PDR LEASE
For the Premises at

340 Bryant Street
San Francisco, California
between
140 PARTNERS, L.P.
and
SKULLCANDY, INC.

PDR Lease
1

Special Lease Terms
1

Basic Lease Terms
10

1.
Delivery of Premises; Acceptance of Premises; Right of First Offer to
Expand    10

2.
Term    11

3.
Rent    11

4.
Pass-Through Expenses Payable as Additional Rent    11

5.
Permitted Use    14

6.
Compliance with Laws; ADA    15

7.
Option to Extend    16

8.
Utilities and Services    18

9.
Improvements and Alterations; Liens; Tenant Improvement Allowance; Test-Fit
Allowance    18

10.
Insurance; Waiver of Subrogation    21

11.
Damage or Destruction    23

12.
Security Deposit    24

13.
Assignments and Subletting    24

14.
Rules    26

15.
Control of Appearance, Signs, and Advertising Media    26

16.
Repairs and Maintenance    26

17.
Property Protection    27

18.
Environmental Compliance    27

19.
Landlord’s Access to Premises    29

20.
Indemnity    30

21.
Abandonment    31

22.
Conveyance by Landlord    31

23.
Condemnation    32

24.
Default; Remedies    32

25.
Subordination and Estoppel Certificates    35

26.
Holding Over and Surrender    36

27.
Commissions    37

28.
True Lease    37

29
Intentionally Deleted    38

30
Notices    38

31
No Third Party Beneficiaries    38

32
Force Majeure    38

33
No Merger    38

34
Characterization of Relationship    38

35
Limitation of Landlord’s Liability    38

36
No Offer    38

37
Signage    39

38
Easements    39

39
Quiet Enjoyment    39

40
Security System    39

41
General    39

Signatures
41

EXHIBIT A
--    Premises Floor Plans

EXHIBIT B-1
--    Tenant’s Space Plan

EXHIBIT B-2
--    Landlord’s Work

EXHIBIT C
--    Signage

EXHIBIT D
--     Rules and Regulations

ATTACHMENT A
--    Exclusions from term “operating expenses”

ATTACHMENT B --
Form of Estoppel Certificate

ATTACHMENT C -- Form of Subordination, Non-Disturbance and Attornment Agreement
ATTACHMENT D -- DISABILITY ACCESS OBLIGATIONS UNDER SAN FRANCISCO ADMINISTRATIVE
CODE CHAPTER 38
PDR LEASE
This PDR Lease (this “Lease”) is made as of the _____ day of _______________,
2015, in the City and County of San Francisco, California by and between 140
Partners, L.P., a California limited partnership (“Landlord”), and the person
named below as “Tenant,” effective as of the date set forth below (the
“Effective Date”). Under the terms, covenants, and conditions of this Lease,
Landlord hereby leases to Tenant, and Tenant leases from Landlord, the real
property described below as the Premises. This Lease consists of the Special
Lease Terms, Basic Lease Terms, and any Exhibits.
SPECIAL LEASE TERMS
A.    
Landlord:
140 Partners, L.P., a California limited partnership, or such other party to
whom this Lease is assigned.

B.    
Landlord Address:
Landlord’s address initially shall be:

140 Partners, L.P.
c/o Group I.
ATTN: Property Manager
500 Sansome Street, Suite 750
San Francisco, CA 94111

C.    
Tenant:
Skullcandy, Inc., a Delaware corporation.

D.    
Tenant Address:
Prior to the Commencement Date, Tenant’s address shall be:

655 4th Street
San Francisco, CA 94107
Attn: Jordan Reiss

After the Commencement Date, Tenant’s address shall be at the Premises, Attn:
Jordan Reiss.

E.    
Premises:
The entire ground floor of 340 Bryant Street, San Francisco, California, deemed
to be approximately 14,597 rentable square feet (“RSF”), as shown on EXHIBIT A.
The building in which the Premises are located is referred to in this Lease as
the “Building.”

F.    
Method of Measurement:
The RSF of the Premises and Building shall be calculated in accordance with
modified Building Owners and Managers Association (“BOMA”) Standard for the
measurement of commercial office space (ANSI/BOMA Z65.1 2010). Neither Landlord
nor Tenant shall have the right to re-measure the Premises during the Lease
Term. The load factor for the Premises is 1.9%.

G.    
Commencement Date:
April 1, 2016.

H.    
Lease Term:

Seven (7) years commencing on the Commencement Date and ending on the date which
is the last day of the eighty-fourth (84th) month following the Commencement
Date (the “Expiration Date”).

I.    
Monthly Rent:
$44.00 per RSF per year for the first year of the Lease Term, on a modified
gross basis as provided in the chart below. Monthly Rent shall be increased by
three percent (3.0%) per RSF per year on each anniversary of the Commencement
Date. The following schedule set forth Monthly Rent for each month of the Lease
Term:

* As used herein, the term “Lease Month” shall mean each calendar month during
the Lease Term. Tenant shall be entitled to one full month of free Monthly Rent,
and no Monthly Rent is due or payable during Lease Month 1.

J.    
Prepaid Rent:
$53,522.33, which represents Monthly Rent for the second month of the Lease
Term, payable upon execution of this Lease, which shall be refunded to Tenant
within 15 days if the Contingencies listed in Paragraph S are not satisfied or
waived by their respective deadlines, resulting in a termination of this lease
at the Tenant's option.

K.    
Additional Rent:

Beginning on January 1, 2017, Tenant shall pay to Landlord, as additional rent,
Tenant’s Share of the operating expenses and direct taxes in excess of the
operating expenses and direct taxes incurred by Landlord during the Base Year as
provided in Sections 4 and 8 and, beginning on the Commencement Date, Tenant
shall pay to Landlord the direct cost of utilities, janitorial service and trash
collection expenses allocated to the Premises (collectively Tenant’s Share of
the operating expenses and direct taxes in excess of the operating expenses and
direct taxes incurred by Landlord during the Base Year and the direct cost of
utilities, janitorial service and trash collection expenses allocated to the
Premises are the “Additional Rent”).

The “Base Year” under this Lease is calendar year 2016, from January 1, 2016
through December 31, 2016, based on a 100% occupied Building. “Tenant’s Share”
is 23%.

L.    
Security Deposit:
$175,763.52, which represents three (3) months’ effective Monthly Rent, payable
upon execution of this Lease.
 
M.    
Landlord’s Work

“Landlord’s Work” shall refer to all core and shell construction work shown on
the plans and specifications listed on EXHIBIT B-2.

N.    
Substantial Completion:
“Substantial Completion” of Landlord’s Work means that Landlord has caused
Landlord’s Work to be completed in good and workmanlike manner in accordance
with all applicable Laws (as defined in Section 6.1), subject only to the
correction or completion of “punch list” items, which items shall be limited to
minor items of incomplete or defective work or materials or mechanical
maladjustments that are of such a nature that the lack of completion does not
materially interfere with or impair Tenant’s access to or use of the Premises
for Tenant’s business.  

O.    
Tenant Improvement Allowance

Landlord shall contribute a Tenant Improvement Allowance of not more than
$583,880.00 ($40.00 per RSF), in accordance with the provisions set forth in
Section 9.3; provided, however, the Tenant Improvement Allowance actually paid
to Tenant shall be reduced by three percent (3%) as Landlord’s construction
management fee. The Tenant Improvement Allowance shall cover costs for the
construction, architectural fees, consulting fees, engineering services,
mechanical and electrical services, construction management, and building
permits associated with Tenant’s initial build-out of the Premises
(collectively, the “Initial Tenant Improvements”)

Landlord, at Landlord’s sole cost has completed a space plan attached hereto as
Exhibit B-1 and has requested and received a written indication from the San
Francisco Planning Department that Tenant’s proposed use as shown in the space
plan as reflected in Exhibit B-1 conforms to PDR use pursuant to the Planning
Code (sometimes referred to as the Zoning Code). Tenant has approved the space
plan and shall, at Tenant’s sole cost and expense, hire its own architects,
engineers, and consultants to complete the plans necessary to obtain a building
permit for Tenant’s Improvements.

P.    
Test-Fit Allowance/
Permit Planning:
$2,189.50 ($0.15) per RSF in accordance with the provisions set forth in Section
9.4.

Q.    
Permitted Use:
PDR (Production, Distribution, and Repair) uses. Tenant acknowledges that the
ground floor of the Building is zoned for PDR use.

R.    
Option to Extend:
Provided that Tenant is not then in default beyond the expiration of any
applicable notice and cure periods under this Lease at the time Tenant proposes
to exercise its option rights, Tenant shall have one (1) five (5) year option to
extend the term of this Lease at 100% of Fair Market Rent pursuant to the
provisions in Section 7. This Option to Extend is personal to Tenant and may not
be transferred or assigned.

S.    
Delivery of Premises:
Failure by Landlord to meet any of the following deadline below shall grant to
Tenant the option to terminate this Lease:
Construction Completion Date; Delays. Landlord shall deliver the Premises on or
before January 1, 2016, in shell condition ready for Tenant’s Improvements, upon
Landlord’s Substantial Completion of Landlord’s Work as described in EXHIBIT
B-2 to this Lease. Landlord shall work diligently to complete Landlord’s Work
and deliver the Premises for Tenant’s occupancy on the Commencement Date;
however, the nature and scope of Landlord’s Work may take substantially longer
and Tenant agrees to postpone occupancy of the Premises until Substantial
Completion of Landlord’s Work. In the event that, Substantial Completion of
Landlord’s Work is incomplete, or Landlord is unwilling or unable to deliver the
Premises for Tenant’s Improvements on January 1, 2016, then for each day
delivery is delayed, Tenant shall be credited for two days of Monthly Rent,
until delivery is made. If Landlord is unwilling or unable to deliver possession
of the Premises to Tenant by February 1, 2016 for any reason, Tenant shall have
the option to terminate the Lease, without default, breach or penalty.

T.    
Early Access:
Tenant shall have the right to enter the Premises for the purposes of
constructing its Improvements upon delivery of the Premises, provided that
Tenant obtains all necessary permits and Tenant’s early access does not
interfere with Landlord’s Work. Tenant shall not be charged for freight
elevators, security, and temporary HVAC prior to the Commencement Date. Tenant
shall notify Landlord at least ten (10) days in advance of commencement of work
in the Premises.

U.    
Signage:
Landlord shall provide Building standard identification in the lobby directory
at no charge to Tenant. Subject to Building Standards, Landlord’s reasonable
approval, the provisions of Sections 15 and 37, and all applicable Laws (as
defined in Section 6.1), Tenant, at Tenant’s sole cost and expense, shall have
the right to custom signage on the ground floor of the Building and the right at
Tenant’s sole cost and expense to one exterior sign as depicted in EXHIBIT C on
the front of the Building, providing such sign is permissible under Landlord’s
signage guidelines and is legally permissible subject to any City and County of
San Francisco laws, rules, regulations, and approvals. Tenant shall be
responsible for all costs of design, installation, maintenance, and removal of
the exterior signage and repair of the Building after the exterior signage is
removed, if necessary.

V.    
Freight Elevators/Loading:

Subject to prior scheduling, upon notice at least five business days prior to
the requested use, Landlord shall make available to Tenant all freight elevators
and loading servicing Tenant’s floors at all times during and after normal
business hours, at no charge. As used herein, “normal business hours” shall mean
8:00 a.m. to 6:00 p.m. Monday through Friday, excluding national holidays.

W.    
Building Security System:
As described in this section, Landlord shall provide security system and
procedures for the Building consistent with other similar projects in the South
of Market submarket.

Landlord shall have the right to lock the main entry door of the Building and
control elevator access at any time of day, or day of week, in order to maintain
the security of the Building. Notwithstanding the foregoing, Tenant will be
provided with access codes and/or FOB keys to enter the Building and operate the
elevator during all times, i.e., Tenant, its permitted subtenants and their
employees, licensees and guests, shall have access to the Premises at all times,
twenty-four (24) hours per day, every day of the year, subject to such
after-normal business hour security procedures as Landlord may require.

Tenant shall have the right, at Tenant’s sole cost and expense, to install its
own security system (which may be a card system) in the Premises and/or provide
Tenant’s own security system, which shall be compatible with Landlord’s existing
Building security system, in accordance with the provisions of Section 40 and
subject to Landlord’s approval, which shall not be unreasonably withheld,
conditioned, or delayed.

X.    
Roof Deck:
Landlord shall, at its cost, construct a roof deck the use of which shall be
subject to the rules of use reasonably established and uniformly applied by
Landlord. The northern portion of the roof deck shall be designated for Tenant’s
non-exclusive use and shall be included in the Common Areas. Subject to
requirements of governmental entities, Landlord shall not reduce the area of the
roof deck without the consent of Tenant, which shall not be unreasonably
withheld. Tenant shall not use the southern portion of the roof deck, which
shall be designated for use solely by another tenant of the Building; provided,
however, that in the event of fire or other emergency, all tenants and occupants
of the Building shall have the right to use the southern portion of the roof
deck without charge for access to the staircase leading from the southern
portion of the roof deck to the street. Such southern portion of the roof shall
not be included in Common Areas. Landlord shall be responsible for maintaining
the roof deck; provided, however, that the maintenance costs of only the
northern portion of the roof deck shall be included as part of operating
expenses. Tenant shall not make or install any alterations, improvements, or
additions to the roof deck without Landlord’s consent, which consent may be
granted or withheld for any reason in Landlord’s sole and absolute discretion.

Y.    
Outdoor Patio:
Landlord shall, at its cost, construct an outdoor patio on the Bryant Street
side of the Building pending Caltrans’ approval, which construction may be
completed after the Commencement Date. Upon completion of construction, the
outdoor patio shall be designated for Tenant’s exclusive use and shall be
included in and part of the Premises, and Tenant shall be responsible for
maintaining the outdoor patio. If Tenant fails to reasonably maintain the
outdoor patio and such failure shall persist for five (5) business days after
written notice of the need for such maintenance is given by Landlord to Tenant
and unless Tenant has commenced such maintenance during such period and is
diligently pursing same, Landlord may (but shall not be required to) perform
such maintenance, and Tenant shall reimburse Landlord the actual costs and
expenses of such maintenance, as Additional Rent, within thirty (30) days of
receipt of invoice. Tenant shall not make or install any alterations,
improvements, or additions to the outdoor patio without Landlord’s consent,
which consent shall be granted or withheld for any reason in Landlord’s sole and
absolute discretion.

Z.    
Parking:

The parking surrounding the Building is state-owned and on a first-come,
first-serve basis. To the extent Landlord can control any parking adjacent to
the Building, Tenant shall have the rights to its pro-rata number of spaces
associated with the Building, at a market-rate monthly parking rent, to be
determined. Landlord provides no representation or warranty concerning the
availability of any parking to Tenant.

AA.    
Common Areas:
The term “Common Areas” means all areas and facilities outside the Premises that
are provided and designated by Landlord for general use and convenience of
Tenant and other of Landlord’s lessees and their respective personnel, agents,
representatives, customers, and invitees. Common Areas include, but are not
limited to, elevators, bicycle storage area, foyers, stairways, corridors,
northern portion of the roof deck, lounge, ground-floor shower rooms for the use
of all tenants within the Building, and all common utility and communication
closets, risers, chases and conduits.

The maintenance (including repairs) and operation of the Common Areas is the
responsibility of Landlord. The manner in which such Common Areas shall be
maintained, and the expenditures for maintenance, shall be at the sole
discretion of Landlord and the use of such Common Areas shall be subject to such
regulations and changes as Landlord shall make from time to time, provided that
Landlord shall at a minimum, ensure Landlord will maintain the Common Areas in
good condition pursuant to commercially reasonable efforts to maintain the same,
consistent with other similar projects in the South of Market submarket. Without
limiting the generality of the preceding sentence, Landlord shall have the right
from time to time to make changes in the Common Areas, including (without
limitations) the location and size of entrances, exits, lobbies, and all other
facilities thereof, the direction and flow of traffic, and the establishment of
prohibited areas, provided that such changes shall not adversely affect Tenant’s
access to or use of the Premises for the normal conduct of Tenant’s business and
data/telecommunications facilities necessary to bring data/telecommunications
services from the Building’s MPOE to the Premises. Landlord hereby grants to
Tenant, during the Lease Term, the right to use, for the benefit of Tenant and
Tenant’s officers, employees, agents, customers, and invitees, in common with
others entitled to such use, all accessible and habitable Common Areas, subject
to any rights, powers, and privileges reserved to Landlord.

BB.    
Right of First Offer to Expand:

See Section 1.2.
CC.    
SNDA:

Notwithstanding anything to the contrary in the Lease, Landlord shall provide
Tenant with a subordination, non-disturbance and attornment agreement from any
present or future lender of Tenant on such lender’s standard form substantially
similar to Exhibit C, with reasonable changes to same as may be approved by
lender.

 
 
 

BASIC LEASE TERMS
1.Delivery of Premises; Acceptance of Premises; Right of First Offer to
Expand    
1.1    Delivery of Premises; Acceptance of Premises. On the date Landlord
delivers the Premises, or portions thereof, to Tenant, in the condition required
by this Lease, i.e., following Substantial Completion of Landlord’s Work, Tenant
will accept possession of the Premises under this Lease. Except as otherwise
expressly set forth in this Lease and subject to completion of Landlord’s Work,
by taking possession of the Premises or portion thereof, Tenant shall be deemed
to have accepted that portion of the Premises as being in good and sanitary
order, condition, and repair, subject to punchlist items (to be described in a
punchlist prepared by Landlord and Tenant within the week following delivery of
the Premises, or portion thereof). Tenant represents to Landlord that Tenant has
made, directly or through Tenant’s contractors and agents, such inspection of
the condition of that portion of the Premises as Tenant deems necessary. Except
as otherwise expressly set forth in this Lease, Tenant agrees that Tenant is
leasing the Premises in “AS IS” condition, with all faults. Except as otherwise
set forth herein, Tenant agrees that Landlord makes no express or implied
representation or warranty as to the condition of the Premises or the fitness of
the Premises for any particular use other than as expressly provided in this
Lease. Tenant hereby acknowledges that Landlord’s Work requires construction
work in or near the Premises, and that dust, noise and inconvenience may result
from such Landlord’s Work; provided, however, that Landlord and Landlord’s
employees and agents shall use commercially reasonable efforts to minimize the
dust, noise and inconvenience related to Landlord’s Work and any related
interference with Tenant’s access to or use of the Premises during Tenant’s
normal business hours therein.
1.2    Right of First Offer to Expand. Subject to any lease rights and extension
rights of any existing Building tenants as of the Commencement Date and
Landlord’s right to extend the term of an existing lease, and further subject to
the current second (2nd) floor tenant’s election to renew or extend its current
lease for its second (2nd) floor premises (with or without an existing
contractual right to do so), provided that Tenant is not in default beyond the
expiration of any applicable notice and cure periods under this Lease at the
time Tenant delivers its Expansion Notice (defined below) and Tenant has not
assigned this Lease (other than pursuant to a Permitted Transfer) or subleased,
in the aggregate, more than forty-nine percent (49%) of the Premises (other than
pursuant to a Permitted Transfer) at the time Tenant delivers such Expansion
Notice, the Tenant originally named in this Lease shall have a right of first
offer to lease any space on the second (2nd) floor of the Building (the
"Expansion Premises") as general office use and other legally permitted uses
effective throughout the Lease Term (including any Extended Term) of this Lease
(the "Expansion Option"). If Landlord desires to lease all or a portion of the
Expansion Premises, then Landlord shall deliver to Tenant Landlord's written
notice of all material economic terms and incentives, including, without
limitation, the express term and condition that the space be used for general
office space and other legally permitted uses, and the term of the proposed
lease, Monthly Rent at the then Fair Market Rent (as defined in Section 7.2.1
below), free rent (if any), the required Security Deposit, Base Year for
operating expenses and direct taxes, any tenant improvement allowance (if any),
and work letter for tenant improvements upon which Landlord would be willing to
lease such Expansion Premises to Tenant, which economic terms and incentives
shall be substantially similar to the economic terms and incentives then being
offered by Landlord to other third-party tenants for similar space in the
Building in Landlord's sole but commercially reasonable discretion (and with all
of the other non-economic terms and incentives of this Lease applying to
Tenant's leasing of the Expansion Premises, including (i) the Lease Term and
(ii) any termination rights of the parties hereunder, so that the Lease of the
Premises and Expansion Premises shall be coterminous) ("Landlord's Expansion
Notice"). Within ten (10) business days after receipt of Landlord's Expansion
Notice, if Tenant desires to exercise the Expansion Option, Tenant shall deliver
its irrevocable written notice to Landlord accepting, without qualification or
modification, the terms set forth in Landlord's Expansion Notice for the leasing
of such Expansion Premises pursuant to the Expansion Option in their "AS IS"
condition (the "Expansion Notice"). The Expansion Notice shall be irrevocable
when made by Tenant. If Tenant fails to deliver its Expansion Notice to Landlord
within ten (10) business days after receipt of Landlord's Expansion Notice, or
delivers a qualified or conditional response to Landlord's Expansion Notice, or
if Tenant declines to lease such Expansion Premises, then, provided Tenant and
Landlord cannot following engaging in good faith discussions, then Tenant's
right to lease such Expansion Premises shall lapse and be null and void and
Landlord shall thereafter be free to lease such Expansion Premises to any third
party on any terms acceptable to Landlord, If Tenant timely delivers its
Expansion Notice to Landlord, then Landlord and Tenant shall within thirty (30)
business days thereafter execute a mutually acceptable amendment to this Lease,
upon the material terms and conditions set forth in Landlord's Expansion Notice
and otherwise on the terms and conditions set forth in this Lease; provided,
however, that any failure of the parties to execute such amendment shall not
affect the validity of Tenant's Expansion Notice. The right to lease the
Expansion Premises set forth in this Section 1.2 is personal to the originally
named Tenant herein (and not by any Permitted Transferee or other assignee,
sublessee, or any transferee of all or any portion of Tenant’s interest in the
Lease or the Premises) if such Tenant has not assigned this Lease (other than
pursuant to a Permitted Transfer) or subleased, in the aggregate, more than
forty-nine percent (49%) of the Premises (other than pursuant to a Permitted
Transfer).
2.    Term    . The Lease Term shall be for the period shown in the Special
Lease Terms.
3.    Monthly Rent    
3.1    Tenant shall pay to Landlord the Monthly Rent, without deduction, set
off, prior notice, or demand, except as otherwise expressly provided in this
Lease. Monthly Rent shall commence one full month after the Commencement Date
(“Rent Commencement Date”). Monthly Rent shall be payable in advance on the
first day of each month, commencing after expiration of the crediting to Tenant
of the first months’ Monthly Rent payment made upon execution of this Lease.
Monthly Rent for any partial month shall be prorated based on the actual number
of days in any such month. All rent shall be paid to Landlord at the address
stated in the Special Lease Terms, unless Landlord provides notice to Tenant to
pay at a different address. Tenant shall make all rent payments by check or
wire-transfer.
4.    Pass-Through Expenses Payable as Additional Rent    
4.1    Definitions
4.1.1    “Tenant’s Share” is defined in the Special Lease Terms.
4.1.2    The “Base Year” is defined in the Special Lease Terms.
4.1.3    The term “operating expenses” shall include all direct costs of
operation, maintenance, and management of the entire Building, including the
Premises, measured under generally accepted accounting principles, consistently
applied. By way of illustration, but not limitation, operating expenses shall
include the cost or charges for the following items, each solely to the extent
in connection with the management and operation of the Building: heat, light,
water, sewer, power, steam, and other utilities (including without limitation
any temporary or permanent utility surcharge or other exaction, whether now or
later imposed) supplied to the Common Areas, waste disposal and janitorial
services supplied to the Common Areas, guard services, exterior window cleaning,
common area air conditioning, materials and supplies, equipment and tools,
service agreements on equipment, insurance premiums, licenses, permits and
inspections, wages and salaries, management services, employee benefits and
payroll taxes, direct taxes (as defined below), accounting and legal expenses,
management fees (which shall in no event exceed six percent (6%) of the gross
rents from the Building payable in the Base Year, and shall in all cases be
competitively priced), cleaning and maintenance of flooring in public corridors
and other Common Areas, and, after the Base Year, the reasonable cost of
contesting the validity or applicability of any governmental enactments if it
results in a reduction of operating expenses (but in no event shall the costs of
such contest exceed the reasonably anticipated cost savings to be derived
therefrom). In no event shall operating expenses include any amounts on
Attachment A. Notwithstanding the foregoing or anything to the contrary in the
Lease, operating expenses shall not include any of the following: (a) the cost
of any new type of insurance coverage which is obtained or effected by Landlord
during any calendar year or part thereof following the Base Year but which was
not obtained or effected during the Base Year unless Landlord adjusts the Base
Year to include the cost of such new type of insurance coverage that would have
been included in the Base Year had Landlord then maintained such insurance
coverage; or (b) those portions of deductibles (including any self-insurance
amounts) under Landlord’s insurance which are in excess of deductibles (or self
insurance amounts) customarily carried (or retained) by prudent institutional
landlords of comparable buildings; or (c) deductibles for earthquake insurance.
Moreover, in the event that Landlord drops any type of insurance coverage in any
calendar year following the Base Year, then the same category of coverage shall
be dropped as a line item included in the costs for the Base Year.
4.1.4    The term “direct taxes” shall include all real property taxes and
assessments on the Building, the land on which the Building is situated, and the
various estates in the Building and the land. Direct taxes shall also include
all personal property taxes levied on the property and assessed in lieu of, in
substitution for, or in addition to, existing or additional real or personal
property taxes on said Building, land, or personal property, whether or not now
customary or within the contemplation of the parties, other than taxes paid by
Tenant or any other tenant of the Building; taxes upon the gross or net rental
income of Landlord derived from the Building and the land (excluding, however,
city, county, state, and federal personal or entity income taxes measured by the
income or gross receipts of Landlord from all sources and any franchise,
inheritance or capital stock taxes and document transfer fees) and the cost to
Landlord of contesting the amount or validity or applicability of any of such
taxes. Net recoveries through protest, appeals, or other actions taken by
Landlord in its discretion, after deduction of all reasonable, out of pocket
costs and expenses, including counsel and other fees, shall be deducted from
direct taxes for the year of receipt. Except as provided in Section 4.1.6 below,
direct taxes shall not include any of the following: (i) any penalties, late
charges or interest thereon; (ii) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord's general or net income, (however, if the present method of taxation
changes so that in lieu of or in addition to the whole or any part of any direct
taxes, there is levied on Landlord a capital tax directly on the rents received
therefrom or a franchise tax, assessment or charge based, in whole or in part,
upon such rents for the Project, then all such taxes, assessments or charges, or
the part thereof so based, shall be deemed to be included within the term
“direct taxes” for purposes hereof); (iii) any taxes paid directly by Tenant
pursuant to the terms of the Lease (or would be paid by other tenants of the
Building if their leases include provisions comparable to this Lease); (iv) any
real property taxes imposed with respect to any improvements constructed within
the Building after the date hereof, unless such improvements are required to
comply with applicable Laws not in effect on the Commencement Date. The initial
real property taxes for the Building (calculated on a fully assessed,
constructed, and occupied basis) shall be included in direct taxes for the Base
Year.
4.1.5    Tenant shall pay before delinquency any and all taxes, assessments,
license fees, and public charges that are assessed, and which become payable
during the Lease Term, upon Tenant’s alterations, improvements, fixtures,
furniture, and personal property installed or located in the Premises. In no
event shall Tenant be obligated to pay any portion of taxes assessed as a result
of improvements installed in the Building other than the Premises or the Common
Areas (subject to Base Year offset). Landlord may instruct all taxing
authorities to mail the appropriate statements and billings directly to Tenant
at the address set forth in the Special Lease Terms above. If Tenant fails to
pay taxes, assessments, and charges that would constitute a lien or encumbrance
on the Property when due, Landlord may, but shall not be obligated to, pay those
taxes, assessments, or charges, together with interest and penalties. Any amount
that Landlord may pay pursuant to this Section shall incur interest at the rate
of 10% per annum, and shall be repaid to Landlord within fifteen (15) days of
written request therefor from Landlord as Additional Rent.

4.1.6    Notwithstanding anything to the contrary in this Section, Tenant shall
pay to Landlord, as additional rent, any (a) rent tax, gross receipts tax, sales
or use tax, service tax, value added tax, or any other applicable tax based on
Landlord’s receipt, or the payment by Tenant, of any rent or services herein;
and (b) taxes assessed upon this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises. In
the event that it shall not be lawful for Tenant to reimburse Landlord for such
taxes, the monthly rent payable to Landlord under this Lease shall be revised to
net to Landlord the same amount after imposition of any such tax upon Landlord
as would have been received by Landlord under this Lease prior to the imposition
of such tax.
4.1.7    Tenant shall have the right to cause Landlord to apply for a reduction
of the Building’s property taxes under Proposition 8 not more often than once
per year, and in the event Landlord receives a reduction, Tenant shall be
entitled to a proportionate reduction against its share of direct taxes
applicable to the year in which the reduction is granted.

4.2    Payment. As Additional Rent, Tenant shall pay to Landlord an amount equal
to Tenant’s Share of operating expenses and direct taxes in excess of those paid
or incurred by Landlord during the Base Year. If at any time during the term of
the Lease, including, without limitation, the Base Year, less than one hundred
percent (100%) of the total RSF of the Building is occupied, the operating
expenses and direct taxes shall be adjusted by Landlord to reasonably
approximate the operating expenses and direct taxes which would have been
incurred if the Building had been one hundred percent (100%) occupied.
At or after the commencement of any calendar year subsequent to the Base Year,
Landlord shall notify Tenant of Landlord’s estimate of the amount of any
increase in operating expenses and direct taxes for such calendar year over
operating expenses and direct taxes for the Base Year and of the amount of such
estimated increases owed by Tenant. Tenant shall pay to Landlord on the first
day of each calendar month during such calendar year one-twelfth (1/12) of the
amount of such estimated increases in operating expenses and direct taxes
payable by Tenant. A statement of the amount of actual operating expenses and
direct taxes for the preceding calendar year and of the amount of such increases
payable by Tenant (the “Annual OpEx Statement”) shall be given to Tenant on
before April 1 of the immediately succeeding calendar year. All amounts owed by
Tenant as shown on the Annual OpEx Statement, less any amounts paid by Tenant,
shall be due and payable within thirty (30) days following delivery of the
Annual OpEx Statement to Tenant. In the event that Tenant has paid in any given
year more than Tenant’s Share, then such overpayment shall be applied toward the
Monthly Rent for the following year or, if the Lease has terminated, such
overpayment shall be promptly refunded to Tenant.
4.3    Proration. Tenant’s Share of operating expenses and direct taxes for the
calendar year in which this Lease terminates shall be prorated based on the
number of days from and including the commencement of said calendar year to and
including the date on which this Lease terminates divided by 365. The
termination of this Lease shall not release Tenant from Tenant’s obligation to
pay any amounts owed by Tenant as shown on the Annual OpEx Statement or release
Landlord from Landlord’s obligation to account for and refund any overpayment.
4.4    Statement Preparation and Audit. If Tenant contests an Annual OpEx
Statement in writing within ninety (90) days after receipt of same, then Tenant
shall have the right to have the Annual OpEx Statement audited, at Tenant’s cost
and in conformity with generally accepted accounting principles, by Tenant’s
personnel or an accounting or audit firm mutually acceptable to Landlord and
Tenant. The audit shall be binding on the parties. If the audit determines an
overpayment by Tenant, Landlord shall promptly refund the amount of such
overpayment to Tenant. In the event that Landlord’s records are determined to be
in error in an amount greater than 3%, then the reasonable costs of Tenant’s
audit shall be paid by Landlord within thirty (30) days of Landlord’s receipt of
a documented invoice therefor.
5.    Permitted Use    . The Premises are to be used exclusively for the purpose
shown in the Special Lease Terms. No other use shall be maintained or operated
on the Premises without the written consent of Landlord. The use by Tenant of
the Premises shall be in a lawful, careful, safe, and proper manner, and Tenant
shall not do or permit anything to be done in or about the Premises that would
increase the rate or affect any fire or other insurance covering the Premises.
Tenant shall not commit nor suffer any waste on the Premises. Landlord does not
represent or warrant that the Premises may be used for any particular use or
purpose, and Tenant has made Tenant’s own determination that the Premises may be
lawfully used for Tenant’s business.
6.    Compliance With Laws; ADA    
6.1    Compliance with Law. “Law(s)” means any law, statute, code, constitution,
ordinance, resolution, regulation, rule, requirement, license, permit,
certificate, administrative order, judgment, decree, or direction of any present
or future municipal, county, state, federal, or other governmental or
quasi-governmental agency, authority, department, board, panel, or court having
jurisdiction over the parties to this Lease or the Premises or the Building in
effect as of the Commencement Date or which may thereafter be enacted, adopted,
amended, or modified. Tenant shall not use the Premises or permit anything to be
done in or about the Premises that will in any way conflict with any Law. Tenant
shall, at its sole cost and expense, promptly comply with all Laws and with the
requirements of any board of fire underwriters or similar body now or in the
future constituted, relating to or affecting Tenant’s use of the Premises, any
work or improvements, alterations, additions, or fixtures made to the Premises
by or on behalf of Tenant (other than Landlord’s Work) or triggered by Tenant’s
specific use of the Premises. It is the intent of the parties to allocate to
Tenant the cost of compliance with any and all Laws, regardless of the existing
condition of the Premises as of the Commencement Date, the cost of compliance,
or the foreseeability of the enactment or application of the Laws to the
Premises. Notwithstanding the foregoing, Tenant shall not be required to make
structural changes to the Premises or alter or improve any Building systems for
which Landlord is responsible unless they arise or are required because of or in
connection with Tenant’s use of the Premises, any work or improvements,
alterations, additions, or fixtures made to the Premises by or on behalf of
Tenant, or Tenant’s acts or omissions
6.2    Compliance with Americans with Disabilities Act. The Premises and the
Building may be subject to, among other Laws, the Americans with Disabilities
Act (42 U.S.C.A. §§12101 et seq.), including, but not limited to Title III of
that Act, and all Laws, including, without limitation, all requirements of Title
24 of the California Code of Regulations, as the same may be in effect as of the
Commencement Date or which may thereafter be enacted, adopted, amended, or
modified (collectively, the “ADA”). All Landlord Work, and any Tenant
improvements, alterations, additions, or fixtures must comply with the
requirements of the ADA. Landlord warrants and represents that, as of the
execution of this Lease, the Building’s Common Areas and path of travel are in
compliance with the ADA, and that all Landlord’s Work and future construction
including the patio, by Landlord shall be performed in compliance with the ADA,
to the extent applicable. If any barrier removal work or other work is required
to the Building or the Common Areas under the ADA, then such work will be the
responsibility of Landlord and subject to reimbursement as an operating expense
(subject to the limitations of Attachment A) as provided elsewhere in the Lease;
except, however, if such work is required to the Building or the Common Areas
under the ADA as a result of Tenant’s use of the Premises, any work or
improvements, alterations, additions, or fixtures made to the Premises by or on
behalf of Tenant (other than Landlord’s Work), or Tenant’s acts or omissions,
then such work will be performed by Landlord at the sole cost and expense of
Tenant, and Tenant shall within ten (10) days receipt pay all invoices, which
invoices shall include any and all costs associated with Landlord’s compliance
with the ADA, therefore as additional rent. Tenant will be responsible at its
sole cost and expense for fully and faithfully complying with all applicable
requirements of the ADA to the extent such requirements apply to Tenant’s use,
occupancy, acts, or omissions and any work or improvements, alterations,
additions, or fixtures made to the Premises by or on behalf of Tenant (other
than Landlord’s Work).
6.3    Notification. Each of Tenant and Landlord shall use reasonable efforts to
notify the other party hereto if it makes alterations to the Premises or the
Common Areas, as the case may be, that might impact accessibility under the ADA.
If a complaint is received by Landlord from either a private or government
complainant regarding disability access to the Common Areas, Landlord shall
promptly notify Tenant thereof, but Landlord reserves the right to mediate,
contest, comply with or otherwise respond to such complaint as Landlord
reasonably determines to be prudent under the circumstances. Within ten (10)
business days after receipt by Tenant, Tenant will advise Landlord in writing,
and provide Landlord with copies of (as applicable), (a) any notices alleging
violation of the ADA relating to any portion of the Premises, the Building, or
the Common Areas; (b) any claims made or threatened orally or in writing
regarding noncompliance with the ADA and relating to any portion of the
Premises, the Building, or the Common Areas; or (c) any governmental or
regulatory actions or investigations instituted or threatened regarding
noncompliance with the ADA and relating to any portion of the Premises, the
Building, or the Common Areas. The notification attached hereto as Attachment D
regarding disability access pursuant to San Francisco ordinance is hereby
incorporated into this Lease and Tenant hereby acknowledges receipt thereof and
the parties hereto shall execute same prior to the execution of this Lease. In
addition, Tenant acknowledges receipt of a copy of the Small Business Commission
Access Information Notice under Section 38.6 of the Administrative Code.
6.4    California Civil Code Section 1938. Landlord has not hired a Certified
Access Specialist (CASp) to inspect any portion of the Premises, Building, or
Common Areas. No determination or report pursuant to California Civil Code
Section 55.53 has been made regarding any construction-related accessibility
standards. This provision is intended to satisfy California Civil Code Section
1938.
6.5    Indemnity. Each party will and hereby agrees to indemnify, defend (with
counsel reasonably acceptable to the other party), and hold harmless each other
party and their respective agents and employees from and against all
liabilities, damages, claims, losses, penalties, judgments, charges, and
expenses (including reasonable attorneys’ fees, costs of court, and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, any act, negligence or failure of either party to comply with the
terms of this Section of the Lease. The parties agree that the obligations of
this Section of the Lease shall survive the expiration or earlier termination of
the Lease.
7.    Option to Extend    
7.1    Grant and Exercise. Tenant shall have an irrevocable option to extend the
Lease Term (“Option to Extend”) for an additional term (“Extended Term”) as
delineated in the Special Lease Terms, upon all the same terms and conditions of
this Lease, excepting only that Monthly Rent shall be determined as provided
below. The Option to Extend shall be exercised by Tenant giving irrevocable
notice of such exercise to Landlord not less than twelve (12) months nor more
than fifteen (15) months prior to the expiration of the Lease Term then in
effect. The Lease Term may not be extended with respect to less than the entire
Premises, then being leased by Tenant. The Option to Extend is personal to
Tenant; however, in the event Tenant assigns or sublets the Lease to an
affiliate or Permitted Transferee, such party shall have the right to exercise
the Option to Extend, in accordance with the provisions in this Section 7 as
Tenant.
7.2    Monthly Rent during Extended Term.
7.2.1    The Monthly Rent payable during the Extended Term shall be 100% of Fair
Market Rent. For purposes hereof, “Fair Market Rent” shall mean the effective
base rental rates (including periodic adjustments to such base rental rates)
then being received for premises of similar size and quality to the Premises,
zoned to allow “PDR” use, located in the South of Market submarket of San
Francisco which are similar in size, quality, age and location to the Building,
leased for terms of approximately five (5) years, and otherwise subject to
leases containing substantially similar terms as those contained in this Lease
(with due consideration of all relevant factors, including without limitation,
prevailing market concessions for renewing tenants at that time).
Notwithstanding the foregoing, “Fair Market Rent” shall not include any rental
value attributable to improvements, alterations, fixtures, equipment, and
personal property installed in the Premises at Tenant’s expense. In determining
Fair Market Rent, no consideration shall be given to any savings to Landlord
attributable to Landlord not incurring any costs for brokerage commissions, rent
holidays, tenant improvements and/or tenant improvement and/or test-fit
allowances (if any).
7.2.2    In the event the parties cannot mutually agree upon the Fair Market
Rent, the following procedures shall apply. Not more than six (6) months nor
less than three (3) months prior to the commencement of the Extended Term,
Landlord and Tenant shall meet and attempt in good faith to determine and
mutually agree upon the Monthly Rent to be paid during the Extended Term. If,
three (3) months prior to the commencement of the Extended Term (the “Trigger
Date”), the parties have not so met or have met but not reached agreement, then
the following procedure shall be used:
7.2.3    Within ten (10) days after the Trigger Date at a time and place to be
mutually agreed by the parties (or failing such agreement at 9:00 a.m. PST at
the Premises on the tenth (10th) day after the Trigger Date), Landlord and
Tenant shall each simultaneously submit to the other in a sealed envelope its
good faith estimate of the Fair Market Rent for the Extended Term. If either
Landlord or Tenant fails to propose a Fair Market Rent at such time and place,
then the Fair Market Rent for the Extended Term proposed by the other party
shall prevail. If the higher of such estimates is not more than one hundred five
percent (105%) of the lower, then the Fair Market Rent shall be the average of
the two. Otherwise, the dispute shall be resolved by arbitration in accordance
with the remainder of this Section. Within ten (10) days after the exchange of
estimates, each party, at its cost and by giving notice to the other, shall
appoint an arbitrator, who shall be a real estate broker with not less than five
(5) years full-time commercial lease experience in the South of Market submarket
of San Francisco, to determine the Fair Market Rent. If a party does not appoint
an arbitrator within said ten (10) day period, the single broker appointed shall
be the sole arbitrator and shall set the Fair Market Rent. Landlord and Tenant
shall submit their respective determinations of the then prevailing Fair Market
Rent to the arbitrator(s), at such time and in such manner as directed by the
arbitrator(s). The arbitrator(s) shall select either Landlord’s or Tenant’s
determination of the then prevailing Fair Market Rent. If two (2) arbitrators
are appointed, and they are unable to agree within thirty (30) days, they shall
select a third broker meeting the qualifications stated above within ten (10)
days after the last day the two (2) brokers are given to determine the Fair
Market Rent. If they are unable to agree on a third broker, either of the
parties to this Lease, by giving ten (10) days notice to the other, may file a
petition with the American Arbitration Association solely for the purpose of
selecting a neutral third broker who meets the qualifications stated herein.
Each party shall bear half the cost of the American Arbitration Association
appointing the third broker and of paying the third broker’s fee. The third
broker shall be a person who has not previously acted in any capacity for either
of the parties hereto. Within thirty (30) days after the selection of the third
broker, a majority of the brokers shall select either Landlord’s or Tenant’s
determination of the then prevailing Fair Market Rent. After the Fair Market
Rent has been determined, the arbitrator(s) shall immediately notify Landlord
and Tenant, and the decision thereof shall be binding on Landlord and Tenant.
The cost of the arbitrators and the arbitration proceeding shall be paid by
Landlord and Tenant equally, except that each party shall pay for the cost of
its own witnesses and attorneys.
8.    Utilities and Services    . Tenant shall pay to Landlord the direct cost
of utilities, janitorial service and trash collection expenses allocated to the
Premises. To the extent separate utility metering is available to the Premises,
Tenant shall engage and procure its own utility services to the Premises,
including electrical and telecommunications. Tenant shall be responsible to
determine that, subject to completion of Landlord’s Work, there is sufficient
utility capacity in the Premises for purposes of conducting Tenant’s use.
9.    Improvements and Alterations; Liens; Tenant Improvement Allowance;
Test-Fit Allowance    
9.1    Improvements and Alterations.
9.1.1    Tenant, its employees, agents, licensees, or contractors shall not make
or install any alterations, improvements, additions, or fixtures (collectively,
“Improvements”) that affect the exterior or interior of the Premises or any
structural, mechanical, or electrical component of the Premises, or mark, paint,
drill, or in any way deface any floors, walls, ceilings, partitions, or any
wood, stone, or iron work, without Landlord’s consent, which shall not be
unreasonably withheld, conditioned or delayed. Tenant shall employ all
reasonably necessary design professionals, (“Architects” and/or “Engineers”) and
responsible licensed California contractor(s) (“Contractor”) (subject to
Landlord’s commercially reasonably approval which may be nonunion), to construct
its Tenant Improvements, subject to applicable code requirements and local
regulations and subject to Landlord’s consent which shall not be unreasonably
withheld, conditioned, or delayed except that no such consent shall be required
for Tenant to conduct minor, non-structural Improvements costing not more than
$10,000. Landlord shall have the right to review and approve, which shall not be
unreasonably withheld, conditioned, or delayed, all improvements made to the
Premises as part of any Tenant Improvements, including being provided at no cost
with proposed and final as-built detailed plans, which approval shall not be
unreasonably withheld, conditioned, or delayed. Before commencing any work on
the Premises and/or in or on the Building, Tenant’s contractor shall obtain
construction liability insurance in a form and policy amount reasonably
acceptable to Landlord and shall name Landlord as an additional insured on each
applicable policy of insurance. All subcontractors retained by Tenant’s
contractor shall obtain construction liability insurance naming Landlord as
additional insured on each applicable policy of insurance. All subcontractors
retained by Tenant’s contractor shall obtain worker’s compensation insurance
consistent with the type and form of insurance required to be procured by Tenant
as provided in Section 10. Additionally, at the conclusion of all Improvements
made to the Premises, Tenant shall cause its Architect and Contractor to update
all working drawings as necessary to reflect all changes made to the working
drawings during the course of construction of Tenant’s Improvements, to certify
to the best of their knowledge that the “record-set” of drawings are true and
correct, which certification shall survive the expiration or termination of this
Lease, and to deliver to Landlord one (1) set of CAD “record-set” drawings
within 90 days following issuance of a certificate of occupancy for the
Premises, and (b) Tenant shall deliver to Landlord a copy of all warranties,
guaranties, and operating manuals and information relating to the improvements.
9.1.2    All Improvements to the Premises will be at Tenant’s option (subject to
Landlord’s consent as provided in this Section 9.1.1) and at Tenant’s sole cost
other than Landlord’s Work described in the Special Lease Terms and as provided
in Sections 9.3 and 9.4 below. Tenant will indemnify and defend Landlord for all
liens, claims, or damages caused by such Improvements by Tenant, but not in
connection with any of Landlord’s Work. Tenant will and hereby agrees to
indemnify, defend (with counsel reasonably acceptable to Landlord), and hold
harmless Landlord Indemnified Parties (as defined in Section 20.1 below) from
and against all liabilities, damages, claims, losses, penalties, judgments,
charges, and expenses (including reasonable attorneys’ fees, costs of court, and
expenses necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, (a) any act of negligence or failure of Tenant to comply with the
terms of this Section of the Lease; and (b) any lien, claim, or damage caused by
the Tenant Improvements, except as due to the gross negligence or willful
misconduct of Landlord or its representatives. The parties agree that the
obligations of this Section of the Lease shall survive the expiration or earlier
termination of the Lease.
9.1.3    Tenant shall give Landlord not less than ten (10) days’ advanced
written notice of the date of commencement of any construction work on the
Premises so that Landlord can post notices of nonresponsibility.
9.1.4    Any and all Improvements effected by Tenant shall be constructed,
installed or performed in a professional workmanlike manner, by licensed
contractors retained by Tenant, in compliance with all applicable statutes,
codes, rules and regulations, and Tenant or Tenant’s contractors shall obtain
all permits and approvals of government agencies required by applicable laws in
connection therewith.
9.1.5    All Improvements (except Tenant’s trade fixtures, furniture, personalty
and equipment) that may be made or installed upon Premises by either Landlord or
Tenant and that in any manner are attached to the floors, walls, or ceilings,
shall be the property of Landlord, and, at the termination of this Lease, shall
remain upon and be surrendered with the Premises as a part of the Premises,
without disturbance or injury unless Landlord, by written notice provided to
Tenant at the time Landlord approves of such Improvements (which notice Landlord
shall be obligated to provide at such time), requires same to be removed or
returned to their original condition prior to the Improvements (reasonable wear
and tear excepted and damage due to casualty for which Landlord is responsible
excepted). Tenant shall repair any damage to the Premises occasioned by the
removal of its trade fixtures. If Landlord notifies Tenant at the time that it
gives its consent to any Improvements requested by Tenant that Tenant must
remove such Improvements or restore the Premises to its original condition at
the end of the Term (reasonable wear and tear excepted and damage due to
casualty for which Landlord is responsible excepted), Tenant shall remove and/or
restore the same, at Tenant’s expense, upon the termination of this Lease, and
Tenant shall, forthwith and with all due diligence at Tenant’s sole cost and
expense remove such Improvements, restore the Premises to their original
condition (reasonable wear and tear excepted and damage due to casualty for
which Landlord is responsible excepted), and repair any damage to the Premises
or Building caused by such removal or restoration. Notwithstanding anything to
the contrary specified herein and for the avoidance of doubt, Tenant shall not
be responsible for or obligated to remove and/or restore any of Landlord’s Work
or any of the Initial Tenant Improvements at the end of the Term.
9.2    Liens. Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished, or obligations incurred by Tenant. If a
lien is so placed, Tenant shall, within thirty (30) days of notice from Landlord
of the filing of the lien, fully discharge the lien by settling the claim which
resulted in the lien or by bonding or insuring over the lien in the manner
prescribed by the applicable Law.
9.3    Tenant Improvement Allowance. A check for the Tenant Improvement
Allowance in the amount set forth in the Special Lease Terms shall be delivered
by Landlord to Tenant following the completion of construction of the Initial
Tenant Improvements on the Premises within the earlier to occur of: (i) (ii)
five (5) business days following the release by Landlord's lender of loan funds
borrowed by Landlord to perform the Tenant Improvements ("TI Loan Funds") or
(ii) forty-five (45) days after the last of the following conditions has
occurred: (A) Landlord has inspected the Premises and determined that Tenant’s
Improvements are complete; (B) Tenant has obtained all required certificates of
occupancy (or signed off building permits) from the City and County of San
Francisco for use and operation of the Premises and delivered copies of all such
certificates to Landlord; (C) Tenant has obtained an unconditional waiver and
release on final payment in the form prescribed by California Civil Code Section
8138 from all persons or entities engaged in providing labor or materials in
connection with the Tenant Improvements and delivered complete copies thereof to
Landlord; (D) Tenant’s Architect has issued a certificate, in a form reasonably
acceptable to Landlord, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed in accordance with
the terms provided in Section 9 and Landlord has been provided with a copy
thereof; (E) Tenant has recorded a notice of completion in the Office of the
Office of the Recorder of the County of San Francisco in accordance with
California Civil Code Sections 8182 and 8184 and provided Landlord with a copy
thereof; (F) Landlord has received copies of all receipted bills marked paid
relating to the Tenant Improvements; and (G) Tenant fulfills its obligations
pursuant to Section 9 of the Lease. In no event shall Landlord be obligated to
make a disbursement in a total amount which exceeds the Tenant Improvement
Allowance. If despite Landlord's good faith, commercially reasonable efforts to
obtain the timely release of the TI Loan Funds within forty five (45) days
following Tenant's satisfaction of the above-stated conditions, Landlord is
unable to obtain such release for reasons outside of its reasonable control,
Landlord shall not then be in default hereunder, provided that Landlord
continues to use its good faith, commercially reasonable efforts to secure such
TI Loan Funds as soon as possible thereafter. If Landlord is does not pay the
Tenant Improvement Allowance on or before ninety (90) days following Tenant's
satisfaction of the above-stated conditions, then interest shall accrue on a
daily basis against the outstanding balance of the unpaid Tenant Improvement
Allowance at an interest rate equal to LIBOR plus 3% per annum commencing on the
sixtieth (60th) day following Tenant's satisfaction of the above-stated
conditions.
9.3.1    Landlord shall only be obligated to make the disbursement from the
Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items. As used in this Lease, “Tenant Improvement
Allowance Items” shall mean:
(a)    Fees and costs of the Architect, the Engineer and Tenant’s Agents;
(b)    Plan check, permit and license fees relating to construction of the
Tenant Improvements;
(c)    The cost of construction of the Tenant Improvements, including, without
limitation, testing and inspection costs, and trash removal costs, utility
usage, and contractors' fees and general conditions;
(d)    The cost of any changes in the Base Building when such changes are
required by the approved construction drawings or to comply with all applicable
building codes, such cost to include all direct architectural and/or engineering
fees and expenses incurred in connection therewith;
(e)    The cost of any changes to the construction drawings or Tenant
Improvements required by all applicable building codes;
(f)    Sales and use taxes; and
(g)    All other costs approved by or expended by Tenant in connection with the
design, permitting or construction of Tenant Improvements. Intentionally
Omitted.
9.4    Test-Fit Allowance. Landlord acknowledges that Tenant intends to make
certain Initial Tenant Improvements and alterations to the Premises. Landlord
shall pay to Tenant the Test-Fit Allowance in the amount set forth in the
Special Lease Terms following the completion of the architectural fit plan by
Tenant’s Architects and/or Engineers, provided that Tenant delivers to Landlord:
(A) a request for payment of the Test-Fit Allowance; (B) invoices from the
Architect and/or Engineer who prepared the architectural fit plan for the
Premises with evidence reasonably satisfactory to Landlord that Tenant has paid
such invoices; (C) the completed architectural fit plan for the Premises; (D)
executed unconditional waiver and release in the form prescribed by California
Civil Code Section 8138 from the Architect and/or Engineer for whose work
payment is sought; and (E) all other information reasonably requested in good
faith by Landlord. Tenant shall have no obligation to remove any element of the
Initial Tenant Improvements.
10.    Insurance; Waiver of Subrogation    
10.1    Liability Insurance. During the Lease Term, Tenant, at its own expense,
shall maintain in full force a policy or policies of commercial general
liability and property damage insurance that insures Tenant against any and all
liability for injury and damage to persons and property and for death of any
person or persons occurring in or about the Premises. The General Liability
policy shall include Landlord as an additional insured party, and shall be for
an amount not less than $2,000,000.00 for any one person injured or killed, or
less than $2,000,000.00 for any one accident, or less than $2,000,000.00 for
property damage in aggregate. Tenant shall maintain its required insurance as
primary insurance policies with a financially reasonable insurance company or
companies licensed to do business in the State of California, which companies
must be rated A-VII or better in the most recent Best’s Insurance Report (which
rating must be maintained throughout the term of the Lease). Tenant shall
provide Landlord with certificates of insurance, including in each instance an
endorsement providing that such insurance shall not be canceled without thirty
(30) days prior notice to Landlord.
10.2    Property Insurance. Landlord shall maintain such fire and casualty
insurance as Landlord determines appropriate on the building structure as a
whole, which shall not include insurance coverage of Tenant’s Improvements,
alterations, fixtures, equipment, inventory or personal property, provided that
such insurance shall be in amounts at least equal to the full replacement value
of the Building, exclusive of footings and foundations. Tenant and Landlord
acknowledge that neither of them anticipates maintaining earthquake insurance.
10.3    Business Interruption Insurance. During the Lease Term, Tenant, at its
own expense, shall maintain and keep in force a policy of business interruption
insurance that covers an interruption for at least one year. The insurance shall
cover all of Tenant’s obligations for Monthly Rent, Additional Rent, and
utilities.
10.4    Worker’s Compensation Insurance. During the Lease Term, Tenant, at its
own expense, shall maintain and keep in force a policy or policies of worker’s
compensation insurance or any other employee benefit insurance sufficient to
comply with all applicable Laws.
10.5    Waiver of Subrogation. Landlord and Tenant hereby release each other
from any liability in connection with, and waive their rights of recovery
against the other with respect to, loss or damage arising out of or incident to
any peril of the type to be covered by the property insurance required to be
carried by either party under this Lease, or actually carried, whether due to
the negligence of Landlord or Tenant or their agents, employees, contractors, or
invitees, or any other cause. Landlord and Tenant each agree to require their
respective insurers issuing any property insurance carried by either party,
including the property insurance required under this Lease, to waive any rights
of subrogation that such companies may have against the other party. Landlord
and Tenant each acknowledges that the waivers and releases set forth in this
Section 10.5 are intended to produce the result that any loss which is covered
by insurance would be borne by the insurance carriers of Landlord or Tenant, as
the case may be, or by the party having the insurable interest if such loss is
not covered by insurance but this Lease requires such party to maintain
insurance to cover such loss. Landlord and Tenant agree that such waivers and
releases were freely bargained for and willingly and voluntarily agreed to by
Landlord and Tenant and do not constitute a violation of public policy.
10.6    Co-Insured; Failure to Maintain Insurance. Landlord shall be named as an
additional insured on policies maintained by Tenant. If Tenant fails to procure
and maintain the insurance required of Tenant, Landlord may, upon not less than
three (3) business days prior notice to Tenant, but shall not be required to,
procure and maintain same at the expense of Tenant, and any such amounts paid by
Landlord shall be immediately due and payable as Additional Rent.
11.    Damage or Destruction    
11.1    If the Building or the Premises is partially or totally destroyed by
fire or other casualty insured under the insurance described above (less the
amount of Landlord’s deductibles thereunder), and the applicable insurance
proceeds will pay for 100% of the reconstruction costs, such damages shall be
repaired or rebuilt promptly by Landlord, unless (a) the damage or destruction
occurs in the last 270 days of the Lease Term or (b) a reputable general
contractor employed by Landlord shall estimate reasonably and in good faith that
the time to restore such damage shall exceed 270 days from the date of such
casualty, and in each case either party shall have the right to terminate this
Lease by written notice to the other party, or (c) the estimated cost to rebuild
or restore the Building exceeds 25% of its market value, in which case Landlord
shall have the right to terminate this Lease by written notice to Tenant.
Landlord shall notify Tenant of Landlord’s estimate of the time required to
rebuild or restore within ninety (90) days after such damage or destruction.
11.2    Unless this Lease is terminated as provided above, the Lease shall
remain in full force and effect, and the parties waive the provisions of any law
to the contrary, including sections 1932 and 1933 of the Civil Code of the State
of California.
11.3    If on account of any damage or destruction which Landlord is required to
repair or rebuild there is a material interference with Tenant’s access to or
use of the Premises, and the Lease is not otherwise terminated, a just and
proportionate part of the Rent shall be abated until the Premises are repaired
or rebuilt and Tenant’s access to and use thereof has been restored; provided,
however, that if any damage or destruction is due to the gross negligence or
willful misconduct of Tenant or its employees, agents, invitees or visitors, or
if any damage or destruction arises under or with respect to compliance with any
applicable building code or similar law and pertains to portions of the Premises
that Tenant rather than Landlord is required to repair or to maintain in
accordance with applicable laws there shall be no abatement of rent, except to
the extent said rent is paid by Landlord’s rent interruption insurance. All
other obligations of Tenant under this Lease shall remain in full force and
effect.
11.4    If Landlord should elect or be obligated to repair or rebuild because of
any damage or destruction, Landlord’s obligation shall be limited to the Common
Areas and the Premises, but shall not include any improvement, addition, or
alteration constructed by Tenant, which shall be the sole responsibility of
Tenant. If Landlord restoration work shall not be completed within the later of
(a) 270 days from the date of the damage or (b) 60 days after the expiration of
Landlord’s reasonable estimated restoration period, then Tenant shall have the
right to terminate this Lease by giving at least 30 days prior written notice to
Landlord within ten (10) days following the later of such dates to occur. In the
event of any such termination of this Lease under the preceding sentence, then
neither Landlord nor Tenant shall have any rights, liabilities or obligations
accruing under this Lease after the effective date of termination, except for
such rights and liabilities which, by the terms of this Lease or at law, are
obligations of Tenant or Landlord which accrued prior to and survive the
expiration or earlier termination of this Lease.
11.5    Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises, Tenant’s
personal property, or Common Area, or any inconvenience or annoyance occasioned
by such damage, repair, reconstruction, or restoration.
12.    Security Deposit    . Tenant has deposited with Landlord the amount
indicated in the Special Lease Terms as a Security Deposit. Such sum shall be
held by Landlord as security for the faithful performance by Tenant of all the
terms, covenants, and conditions of this Lease. If Tenant commits a Default,
including, but not limited to, the provisions relating to the payment of rent,
and such Default is not cured within any applicable cure period, Landlord may
(but shall not be required to) use, apply or retain all or any part of this
Security Deposit for the payment of any rental or any other sum in default, or
for the payment of any amount that Landlord may spend or become obligated to
spend by reason of Tenant’s Default, or to compensate Landlord for any other
loss or damage that Landlord may suffer by reason of Tenant’s Default. If any
portion of said Security Deposit is so used or applied, Tenant shall within five
(5) business days after written demand therefor, deposit cash with Landlord in
an amount sufficient to restore the Security Deposit to its original amount, and
Tenant’s failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. The
Security Deposit or any balance thereof after application as provided hereunder,
shall be returned to Tenant (or, at Landlord’s option, to the last successor to
Tenant’s interest hereunder) within forty-five (45) days after the expiration or
earlier termination of the Lease Term (including the Extended Term, if
applicable). In the event of termination of Landlord’s interest in this Lease,
Landlord shall transfer said deposit to Landlord’s successor in interest and
shall, within five (5) business days of such transfer provide Tenant with
written notice thereof.
13.    Assignments and Subletting    
13.1    Except in connection with a Permitted Transfer (defined below), Tenant
shall not voluntarily assign or encumber this Lease or any interest in this
Lease, or permit the use of the Premises by any person or persons other than
Tenant and its agents, employees, visitors, and contractors, or sublet the
Premises, or any part, without Landlord’s prior consent, which shall not be
unreasonably withheld, conditioned or delayed, subject to the provisions of
Section 13.2 below. Notwithstanding anything to the contrary contained in this
Lease, Tenant may assign this Lease or sublet the Premises, or any portion
thereof, without Landlord’s consent, to any entity which controls, is controlled
by, or is under common control with Tenant; to any entity which results from a
merger of, reincorporation of, reorganization of, or consolidation with Tenant;
or to any entity which acquires substantially all of the memberships, interests,
stock or assets of Tenant, as a going concern, with respect to the business that
is being conducted in the Premises (hereinafter each a “Permitted Transfer”). In
addition, a sale or transfer of the memberships, interests or stock of Tenant
shall be deemed a Permitted Transfer if (1) such sale or transfer occurs in
connection with any bona fide financing or capitalization for the benefit of
Tenant, or (2) Tenant is, or in connection with the proposed transfer becomes, a
publicly traded entity. Landlord shall have no right to terminate the Lease in
connection with, and shall have no right to any sums or other economic
consideration resulting from, any Permitted Transfer.
13.2    Tenant acknowledges and agrees that Landlord’s withholding of consent is
conclusively reasonable in any of the following situations:
13.2.1    Tenant has not provided sufficient information to Landlord that, in
Landlord’s reasonable judgment, would enable Landlord to determine that the
proposed transferee has a financial condition sufficient to perform its
obligations hereunder in case of an assignment or under a sublease in the case
of a subletting. In order to determine whether a proposed transfer satisfies
such criteria, Tenant shall, prior to any such transfer, provide Landlord with
such information as Landlord may reasonably request, including, but not limited
to, current, complete and accurate audited or certified financial statements of
the proposed transferee, and federal and state tax returns of the proposed
transferee.
13.2.2    The proposed transferee will not make use of the Premises which (1) is
unlawful or (2) is inconsistent with the permitted use of the Premises under
this Lease.
13.2.3    Tenant has failed to pay all of Landlord’s reasonable documented out
of pocket costs and expenses incurred in connection with negotiation, review and
processing of the transfer, including, but not limited to, reasonable attorneys’
fees and costs; provided, however, that Tenant shall not be obligated to pay any
more than $1,500 in the aggregate for such costs and expenses.
13.2.4    The proposed assignee has not assumed in writing in form reasonably
satisfactory to Landlord all the obligations of Tenant under this Lease.
13.2.5    At the time of the proposed transfer, Tenant has committed a Default
hereunder which has not been cured within the applicable notice and cure
periods.
13.3    Additionally, Landlord may require as a condition of such approval that
all Landlord’s reasonable out of pocket costs, including reasonable attorneys’
fees, in evaluating and approving any such assignment be paid by Tenant, subject
to the limitations under Section 13.2.3. No subletting or assignment, including
with the consent of Landlord, shall relieve Tenant of its obligation to pay the
rent and to perform all of the other obligations to be performed by Tenant.
Approval of any subletting, assignment, or transfer shall only be by a specific
writing setting forth such approval, and the acceptance of rent by Landlord from
Tenant or any other person (including a proposed sublessee, assignee, or
transferee, including one who may actually have taken possession without
approval) shall not be deemed to be a waiver by Landlord of any provision of
this Lease or to be a consent to any assignment, subletting, or other transfer.
Consent to one assignment, subletting, or other transfer shall not be deemed to
constitute consent to any subsequent assignment, subletting, or other transfer.
If Tenant assigns or sublets the Premises, or any part of the Premises to any
party other than in connection with a Permitted Transfer, Tenant shall pay to
Landlord fifty percent (50%) of the excess rent received by Tenant from
subtenants and fifty percent (50%) of all consideration received by Tenant for
any assignment, after first deducting any sums incurred by Tenant with respect
to such transaction, including, without limitation, brokerage fees, consent
fees, legal fees and expenses, tenant improvement costs, free rent and other
inducements, and fees and costs paid to Landlord in connection with a request
for consent.
13.4    In the event of any assignment or sublet, Tenant shall not be relieved
of any of its responsibilities under the Lease.
13.5    Notwithstanding anything to the contrary stated in this Lease, in the
event Tenant assigns or sublets the Lease to an affiliate or Permitted
Transferee, such party shall have the right to exercise the Option to Extend, in
accordance with the provisions in Section 7.
14.    Rules    . Tenant shall before and during the Term observe and comply
with the rules and regulations attached hereto and incorporated herein as
EXHIBIT D and all reasonable modifications thereof and additions thereto from
time to time put into effect by Landlord of which Tenant has reasonable prior
written notice and such rules and regulations as are put into effect by Landlord
of which Tenant has reasonable prior written notice, provided that no such
modifications or additions or rules and regulations put into effect by Landlord
materially increase Tenant's obligations or materially decrease Tenant's rights
hereunder. A material failure to comply with the rules and regulations, where
such failure continues for more than ten (10) days after Landlord’s notice of
violation, shall constitute a Default by Tenant under this Lease. If there are
any inconsistencies between any such rules and regulations and the other
provisions of this Lease, the other provisions of this Lease shall control to
the extent necessary to resolve the inconsistency. Landlord shall not be
responsible for the nonperformance by any other tenant of the Building of any
rules and regulations. Landlord shall use reasonable efforts to obtain the
compliance by another tenant of the Building with such rules and regulations if
such other tenant's failure to comply materially interferes with Tenant's
ability to operate its business in the Premises, but Landlord shall have no
obligation to bring legal action against or terminate the lease of any other
tenant of the Building for violating any rules and regulations.
15.    Control of Appearance, Signs, and Advertising Media    . Except as
expressly agreed in this Lease regarding signage, without Landlord’s written
consent and approval, Tenant shall not: install any decorations or signs outside
of the Premises; erect or install any door lettering, signs, advertising media
or placards outside of the Premises; or keep or display any merchandise on, or
otherwise obstruct, the sidewalks, Common Areas; or areaways adjacent to the
Premises. Landlord shall install and maintain Tenant’s name in the Building
directory in the lobby of the Building. Tenant shall not use on the Premises any
advertising or other media objectionable to Landlord such as loud speakers,
phonographs, or radio broadcasts that can be heard outside the Premises. No
unsightly or objectionable items in the sole opinion of Landlord will be
permitted to be visible outside of the Premises.
16.    Repairs and Maintenance    
16.1    Landlord shall keep in good order, condition, and repair the Common
Areas and the Building foundations, exterior walls and interior bearing walls
(except for the interior faces) and other structural elements of the Building,
and roof of the Building, and all plumbing, mechanical, electrical, fire/life
safety, heating, air conditioning and ventilation equipment and systems that
service portions of the Building other than or in addition to the Premises,
except (as to all items) for any damage caused by any willful or negligent act
or omission of Tenant or its employees, agents, invitees, licenses, or
contractors (excluding ordinary wear and tear). Landlord shall not be obligated
to repair the exterior or interior of doors, windows (except for the exterior
windows), plate glass, and/or showcases used on or in the Premises, and damage
caused by any casualty or act of God, except as otherwise provided for herein.
16.2    Tenant shall keep and maintain in good order, condition and repair,
except for reasonable use and wear and damage by fire or other casualty, the
non-structural elements of the Premises and every part that exclusively serves
the Premises, including without limitation, all interior building fixtures,
walls, floors, ceilings, appliances and similar equipment and the exterior and
interior portions of doors, windows (excluding the exterior windows), and plate
glass, in the Premises. Notwithstanding anything to the contrary herein, Tenant
shall have no obligation to repair or maintain the Building infrastructure or
systems, including the roof, foundation, exterior shell, plumbing, curtain wall,
elevators, heating, ventilation, air conditioning, or mechanical systems, it
being understood that Landlord shall be responsible therefor.
16.3    Any and all repairs effected by Tenant shall be performed in a
professional workmanlike manner, by licensed contractors, in compliance with all
applicable statutes, codes, rules and regulations, and Tenant or Tenant’s
contractors shall obtain all permits and approvals of government agencies
required by applicable laws in connection therewith.
16.4    If Landlord reasonably deems any repairs required to be made by Tenant
necessary, it may demand that Tenant make them by giving written notice to
Tenant, and if Tenant refuses or neglects to commence such repairs within ten
(10) business days after such notice, or fails to diligently prosecute such
repairs thereafter, Landlord may make or cause such repairs to be made. If
Landlord makes or causes repairs to be made, Landlord shall not be responsible
to Tenant for any loss or damage that may accrue to Tenant’s business by reason
of the repair work, and Tenant shall, on demand, immediately pay to Landlord the
cost of the repairs. Tenant waives the provisions of Sections 1941 and 1942 of
the Civil Code of the State of California and any and all other statutes or laws
permitting repairs by a lessee at the expense of a lessor or to terminate a
lease by reason of the condition of the Premises.
17.    Property Protection    . The parties hereto acknowledge and agree that
each of the doors into Building and Premises are equipped with standard
door-locks that are operable and will secure each such door in a “locked”
position. Notwithstanding the foregoing, Tenant shall, by virtue of Tenant’s use
of the door lock on the front door to the Premises, be responsible for securing
the Premises against unauthorized entry. As specified in the Special Lease
Terms, Landlord will provide a security system for the Building. Tenant shall
keep all doors and windows closed to maximize the efficiency of heating and air
conditioning systems. Tenant shall not allow any offensive odors such as cigar,
pipe, or cigarette odors to offend adjacent tenants and their employees and
invitees.
18.    Environmental Compliance    
18.1    Tenant shall keep and maintain the Premises in compliance with and shall
not cause or permit the Premises to be in violation of any federal, state, or
local laws, ordinances, or regulations relating to Hazardous Materials (as
defined below), on the Premises, to the extent such Hazardous Materials were
released in the Premises by Tenant or a Tenant employee, contractor, invitee, or
licensee. Tenant shall not use, generate, manufacture, store, or dispose of on,
under or about the Premises, or transport to or from the Premises or the
Building any Hazardous Materials, other than the use and storage of materials
which technically come within the definition of Hazardous Materials, but which
are customarily used in the operation of the business described under “Permitted
Uses” in the Special Lease Terms or in a business office, such as cleaning and
office supplies, provided that such materials are in ordinary and reasonable
amounts and used, stored or disposed of in compliance with all Hazardous
Materials Laws (as defined below).
18.2    Tenant shall promptly advise Landlord in writing of (i) any and all
enforcement, cleanup, remedial, removal, or other governmental or regulatory
actions instituted, completed, or threatened pursuant to any applicable federal,
state or local laws, ordinances, or regulations relating to any Hazardous
Materials affecting the Premises (“Hazardous Materials Laws”); (ii) all claims
made or threatened by any third party against Tenant or the Premises relating to
damage, contribution, cost recovery compensation, loss, or injury resulting from
any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are
hereinafter referred to as “Hazardous Materials Claims”); and (iii) Tenant’s
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Premises that could cause the Premises to be classified as
“border-zone” property, under the provisions of the California Health and Safety
Code, 25220 et seq., or any regulation adopted in accordance therewith, or, to
Tenant’s knowledge, to be otherwise subject to any restrictions on the
ownership, occupancy, transferability, or use of the Premises under any
Hazardous Materials Laws.
18.3    Without Landlord’s prior written consent, Tenant shall not take any
remedial action in response to the presence of any Hazardous Materials in, on or
under the Premises or the Building, nor enter into any settlement agreement,
consent decree, or other compromise in respect to any Hazardous Materials
Claims, which remedial action, settlement, consent or compromise might, in
Landlord’s judgment, impair the value of the Premises or the Building; provided,
however, that Landlord’s prior consent shall not be necessary in the event that
the presence of Hazardous Materials on, under, or about the Premises or the
Building either poses an immediate threat to the health, safety, or welfare or
any individual or is of such a nature that an immediate remedial response is
necessary, or is required by an applicable governmental authority, and in each
case it is not possible to obtain Landlord’s consent before taking such action,
provided that in such event Tenant shall notify Landlord as soon as practicable
of any action so taken. Landlord agrees not to withhold its consent, when such
consent is required hereunder, if either (i) a particular remedial action is
ordered by a court of competent jurisdiction or other governmental authority, or
(ii) Tenant establishes to the reasonable satisfaction of Landlord that there is
no reasonable alternative to such remedial action that would result in
materially less impairment of the value of the Premises or the Building.
18.4    Tenant shall be solely responsible for and shall indemnify, defend and
hold the Landlord Indemnified Parties (as defined below) harmless from and
against any claim, loss, damage, cost, expense, liability, or cause of action
directly or indirectly arising out of the use, generation, manufacture, storage,
treatment, release, threatened release, discharge, disposal, transportation or
presence of any oil, gasoline, petroleum products, flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes,
toxic or contaminated substances or similar materials, including, without
limitation, any substances which are “hazardous substances”, “hazardous wastes”,
“hazardous materials”, or “toxic substances” under applicable environmental
laws, ordinances or regulations (collectively, “Hazardous Materials”) caused
directly by Tenant, its employees, agents, contractors, invitees, assigns, in,
on or under any of the Premises and the Building, including, without limitation,
(i) the costs of any required or necessary repair, cleanup or detoxification of
the Premises and the Building and the preparation and implementation of any
closure, remedial or other required plans whether required under any Hazardous
Materials Laws or otherwise; and (ii) all court costs, including reasonable
attorneys’ fees, paid or incurred by Landlord or any other Indemnified Party in
connection with such claim. Notwithstanding the foregoing or any other provision
of this Lease, Tenant shall not be responsible for any consequential damages.
The foregoing indemnity shall not apply to, and Tenant shall not be responsible
for, the presence of Hazardous Materials on, under, or about the Premises or
Building prior to the Commencement Date (except to the extent caused by Tenant
or any of Tenant’s agents, employees, affiliates, contractors, invitees,
licensees, sublessees or other representatives prior to the Commencement Date)
or to the extent caused by third parties (i.e. persons or entities other than
Tenant or its agents, employees, affiliates, contractors, subcontractors,
sublessees, licensees, invitees, and other representatives) or by Landlord or
Landlord’s employees, agents or contractors.

18.5    Each of the Landlord Indemnified Parties shall have the right to join
and participate in, as a party if it so elects, any legal proceedings or actions
initiated in connection with any Hazardous Materials Claims as to which the
Landlord Indemnified Parties are entitled to indemnify under this Section 18,
and to have its reasonable attorneys’ fees in connection therewith paid by
Tenant. Each of the Landlord Indemnified Parties shall have the right upon
thirty (30) days prior written notice to Tenant, to settle or compromise in good
faith any such Hazardous Materials Claims against them. In case any such claim
shall be made against any of the Landlord Indemnified Parties, Tenant agrees
that such Landlord Indemnified Parties may employ independent counsel of the
Landlord Indemnified Parties’ own selection to appear and defend the Landlord
Indemnified Parties. All of the reasonable documented costs and expenses of such
defense shall be paid by Tenant.
18.6    Landlord shall be solely responsible for and shall indemnify, defend and
hold the Tenant Indemnified Parties (as defined below) harmless from and against
any claim, loss, damage, cost, expense, liability, or cause of action directly
or indirectly arising out of the use, generation, manufacture, storage,
treatment, release, threatened release, discharge, disposal, transportation or
presence of any Hazardous Materials in, on or under any of the Premises and the
Building caused directly by Landlord, its employees, agents, contractors,
invitees, assigns, prior to the date that Landlord delivers the Premises to
Tenant as contemplated herein, including, but not limited to, (i) the costs of
any required or necessary repair, cleanup or detoxification of the Premises and
the Building and the preparation and implementation of any closure, remedial or
other required plans whether required under any Hazardous Materials Laws or
otherwise; and (ii) all court costs, including reasonable attorneys’ fees, paid
or incurred by Tenant or any other Tenant Indemnified Party in connection with
such claim. Notwithstanding the foregoing or any other provision of this Lease,
Landlord shall not be responsible for any consequential damages.
19.    Landlord’s Access to Premises    
19.1    Landlord and its designees, with reasonable written notice (of not less
than 48 hours), shall have the right to enter the Premises at all reasonable
hours, and in emergencies at all times, to inspect the Premises, to make
repairs, additions, or alterations to the Premises or the Building required or
permitted to be performed under this Lease, provided Landlord shall use
commercially reasonable efforts to minimize interference with Tenant’s access to
and use of the Premises during Tenant’s normal business hours within the
Premises. At Tenant’s option, all such entry shall be subject to the requirement
that Landlord be accompanied by a Tenant representative.
19.2    For a period commencing one hundred twenty (120) days prior to the end
of the Lease Term, Landlord and its designees, with reasonable written notice
(of not less than 24 hours), shall have reasonable access to the Premises, upon
prior notice for the purpose of exhibiting “For Lease” signage and showing the
Premises to prospective lessees. Landlord’s “For Lease” signs shall be of a size
customary for the purpose and shall be located so as not to obstruct Tenant’s
signs.
20.    Indemnity    
20.1    Tenant shall defend, indemnify, and hold harmless Landlord, Landlord’s
trustees, general partners and limited partners, shareholders, directors,
officers and employees, and agents of Landlord’s trustees, general partners,
limited partners and shareholders (individually a “Landlord Indemnified Party”
and collectively, the “Landlord Indemnified Parties”) against and from any and
all claims arising from: (A) Tenant’s use of the Premises for the conduct of
Tenant’s business; (B) any activity, work, or other thing done or permitted by
Tenant on the Premises, except as may be caused by or be the result of Landlord
or any Landlord Indemnified Party’s gross negligence or willful misconduct or as
expressly otherwise set forth in this Lease; (C) any act or omission (including,
but not limited to negligent acts or omissions) of Tenant, or of any officer,
agent, employee, guest, or invitee of Tenant; and (D) any and all Defaults
committed by Tenant under the terms of this Lease. Except as expressly otherwise
set forth in this Lease, Tenant shall also defend, indemnify, and hold harmless
the Indemnified Parties against and from any and all claims brought by Tenant’s
employees, contractors, agents, or business invitees (including customers)
arising from any act (including but not limited to negligent and intentional
torts and criminal acts) committed by any third party (other than an Indemnified
Party or any agent or other person acting on behalf of any Indemnified Party) in
the Premises. The indemnity provided by this Section 20.1 shall include
indemnification, from and against all reasonable costs, attorneys’ fees,
expenses, and liabilities incurred in connection with or arising from any such
claim or any action or proceeding brought thereon; and in any suit, action, or
proceeding brought against any of the Landlord Indemnified Parties by reason of
any such claim, Tenant, upon notice from any of the Landlord Indemnified
Parties, shall defend the same at Tenant’s expense by counsel reasonably
satisfactory to the Landlord Indemnified Parties. Tenant as a material part of
the consideration to Landlord, except as otherwise expressly set forth in this
Lease, hereby assumes all risk of damage to property or injury to persons in,
upon, or about the Premises, from any cause other than Landlord’s breach of this
Lease or the negligence or willful misconduct of any Landlord Indemnified Party
(but only to the extent attributable to Landlord’s breach of this Lease or the
negligence or willful misconduct of Landlord or any Landlord Indemnified Party),
and Tenant hereby waives all such claims against the Landlord Indemnified
Parties.
20.2    Landlord shall defend, indemnify, and hold harmless Tenant, Tenant’s
members, trustees, general partners and limited partners, shareholders,
directors, officers, employees, and the members, trustees, general partners and
limited partners, shareholders, directors, officers, employees, and agents of
Tenant’s trustees, general partners, limited partners and shareholders (“Tenant
Indemnified Parties”) against and from any and all claims made by third parties
arising from the act or omission of Landlord, or Landlord’s contractors,
subcontractors, trustees, general partners and limited partners, shareholders,
directors, officers, employees, and the contractors, subcontractors, trustees,
general partners and limited partners, shareholders, directors, officers,
employees, and agents of Landlord’s trustees, general partners, limited partners
and shareholders, including any default by Landlord under this Lease, provided
that in no event shall Landlord be liable for consequential damages or lost
profits. The indemnity provided by this Section 20.2 shall include
indemnification, from and against all reasonable costs, attorneys’ fees,
expenses, and liabilities incurred in connection with or arising from any such
claim or any action or proceeding brought thereon; and in any suit, action, or
proceeding brought against any of the Tenant Indemnified Parties by reason of
any such claim, Landlord, upon notice from the relevant Tenant Indemnified
Parties, shall defend the same at Landlord’s expense by counsel reasonably
satisfactory to Tenant.
20.3    Landlord, Landlord’s agents and the other Landlord Indemnified Parties
shall not be liable for any injury to or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity, water, or rain
that may leak from any part of the Premises or from the pipes, appliances, or
plumbing works therein or from the roof, street, or subsurface, or from any
other place resulting from dampness or any other cause whatsoever, unless caused
by or due to the negligence or willful misconduct of Landlord, Landlord’s
contractors, subcontractors, agents, servants, or employees and only to the
extent actually caused by the negligence or willful misconduct of Landlord,
Landlord’s contractors, subcontractors, agents, servants, or employees.
Landlord, Landlord’s agents and the other Landlord Indemnified Parties shall not
be liable for interference with the light or other incorporeal hereditament,
loss of business by Tenant, or any latent defect in the Premises, unless caused
by the negligence or willful misconduct of Landlord, Landlord’s contractors,
subcontractors, agents, servants, or employees. Tenant shall give prompt notice
to Landlord in case of fire or accidents in the Premises or of defects therein
or in the fixtures or equipment.
21.    Abandonment    . Tenant shall not abandon the Premises at any time during
the Lease Term. If Tenant abandons the Premises, or is dispossessed by process
of law, or otherwise, Tenant shall promptly remove from the Premises all of
Tenant’s personal property, unless Tenant is paying and is current on all rental
obligations. “Abandonment” shall mean Tenant vacating the Premises for a period
of more than sixty (60) days while also in violation of any provision specified
in Section 24.1 hereof.
22.    Conveyance by Landlord    . If during the Lease Term, Landlord sells or
otherwise transfers its interest in the Building and/or Premises, from and after
the effective date of the sale, Landlord shall be released and discharged from
any and all obligations and responsibilities under this Lease accruing or
arising after the date of such transfer. Upon any conveyance of title to the
Building and/or Premises, the grantee or transferee shall be deemed to have
assumed Landlord’s obligations to be performed under this Lease from and after
the date of such conveyance. Landlord shall transfer the then uncredited portion
of the Prepaid Rent and the LOC to the grantee or transferee of Landlord’s
interest in the Building and/or Premises, and upon such transfer and written
assumption by the grantee or transferee, Landlord shall be released from any
further responsibility or liability for the Prepaid Rent and the LOC and Tenant
shall attorn to any such grantee or transferee as the new Landlord; provided,
however, that Landlord shall provide Tenant with written notice of such
transfer.
23.    Condemnation    
23.1    If title to all of the Premises is taken for any public or quasi-public
use by right of eminent domain or by private purchase in lieu of eminent domain,
or if title to a portion of the Premises is taken, and a reasonable amount of
reconstruction of the Premises will not result in the Premises being reasonably
suitable for Tenant’s continued occupancy for the use for which the Premises are
leased, in either such event, upon written notice given within thirty (30) days
after the date that possession of the Premises or a part thereof is taken,
Landlord or Tenant may terminate this Lease. If any part of the Premises shall
be so taken and the remaining part of the Premises (after reconstruction of the
then existing Building in which the Premises are located) is reasonably suitable
for Tenant’s continued occupancy for the use for which the Premises are leased,
this Lease, as to the part so taken, shall terminate as of the date that
possession of such part is taken, and the rent shall be reduced by an amount
that bears the same ratio to the rent provided in this Lease prior to such
taking as the value of the portion of the Premises taken bears to the total
value of the Premises immediately before the date of taking. If the Premises
would not be reasonably suitable for Tenant’s use after the condemnation but can
be reconstructed to be reasonably suitable for Tenant’s continued use, Landlord,
at Landlord’s option, may at its own cost and expense make all necessary repairs
or alterations to the Building in which the Premises, in which case this Lease
shall continue, and otherwise this Lease shall terminate. There shall be no
abatement of rent during such restoration except to the extent otherwise
provided in this Section 23.
23.2    Tenant shall not be entitled to share in any portion of the award, and
Tenant hereby expressly waives any right or claim to any part thereof. All
compensation awarded or paid upon a total or partial taking of the Premises
shall belong to Landlord, whether such compensation be awarded or paid as
compensation for diminution in value of the leasehold or the fee. Tenant shall,
however, have the right to claim and recover, only from the condemning authority
and not from Landlord, any amount necessary to reimburse Tenant for the cost of
removing stock and fixtures, cost of relocation, and Tenant’s goodwill;
provided, however, that the foregoing shall not prohibit Tenant from prosecuting
a separate claim against the condemning authority for an amount separately
designated for the interruption of or damage to Tenant’s business or as
compensation for Tenant’s personal property or other improvements paid for by
Tenant.
24.    Default; Remedies    
24.1    Tenant Defaults. The occurrence of any of the following shall constitute
a material default and breach of this Lease by Tenant (each, a “Default”):
24.1.1    any failure by Tenant to pay rent or any other monetary sums within 5
days of the date required to be paid;
24.1.2    the vacating or abandonment of the Premises by Tenant;
24.1.3    a failure by Tenant to observe and perform any other provision of this
Lease to be observed or performed by Tenant (including Tenant’s material
compliance with the rules and regulations of the Building as applied by Landlord
in a non-discriminatory manner to all tenants within the Building), where such
failure continues for fifteen (15) days after written notice by Landlord to
Tenant, unless such failure reasonably requires more than fifteen (15) days to
cure, then Tenant shall only be required to show documented proof that Tenant
has undertaken commercially reasonable efforts to remedy within the fifteen (15)
day period, but in any event shall cure such failures within sixty (60) days;
24.1.4    the making by Tenant of any general assignment or general arrangement
for the benefit of creditors;
24.1.5    the filing by or against Tenant of a petition to have Tenant adjudged
a bankrupt or of a petition for reorganization or arrangement under any law
relating to bankruptcy unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty (60) days;
24.1.6    the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or
24.1.7    the attachment execution or other judicial seizure of substantially
all of Tenant’s assets located at the Premises or of Tenant’s interest in the
Lease where such seizure is not discharged within thirty (30) days.
24.2    Remedies. In the event of a Default by Tenant, Landlord may, at any time
thereafter without limiting Landlord in the exercise of any right or remedy at
law or in equity which Landlord may have by reason of such Default:
24.2.1    Maintain Lease. Maintain this Lease in full force and effect and
recover the rent and other monetary charges as they become due pursuant to
California Civil Code section 1951.4 or any similar, successor or related
provision of Law, without terminating Tenant’s right to possession irrespective
of whether Tenant shall have abandoned the Premises. In the event Landlord
elects not to terminate the Lease, Landlord shall have the right to attempt to
re-let the Premises at such rent and upon such conditions and for such a term,
and to do all acts necessary to maintain or preserve the Premises as Landlord
deems reasonable and necessary without being deemed to have elected to terminate
the Lease, including removal of all property from the Premises. Such property
may be removed and stored in a public warehouse or elsewhere at the cost of and
for the account of Tenant. In the event any such re-letting occurs, this Lease
shall terminate automatically upon the new Tenant taking possession of the
Premises. Notwithstanding that Landlord fails to elect to terminate the Lease
initially, Landlord at any time during the Lease Term may elect to terminate
this Lease by virtue of such previous default of Tenant
24.2.2    Terminate Lease. Terminate Tenant’s right to possession by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant’s Default, including, without limitation thereto, the following: (a) the
worth at the time of award of any unpaid rent which had been earned at the time
of such termination; plus (b) 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 rental loss that is proved could have
been reasonably avoided; plus (c) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that is proved could be reasonably
avoided; plus (d) any other amount reasonably necessary to compensate Landlord
for all the detriment proximately caused by Tenant’s failure to perform its
obligations under this Lease which in the ordinary course of events would be
likely to result therefrom; plus (e) at Landlord’s election, such other
reasonable amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable Law. Upon any such re-entry, Landlord
shall have the right to make any reasonable repairs, alterations, or
modification to the Premises which Landlord in its sole discretion deems
reasonable and necessary. As used in (a) and (b) above, the “worth at the time
of award” is computed by allowing interest at the rate of 10% per annum from the
date of Default. As used in (c) above, the “worth at the time of award” is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus 1%. The term “rent,” as used in
this sub-section 24.2.2, shall be deemed to be and to mean the Monthly Rent to
be paid pursuant to this Lease and all other monetary sums required to be paid
by Tenant pursuant to the terms of this Lease. All such amounts, other than
Monthly Rent, as may become due in the future shall be computed on the basis of
the average monthly amount thereof accruing during the immediately preceding
twelve (12) month period prior to Default, except that if it becomes necessary
to compute such rent before such twelve (12) month period has occurred, then on
the basis of the average monthly amount accruing during such shorter period.
24.2.3    Landlord Cure of Tenant Default. Landlord, at any time after Tenant
commits a Default, and fails to cure within the appropriate notice and cure
periods set forth herein, can cure such Default at Tenant’s cost. If Landlord at
any time, by reason of Tenant’s Default, pays any sum or does any act that
requires the payment of any sum, the sum paid by Landlord shall be due within
fifteen (15) days of written request therefor from Landlord and shall bear
interest at the rate of 10% per annum from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant. The sum, together with interest on it,
shall be additional rent.
24.2.4    Default Interest. Rent not paid when due shall bear interest at the
rate of 10% per annum, plus a late charge as provided in this Lease.
24.2.5    Late Charge. Tenant acknowledges that late payment of rent will cause
Landlord to incur costs not contemplated by this Lease. Therefore, if any
installment of rent is not received by Landlord no later than five (5) days
after the date when due, Tenant shall pay to Landlord an additional sum equal to
five percent (5%) of the overdue rent as a late charge, which shall begin
accruing the day after the date when due. Acceptance of any late charge shall
not constitute a waiver of Tenant’s Default with respect to the overdue amount
or prevent Landlord from exercising any of the other rights and remedies
available to Landlord.
24.3    Landlord Defaults. Landlord shall not be in default under this Lease
unless Tenant shall have given Landlord written notice of the breach and, within
thirty (30) days after notice (or such shorter time as is reasonable in the
event of an emergency), Landlord has not cured the breach or, if the breach is
such that it cannot reasonably be cured under the circumstances within thirty
(30) days, has not commenced diligently to prosecute the cure to completion (a
“Landlord Default”). Any money judgment obtained by Tenant based upon Landlord’s
breach of this Lease shall be satisfied only out of the unencumbered rents or
other income from the Building receivable by Landlord and the proceeds of the
sale or disposition of Landlord’s interest in the Building (whether by Landlord
or by execution of judgment). Notwithstanding anything to the contrary set forth
herein, if Landlord fails to make any repairs or to perform any maintenance
required of Landlord hereunder and within Landlord’s reasonable control, and
such failure shall persist for an unreasonable time (except in cases of
emergency, not less than thirty (30) days) after written notice of the need for
such repairs or maintenance is given to Landlord and unless Landlord has
commenced such repairs or maintenance during such period and is diligently
pursuing the same, Tenant may (but shall not be required to) following a second
notice (which notice shall have a heading in at least 12-point type, bold and
all caps “FAILURE TO RESPOND SHALL RESULT IN TENANT EXERCISING SELF-HELP
RIGHTS”) and Landlord’s failure to commence repairs within five (5) days after
receipt of such second notice, perform such repairs or maintenance in accordance
with the provisions of this Lease governing Tenant’s repairs and Alterations
(except without any requirement for Landlord’s consent or approval) and Landlord
shall reimburse Tenant for all reasonable costs and expenses therefor within
thirty (30) days after presentation of appropriate invoices and back-up
documentation. If Landlord fails to reimburse Tenant within such 30-day period,
Tenant shall be permitted to off-set such amount against Rent next due under the
Lease until Tenant is fully compensated therefor. If as a result of a Landlord
Default, Tenant’s ability to use the Premises is materially impaired, then
Tenant shall be entitled to an abatement of Rent for the period commencing on
the second (2nd) business day following the date on which the Premises are
unusable through the date on which the Premises are again usable. In the event
of a Landlord Default, Tenant may terminate this Lease upon written notice to
Landlord. An “Event of Material Interference” shall occur if any work, condition
or disruption at the Building is caused by Landlord (or is consented to by
Landlord) and such work, condition or disruption materially interferes with
Tenant’s use of the Premises for a substantial portion of any business day.
Tenant shall promptly notify Landlord in writing upon the occurrence of an Event
of Material Interference with such notice specifying the work, condition or
disruption causing the event and the scope, time and date of such event.
25.    Subordination and Estoppel Certificates    
25.1    This Lease shall be subordinate to any and all encumbrances now of
record or recorded after the date of this Lease affecting the Premises, the
Building, Common Area, other improvements, and land on which they are a part,
and to any and all advances made on the security thereof, and to all renewals,
modifications, replacements, and extensions. Tenant shall from time to time on
request from Landlord execute, acknowledge, and deliver any documents or
instruments that may be required by a lender, or otherwise convenient, to
effectuate or acknowledge any subordination. In the event any proceedings are
brought for foreclosure or in the event of the exercise of the power of sale
under any mortgage, deed of trust, or other encumbrance covering the Premises,
Tenant shall attorn to the purchaser as landlord, subject to and in accordance
with the provisions of the Subordination, Non-Disturbance and Attornment
Agreement as provided in Attachment C, attached hereto. If Tenant fails to
execute, acknowledge, and deliver any such documents or instruments, Tenant
irrevocably constitutes and appoints Landlord as Tenant’s special
attorney-in-fact to execute, acknowledge, and deliver any such documents and
instruments. Notwithstanding anything contrary specified herein, Landlord shall,
within thirty (30) days after the Commencement Date as specified herein, obtain
from Landlord’s mortgagee a written “non-disturbance agreement” in favor of
Tenant substantially in the form attached hereto as Attachment C which contains
modifications to lender’s form made by Tenant and Landlord will submit to
Landlord’s lender Tenant’s proposed modifications without any representation
that Tenant’s proposed changes can be made, providing that if Tenant has not
committed a Default which has not been cured within the applicable notice and
cure period, such party will recognize this Lease and Tenant’s rights hereunder
and will not disturb Tenant’s possession hereunder, and if this Lease is by
operation of law terminated in a foreclosure, that a new lease will be entered
into on the same terms as this Lease for the remaining term hereof.
25.2    Landlord’s interest in this Lease, the Premises, and the Building shall
not be subordinant to any encumbrances resulting from any act of Tenant, and
nothing in this Lease shall be construed to require such subordination by
Landlord, except as provided in the Special Lease Terms. Tenant is not
authorized to place or allow to be placed any lien, mortgage, deed of trust, or
encumbrance of any kind upon all or any part of the Premises and/or the Building
or Tenant’s leasehold interest in the Premises, and any such purported
transaction shall be void, except as provided in the Special Lease Terms.
Furthermore, any such purported transaction shall be deemed a tortious
interference with Landlord’s relationship with Tenant and Landlord’s fee
ownership of the Premises and/or the Building, except as provided in the Special
Lease Terms.
25.3    Tenant shall, at any time and from time to time, without cost or charge
to Landlord, upon not less than ten (10) business days prior written request by
Landlord, execute, acknowledge, and deliver to Landlord a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same are in full force and effect as
modified and stating the modification) and, if so, the dates to which the fixed
rent and any other charges have been paid in advance, and stating the Term
Commencement Date, number of options to extend the term and such other
statements of fact pertinent to the terms and conditions of this Lease as
Landlord may reasonably request, it being intended that any such statement
delivered pursuant to this Section 25.3 may be relied upon by any prospective
purchaser, encumbrancer, mortgagee, or lender (including assignees) of the
Premises. The form of Estoppel Certificate is provided in Attachment B attached
hereto. Landlord shall, at any time and from time to time, without cost or
charge to Tenant, upon not less than ten (10) business days prior written
request by Tenant, execute, acknowledge, and deliver to Tenant a similar
statement.
26.    Holding Over and Surrender    
26.1    If Tenant should remain in possession of the Premises after the
expiration of the Lease Term and without exercising any option rights in the
manner described below or without executing a new lease, such holding over shall
be construed as a tenancy from month to month subject to all the conditions
provision and obligations of this Lease that is consistent with a month-to-month
tenancy. If such holding over is with the written approval of Landlord, the
monthly rental shall be at the rate agreed upon by the parties at that time. If
such holding over is without Landlord’s approval, the monthly rent shall be 150%
of the Monthly Rent in effect for the last month of the Lease Term prior to the
beginning of such holding over.
26.2    On the last day or sooner termination of the Lease Term, Tenant shall
surrender the Premises, broom-clean, in good condition and repair (reasonable
wear and tear excepted and damage due to casualty for which Landlord is
responsible excepted) together with all alterations, additions, and improvements
that have been made in, to, or on the Premises, except movable furniture or
trade fixtures and portable improvements put in at Tenant’s expense. If Tenant
fails to remove any of its property from the Premises at the end of the term,
all property not removed shall be deemed abandoned by Tenant. If the Premises
are not surrendered at the end of the Lease Term and Landlord has not approved
Tenant continuing in the Premises, Tenant shall be liable for, and shall
indemnify Landlord against, all loss or liability arising or resulting from
delay by Tenant in surrendering the Premises, including but not limited to (i)
any rent payable by or any loss, cost, or damages, including lost profits,
claimed by any prospective tenant of the Premises or any portion thereof, and
(ii) Landlord’s damages as a result of such prospective tenant rescinding or
refusing to enter into the prospective lease of the Premises or any portion
thereof by reason of such failure to timely surrender the Premises.
27.    Commissions    . Both Landlord and Tenant warrant and represent that they
have been informed of and consent to the fact that CBRE, Inc., represents both
Landlord and Tenant. The parties acknowledge and agree that the leasing team
representing Landlord and the leasing term representing Tenant are two separate
and distinct teams, service separate clients, and do not share revenues. Upon
full execution of this Lease, Landlord shall pay CBRE, Inc., in its capacity as
Tenant’s broker, a real estate brokerage commission of Two Dollars ($2.00) per
RSF per year up to a maximum of Fourteen Dollars ($14.00) per RSF as
consideration for brokerage services rendered in assisting in the consummation
of the Lease. Fifty percent (50%) of the commission shall be due and payable
upon the full execution and delivery of the Lease, and fifty percent (50%) shall
be due and payable on the Commencement Date. In addition, Landlord shall pay
CBRE, Inc., in its capacity as Landlord’s broker, a real estate brokerage
commission pursuant to a separate agreement between Landlord and CBRE, Inc., as
consideration for brokerage services rendered to Landlord in assisting in the
consummation of the Lease. Aside from CBRE, Inc., neither party has had any
contact or dealing regarding this Lease, or any communication in connection with
this Lease, with any person who can claim a commission or finder’s fee as a
procuring cause of obtaining this Lease. If any broker or finder other than
CBRE, Inc., perfects a claim for a commission or finder’s fee based on any
contract, dealing or communication with Tenant, Tenant agrees to hold Landlord
harmless from any cost, expense, or liability for any compensation, commission,
or charges claimed by any realtor, broker, or other party acting or purporting
to act on behalf of Tenant with respect to this Lease or the negotiations of
this Lease. If any other broker or finder perfects a claim for a commission or
finder’s fee based on any contract, dealing or communication with Landlord,
Landlord agrees to hold Tenant harmless from any cost, expense, or liability for
any compensation, commission, or charges claimed by any realtor, broker, or
other party acting or purporting to act on behalf of Landlord with respect to
this Lease or the negotiations of this Lease.
28.    True Lease    . Each of Landlord and Tenant intends for this Lease to be
a “true lease” and not a financing lease, capital lease, mortgage, equitable
mortgage, deed of trust, trust agreement, security agreement or other financing
or trust arrangement, and the economic realities of this Lease are those of a
true lease. The term of this Lease is less than the remaining economic life of
the Premises. Each of Landlord and Tenant waives any claim or defense based upon
the characterization of this Lease as anything other than a true lease, and
Tenant stipulates and agrees not to challenge the validity, enforceability, or
characterization of the lease of the Premises as a true lease and further
stipulates and agrees that nothing contained in this Lease creates or is
intended to create a joint venture, partnership, equitable mortgage, trust,
financing device or arrangement, security interest, or the like. Each of
Landlord and Tenant shall support the intent of the parties that the lease of
the Premises pursuant to this Lease is a true lease and does not create a joint
venture, partnership, equitable mortgage, trust, financing device or
arrangement, security interest, or the like, if, and to the extent that, any
challenge occurs.
29.    Intentionally Deleted    .
30.    Notices    . All notices and demands under this Lease by either party to
the other shall be in writing and shall be sufficiently given and served upon
the other party if personally delivered or sent by certified mail, return
receipt requested, postage prepaid, or by recognized overnight courier and
addressed as stated in the Special Lease Terms or such other address noticed by
the applicable party under this Section. Such notices and demands shall be
deemed effective upon the date shown as delivered on the return receipt. Either
party may designate a different address by written notice.
31.    No Third Party Beneficiaries    . The parties to this Lease are Landlord
and Tenant and each of their respective successors and/or assigns, and no other
person or entity, whether a partner, shareholder, officer, director, employee,
contractor, agent, subtenant, or business invitee of Tenant or otherwise, shall
have any rights or be entitled to any benefits under this Lease.
32.    Force Majeure    . Any prevention, delay, or stoppage due to strikes,
lockouts, acts of God, enemy, terrorist, or hostile governmental action, civil
commotion, fire, or other casualty beyond the control of the party obligated to
perform shall excuse the performance by such party for a period equal to any
such prevention, delay or stoppage except the obligations imposed with regard to
rental and other monies to be paid by Tenant pursuant to this Lease.
33.    No Merger    . The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation thereof, shall not result in a merger of Landlord’s and
Tenant’s estates, and shall, at the option of Landlord, either terminate any or
all existing subleases or subtenancies, or operate as an assignment to Landlord
of any or all of such subleases or subtenancies.
34.    Characterization of Relationship    . It is the intent of the parties
that the business relationship created by this Lease, and any related documents
is solely that of a long-term commercial lease between Landlord and Tenant and
has been entered into by both parties in reliance upon the economic and legal
bargains contained in this Lease. None of the agreements contained in this Lease
is intended to create a partnership between Landlord and Tenant, to make them
joint venturers, to make Tenant an agent, legal representative, partner,
subsidiary, or employee of Landlord, or to make Landlord in any way responsible
for the debts, obligations, or losses of Tenant.
35.    Limitation of Landlord’s Liability    . Notwithstanding anything to the
contrary provided in this Lease, it is specifically understood and agreed that
Landlord’s liability with respect to any of the terms and conditions of this
Lease shall be limited to Landlord’s equity in the Building, any condemnation
award, proceeds of insurance or of sale or other disposition of the Building.
36.    No Offer    . No contractual or other rights shall exist between Landlord
and Tenant with respect to the Premises until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Landlord and
notwithstanding that Landlord may have delivered to Tenant an unexecuted copy of
this Lease. The submission of this Lease to Tenant shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Tenant to lease or otherwise create any interest on the part of
Tenant in the Premises.
37.    Signage    . Landlord shall include Tenant’s name, at Landlord’s cost, on
the building directory sign in the lobby. Tenant shall be allowed to install, at
Tenant’s cost, signage at the reception area/elevator vestibule on floors it
occupies, subject to Landlord’s review and approval of location, size and
design.
38.    Easements    . During the Lease Term, Landlord shall have the right to
grant utility easements on, over, under and above the Premises without the prior
consent of Tenant, provided that such easements will not materially interfere
with Tenant’s use and quiet enjoyment of the Premises.
39.    Quiet Enjoyment    . So long as Tenant is not in default under this
Lease, Tenant shall have the right to use and occupy the Premises in accordance
with and subject to the terms and conditions of this Lease as against Landlord
and any person claiming by, through or under Landlord.
40.    Security System    
40.1    Installation. Tenant may install, at Tenant’s cost and expense, a
proximity card system or equivalent at the entries to and throughout the
Premises (a “Security System”).
40.2    Plans and Specifications. Landlord will have the right to review and
approve all plans and specifications for the Security System and for the
installation of the Security System and any related equipment. Landlord’s
approval of the Security System and related equipment shall not be unreasonably
withheld, conditioned, or delayed.
40.3    Installation and Maintenance Costs. Tenant will be solely responsible
for all costs and expenses incurred in installing, maintaining and repairing the
Security System, except that the Tenant Improvement Allowance may be applied to
the acquisition and installation thereof.
41.    General    
41.1    Governing Law. This Lease shall be construed and governed in all
respects by the laws of the State of California.
41.2    Amendment. This Lease and any term of this Lease may be amended,
discharged, or terminated only by a written instrument signed by the party
against whom enforcement of such amendment, discharge, or termination is sought.
41.3    Execution of Documents. Each party agrees to execute, with
acknowledgment or certification as necessary, all instruments and agreements
that are reasonably necessary or convenient in fulfilling the purposes of this
Lease.
41.4    Binding on Successors and Assigns. This Lease shall be binding on each
party and the party’s heirs, successors, assigns, executors, and administrators.
41.5    Integration. This Lease, any attached exhibits and attachments, and the
documents expressly described or referred to in this Lease constitute all of the
understandings and agreements existing between the parties concerning the
subject of this Lease and the rights and obligations created under it. Neither
party has made or relied upon any agreement, warranty, representation, promise,
or statement, whether oral or written, not expressly included in this Lease.
41.6    Waivers, Delays, and Omissions. One or more waivers, consents, or
approvals by any party of any covenant, condition, or tenant act or any breach
under this Lease shall not be construed as a waiver, consent, or approval of any
subsequent condition, covenant, act, or breach or as a consent or approval to
the same or any other covenant or condition. The acceptance by Landlord of any
rent shall not be deemed a waiver of or acquiescence to any breach other than
the payment of that rent amount itself, notwithstanding that the acceptance of
the rent occurs at a time after the breach and that Landlord is aware of the
breach at the time of the rent acceptance. A waiver by any party of any breach,
and any consent or approval by any party, shall only be accomplished by a
written document identifying the item being waived or approved. No delay or
omission to exercise any right, power, or remedy accruing to any party upon any
breach or default of the other party under this Lease shall impair any such
right, power, or remedy of the party not in breach or default.
41.7    Form and Gender. Whenever the singular number or plural number is used,
when required by the context, each shall include the other; and the masculine,
feminine, and neuter genders shall include the others. The word “person” shall
include corporation, firm, or association. If there is more than one Tenant, the
obligations imposed under this Lease upon Tenant shall be joint and several.
41.8    References. References in this Lease to sections, paragraphs,
subparagraphs, and exhibits are references to sections, paragraphs, and
subparagraphs in this Lease and exhibits attached to this Lease unless specified
otherwise.
41.9    Section Headings. Section headings are for the convenience of the
parties and do not form a part of this Lease.
41.10    Construction. The parties agree that this Lease is a negotiated
agreement, with each party free to review and negotiate each section of the
Lease and otherwise clarify all sections of the Lease that appear to the party
(at the time of signing) to be ambiguous or unclear, and that both parties are,
therefore, deemed to be the drafting parties, and that, therefore, the rules of
construction to the effect that any ambiguities are to be resolved against the
drafting party or parties shall not be employed in the interpretation of this
Lease.
41.11    Unenforceable Provisions. If all or part of any one or more of the
provisions contained in this Lease is for any reason held to be invalid,
illegal, or unenforceable in any respect, the invalidity, illegality, or
unenforceability shall not affect any other provisions, and this Lease shall be
equitably construed as if it did not contain the invalid, illegal, or
unenforceable provision.
41.12    Attorneys’ Fees. In the event an action is brought to enforce or
interpret the provisions of this Lease, the prevailing party in such action
shall be entitled to an award of its attorneys’ fees and costs incurred in such
action, including any fees and costs incurred in any appeal and in any
collection effort.
41.13    Time. Time is of the essence of each and every provision of this Lease
in which time is an element. Each party specifically acknowledges that such
party’s failure to timely perform each and every one of its obligations under
this Lease could cause serious damages to the other party.
41.14    Warranty of Authority. The parties hereto each warrant that the person
executing this Lease on behalf of such entity has the authority to execute this
Lease on behalf of such entity or other person, and that no consent or approval
by any third person is required for such entity to enter into and perform its
obligations under this Lease.
41.15    Counterparts. This Lease and all amendments and supplements to it may
be executed in counterparts, and all counterparts together shall be construed as
one document.
41.16    Separate Representation. Each party acknowledges that he has been
separately represented by independent counsel and such other advisors as the
party deems appropriate in the negotiation, drafting, and entry into this Lease,
and has had an opportunity to have such counsel and other advisors review this
Lease on behalf of that party, and that the party has had this Lease so reviewed
to the full extent that the party deems necessary or advisable.
IN WITNESS WHEREOF, the parties have executed this Lease effective as of the
date first written above. :

“Landlord”:
140 Partners, L.P.,

a California limited partnership

By Ou Interests, Inc., dba Group I , general partner

By:                        
Joy Ou, Its President
Execution Date: ___________________, 2015

“Tenant”:
Skullcandy, Inc.,
a Delaware corporation

By:                        
Name:                            
Its:                        

By:                        
Name:                            
Its:                        
Execution Date: ___________________, 2015

EXHIBIT A
Premises Floor Plans

14,597 rentable square feet
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EXHIBIT B-1
Tenant’s Space Plan

Attached

EXHIBIT B-2
Landlord’s Work
340 Bryant Street Delivery Condition
Core, Shell & Pre-Tenant Improvement Requirements

Restrooms/Path of Travel/Bike Storage
▪
Adequate restrooms will be provided on each occupied level (excluding mezzanine)
to meet the current code for office occupancy

▪
Restrooms to meet current ADA requirements

▪
8 shower stalls – two shower stalls per floor

▪
A class 1 bike storage room with space sufficient for 12 bikes

▪
All path of travel to and within the Premises complete and upgraded to current
code at time of delivery (Landlord to provide path of travel drawings to Tenant)

Stairs/Exiting/Elevator
▪
Adequate stairs and exit widths from the Premises to the ground floor; and as
may be required in the Premises; and out to the street for code compliant
exiting for office use

▪
Basic card reader building access system will be installed on the main entry

▪
New elevator to service all floors, including the roof deck but excluding the
mezzanine, will be installed

▪
Tenant will be responsible for any modifications or additions to the exit path
and/or exit signage resulting from their build-out or use, subject to Landlord’s
approval

HVAC
▪
Rooftop mounted HVAC heat pumps for VRF system will be provided and be
sufficient to maintain a comfortable temperature range (no higher than 74
degrees in summer and no lower than 70 degrees in winter) and operate in
accordance with ASHRAE 62(-2001) for occupancy headcount at 1/125 RSF

▪
HVAC system will provide stubbed-out refrigerant lines from the rooftop heat
pumps will be provided at two central locations per floor (excluding mezzanine).
Tenant to be responsible for permitting and installation of interior
distribution as required by its build-out

Fire Sprinkler & Life-Safety
▪
Fully functioning detection/notification fire-life safety head end system with
devices distributed per code throughout the Premises for a general open office
layout. Tenant to be responsible for permitting and installation for changes to
layout. Tenant shall relocate and/or install additional devices as required for
its build-out

▪
Fire sprinkler system in good working order, distributed per code throughout the
Premises, with quick action heads upturned for open ceiling distribution for a
general open layout. Tenant to be responsible for permitting and installation
for changes to layout. Tenant shall relocate and/or install additional laterals
and heads as required for its build-out

Exterior/Shell/Structure
▪
All seismic upgrades required by current code

▪
Building to be weather tight.

▪
Shell, roof, perimeter and glazing systems to be code compliant including, but
not limited to Title 24 energy codes

Windows
New double pane windows will be installed within existing metal frames

Interior/Structure
▪
All drywall or plaster interior or perimeter surfaces to be delivered code
compliant, fire caulked and finished to a Level 4 standard, with all gaps and
holes patched and smoothed, ready for Tenant’s paint finish

▪
All remaining vestiges of previous interior improvements demolished and brought
back to the core/shell

▪
All concrete wall surfaces clean and ready for Tenant’s paint

▪
All floors level to within reasonable level within existing building structure,
ready for Tenant’s flooring material installation, with all previous flooring
material stripped away

Kitchen Plumbing/Waste
▪
Provide cold and hot water supply, waste and vent stubbed to floor 1 to 4
(excluding mezzanine) of the Premises

Power and Data
▪
The Building will be equipped with a 480V/3-Phase/3-Wire amp system as the
Building’s incoming power system

▪
Power supplied to central electrical closet on each floor 1 to 4 (excluding
mezzanine) with sufficient power under a 208V/3-Phase/4-Wire system including
transformers and electrical sub-panels/distribution panels to provide both 120v
and 208v, totaling five (5) Watts/RSF, for Tenant use exclusive of HVAC loads.

▪
Internet access point will be provided from central electrical closet on each
floor 1 to 4 (excluding mezzanine)

▪
Adequate vertical riser space for tenant’s cabling and communications lines

Hazardous Materials
▪
All hazardous materials abated and removed from the Premises.

Outdoor Spaces/Roof Deck/Patio:
▪
ADA accessible patio on the Bryant Street side of the Building with exterior
lighting and new landscaping pending Caltrans’ approval

▪
ADA accessible roof deck with elevator access

▪
Finishes of the roof deck shall be of the following:

•
Stone or similar pavers on pedestals

•
Metal trellis surrounding HVAC equipment

•
Planter boxes as indicated on drawing plan

•
Metal railing with glass panels

Building Lobby & Common Areas
▪
Common area finishes shall of the following:

•
Exposed concrete walls, columns and beams

•
Cleaned concrete floors; ; floor areas for lobby, stair treads and ground floor
corridor will be sealed

•
Exposed floor joists on the underside of the floor 2

•
Exposed electrical conduits and HVAC equipment

•
Exposed fire sprinkler lines

▪
Tenant shall have the right to improve the finishes and lighting in the Common
Areas, subject to Landlord’s approval

Environmental
▪
All hazardous materials (inclusive of asbestos and lead-based paint) removed or
otherwise remediated to Tenant’s reasonable satisfaction

EXHIBIT C
Signage

[a106astroleaseimage2.gif]
EXHIBIT D
Rules and Regulations

1.Sidewalks, halls, passages, exits, entrances, elevators, escalators and
stairways shall not be obstructed by tenants or used by them for any purpose
other than for ingress to and egress from their respective premises. The halls,
passages, exits, entrances, elevators, escalators and stairways 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, would be prejudicial to the safety, character, reputation
and interests of the Building and its tenants.
2.    No sign, placard, picture, name, advertisement or notice, visible from the
exterior of leased premises shall be inscribed, painted, affixed or otherwise
displayed by any tenant either on its premises or any part of the Building
without the prior written consent of Landlord, and Landlord shall have the right
to remove any such sign, placard, picture, name, advertisement, or notice
without notice to and at the expense of the tenant.
3.    If Landlord shall have given such consent to any tenant at any time,
whether before or after the execution of the Lease, such consent shall in no way
operate as a waiver or release of any of the provisions hereof or of such Lease,
and shall be deemed to relate only to the particular sign, placard, picture,
name, advertisement or notice so consented to by Landlord and shall not be
construed as dispensing with the necessity of obtaining the specific written
consent of Landlord with respect to any other such sign, placard, picture, name,
advertisement or notice.
4.    The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of tenants only and
Landlord reserves the right to exclude any other names therefrom. Landlord
reserves the right to restrict the amount of directory space utilized by Tenant.
5.    No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with, any window on any premises without the prior written
consent of Landlord. In any event, with the prior written consent of Landlord,
all such items shall be installed inside of Landlord's standard draperies and
shall in no way be visible from the exterior of the Building. No articles shall
be placed or kept on the window sills so as to be visible from the exterior of
the Building.
6.    Landlord reserves the right to exclude from the Building between the hours
of 6:00 P.M. and 7:00 A.M. and at all hours on Saturdays, Sundays and Holidays
all persons who do not present a pass to the Building signed by Landlord.
Landlord will furnish passes to persons for whom any tenant requests the same in
writing. Each tenant shall be responsible for all persons for whom it requests
passes and shall be liable to Landlord for all acts of such persons.
7.    Landlord shall in no case be liable for damages for any error with regard
to the admission to or exclusion from the Building of any person.
8.    During any invasion, terrorist act, mob, riot, public excitement or other
circumstance rendering such action advisable in Landlord's opinion, Landlord
reserves the right to access to the Building by closing the doors, or otherwise,
for the safety of tenants and protection of the Building and property in the
Building.
9.    No tenant shall employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the premises unless otherwise agreed to by
Landlord in writing. Except with the written consent of Landlord, no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. No tenant shall cause any
unnecessary labor by reason of such tenant's carelessness or indifference in the
preservation of good order and cleanliness. Landlord shall in no way be
responsible to any tenant for any loss of property on the premises, however
occurring, or for any damage done to the property of any tenant by the janitor
or any other employee or any other person. Janitorial service shall include
ordinary dusting and cleaning by the janitor assigned to such work and shall not
include beating or cleaning of carpets or mgs or moving of furniture or other
special services. Janitorial service will not be furnished on nights when rooms
are occupied after 9:00 P.M. Window cleaning shall be done only by Landlord, and
at such intervals and such hours as Landlord shall deem appropriate.
10.    No tenant shall obtain for use upon its premises ice, drinking water,
food, beverage, towel or other similar services, or accept barbering or
bootblacking services in its premises, except from persons authorized by
Landlord, and at hours and under regulations fixed by Landlord.
11.    Each tenant shall see that the doors of its premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before the tenant or its employees
leave such premises, and that all utilities shall likewise be carefully shut
off, so as to prevent waste or damage, and for any default or carelessness the
Tenant shall make good all injuries sustained by other tenants or occupants of
the Building or Landlord. On multiple-tenancy floors all tenants shall keep the
door or doors to the Building corridors closed at all times except for ingress
and egress.
12.    No tenant shall alter any lock or install a new or additional lock or any
bolt on any door of its premises without the prior written consent of Landlord.
If Landlord shall give its consent, the tenant shall in each case furnish
Landlord with a key for any such lock.
13.    Upon the termination of its tenancy, Tenant shall deliver to Landlord all
keys to doors in the Building and the Premises.
14.    The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the tenant who, or whose employees or invitees, shall
have caused it.
15.    No tenant shall use or keep in its 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.
16.    No tenant shall use, keep (or permit to be used or kept in its premises)
any foul or noxious gas or substance or permit or suffer such premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations or
interfere in any way with other tenants or those having business therein.
17.    No cooking shall be done or permitted by any tenant on its premises,
except that the preparation of coffee, tea, hot chocolate and similar items for
tenants and their employees shall be permitted, nor shall such premises be used
for lodging.
18.    Except with the prior written consent of Landlord, no tenant shall sell,
or permit the sale, at retail of newspapers, magazines, periodicals, theater
tickets or any other goods or merchandise in or on any premises, nor shall any
tenant carry on, or permit or allow any employee or other person to carry on,
the business of stenography, typewriting or any similar business in or from any
premises for the service or accommodation of occupants of any other portion of
the Building, nor shall the premises of any tenant be used for the storage of
merchandise or for manufacturing of any kind, or the business of a public
barbershop, beauty parlor, or any business or activity other than that
specifically provided for in such tenant's lease.
19.    Landlord will direct electricians as to where and how telephone,
telegraph and electrical wires are to be introduced or installed. No boring or
cutting for wires will be allowed without the prior written consent of Landlord.
The location of telephones, call boxes and other office equipment affixed to all
premises shall be subject to the written approval of Landlord. All electrical
appliances must be grounded and must meet UL Label Standards.
20.    No tenant shall install any radio or television antenna, loudspeaker or
any other device on the exterior walls of the Building.
21.    No tenant shall lay linoleum, tile, carpet or any other floor covering so
that the same shall be affixed to the door of its premises in any manner except
as approved in writing by Landlord. The expense of repairing any damage
resulting from a violation of this rule or the removal of any floor covering
shall be borne by the tenant by whom, or by whose contractors, employees or
invitees, the damage shall have been caused.
22.    No furniture, freight, equipment, packages or merchandise will be
received in the Building or carried up or down the elevators, except between
such hours, through such entrances and in such elevators as shall be designated
by Landlord. Landlord reserves the right to require that moves be scheduled and
carried out during non- business hours of the Building. Landlord shall have the
right to prescribe the weight, size and position of all safes and other heavy
equipment brought into the Building. Safes or other heavy objects shall, if
considered necessary by Landlord, stand on wood strips of such thickness as is
necessary to properly distribute the weight thereof. 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 the Tenant.
23.    No tenant shall overload the floor of its premises or mark, or drive
nails, screw or drill into, the partitions, woodwork or plaster or in any way
deface such premises or any part thereof.
24.    There shall not be used in any space, or in the public areas of the
Building, either by any tenant or others, any hand trucks except those equipped
with rubber tires and side guards. No other vehicles of any kind shall be
brought by any tenant into or kept in or about any premises in the Building.
25.    Each tenant shall store all its trash and garbage within the interior of
its premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in the City
of San Francisco without violation of any law or ordinance governing such
disposal. All trash, garbage and refuse disposal shall be made only through
entryways and elevators provided for such purposes and at such times as Landlord
shall designate.
26.    Canvassing, soliciting, distribution of handbills and other written
materials and peddling in the Building are prohibited and each tenant shall
cooperate to prevent the same.
27.    Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and address of the Building.
28.    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.
29.    Except as otherwise restricted below or by Landlord, Tenant is permitted
to bring up to three (3) dogs onto the Premises provided such animals are not
kept, bred or raised for commercial purposes. Landlord permission is required to
bring any other type of pet into the Building. No pet shall be allowed in the
Building that the Landlord determines to be a threat to the safety, welfare,
quiet comfort or enjoyment of other Tenants and invitees. If Landlord determines
that a pet is a nuisance, annoyance or threat, the pet will be required to be
removed from the Building. Pet owners agree to comply with the following
requirements for pets brought into the Building:
a.The California State Health and Safety Code.
b.All applicable Laws such as but not limited to licensing, vaccinations,
leashing, sanitation, etc.
c.All dogs must be spayed or neutered. No puppies (four (4) months or less) are
allowed, and no adult dog, fully grown, shall exceed forty (40) pounds.
d.All dogs must be restrained on a leash at all times in Common Areas and under
no circumstances are they to be allowed to run free in the Building or on the
roof deck.
e.Any pet found off-leash in the Common Areas or the roof deck may be removed to
a pound or animal shelter by calling the appropriate authorities.
f.No pets are allowed in the common shower rooms at any time.
g.No pets are allowed in the elevators at any time. The pet and its
handler/owner may only take the stairs.
h.In no event shall any pit bull, rottweiler, doberman pinscher, mastiff,
canaria press, or any other dog breed known as a "fighting breed" or mix thereof
be allowed in the Building.
i.The Common Areas (including, but not limited to, hallways, stairwells,
elevators, patios, decks, balconies, courtyards, the northern portion of the
roof deck, roof, sidewalks, and landscaping beds) and the southern portion of
the roof deck shall not be used for relieving of pets’ bodily functions. Any
accidental defecation must immediately be removed and disposed of by the pet’s
owner and the area cleaned and sanitized. The cost of cleaning and deodorizing
Common Areas due to pet “accidents” is the pet owner’s obligation.
j.Within five (5) business days following Tenant's receipt of Landlord's written
request therefor, Tenant shall provide Landlord with reasonable satisfactory
evidence showing that all current vaccinations have been received by each of the
pets within the Premises.
k.No pets shall be brought into the Building if any such pet is ill or contracts
a disease that could potentially threaten the health or wellbeing of any tenant
or occupant of the Building. Notwithstanding any provision to the contrary
contained in this Amendment, Landlord shall have the unilateral right at any
time to rescind Tenant's right to have pets in the Building, if in Landlord's
reasonable judgment, any such pets are found to be a substantial nuisance (for
purposes hereof, a pet may found to be a “substantial nuisance” if such pet
defecates in the Common Areas, damages or destroys property at the Building or
exhibits threatening behavior).
l.Damages to the Common Areas by pets shall be billed to the Tenant at the
current replacement and/or repair cost, plus reasonable documented
administrative expenses, not to exceed $1,000 per occurrence. The expense limit
does not apply to liability for injury to persons caused by pets.
m.Pet owners are responsible for controlling the noise of their pets. Pet owners
are responsible for any personal injury or property damage caused by their pets.
n.Pets shall not be left unattended in the Premises at any time, or in any of
the Common Areas of the Building.
o.Tenants shall not allow any visitor to bring a pet into the building. This
rule does not apply to any animal used by a tenant or visitor that is needed as
a reasonable accommodation for the tenant or visitor’s disability.
p.In accordance with applicable Laws, service animals that assist persons with
disabilities are considered to be auxiliary aids and are exempt from the pet
rules (d) through (h) noted herein. Examples include guide dogs for persons with
vision impairments, hearing dogs for persons with hearing impairments, and
emotional assistance animals for persons with chronic mental illness.
a.The feeding of stray animals and wild birds at the Building is strictly
prohibited as they pose a health hazard and are a nuisance to the other tenants
in the Building.
30.    Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all tenants of the Building.
31.    These Rules and Regulations may be changed from time to time in a
reasonable and non-discriminatory manner, as Landlord may deem reasonably
appropriate, and are in addition to, and shall not be construed to in any way
modify, alter or amend, in whole or in part, the terns, covenants and conditions
of the Lease.
ATTACHMENT A
Exclusions from term “operating expenses”
(a)    costs, including marketing costs, legal fees, space planners’ fees,
advertising and promotional expenses, and brokerage fees incurred in connection
with the original construction or development, or reconstruction or
redevelopment, or original or future leasing of the Building, and costs,
including permit, license and inspection costs, incurred with respect to the
installation of tenant improvements made for new tenants in the Building or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the Building;
(b)    depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and alterations,
and costs of capital improvements and equipment, but not excluding depreciation
expenses for the amortization of the cost of capital improvements for reducing
operating expenses (but only to the extent of actual reductions) or causing the
Building to comply with applicable legal requirements enacted after the
Commencement Date (which amortization shall be over the useful life of such
capital improvement);
(c)    costs for which is reimbursed (or entitled to reimbursement) by any
tenant or occupant of the Building or by insurance by its carrier or any
tenant’s carrier or by anyone else, and electric power costs for which any
tenant directly contracts with the local public service company;
(d)    any bad debt loss, rent loss, or reserves for bad debts or rent loss;
(e)    the wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Building unless such wages and benefits
are prorated to reflect time spent on operating and managing the Building
(f)    costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings or other objects of art;
(g)    any costs expressly excluded from operating expenses elsewhere in this
Lease;
(h)    costs arising from the negligence or willful misconduct of Landlord or
its agents, employees, vendors, contractors, or providers of materials or
services;
(i)    costs incurred to comply with laws relating to the removal of Hazardous
Material (as defined in the Lease) from the Building;
(j)    costs arising from Landlord’s charitable or political contributions;
(k)    advertising and promotional expenditures (whether for existing tenants or
in order to attract new tenants), and costs of acquisition and maintenance of
signs in or on the Building to identify the owner of the Building or other
tenants;
(l)    marketing costs, including leasing commissions, attorneys’ fees (in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments), space planning costs, and
other costs and expenses incurred in connection with the lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants or
other occupants of the Building;
(m)    costs, including permit, license and inspection costs, incurred with
respect to the installation of tenants’ improvements made for tenants in the
Building incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants in the Building;
(n)    expenses in connection with services or other benefits for which Tenant
is charged directly;
(o)    costs incurred by Landlord due to the violation by Landlord or any tenant
of the terms and conditions of any lease of space in the Building or any
applicable laws;
(p)    costs for services normally provided by a property manager where
operating expenses already include a management fee to such property manager;
(q)    costs arising from latent defects of any tenant improvements, or repair
thereof;
(r)    costs (including in connection therewith all attorneys’ fees and costs of
settlements, judgments and payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or actual claims,
litigation or arbitration pertaining to Landlord and/or the Building;
(s)    the cost of making any repairs, replacements or modifications to the
Building that are required by any federal, state, and local laws, ordinances,
rules and regulations, court orders, governmental directives, governmental
orders and interpretations of the foregoing (“Applicable Laws”) in effect as of,
and as interpreted and enforced by governmental authority having jurisdiction or
responsibility for such law as of, the Commencement Date, including without
limitation the ADA and any similar state or local law;
(t)    expenses in connection with services or benefits of a type which are not
provided to Tenant but which are provided to other tenants or occupants of the
Building;
(u)    rental under any ground or underlying lease;
(v)    amounts paid to subsidiaries or other affiliates of Landlord (i.e.,
persons or companies controlled by, under common control with, or which control,
Landlord) for services on or to the Land, the Building or the Premises (or any
portion thereof), to the extent only that the costs of such services exceed
competitive costs of such services were they not so rendered by a subsidiary or
other affiliate of Landlord; and
(w)    costs associated with the operation of the business of the partnership or
entity which constitutes Landlord, or the operation of any parent, subsidiary or
affiliate of Landlord, as the same are distinguished from the costs of operation
of the Building, including without limitation costs of any disputes between
Landlord and its employees or disputes of Landlord with third-party building
management.
(x)    Attorneys' fees, accountants' fees, arbitration fees and other costs and
expenses incurred in connection with (i) any audits conducted by any past or
present tenant; (ii) any existing or prospective leasing, lease renewal, lease
termination, lease modification or other negotiations; (iii) disputes with
employees, present or prospective tenants or other occupants of the Building, or
their assignees or subtenants, lenders or ground landlords; or (iv) the
violation or alleged violation by Landlord or any other tenant of the Building
of the terms and conditions of any lease of space on the Building.
ATTACHMENT B
Form of Estoppel Certificate

ESTOPPEL CERTIFICATE

_____________________, 20__
_________________________
_________________________
_________________________

Re: 340 Bryant Street, San Francisco, CA

Gentlemen:
You and your successors, assigns, and designees (collectively, “Buyer”) are
hereby advised that the undersigned is the tenant (“Tenant”) and present
occupant of the ground floor of 340 Bryant Street, Sab Francisco, California
(the “Premises”). Tenant has been advised that you intend to [purchase /
finance] the real property and improvements of which the Premises are a part
(the “Property”). As an inducement to [Buyer’s purchase / Lender’s funding] of
the Property, Tenant hereby certifies and warrants as follows:
1.    Tenant is leasing the Premises under the provisions of a lease agreement
dated _____________________________________ from
__________________________________ (“Landlord”), as amended by
_____________________________________ (collectively the “Lease”). Attached
hereto is a true, complete and correct copy of the Lease, which contains all of
the understandings and agreements, whether oral or written, between Landlord and
Tenant with respect to the Premises. The Lease has not been amended or modified,
either verbally or in writing, except as attached hereto.
2.    The commencement date of the term of the Lease is _______________________,
and Tenant’s obligation to pay rent has commenced. The expiration date of the
Lease is _______________________________, and if the expiration date has already
occurred, the Lease is now on a month-to-month basis. The Premises are deemed to
contain ________ square feet of rentable area.
3.    (a)    The Lease provides for monthly base rent. Monthly base rent is
currently payable in the amount of $_____________________, and such monthly base
rent commenced to accrue on __________, _____;
(b)    The Lease provides for Tenant to pay a pro rata share of operating
expenses and direct taxes over a Base Year and direct expenses for utilities,
janitorial and refuse removal. Additional charges presently payable under the
terms of the Lease are: (if none, insert “None”): ____________, and have been
paid through ___________. Tenant is currently paying $_____________ per month
for the foregoing expenses.
(c)    No rent has been paid by Tenant in advance under the Lease except for the
monthly rent that became due for the current month, and rent and all other
amounts payable by Tenant under the Lease are fully paid through _____________.
4.    The Lease contains no first right of refusal, option to purchase, option
to extend, option to terminate, or exclusive business rights, except as follows:
One option to extend for 5 years, subject to Section 7 of the Lease.        .
5.    Landlord is holding a security deposit of $______________________. The
undersigned shall not look to you, your successors or assigns for the return or
credit of the security deposit or any prepaid rent unless said monies have been
so designated and transferred to you.
6.    Tenant has accepted possession of the Premises pursuant to the terms of
the Lease, and the Lease is in full force and effect. Tenant has not sublet any
portion of the Premises, and Tenant has not assigned its interest in the Lease,
except as follows: __________. To Tenant’s actual knowledge, Landlord has
fulfilled all of its duties and obligations under the Lease, and neither Tenant
nor Landlord is in default under the terms, covenants or obligations of the
Lease. To Tenant’s actual knowledge, Tenant has no offsets, counterclaims or
credits against rentals, nor does Tenant possess or assert any claims against
Landlord for any failure of performance of any of the terms of the Lease, except
as follows: __________. The improvements and space required to be furnished
according to the Lease have been completed in all respects, except as follows:
__________. Landlord has no obligation to construct, refurbish, install,
rehabilitate or renovate any existing or additional improvements in the Premises
or in the Property, except as follows: __________.        .
7.    Tenant has no notice of a prior assignment, hypothecation or pledge of
rents under the Lease or of the Lease, except as follows: __________.
8.    There has not been filed by or against Tenant any petition in bankruptcy,
voluntary or otherwise, or an assignment for the benefit of creditors, any
petition seeking reorganization or arrangement under the bankruptcy laws of the
United States or of any State, or any other action brought under such bankruptcy
laws.
9.    Tenant acknowledges that all of Tenant’s covenants and representations
contained in this Estoppel Certificate are made with the understanding that
[Buyer / Lender] shall rely on them in connection with its purchase of the
Property.
10.    Upon Buyer’s notice of closing its acquisition of the Property, Tenant
shall make all rental and other payments and send all other notices under the
Lease to Buyer at:
Attn:     
or to such other entity or address as Landlord shall direct in writing.
Dated: _________________, ____
        
(Name of Tenant)
        
(Signature)
ATTACHMENT C
Form of Subordination, Non-Disturbance and Attornment Agreement

SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”)
made as of the ___ day of ____________, 20__, by and among
______________________________, having its offices at ______________(“Lender”),
____________________, having an office at ______________________ (“Tenant”) and
________________-, having an office at ____________________ (“Landlord”).

WITNESSETH:

WHEREAS, Lender has agreed to make a loan (the “Loan”) to Landlord:

WHEREAS, the Loan will be evidenced by a promissory note (the “Note”) made by
Landlord to order of Lender and will be secured by, among other things, a deed
of trust and security agreement (the “Deed of Trust”) of even date herewith made
by Landlord to Lender covering the land (the “Land”) described on Schedule A
hereto and all improvements (the “Improvements”) now or hereafter located on the
land (the Land and the Improvements hereinafter collectively referred to as the
“Trust Property”); and

WHEREAS, by a lease dated as of [______________] (which lease, as the same may
have been amended and supplemented, is hereinafter called the “Lease”), Landlord
leased to Tenant approximately [__________] square feet of space located in the
Improvements (the “Premises”); and

WHEREAS, the parties hereto desire to make the Lease subject and subordinate to
the Deed of Trust.

NOW, THEREFORE, the parties hereto, in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, hereby agree as follows:

1.Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Lease.

2.The Lease, as the same may hereafter be modified, amended or extended, and all
of Tenant’s right, title and interest in and to the Premises and all rights,
remedies and options of Tenant under the Lease, are and shall be unconditionally
subject and subordinate to the Deed of Trust and the lien thereof, to all the
terms, conditions and provisions of the Deed of Trust, to each and every advance
made or hereafter made under the Deed of Trust, and to all renewals,
modifications, consolidations, replacements, substitutions and extensions of the
Deed of Trust, so that at all times the Deed of Trust shall be and remain a lien
on the Trust property prior and superior to the Lease for all purposes;
provided, however, and Lender agrees, that so long as no default of Tenant has
occurred under the Lease that remains uncured beyond applicable notice and cure
periods; then, and in such event Tenant’s leasehold estate under the Lease shall
not be terminated, Tenant’s possession of the Premises shall not be disturbed by
Lender and Lender will recognize this Lease and accept the attornment of Tenant.
Notwithstanding the foregoing, Lender shall not in any event have any liability
for any default by Landlord under the Lease occurring prior to the date on which
Lender shall have succeeded to the rights of Landlord under the Lease (including
without limitation any liability under any warranty of construction).

3.Notwithstanding anything to the contrary contained in the Lease, Tenant hereby
agrees that in the event of any act, omission or default by Landlord or
Landlord’s agents, employees, contractors, licensees or invitees which would
give Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, or to
reduce the rent payable thereunder or credit or offset any amounts against
future rents payable thereunder (excluding Tenant’s remedies under Sections 7,
9.3, and 9.4 of the Lease), Tenant will not exercise any such right (i) until it
has given written notice of such act, omission or default to Lender by
delivering notice of such act, omission or default, by certified or registered
mail, addressed to Lender at Lender’s address as given hereby or at the last
address of Lender furnished to Tenant in writing, and (ii) until a period of not
less than sixty (60) days for remedying such act, omission or default shall have
elapsed following the giving of such notice. Notwithstanding the foregoing, in
the case of any default of Landlord which cannot be cured within such sixty (60)
day period, if Lender shall within such period comment in writing and proceed
promptly to cure the same (including such time as may be necessary to acquire
possession of the Premises if possession is necessary to effect such cure) and
thereafter shall prosecute the curing of such default with diligence, then the
time within which such default may be cured by Lender shall be extended for such
period as may be necessary to complete the curing of the same with diligence.
Tenant shall also give a copy of any such notice hereunder to any successor to
lender’s interest under the Deed of Trust, provided that lender or such
successor notifies Tenant of the name and address of the party Tenant is to
notify. Lender’s cure of Landlord’s default shall not be considered an
assumption by Lender of Landlord’s other obligations under the Lease. Unless
Lender otherwise agrees in writing, Landlord shall remain solely liable to
perform Landlord’s obligations under the Lease (but only to the extent required
by and subject to the limitation included with the Lease), both before and after
Lender’s exercise of any right or remedy under this Agreement; provided,
however, the foregoing exemption of Lender shall not apply after Lender has
required Tenant to attorn to Lender. If Lender or any successor or assign become
obligated to perform as Landlord under the Lease, such person or entity will be
released from those obligations when such person or entity assigns, sells or
otherwise transfers its interest in the premises or the Trust Property.

4.Without limitation of any of the provisions of the Lease, in the event that,
by reason of any default under the Deed of Trust on the part of Landlord, Lender
or its successors or assigns shall succeed to the interest of Landlord or any
successor to Landlord, then subject to the provisions of this Agreement
including, without limitation, Paragraph 1, above, the Lease shall nevertheless
continue in full force and effect and Tenant shall and does hereby agree to
attorn to and accept Lender or its successors or assigns and to recognize Lender
or its successors or assigns as its Landlord under the Lease for the then
remaining balance of the term thereof, and upon request of Lender or its
successors or assigns, Tenant shall execute and deliver to Lender or its
successors or assigns an agreement of attornment satisfactory to Lender or such
successor or assign.

5.If Lender or its successors or assigns shall succeed to the interest of
Landlord or any successor to Landlord, Lender or its successors or assigns shall
recognize Tenant and its rights under this Lease and shall assume the
obligations of Landlord thereunder, provided that, in no event shall Lender or
its successor or assigns have any liability for any act or omission of any prior
landlord under the Lease which occurs prior to the date Lender or such successor
or assign shall succeed to the rights of Landlord under the Lease, nor any
liability for claims, offsets or defenses which Tenant might have had against
Landlord and in any event Lender and its successors or assigns shall have no
personal liability as successor to Landlord and Tenant shall look only to the
estate and property of Lender or its successors or assigns in the Land and the
Improvements for the satisfaction of Tenant’s remedies for the collection of a
judgment (or other judicial process) requiring the payment of money in the event
of any default by Lender or its successors or assigns as Landlord under the
Lease, and no other property or assets of Lender or its successors or assigns
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant’s remedies under or with respect to the Lease, the
relationship of Landlord and Tenant thereunder or Tenant’s use or occupancy of
the Premises.

6.Tenant agrees that no prepayment of rent or additional rent due under the
Lease of more than one month in advance (other than the Prepaid Rent, as defined
in the Special Lease Terms of the Lease), and no amendment, modification,
surrender or cancellation of the Lease, shall be binding upon or as against
Lender, as holder of the Deed of Trust, and as Landlord under the Lease if it
succeeds to that position, unless consented to in writing by Lender. In
addition, and notwithstanding anything to the contrary set forth in this
Agreement, Tenant agrees that, except for the completion of Landlord’s Work (as
described in Exhibit B to the Lease), the Tenant Improvement Allowance set forth
in Section 9.3 of the Lease, and the Test-Fit Allowance set forth in Section 9.4
of the Lease, Lender, as holder of the Deed of Trust, and as landlord under the
Lease if it succeeds to that position, shall in no event have any liability for
the performance or completion of any initial work or installations or for any
loan or contribution or rent concession towards initial work, which are required
to be made by Landlord (A) under the Lease or under any related Lease documents
or (B) for any space which may hereafter become part of said Premises, and any
such requirement shall be inoperative in the event Lender succeeds to the
position of Landlord prior to the completion or performance thereof. Tenant
further agrees with Lender that Tenant will not voluntarily subordinate the
Lease to any lien or encumbrance without Lender’s prior written consent.

7.Tenant shall cause Lender to be named as an additional insured in policies of
insurance required to be carried by Tenant under Section 10 of the Lease.

8.Landlord represents and warrants that the Lease was duly executed by Landlord
and all consents, resolutions or other approvals required for Landlord to
execute the Lease were obtained. Tenant represents and warrants that the Lease
was duly executed by Tenant and all consents, resolutions or other approvals
required for Tenant to execute the Lease were obtained.

9.Tenant further represents and warrants to Lender that as of the date hereof
(i) Tenant is the owner and holder of Tenant’s interest under the Lease, (ii)
the Lease has not been modified or amended, (iii) the Lease is in full force and
effect, (iv) the Premises have been completed, (v) to Tenant’s knowledge,
neither Tenant nor Landlord is in default under any of the terms, covenants or
provisions of the Lease and Tenant to its actual knowledge knows of no event
which but for the passage of time or the giving of notice or both would
constitute an event of default by Tenant or Landlord under the Lease, (vi)
neither Tenant nor Landlord has commenced any action or given or received any
notice for the purpose of terminating the Lease, (vii) all rents, additional
rents and other sums due and payable under the Lease have been paid in full and
no rents, additional rents or other sums payable under the Lease have been paid
for more than one (1) month in advance of the due dates thereof; provided,
however, that Landlord acknowledges that Tenant has paid the first month of
monthly rent in advance, and (viii) to Tenant’s actual knowledge there are no
offsets or defenses to the payment of the rents, additional rents, or other sums
payable under the Lease.

10.Tenant and Landlord shall provide a document similar to this to any Lender
making a loan secured by property including the Premises the proceeds of which
loan are used to repay the loan secured by the Deed of Trust in whole or part as
may be agreed to by such lender and subject to such reasonable modifications as
may be requested by such lender.

11.In the event of foreclosure of the Deed of Trust (by judicial process, power
of sale or otherwise) or conveyance in lieu of foreclosure, which foreclosure,
power of sale, or conveyance occurs prior to the expiration date of the Lease,
including any extensions and renewals of the Lease now provided thereunder, and
so long as Tenant is not in default under any of the terms, covenants and
conditions of the Lease beyond any applicable grace or cure period, Lender
agrees on behalf of itself, its successors and assigns, and on behalf of any
purchaser at such foreclosure ("Purchaser") that Tenant shall not be disturbed
in the quiet and peaceful possession of the Premises. Tenant acknowledges that
Lender has a claim superior to Tenant's claim for insurance proceeds, if any,
received with respect to the Improvements, the Land, or the Trust Property.

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

13.All remedies which Lender may have against Landlord provided herein, if any,
are cumulative and shall be in addition to any and all other rights and remedies
provided by law and by other agreements between Lender and Landlord or others.
If any party consists of multiple individuals or entities, each of same shall be
jointly and severally liable for the obligations of such party hereunder.

14.The reasonable cost of attorneys’ fees and disbursements for any legal action
or arbitration between or among the parties arising out of any dispute or
litigation relating to enforcement of this Agreement shall be borne by the
party(s) against whom a final decision is rendered.

15.All notices to be given under this Agreement shall be in writing and shall be
deemed served upon receipt by the addressee if served personally or, if mailed,
upon the first to occur of receipt or the refusal of delivery as shown on a
return receipt, after deposit in the United States Postal Service certified
mail, postage prepaid, addressed to the address of Landlord, Tenant or Lender
appearing below, or, if sent by telegram, when delivered by or refused upon
attempted delivery by the telegraph office. Such addresses may be changed by
notice given in the same manner. If any party consists of multiple individuals
or entities, then notice to any one of same shall be deemed notice to such
party.

Lender’s Address:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention:___________________________________

With a copy to:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention: ___________________________________

Tenant’s Address:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention: ___________________________________

With a copy to:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention: ___________________________________

Landlord’s Address:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention: ___________________________________

With a copy to:

___________________________________________
___________________________________________
___________________________________________
___________________________________________
Attention: ___________________________________

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

17.    This Agreement shall apply to, bind and inure to the benefit of the
parties hereto and their respective successors and assigns. As used herein
“Lender” shall include any subsequent holder of the Deed of Trust and any
purchaser at any foreclosure or trustee’s sale.

18.    Landlord, Tenant and Lender agree that unless Lender shall otherwise
consent in writing, Landlord’s estate in and to the Trust Property and the
leasehold estate created by the Lease shall not merge but shall remain separate
and distinct, notwithstanding the union of said estates either in Landlord or
Tenant or any third party by purchase, assignment or otherwise.

19.    Tenant acknowledges that Landlord has assigned to Lender its right, title
and interest in the Lease and to the rents, issues and profits of the Trust
Property and the Property pursuant to the Deed of Trust, and that Landlord has
been granted the license to collect such rents provided no Event of Default has
occurred under, and as defined in, the Deed of Trust. Tenant agrees to pay all
rents and other amounts due under the Lease directly to Lender upon receipt of
written demand by Lender, and Landlord hereby consents thereto. The assignment
of the Lease to Lender, or the collection of rents by Lender pursuant to such
assignment, shall not obligate Lender to perform Landlord’s obligations under
the Lease.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

[LENDER]

By: ____________________________________

Its: ____________________________________

[LANDLORD]

By: ____________________________________

Its: ____________________________________

[TENANT]

By: ____________________________________

Its: ____________________________________

[Add Acknowledgments]

ATTACHMENT D
DISABILITY ACCESS OBLIGATIONS UNDER
SAN FRANCISCO ADMINISTRATIVE CODE CHAPTER 38

Before Tenant enters into the Lease with Landlord, for the following property
340 Bryant Street, San Francisco, California (the “Property”), please be aware
of the following important information about the Lease:
Tenant May Be Held Liable for Disability Access Violations on the Property. Even
though Tenant is not the owner of the Property, Tenant, 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. Tenant may wish to consult with an attorney prior to
entering this Lease to make sure that Tenant understands its obligations under
Federal and State disability access laws. Landlord must provide Tenant with a
copy of the Small Business Commission Access Information Notice under Section
38.6 of the Administrative Code in Tenant’s requested language (e.g., English,
Spanish, Chinese). For more information about disability access laws applicable
to small businesses, Tenant 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 City law, the Lease must include a
provision in which Tenant and Landlord agree upon each of their respective
obligations and liabilities for making and paying for required disability access
improvements on the leased Property. [See Section 6 of the Lease.] The Lease
must also require Tenant and 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. [See Section 6 of
the Lease.] Tenant may wish to review those provisions with Tenant’s attorney
prior to entering this Lease to make sure that Tenant understands its
obligations under the Lease.
[Signature Page Follows]
By signing below Tenant confirms that it has read and understood this Disability
Access Obligations Notice.
“Landlord”:
140 Partners, L.P.,

a California limited partnership

By Ou Interests, Inc., dba Group I, general partner
By:                        
Joy Ou, Its President

Execution Date: ___________________, 2015
“Tenant”:
Skullcandy, Inc.,
a Delaware corporation

By:                        
Name:                            
Its:                                    
Execution Date: ___________________, 2015