure rights) giving rise to any and all Landlord
remedies hereunder, and Tenant hereby agrees to defend, indemnify and hold
harmless Landlord from and against any and all claims, damages, losses, risks,
liabilities, fines, penalties, forfeitures and expenses (including without
limitation costs and attorneys' fees) arising from or related to any such
Default. 

23.11

CIVIL CODE SECTION 1938. The Premises have not undergone an inspection by a
Certified Access Specialist (CASp). This notice is given pursuant to California
Civil Code Section 1938.

23.12

DISABILITY ACCESS NOTICE REQUIREMENTS. In accordance with Chapter 38 of the San
Francisco Administrative Code, the Disability Access Obligations Notice attached
hereto as Exhibit F (the “Access Notice”) is incorporated herein by this
reference. Execution of this Lease by the parties hereto shall be deemed to
constitute and represent the parties’ acknowledgement and execution of the
Access Notice, notwithstanding that such Access Notice may not be separately
executed. Article 7 of this Lease sets forth the parties’ respective obligations
regarding the performance of and payment for disability access improvements.
Further, each party shall use reasonable efforts to notify the other of
alterations the notifying party may make to or affecting the Premises or
Building that might impact accessibility under federal and state disability
access laws. Such notification regarding alterations shall in no event be
construed to limit Tenant’s obligations or to expand Tenant’s rights under this
Lease (including, without limitation, Article 9 of this Lease, and, without
limiting the generality of the foregoing, in no event shall such notification be
deemed to constitute any notice required to be given by Tenant to Landlord under
any other provision of this Lease.

23.13

SIGNAGE. Landlord, at its cost, shall provide Tenant with its pro rata share of
ground floor lobby directory signage and front door entry signage on the 5th
floor, 6th floor and 7th floor of the Building.

23.14

BICYCLE PARKING. Landlord shall provide unsecured bicycle parking in the
Building’s designated bicycle parking area, on a first come first serve basis.
Tenant shall have the right to bring bicycles into the Premises provided that
(i) Tenant shall provide and maintain a designated bicycle area within the
Premises in accordance with San Francisco Fire Department regulations and (ii)
the bringing of bicycles into the Premises by Tenant shall not interfere with
Landlord’s operation of the Building or the Common Areas or with the use and
enjoyment of the Building and the Common Areas by the other tenants of the
Building and shall at all times comply with the Rules and Regulations.

23.15

SECURITY SYSTEM. Landlord shall not be obligated to provide or maintain any
security patrol or security system and shall not be responsible for the quality
of any such patrol or system which may be provided or for any damage or injury
to Tenant, its officers, directors, employees, agents, contractors, guests, or
invitees. Tenant shall have the right to install a security system meeting
Tenant’s general corporate requirements, including access controls, sensors, and
other features. Landlord has been provided with a description of Tenant’s
standards and requirements for security.

23.16

COUNTERPARTS. This Lease may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which, together, shall constitute
one and the same instrument. Telecopied signatures or signatures transmitted by
electronic mail in so-called “pdf” format may be used in place of original
signatures on this Lease. Landlord and Tenant intend to be bound by the
signatures on the telecopied or e-mailed document, are aware that the other
party will rely on the telecopied or e-mailed signatures, and hereby waive any
defenses to the enforcement of the terms of this Lease based on such

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telecopied or e-mailed signatures. Promptly following request by either party,
the other party shall provide the requesting party with original signatures on
this Lease. 

23.17

RIGHT OF FIRST REFUSAL. Subject to the rights of any tenant of Landlord existing
as of the date of this Lease, Tenant shall have a one-time right of first
refusal to lease Suite 550 of the Building (for purposes of this paragraph only,
the "Refusal Space") on the terms set forth in this paragraph. If at any time
during the term of the Lease, Landlord receives a bona fide offer from a third
person for the lease of all or any part of the Refusal Space, which offer
Landlord desires to accept (the "Lease Offer"), Landlord shall promptly deliver
to Tenant a copy of such Lease Offer. Provided that any tenant of Landlord with
a superior right of first refusal has waived such right, Tenant may, within
thirty (30) days of Landlord’s written notice, elect to lease the Refusal Space
or the portion thereof offered to be leased on all the same terms and conditions
as the lease of the Premises (including the expiration date, but excluding the
Base Rent, which shall be at the fair market rental for the additional space
during the period of its possession by Tenant), excepting that Tenant shall be
credited, against the rent to be paid by Tenant, with a sum equal to the amount
of any brokerage commission, if any, which Landlord shall save by a lease to
Tenant.  If Tenant declines to lease the Refusal Space, or fails to respond to
the Lease Offer, then Tenant’s right of first refusal granted hereunder shall be
null, void and of no further force or effect..

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties have executed and delivered this Lease as of the
Effective Date.

 

TENANT:

 

LANDLORD:

 

 

 

ZENDESK, INC., a Delaware corporation

 

1035 MARKET STREET, LLC,

 

 

 

a Nevada limited liability company

By:

/s/ Elena Gomez

 

 

 

Name:

ELENA GOMEZ

 

 

 

Its:

CFO

 

By:

/s/ Larissa Trummell

 

 

 

Print Name:

LARISSA TRUMMELL

 

 

 

Its:

AUTHORIZED SIGNATORY

 

 

 

 

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EXHIBIT A—PLAN OF PREMISES

 

 

 

 

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EXHIBIT B—COMMENCEMENT DATE AGREEMENT

                                       (“Landlord”), and
                                                 , a
                                  (“Tenant”), have entered into that certain
Lease dated as of                                         , 200_ (the “Lease”).

WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement
Date and Expiration Date of the Lease as provided for in Section 2.2 of the
Lease;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Lease, Landlord and Tenant agree as follows:

1.      Unless otherwise defined herein, all capitalized terms shall have the
same meaning ascribed to them in the Lease.

2.      The Commencement Date (as defined in the Lease) of the Lease is
                    .

3.      The Expiration Date (as defined in the Lease) of the Lease is
                                    .

4.      Tenant hereby confirms the following: (a) That it has accepted
possession of the premises pursuant to the terms of the Lease; and (b)That the
Lease is in full force and effect.

5.      Except as expressly modified hereby, all terms and provisions of the
Lease are hereby ratified and confirmed and shall remain in full force and
effect and binding on the parties hereto.

6.      The Lease and this Commencement Date Agreement contain all of the terms,
covenants, conditions and agreements between the Landlord and the Tenant
relating to the subject matter herein.  No prior other agreements or
understandings pertaining to such matters are valid or of any force and effect.

 

TENANT:

 

LANDLORD:

 

 

 

 

 

1035 MARKET STREET, LLC,

                                                                                           ,

 

a Nevada limited liability company

a                                                   

 

 

 

 

 

 

 

 

By:

 

By:

 

 

Print Name:

 

Print Name:

 

 

Its:

 

Its:

 

 

 

 

 

 

 

 

 

Date:

 

 

Date:

 

 

 

 

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EXHIBIT C—RULES AND REGULATIONS

1.      The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by any of the Tenant Parties or used by Tenant
for any purpose other than for ingress to and egress from its Premises. The
halls, passages, exits, entrances, elevators, stairways, balconies and roof are
not for the use of the general public and Landlord shall in all cases retain the
right to control and prevent access thereto by all persons whose presence in the
judgment of Landlord shall be prejudicial to the safety, character, reputation
and interests of the Building and its tenants. No tenant and no employees or
invitees of any tenant shall go upon the roof of the Building.

2.      Tenant shall not overload the floor of the Premises or unreasonably
mark, drive nails, screw or drill into the partitions, woodwork or plaster or in
any way deface the Premises or any part thereof in a manner that is excessive
for customary office use.

3.      No awning or other projection shall be attached to the outside walls or
windows of the Building without the prior written consent of Landlord.  No
curtains, blinds, shades, drapes or screens shall be attached to or used in
connection with any window or door of the Premises, without the prior written
consent of Landlord.  Such items must be of a quality, type, design, color,
material and general appearance approved by Landlord, and shall be attached in
the manner approved by Landlord.

4.      No sign, placard, picture, advertisement, notice, lettering, decoration
or other thing shall be exhibited, inscribed, painted or affixed by Tenant on
any part of the outside or inside of the Premises or of the Building without the
prior written consent of Landlord.  In the event of the violation of the
foregoing by Tenant, Landlord may remove same without any liability, and may
charge the expense incurred by such removal to Tenant.  

5.      No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in public portions thereof
without the prior written consent of Landlord.

6.      The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein.  All
damages resulting from any misuse of the fixtures shall be borne by Tenant to
the extent that Tenant or Tenant’s agents, servants, employees, contractors,
visitors or licensees shall have caused the same.

7.      Tenant shall not paint, drill into or in any way deface any part of the
Premises or the Building in a manner that is excessive for customary office
use.  No animal or bird shall be brought into or kept in or about the Premises,
except seeing-eye dogs.  Tenant shall draw or lower window coverings and
extinguish all lights when leaving the Premises.

8.      Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Building, or neighboring
buildings or premises, or those having business with them.  

9.      Neither Tenant nor any of Tenant’s agents, servants, employees,
contractors, visitors or licensees shall at any time bring or keep upon the
Premises any flammable, combustible or explosive fluid, chemical or substance.

10.    Tenant shall have the right to install a security system meeting Tenant’s
requirements, subject to removing the same (at Landlord’s election) at the
expiration or sooner termination of this Lease and repairing any damage caused
by such installation or removal.  Except in connection with the installation of
such security system, no additional locks, bolts or mail slots of any kind shall
be placed upon any of the doors or windows by Tenant, nor shall any change be
made in existing locks or the mechanism thereof.  Tenant must, upon the
termination of the tenancy, restore to Landlord all keys of stores, offices and
toilet rooms, either furnished to, or otherwise procured by Tenant, and in the
event of the loss of any keys so furnished, Tenant shall pay to Landlord the
cost thereof.

11.    No furniture, freight or equipment of any kind shall be brought into the
Building without the consent of Landlord and all moving of the same into or out
of the Building shall be done at such time and in such manner as Landlord shall
designate. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy equipment brought into the Building and
also the times and manner of moving the same in and out of the

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Building.  Safes or other heavy objects shall, if considered necessary by
Landlord, stand on a platform of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such safe or property from any cause, and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at the
expense of Tenant. The elevator designated for freight by Landlord shall be
available for use by all tenants in the Building during the hours and pursuant
to such procedures as Landlord may determine from time to time. The persons
employed to move Tenant’s equipment, material, furniture or other property in or
out of the Building must be acceptable to Landlord. The moving company must be a
locally recognized professional mover, whose primary business is the performing
of relocation services, and must be bonded and fully insured. In no event shall
Tenant employ any person or company whose presence may give rise to a labor or
other disturbance in the Building.  A certificate or other verification of such
insurance must be received and approved by Landlord prior to the start of any
moving operations. Insurance must be sufficient in Landlord’s sole opinion, to
cover all personal liability, theft or damage to the Building, including, but
not limited to, floor coverings, doors, walls, elevators, stairs, foliage and
landscaping. Special care must be taken to prevent damage to foliage and
landscaping during adverse weather. All moving operations shall be conducted at
such times and in such a manner as Landlord shall direct, and all moving shall
take place during non-business hours unless Landlord agrees in writing
otherwise.

12.    Tenant is permitted to retain Total Quality Maintenance to provide
janitorial services to the Premises. Except with the written consent of
Landlord, no person or persons other than Total Quality Maintenance and those
other persons approved by Landlord shall be permitted to enter the Building for
the purpose of cleaning the Building or the Premises.  Tenant shall not cause
any unnecessary labor by reason of Tenant’s carelessness or indifference in the
preservation of good order and cleanliness.  

13.    Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Building which, in Landlord’s opinion,
tends to impair the reputation of the Building or its desirability as a first
class building for offices and/or commercial services and upon notice from
Landlord, Tenant shall refrain from or discontinue such advertising.  Tenant
shall not use the name of the Building for any purpose other than as the address
of the business to be conducted by Tenant in the Premises, nor shall Tenant use
any picture of the Building in its advertising, stationery or in any other
manner without the prior written permission of Landlord.  Landlord expressly
reserves the right at any time to change said name without in any manner being
liable to Tenant therefor.

14.    Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 8:00 a.m. Monday through Friday and at all hours on
Saturdays, Sundays and holidays, all persons who do not identify themselves as
employees of Tenants.  Landlord reserves the right to exclude or expel from the
Building any person who, in the judgment of Landlord, is intoxicated or under
the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building

15.    Tenant’s contractors shall, while in the Building or Premises, be subject
to the supervision of the Building Manager (but not as agent of said Building
Manager or of Landlord).  Prior to commencement of work, Tenant’s contractors
shall provide the Building Manager with an insurance certificate naming Landlord
and Building Manager as co-insured in an amount and form reasonably acceptable
to Landlord and with insurance limits as set from time to time by
Landlord.  Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced into the Premises and the Building. No
boring or cutting for wires will be allowed without the prior consent of
Landlord. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the prior approval of Landlord

16.    Tenant shall be responsible for insuring that the doors of the Premises
are closed and securely locked before leaving the Building and must observe
strict care and caution that all water faucets or water apparatus are entirely
shut off before Tenant or Tenant’s employees leave the Building, and that all
electricity, gas or air shall likewise be carefully shut off, so as to prevent
waste or damage, and for any default or carelessness Tenant shall make good all
injuries sustained by other tenants or occupants of the Building or Landlord.
Landlord shall not be responsible to Tenant for loss of property on the
Premises, however occurring, or for any damage to the property of Tenant caused
by the employees or independent contractors of Landlord or by any other person.

17.    If the Premises is or becomes infested with vermin as a result of the use
or any misuse or neglect of the Premises by Tenant, its agents, servants,
employees, contractors, visitors or licensees, Tenant shall forthwith at

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Tenant’s expense cause the same to be exterminated from time to time to the
satisfaction of Landlord and shall employ such licensed exterminators as shall
be approved in writing in advance by Landlord.

18.    The requirements of any tenant will be attended to only upon application
at the office of the Building. Employees of Landlord shall not perform any work
or do anything outside of their regular duties unless under special instructions
from Landlord, and no employee will admit any person (tenant or otherwise) to
any office without specific instructions from Landlord.

19.    Canvassing, soliciting and peddling in the Building are strictly
prohibited and Tenant shall cooperate to prevent the same.

20.    Tenant, Tenant’s agents, servants, employees, contractors, licensees, or
visitors shall not park any vehicles in any driveways, service entrances, or
areas posted “No Parking” and shall comply with any other parking restrictions
imposed by Landlord from time to time.

21.    Tenant shall install and maintain, at Tenant’s sole cost and expense, an
adequate visibly marked (at all times properly operational) fire extinguisher
next to any duplicating or photocopying machine or similar heat producing
equipment.

22.    Tenant shall not prepare any food nor do any cooking except in the
designated kitchen area of the Premises or otherwise as expressly approved by
Landlord or operate or conduct any restaurant, luncheonette or cafeteria within
the Premises.

23.    The Premises shall not, without the specific written consent of Landlord,
be used as an employment agency, a physician’s or dentist’s office, a dance or
music studio, a school, a beauty salon, or barber shop, the business of
photographic, multilith or multigraph reproductions or offset printing, a
restaurant or bar, an establishment for the preparing, dispensing or consumption
of food or beverages of any kind in any manner whatsoever, or sale of
merchandise, goods, services or property of any kind at wholesale, retail or
auction, or for lodging, sleeping or for any immoral purposes.

24.    Business machines and mechanical equipment shall be placed and maintained
by Tenant at Tenant’s expense in settings sufficient in Landlord’s judgment to
absorb and prevent vibration, noise and annoyance.  Tenant shall not install any
machine or equipment which causes noise, heat, cold or vibration to be
transmitted to the structure of the building in which the Premises are located
without Landlord’s prior written consent.

25.    Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline, or inflammable or combustible fluid or material, or use any
method of heating or air conditioning other than that supplied by Landlord.

26.    Smoking is strictly prohibited in the Premises, the Building and all
enclosed Common Areas of the Building, including all lobbies, all hallways, all
elevators and all lavatories.

If there is any conflict between the Lease and these Rules and Regulations, the
Lease shall control.

 

 

 

C-3

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EXHIBIT D—TENANT WORK

 

 

 

 

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EXHIBIT E—DEFINITIONS

As used in the Lease, the following terms shall have the following meanings:

ADJUSTMENT YEAR:  The applicable calendar year or any portion thereof, during
the Term, after the Base Year for which a Rent Adjustment computation is being
made.

AFFILIATE:  Any corporation or other business entity that is owned or controlled
by, owns or controls, or is under common ownership or control with Tenant or
Landlord, as the case may be.

BUILDING:  The building located at the address specified in Section 1.1(1) of
the Lease.  The Building includes office, retail and other uses.

COMMON AREAS:  All areas of the Building made available by Landlord from time to
time for the general common use or benefit of the tenants of the Building, and
their employees and invitees, or the public, as such areas currently exist and
as they may be changed from time to time.

DECORATION:  Tenant Alterations which do not require a building permit and which
do not involve any of the structural elements of the Building, or any of the
Building’s systems, including its electrical, mechanical, plumbing, security,
heating, ventilating, air-conditioning, communication, and fire and life safety
systems.

DEFAULT RATE:  Two (2) percentage points above the rate then most recently
announced by Bank of America N.A. at its San Francisco main office as its base
lending reference rate, from time to time announced, but in no event higher than
the maximum rate permitted by Law.

DELIVERY DATE:  (i) as to the 5th Floor Space, the date upon which Landlord
delivers the 5th Floor Space in its “AS-IS” and “AS-BUILT” configuration, which
is expected to be June 1, 2016 and (ii) as to the 6th and 7th Floor Space, the
date upon which Landlord delivers the 6th and 7th Floor Space in its “AS-IS” and
“AS-BUILT” configuration, which is expected to be June 1, 2016  

ENVIRONMENTAL LAWS:  All federal, state and local statutes, ordinances,
regulations and rules in effect and as amended from time to time relating to
environmental quality, health, safety, contamination and cleanup, including,
without limitation, the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean
Water Act, 33 U.S.C. Section 1251 et seq., and the Water Quality Act of 1987;
the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), 7 U.S.C.
Section 136 et seq.; the Marine Protection, Research, and Sanctuaries Act, 33
U.S.C. Section 1401 et seq.; the National Environmental Policy Act, 42 U.S.C.
Section 4321 et seq.; the Noise Control Act, 42 U.S.C. Section 4901 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Resource
Conservation and Recovery Act (“RCRA”), 42 U.S.C. Section 6901 et seq., as
amended by the Hazardous and Solid Waste Amendments of 1984; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. Section 9601 et
seq., as amended by the Superfund Amendments and Reauthorization Act, the
Emergency Planning and Community Right-to-Know Act, and the Radon Gas and Indoor
Air Quality Research Act; the Toxic Substances Control Act (“TSCA”), 15 U.S.C.
Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et seq., and
the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section 10101 et seq., and state
and local superlien and environmental statutes and ordinances, with implementing
regulations, rules and guidelines, as any of the foregoing may be amended from
time to time. Environmental Laws shall also include all state, regional, county,
municipal, and other local laws, regulations, and ordinances insofar as they are
equivalent or similar to the federal laws recited above or purport to regulate
Hazardous Materials.

FORCE MAJEURE:  Any accident, casualty, act of God, war or civil commotion,
strike or labor troubles, or any cause whatsoever beyond the reasonable control
of Landlord, including water shortages, energy shortages or governmental
preemption in connection with an act of God, a national emergency, or by reason
of Law, or by reason of the conditions of supply and demand which have been or
are affected by act of God, war or other emergency.

HAZARDOUS MATERIAL: All of the following, including mixtures thereof:  any
hazardous substance, mold, pollutant, contaminant, waste, by-product or
constituent regulated under CERCLA; oil and petroleum products and natural gas,
natural gas liquids, liquefied natural gas and synthetic gas usable for fuel;
pesticides regulated under FIFRA; asbestos and asbestos-containing materials,
PCBs, and other substances regulated under TSCA; source

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material, special nuclear material, by-product material and any other
radioactive materials or radioactive wastes, however produced, regulated under
the Atomic Energy Act or the Nuclear Waste Policy Act; chemicals subject to the
OSHA Hazard Communication Standard, 29 C.F.R. § 1910.1200 et seq.; and
industrial process and pollution control wastes whether or not hazardous within
the meaning of RCRA, and any other hazardous substance, pollutant or contaminant
regulated under any Environmental Laws; provided, however, that “Hazardous
Materials” shall not include normal quantities of materials, supplies and
substances used by Tenant in operation of Tenant’s business in the ordinary
course and in compliance with (x) Environmental Laws and (y) the Landlord Rules,
and such other materials and substances not in violation of Environmental Laws.

INDEMNITEES:  Collectively, Landlord, any Mortgagee or ground lessor of the
Property, the property manager and the leasing manager for the Property and
their respective partners, members, directors, officers, agents and employees.

LAND:  The parcel(s) of real estate on which the Building and Premises are
located.

LAWS OR LAW:  All laws, ordinances, rules, regulations, other requirements,
orders, rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant’s activities at the Premises and any covenants, conditions or
restrictions of record which affect the Property.

LEASE:  The Lease instrument dated as of ____________ between Landlord and
Tenant together with all exhibits and riders attached thereto, including but not
limited to this Exhibit, as may be amended from time to time.

MONTHLY BASE RENT:  The monthly base rent specified in Section 1.1(6) of the
Lease.

MORTGAGEE:  Any holder of a mortgage, deed of trust or other security instrument
encumbering the Property.

NATIONAL HOLIDAYS:  New Year’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord
and the janitorial and other unions servicing the Building in accordance with
their contracts.

OPERATING EXPENSES:  All costs, expenses and disbursements of every kind and
nature, which Landlord shall pay or become obligated to pay in connection with
the ownership, management, operation, maintenance, replacement and repair of the
Building (including, without limitation, the cost of electricity, steam, water,
gas, fuel, heating, lighting, air conditioning, window cleaning, janitorial
service, insurance, including (without limitation) fire, extended coverage,
liability, workmen’s compensation, elevator or any other insurance carried by
Landlord and applicable to the Building, the costs of changing utility service
providers, painting, uniforms, management fees, supplies, sundries, sales or use
taxes on supplies or services, cost of wages and salaries of all persons engaged
in the operation, administration, maintenance and repair of the Building, and
fringe benefits, including (without limitation) social security taxes,
unemployment insurance taxes, cost for providing coverage for disability
benefits, cost of any pension, hospitalization, welfare or retirement plans, or
any other similar or like expenses incurred under the provisions of any
collective bargaining agreement, or any other cost or expense which Landlord
pays or incurs to provide benefits for employees so engaged in the operation,
administration, maintenance and repair of the Building, the charges of any
independent contractor who, under contract with Landlord or its representative,
does any of the work of operating, maintaining or repairing the Building, legal
and accounting expenses, including (without limitation) such expenses as relate
to seeking or obtaining reductions in and refunds of real estate taxes, or any
other expense or charge, whether or not hereinbefore mentioned, which in
accordance with generally accepted accounting or management principles
respecting first-class office buildings in San Francisco, California, would be
considered as an expense of owning, managing, operating, maintaining or
repairing the Building.  Operating Expenses shall also include the amortized
portion of any capital expenditure or improvement as permitted hereunder,
together with interest thereon.  Operating Expenses shall not include:  

 

(i)

costs of alterations of the premises of tenants of the Building, except where
such costs are necessitated by the acts or omissions of Tenant or its employees,
servants, agents, contractors, customers, or invitees,

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(ii)

costs of capital expenditures or capital improvements to the Building (except
for the amortized portion calculated on a straight-line basis calculated over
the useful life of the capital expenditure or improvement as reasonably
determined by Landlord of capital improvements installed for the purpose of
reducing or controlling Operating Expenses (but only to the extent that the
actual annual cost savings realized do not redound primarily to the benefit of
any particular Building tenant) or complying with applicable Laws (or revisions
thereto) not in effect as of the Commencement Date), 

 

(iii)

depreciation charges,

 

(iv)

interest and principal payments on loans,

 

(v)

ground lease rental payments,

 

(vi)

real estate brokerage and leasing commissions,

 

(vii)

advertising and marketing expenses,

 

(viii)

charges for Landlord Services and charges for utilities provided to the Premises
but only to the extent the same are paid by Tenant directly to the relevant
service provider;  

 

(ix)

costs of Landlord reimbursed by insurance proceeds, and

 

(x)

expenses incurred in negotiating leases of tenants in the Building or enforcing
lease obligations of other tenants in the Building.

Any repair or maintenance costs which are recovered by a warranty or service
contract in the Base Year shall be imputed to the Base Year Operating
Expenses.  In the event any facilities, services, or utilities used in
connection with the Building are provided from another building owned or
operated by Landlord or vice versa, the costs incurred by Landlord in connection
therewith shall be allocated to Operating Expenses by Landlord on a reasonably
equitable basis.

If Landlord includes any Operating Expenses in any year following the Base Year
for services or items that were not included in the Base Year (as opposed to
increases in existing services or items), then, for the purposes of this Lease,
the additional expense shall be included in the Base Year for a period of 12
months following the date the additional charge or cost first occurs and
Landlord has included in Operating Expenses as if such expense occurred during
the Base Year

PREMISES:  Individually or collectively, as the case may be and as required in
this Lease, Suite 500 on the 5th Floor of the Building (sometimes referred to
herein as the “5th Floor Space”) and the 6th and 7th Floors of the Building (the
6th and 7th Floors of the Building, collectively, sometimes referred to herein
as the “6th and 7th Floor Space”), as depicted on Exhibit A to the Lease.

PROPERTY:  The Building consists of the office building with ground floor office
and/or retail spaces located at the street address specified in Section 1.1(1)
of the Lease in San Francisco, California, landscaping and improvements,
together with the Land, any associated interests in real property, and the
personal property, fixtures, machinery, equipment, systems and apparatus located
in or used in conjunction with any of the foregoing.  The Building may also be
referred to as the Property.

REAL PROPERTY:  The Property excluding any personal property.

RENT:  Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits, and all other charges, payments, late fees or other amounts required
to be paid by Tenant under this Lease.

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RENT ADJUSTMENT:  Any amounts owed by Tenant for payment of Operating Expenses
in excess of Base Year Operating Expenses or Taxes in excess of Base Year
Taxes.  The Rent Adjustments shall be determined and paid as provided in Article
Four of this Lease.

RENT ADJUSTMENT DEPOSIT:  An amount equal to Landlord’s reasonable estimate of
the Rent Adjustment attributable to each month of the applicable Adjustment
Year.  On or before the beginning of each Adjustment Year or with Landlord’s
Statement (defined in Article Four), Landlord may reasonably estimate and notify
Tenant in writing of its estimate of the amount of Operating Expenses in excess
of the Base Year Operating Expenses and Taxes in excess of the Base Year Taxes
payable by Tenant for such year or applicable portion.  Prior to the first
determination by Landlord of the amount of such excess Operating Expenses and
Taxes, Landlord may estimate such amounts in the foregoing calculation.  The
last estimate by Landlord shall remain in effect as the applicable Rent
Adjustment Deposit unless and until Landlord notifies Tenant in writing of a
change, which notice may be given by Landlord from time to time during any
Adjustment Year.

RENTABLE AREA OF THE PREMISES:  The amount of square footage set forth in
Section 1.1(7) of the Lease.

RULES AND REGULATIONS.  The rules and regulations listed on Exhibit C, attached
hereto and made a part hereof, together with all modifications and additions
thereto which Landlord may make from time to time

SECURITY DEPOSIT:  The funds specified in Section 1.1(11) of the Lease, if any,
deposited by Tenant with Landlord as security for Tenant’s performance of its
obligations under this Lease.

STANDARD OPERATING HOURS:  Monday through Friday from 8:30 A.M. to 6:00 P.M.,
excluding National Holidays.

TAXES:  All federal, state and local governmental taxes, assessments and charges
of every kind or nature, whether general, special, ordinary or extraordinary,
which Landlord shall pay or become obligated to pay because of or in connection
with the ownership, leasing, management, control or operation of the Property or
any of its components (including any personal property used in connection
therewith), which may also include any rental or similar taxes levied in lieu of
or in addition to general real and/or personal property taxes.  For purposes
hereof, Taxes for any year shall be Taxes which are assessed for any period of
such year, whether or not such Taxes are billed and payable in a subsequent
calendar year.  There shall be included in Taxes for any year the amount of all
fees, costs and expenses (including reasonable attorneys’ fees) paid by Landlord
during such year in seeking or obtaining any refund or reduction of Taxes
(provided that such costs shall not separately be included in Operating Expenses
so as to create duplicate expenses).  Taxes for any year shall be reduced by the
net amount of any tax refund received by Landlord attributable to such year.  In
the event that Landlord receives a Proposition 8 reduction in Taxes attributable
to the Base Year, then Taxes for the Base Year and any subsequent year shall be
computed as if no Proposition 8 tax reduction was obtained during the Base Year
and any subsequent year.  If a special assessment payable in installments is
levied against any part of the Property, Taxes for any year shall include only
the installment of such assessment and any interest payable or paid during such
year.  Taxes shall not include any franchise, transfer, capital stock, federal
or state inheritance, general or net income, or gift or estate taxes, except
that if a change occurs in the method of taxation resulting in whole or in part
in the substitution of any such taxes, or any other assessment, for any Taxes as
above defined, such substituted taxes or assessments shall be included in the
Taxes.

TENANT ADDITIONS:  Collectively, the Tenant Work and Tenant Alterations.

TENANT ALTERATIONS:  Any alterations, improvements, additions, installations or
construction in or to the Premises or any Building systems serving the Premises
(excluding Tenant Work); and any supplementary air-conditioning systems
installed by Landlord or by Tenant at Landlord’s request pursuant to Article Six
of the Lease.

TENANT WORK:  The work to be installed or furnished to the Premises by Tenant
prior to the Commencement Date, as specifically described on Exhibit D, attached
hereto and made a part hereof.

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TENANT’S SHARE: The percentage that represents the ratio of the Rentable Area of
the Premises to the Rentable Area of the Building, as determined by Landlord
from time to time.  Tenant acknowledges that the Rentable Area of the Premises
or Building may change from remeasurement or otherwise during the Term, provided
that Tenant’s Share shall not thereby increase or decrease.

TERM:  The period set forth in Section 1.1(5) of the Lease.

TERMINATION DATE:  The Expiration Date or such earlier date as this Lease
terminates or Tenant’s right to possession of the Premises terminates.

 

 

 

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EXHIBIT F

DISABILITY ACCESS OBLIGATIONS UNDER

SAN FRANCISCO ADMINISTRATIVE CODE CHAPTER 38

Before you, as the Tenant, enter into the lease document to which this Exhibit
is attached (whether a new lease or an amendment to an existing lease) with us,
the Landlord, for premises in the building located in San Francisco, CA and more
particularly described in the Lease (the “Property”), please be aware of the
following important information about the Lease:

You May Be Held Liable for Disability Access Violations on the Property. Even
though you are not the owner of the Property, you, as the Tenant, as well as the
Property owner, may still be subject to legal and financial liabilities if the
leased Property does not comply with applicable Federal and State disability
access laws.  You may wish to consult with an attorney prior to entering into
the lease document to make sure that you understand your obligations under
Federal and State disability access laws. The Landlord must provide you with a
copy of the Small Business Commission Access Information Notice under Section
38.6 of the Administrative Code in your requested language; a copy of such
Notice is attached hereto in satisfaction of such obligation.  For more
information about disability access laws applicable to small businesses, you may
wish to visit the website of the San Francisco Office of Small Business or call
415-554-6134.

The Lease Must Specify Who Is Responsible for Making Any Required Disability
Access Improvements to the Property.  Under the laws of the City of San
Francisco, the lease must include a provision in which you, the Tenant, and the
Landlord agree upon your respective obligations and liabilities for making and
paying for required disability access improvements on the leased Property.  The
Lease must also require you and the Landlord to use reasonable efforts to notify
each other if they make alterations to the leased Property that might impact
accessibility under Federal and State disability access laws. You may wish to
review those provisions with your attorney prior to entering the lease to make
sure that you understand your obligations under the Lease.

PLEASE NOTE: The Property may not currently meet all applicable
construction-related accessibility standards, including standards for public
restrooms and ground floor entrances and exits.

By signing below, each party confirms that it has read and understood this
Notice.

 

LANDLORD:

 

TENANT:

 

 

 

 

 

By:

/s/ Larissa Trummell

 

By:

/s/ Elena Gomez

 

 

 

 

 

Name:

LARISSA TRUMMELL

 

Name:

ELENA GOMEZ

 

 

 

 

 

Title:

AUTHORIZED SIGNATORY

 

Title:

CFO

 

 

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ACCESS INFORMATION NOTICE [ENGLISH]

 

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PROTECT YOUR BUSINESS FROM POTENTIAL ADA LAWSUITS   Businesses Have you received
an ADA notice?  no  No Notice  Pre Assessment by Office of Small Business (OSB)
& SF SHINES low amount of barriers medium amount of barriers high amount of
barriers  Yes  Notice The business receives a letter(s).The letter(s) may be
sent by a person with disability claiming he/she encountered problems while
visiting your business.This letter(s) is often a precursor to state or federal
lawsuit and MUST NOT be ignored. Proactive action and response to the letter can
prevent a lawsuit.  Attorney Contact an experienced legal consultant or the
Office of Small Business to respond to the letter or lawsuit.  CASp Action (see
below) Consult inspection report “readily achievable” solution
Remediation/Resolution Low, medium, high barriers scope of work by AND or an
alternative architecture firm. Certified Access Specialist (CASp)  Signed into
law on September 28, 2008, SB 1608 a Certified Access Specialist (CASp) report
provides a defense against lawsuits, but only if the business obtained a CASp
report BEFORE being sued. With a CASp report in hand, businesses may request a
90-day stay (a temporary stop) of the lawsuit filed in State Court and an Early
Evaluation Conference (EEC) to explore fair settlements. A Certified Access
Specialist (CASp) is a person that has been tested and certified by the state as
an expert in disability access laws. A business that hires a CASp to inspect
their buildings helps ensure compliance with disability access standards. After
inspection, the CASp writes up an inspection report as proof that the business
hired a CASp. A CASp should help your business identify "readily achievable"
barriers for removal. COMPLIANCE VS. LAWSUIT Compliance is a recommended
investment as not only will your business be less vulnerable to drive-by
lawsuits, but you gain a growing  market of seniors, families with baby
strollers,  and persons  with disabilities. Cost will depend on the type of
alterations, and on what is affordable at the present and future. If you decide
to do nothing and rely on "luck" that you will not be sued, consider the
potential costs of being an "unlucky" defendant. The reality today is that more
ADA lawsuits are targeting small stores and minority-owned businesses because
they are likely to settle rather than incur the costs and risks of
litigation.  The average  cost to comply  with a plaintiff's  requested  barrier
removal  is less than $4,000,  according to amicus  curiae brief filed in the
Ninth Circuit of Appeal,  Jerry Doran v. Del Taco, Inc. Fighting  a lawsuit
including  paying a settlement  may cost around  $30,000,  according  to OSB.
Investing in Certified Access Inspection and "readily achievable" compliance
before a lawsuit is the best way to protect your business from expensive
lawsuits. BUSINESS RESOURCES  Office of Small Business  City Hall, room 110 1
Carlton B. Goodlett Place San Francisco, CA 94102 415-554-6134,
www.sfgov.org/osb Certified Access Specialists  www.sfgov.org/osb Asian
Neighborhood Design  1245 Howard Street San Francisco, CA 94103 415-575-0423,
www.andnet.org SF Shines - Office of Economic Workforce Development  City Hall,
room 448 1 Carlton B. Goodlett Place San Francisco, CA 94102 415-554-6969,
www.oewd.org San Francisco Bar Association  The Lawyer Referral and Information
Service (LRIS) program offers businesses legal assistance from their panel of
experienced lawyers. www. sfbar.org/lawyerreferrals/index.aspx BUSINESS
RESOURCES Department of Justice ADA Guide for Small Businesses Business Briefs
www.ada.gov/business.htm#anchor-bbriefs  ADA Guide for Small Businesses
www.ada.gov/publicathtm#Anchor-ADA-35326  DOJ toll-free ADA information line
800-514-0301  Department of Building Inspection -Technical Services
Division  DBI staff persons are available to review state access requirements.
Visit 1660 Mission Street, 4th floor to request a review of your business
plans.  415-558-6084, www.sfgov.org/dbi A Guide to Disabled Accessibility
Compliance Small Business Commission Access Information Notice   DISABLED
ACCESSIBILITY Two Sets of Access Laws There are two different bodies of law in
California that regulate disability access: a state building code, and a federal
civil rights law. The state building code requirements for access are located in
the California Code of Regulations, Title 24, Part 2, and are commonly referred
to as Title 24.  The Americans with Disabilities Act of 1990 (ADA) is a sweeping
federal civil rights law which prohibits discrimination against persons with
disabilities. Specifically, Title III of the ADA requires public accommodations
to provide goods and services to people with disabilities on an equal basis with
the rest of the general public. The United States Department of Justice (DOJ)
enforces the ADA.  Being compliant to the regulations of one law does not
relieve your responsibilities to be compliant with the other set of laws. Non
Compliance If the building is not compliant with California Title 24, the
citizen compliant is routed to the Department of Building Inspection (DBI). DBI
will send staff to visit the site and perform an inspection, and if necessary,
the inspector will initiate actions to require the owner to correct the
problem.  If the citizen’s complaint is ADA driven, the plaintiff can take the
business to civil court for remedy. The federal ADA does not have an
“inspection” mechanism, and private lawsuits can be filed directly in federal
courts by those who believe their civil rights have been violated. Who is
Required to Remove Barriers? Barriers are defined by the ADA as obstacles to
accessibility. Such obstacles make it difficult — sometimes impossible — for
people with disabilities to do the things most of us take for granted — things
like going shopping, working dining in a restaurant or taking public transit. If
your business provides goods and services to the public , you are required to
remove barriers if doing so is “readily achievable.” Such as business is called
a public accommodation because it serves the public. if your business is not
open to the public (no adjacent retail or open to tours), but is only a place of
employment like a warehouse, manufacturing facility or office building, then
there are fewer requirements to remove barriers. Such a facility is called a
commercial facility. While the operator of a commercial facility has different
requirements to remove barriers, you must comply with the ADA Standards for
Accessible Design when you alter, renovate or expand your facility.   Readily
Achievable “Readily achievable” means easily accomplishable and able to be
carried out without much difficulty or expense. Determining if barrier removal
is readily achievable is, by necessity, a case-by-case judgment. “Readily
achievable” is based on factors including review of the overall nature of the
business and its financial statements. AsianNeighborhoodDesign 1245 Howard
Street San Francisco, CA 94103 415-575-0423, www.andnet.org Office of Small
Business City Hall, room 110 1 Carlton B. Goodlett Place San Francisco, CA 94102
415-554-6134, www.sfgov.org/osb SF Shines – Office of Economic Workforce
Development City Hall, room 448 1 Carlton B. Goodlett Place San Francisco, CA
94102 415-554-6969, www.oewd.org This document is intended as informal technical
guidance.  It is NOT legal advice and does not replace the professional advice
or guidance that an architect, CASp or attorney knowledgeable in ADA
requirements can provide.    (Continued)

 

 

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LOW BARRIERS obstacles to accessibility that are minor, and most likely can be
“readily achievable” A. Service Counter Height and Visibility A portion
specified by local codes of the counter must be between 28” - 34” above the
floor.  B. Path of Travel Clearance All Aisles to public zones must be at least
36” wide and remain unobstructed.  C. Door Clearance The pull side of doors must
have a clearance specified by local codes. D. Door Hardware All doors must be
operable without action of pinching or grasping.  MEDIUM BARRIERS obstacles that
require more attention, and likely professional guidance A. Step at Entrance The
entrance must be accessible for occupants in wheelchairs, with sloping and
clearance requirements specified by local codes. B. Restroom Vanity Clearance
The sink must provide knee clearance specified by local codes.  C. Undersized
Path of Travel All aisles to public zones must be at least 36” wide. D. No
Accessible Seating A portion specified by local codes of seating must be
accessible. HIGH BARRIERS obstacles that require a lot of attention, and
definite professional guidance  A. Multiple Steps at Entrance The entrance must
be accessible for occupants in wheelchairs, with sloping and clearance
requirements specified by local codes. B. Step in Dining/Customer Space Public
zones must be accessible for occupants in wheelchairs, see note A. C. Undersized
or Lack of Restroom The correct number of accessible restrooms must be provide.
D. Ramp Exceeds Maximum Slope Allowed Businesses must be accessible for
occupants in wheelchairs, see note A.  ADA COMPLINCE barriers are minimized or
removed  A. Compliant Entry The entrance is accessible by stairs and a compliant
ramp. B. Path of Travel Clearance All aisles to public zones, including seating,
restrooms, and food pick-up are at least 36” wide and remain unobstructed. C.
Compliant Counters Service counter is between 28” - 34” above the floor. D.
Compliant Restroom The accessible restroom has the required fixtures, dimensions
and clearances/  service counter is too high for customers in wheelchair objects
placed in required path of travel main entrance object placed in required door
clearance space door knob is not operable without pinching or grasping  step at
main entrance sink has a built-in base that does not provide required knee
clearance undersized hallway/path of travel 30” fixed seating at raised
counter   multiple steps at main entrance step in dining space object in path of
travel 24” plan diagram of undersized restroom undersized restroom with missing
fixtures & grab bars ramp exceeds maximum allowable slope  A. B. C. D. Plan
diagram of accessible restroom  COMMON MISCONCEPTIONS I am exempt from
compliance or “grandfathered” The answer is “NO”. A Place of public
accommodation must remove barriers when it is “readily achievable” to do so.
Although the facility may be “grandfathered” according to the local building
code, the federal ADA does not have a provision to “grandfather” a facility.
While a local building authority may not require any modifications to bring a
building “up to code” until a renovation or major alteration is done, the
federal ADA requires that a place of public accommodation remove barriers that
are readily achievable even when no alterations or renovations are planned.  As
a business you have an on-going obligation to bring your business into
compliance. I am exempt since my building has historic designation Neither State
nor Federal laws exempt historical buildings from compliance, but there are
specific guidelines. In San Francisco, any building over 50 years old is
considered as a potentially significant historical resource.   Accessibility
improvements to the entrance or exterior of these buildings may require
additional review by historic Preservation staff and may lengthen the permitting
process.  Another common misconception is that City staff will deny your
application if the building is considered historic. This is extremely rare,
though during the review process you will be required to find alternatives that
respect historic designs and materials while also providing disabled access.
Historically sensitive accessibility improvements may add cost to your project
but are generally worth the investment over the long run. Settling the lawsuit
will relieve me of my responsibilities Business owners need to know that the ADA
is now a part of our society and that there is no limit to the number of times a
business can be sued regarding accessible barriers. The best solution is to make
the “readily achievable” physical changes and to understand that compliance is
ongoing. If a business is sued over a physical barrier (s) to accessibility,
they can still be sued for that same barrier in the future if it still exists.
Tenant vs. Landlord (Owner) The federal ADA law states that any private entity
who owns, leases, leases to, or operates a place of public accommodation shares
in the obligation to remove barriers. Tenants and property owners also share in
the obligation, so often times a negotiation must take place to determine who
pays what costs, or percentage of costs for access compliance and/or litigation
defense. Effective January 1, 2013, San Francisco law requires property owners
of a commercial space of 7,500 square feet or less to provide a “Disabled Access
Obligation Notice” before entering into or amending a lease. Effective July 1,
2013, State law requires a commercial property owner to state on a lease or
rental agreement whether the property has undergone inspection by a certified
access specialist (CASp). These two laws were passed to help ensure businesses
are informed of their on-going obligation and aid in the prevention of lawsuits.
There are also tax benefits that are available to each party in some cases to
help pay for barrier removal.

 

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