CITY OF SAN MATEO. Administrative Report

Transcription

1 CITY OF SAN MATEO City Hall 330 W. 20th Avenue San Mateo, CA Administrative Report Agenda Number: 6., Status: Consent Calendar TO: FROM: PREPARED BY: City Council Larry A. Patterson, City Manager City Manager s Office MEETING DATE: Monday, March 16, 2015 SUBJECT: st Avenue - Lease Agreement RECOMMENDATION Adopt a Resolution to approve the use of an alternative purchasing method to approve the lease agreement with Redkix for the Transit Center property at st Avenue in the amount $129,964 for two years and authorize the City Manager to execute the agreement. BACKGROUND The City leases and operates eight commercial spaces at the Main Street Garage and Transit Center. The overall objective for leasing out these spaces is to secure strong tenants who are compatible with the downtown and can provide products or services that will benefit downtown patrons. Staff is seeking an exception to Municipal Code section (b) which requires the leasing of City real property to be subject to the bid provisions of the Council Award Procedure or the Manager Award Procedure as set forth in Chapter 3.60 since this lease is over $100,000. Municipal Code section (b) allows for an exception where calling for bids would be impracticable since the City marketed the property through our Property Manager, Capital Realty. The proposed tenant, Redkix, is an internet-based startup company which is developing an , calendaring and contact platform. From a floorplan and space utilization standpoint, Redkix will be similar to the former startup tenant, AdsWizz. This lease is a triple-net lease where the tenant covers their utilities, taxes and other such expenses. The tenant is directly responsible for tenant improvements (including signage), equipment maintenance and pro-rata share of the comment area maintenance expenses. This lease is for approximately 1,670 square feet of retail/office space with a term of two years. The initial lease base rent starts at $3.00 per square foot and increases 3% annually. BUDGET IMPACT The agreement would generate approximately $129,964 to the City in revenues over the next two years. Tenant revenue covers the City/Landlord expenses for operating and maintaining these spaces and provides funding for facilities improvement at the Main Street Garage and Transit Center. Currently, the combined gross annual income from all eight of the leased tenant spaces is approximately $286,000. ENVIRONMENTAL DETERMINATION The project is Categorically Exempt from further environmental review (Guidelines Section Class I Existing Facilities ) in that it is a lease of an existing space in an existing building for a use permitted by the General Plan and Zoning Code in this location. CITY OF SAN MATEO Page 1 of 2 Printed on 3/9/2015 powered by Legistar

2 Agenda Number: 6., Status: Consent Calendar NOTICE PROVIDED All meeting noticing requirements were met. ATTACHMENTS 1 - Proposed Resolution 2 - Lease Agreement 3 - Floor Plan 4 - Letter of Intent STAFF CONTACT Marcus Clarke, Economic Development Manager Mclarke@cityofsanmateo.org (650) Vivian Ng, Administrative Technician ng@cityofsanmateo.org (650) CITY OF SAN MATEO Page 2 of 2 Printed on 3/9/2015 powered by Legistar

3 CITY OF SAN MATEO RESOLUTION NO. (2015) APPROVING THE LEASE AGREEMENT WITH REDKIX, INC., FOR COMMERCIAL SPACE AT 385 FIRST AVENUE (TRANSIT CENTER) WHEREAS, the City leases and operates commercial spaces at the Main Street garage and the Transit Center with the overall objective to lease the spaces to strong tenants compatible with and providing products, services or benefits to downtown patrons; and WHEREAS, the property was marketed through the City s broker who negotiated terms that best benefit the City with the proposed tenant, Redkix, an internet- startup, who agreed to a two-year term, starting at $3.00 per square foot, increasing by 3% annually, for an estimated total of $128,160 in revenues; and WHEREAS, in accordance with Municipal Code section (b) agreements may be awarded without competitive bids if calling for bids would be impracticable, unavailing or impossible and the City Council sets forth findings designating the reasons; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA, HEREBY FINDS and RESOLVES that: 1. Environmental Review. This project is categorically exempt from further environmental review (California Environmental Quality At Guidelines section Class I Existing Facilities ) in that it is a lease of an existing space in an existing building for a use permitted by the General Plan and Zoning Code in this location. 2. In accordance with Municipal Code section (b), calling for bids would be impracticable and the method used is in the best interest of the City, because marketing the property through the City s broker provided lease agreement terms that meet the City s objectives and best benefit the City. 3. The Lease Agreement with Redkix, Inc., for retail/office space at the 385 First Avenue (the Transit Center), is approved, subject to the terms summarized above and fully detailed in the accompanying Administrative Report and its attachments. 4. The City Manager is authorized to execute the Lease Agreement in substantially the form submitted, on behalf of the City. C:\Users\GRANIC~1\AppData\Local\Temp\BCL Technologies\easyPDF 7\@BCL@F00527CC\@BCL@F00527CC.docx

4 Date (For reference only): Date of the last party to sign City of San Mateo ("Landlord") and Redkix, Inc., a Delaware Corporation ("Tenant") agree as follows: 1. PROPERTY: Landlord rents to Tenant and Tenant rents from Landlord, the real property and improvements shown in Exhibit A and is approximately 1,670 square feet at: st Avenue, San Mateo, CA (the Premises ). 2. BASE RENT: Tenant agrees to pay a monthly Base Rent ( Base Rent ) at the rate of $5, per month, for the first 12 months of the agreement. Commencing with the 13th month, and upon expiration of each 12 months thereafter, Base Rent shall be increased annually by 3%. However, in no event will an annual rent increase exceed 6%. If the CPI is no longer published, then the adjustment to Base Rent shall be based on an alternate index that most closely reflects the CPI. 3. RENT: A. Definition: "Rent" shall mean all monetary obligations of Tenant to Landlord under the terms of this agreement, except security deposit. B. Payment: Rent shall be paid to Capital Realty Group at 1200 Howard Avenue Suite 204, Burlingame, CA or at any other location specified by Landlord in writing to Tenant. C. Timing: Rent is payable in advance on the 1st day of each calendar month, and is delinquent 10 days after that. 4. ADDITIONAL COMMON AREA MAINTENANCE CHARGES: In addition to Base Rent, which the parties intend to be absolutely net, Tenant agrees to pay its proportionate share of Landlord's estimated monthly property operating expenses, including but not limited to, common area maintenance, consolidated utility and service bills, insurance, and real estate taxes, (collectively CAM charges ), based on the ratio of the square footage of the Premises to the total square footage of the rentable space in the entire property. Tenant shall pay one-twelfth (1/12 th ) of the annual estimated CAM charges with each monthly Base Rent installment, based on the Landlord s estimation of the actual cost. The estimated CAM Charges are a fixed amount of $ per month and is considered additional rent. 5. TENANT OPERATING EXPENSES: Tenant agrees to pay for all utilities and services directly billed to Tenant including, but not limited to, sewer, which is based on a City supplied water meter to determine usage during the billing period, and water billing is completed in the CAM charges based, electricity, garbage, and telephone. Tenant shall be responsible and directly pay for all other charges not covered in CAM charges including, but not limited to, City permit fees, fees for any regulatory licenses or inspections, or other governmental charges such as unsecured business property tax, possessory interest tax, or ABC permits. The property interests created by this Lease may be subject to property taxation and Tenant, in whom the possessory interest is vested, will be responsible for the timely payment of any property taxes levied on such possessory interest. Tenant agrees to pay before delinquency all lawful taxes, assessments, fees or charges which at any time may be levied by the state, county, city or any tax or assessment levying body against the transfer of the leasehold interest hereunder upon recordation or otherwise, or upon any activity carried on under this Lease, any interest in this Lease or any possessory right which Tenant may have in or to the Premises by reason of its use or occupancy thereof or otherwise. 6. TERM: The term begins April 1, 2015 ("Commencement Date"), (Check A or B): X A. Lease: and is for a term of two (2) years and terminates on March 30, 2017 at 6:00 PM.

5 B. Month-To-Month: and continues as a month-to-month tenancy. Either party may terminate the tenancy by giving written notice to the other at least 30 days prior to the intended termination date, subject to any applicable local laws. Such notice may be given on any date. 7. SECURITY DEPOSIT: A. Tenant agrees to pay Landlord $5, as a security deposit. B. All or any portion of the security deposit may be used, as reasonably necessary, to: (i) cure Tenant's default in payment of Rent, late charges, non-sufficient funds ("NSF") fees, or other sums due; (ii) repair damage, excluding ordinary wear and tear, caused by Tenant or by a guest or licensee of Tenant; (iii) broom clean the Premises, if necessary, upon termination of tenancy; and (iv) cover any other unfulfilled obligation of Tenant. SECURITY DEPOSIT SHALL NOT BE USED BY TENANT IN LIEU OF PAYMENT OF LAST MONTH'S RENT. If all or any portion of the security deposit is used during tenancy, Tenant agrees to reinstate the total security deposit within 5 days after written notice is delivered to Tenant. Within 30 days after Landlord receives possession of the Premises, Landlord shall: (i) furnish Tenant an itemized statement indicating the amount of any security deposit received and the basis for its disposition, and (ii) return any remaining portion of security deposit to Tenant. C. No interest will be paid on security deposit, unless required by local ordinance. 8. PARKING: Parking is limited to such parking that exists on the Premises. 9. LATE CHARGE; INTEREST; NSF CHECKS: Tenant acknowledges that either late payment of Rent or issuance of a NSF check may cause Landlord to incur costs and expenses, the exact amount of which are extremely difficult and impractical to determine. These costs may include, but are not limited to, processing, enforcement and accounting expenses, and late charges imposed on Landlord. If any installment of Rent due from Tenant is not received by Landlord within 10 calendar days after date due, or if a check is returned NSF, Tenant shall pay to Landlord, respectively, $ as late charge, and $25.00 as a NSF fee, any of which shall be deemed additional Rent. Landlord and Tenant agree that these charges represent a fair and reasonable estimate of the costs Landlord may incur by reason of Tenant's late or NSF payment. Any late charge or NSF fee due shall be paid with the current installment of Rent. Landlord's acceptance of any late charge or NSF fee shall not constitute a waiver as to any default of Tenant. Landlord's right to collect a Late Charge or NSF fee shall not be deemed an extension of the date Rent is due under section 3, or prevent Landlord from exercising any other rights and remedies under this agreement, and as provided by law. 10. CONDITION OF PREMISES: Landlord warrants that the Premises has the following equipment and will be in the following condition on delivery: A. HVAC: Operational standard rooftop with one thermostat (or per code) with warranty and initial inspection. B. Amperage: Operational 200 amp panel, 3 phase, 4 wire, installed to code. C. Sprinklers: to code; minimum 4' off demising walls. D. Water: Operational water line for tenant hook-up in kitchen and bathroom E. Hazmats: Premises shall be delivered free of all asbestos, mold and hazardous materials. F. Other: Premises will be ADA compliant G. Refrigerator H. The carpeting will be professionally cleaned with the interior painted matching the existing paint. Tenant is responsible for the immediate notification to Landlord of maintenance, loss, damage or any other issues related to the Premises as indicated: Maintenance Issues, - Capital Realty Group Claims - First, Tenant insurer as stated in Lease Secondly, the City Attorney s Department,

6 All other questions City Manager s Office, ZONING AND LAND USE: Tenant accepts the Premises subject to all local, state and federal laws, regulations and ordinances ("Laws"). Landlord makes no representation or warranty that Premises are now or in the future will be suitable for Tenant's use. Tenant has made its own investigation regarding all applicable Laws. 12. USE: The Premises are for the sole use as specified: A. Use of the Premises: Office B. Exclusive Use: Tenant shall have exclusive use of the Premises 24 hours a day, for the uses allowed under this Article, except that Landlord shall be allowed entry on the Premises to conduct necessary maintenance and repairs within its responsibility and as otherwise allowed under this Lease, subject to 24 hours prior notice to Tenant. No other use is permitted without Landlord's prior written consent. If any use by Tenant causes an increase in the premium on Landlord's existing property insurance, Tenant shall pay for the increased cost. Tenant will comply with all Laws affecting its use of the Premises. 13. RULES/REGULATIONS: Tenant agrees to comply with all rules and regulations of Landlord (and, if applicable, Owner's Association) that are at any time posted on the Premises or delivered to Tenant. Tenant shall not, and shall ensure that guests and licensees of Tenant do not, disturb, annoy, endanger, or interfere with other tenants of the building or neighbors, or use the Premises for any unlawful purposes, including, but not limited to, using, manufacturing, selling, storing, or transporting illicit drugs or other contraband, or violate any law or ordinance, or committing a waste or nuisance on or about the Premises. Tenant shall operate the use upon the Premises during the same hours as competing similar uses. 14. MAINTENANCE: A. Tenant shall professionally maintain the interior of the Premises including heating, air conditioning, electrical, plumbing and water systems, if any. If Tenant fails to maintain the interior of the Premises including heating, air conditioning, electrical, plumbing and water systems, if any, Landlord may contract for or perform such maintenance, and charge Tenant for Landlord's cost. Tenant is responsible for vector control and will notify Landlord of all vector control occurring in the space. Tenant shall be responsible for all expenses for maintenance, repair, replacement and all other associated expenses for all interior tenant improvements in the Premises, including but not limited to floors, walls, and fixtures. B. Landlord shall maintain the roof, foundation, exterior walls, common areas and exterior of the Premises and keep glass, windows and doors in operable and safe condition. Landlord is responsible for the heating, ventilation and air conditioning system replacement on a predetermined replacement schedule. 15. LOSS OF KEY: Loss of any key will result in re-keying of lock with all costs to re-key paid for by Tenant. 16. ALTERATIONS: Tenant shall not make any alterations in or about the Premises, including installation of trade fixtures and signs, without Landlord's prior written consent, which shall not be unreasonably withheld. Any alterations to the Premises shall be done according to law and with required permits. Tenant shall give Landlord advance notice of the commencement date of any planned alteration, so that Landlord, at its option, may post a Notice of Non-Responsibility to prevent potential liens against Landlord's interest in the Premises. Landlord may also require Tenant to provide Landlord with lien releases from any contractor performing work on the Premises. Premises offered in an as is condition. Any Tenant alterations will be made at Tenant s expense. 17. GOVERNMENT IMPOSED ALTERATIONS: Any alterations required by law as a result of Tenant's use shall be Tenant's responsibility. Landlord shall be responsible for any other alterations required by Law. 18. ENTRY: Tenant shall make Premises available to Landlord or Landlord's agent for the purpose of entering to make inspections, necessary or agreed repairs, alterations, or improvements, or to supply necessary or agreed services, or to show Premises to prospective or actual purchasers, tenants, mortgagees, lenders, appraisers, or contractors. Landlord and Tenant agree that 24 hours notice (oral or written) shall be reasonable and sufficient

7 notice. In an emergency, Landlord or Landlord's representative may enter Premises at any time without prior notice. 190.SIGNS: Tenant authorizes Landlord to place a FOR LEASE sign on the Premises at any time, and a FOR LEASE sign on the Premises within the 30 day period preceding the termination of the agreement. Tenant may install signs in conformance with the City s sign ordinance. 20. SUBLETTING/ASSIGNMENT: Tenant shall not sublet or encumber all or any part of Premises, or assign or transfer this agreement or any interest in it, without the prior written consent of Landlord, which shall not be unreasonably withheld. Unless such consent is obtained, any subletting, assignment, transfer, or encumbrance of the Premises, agreement, or tenancy, by voluntary act of Tenant, operation of law, or otherwise, shall be null and void, and, at the option of Landlord, terminate this agreement. Any proposed sublessee, assignee, or transferee shall submit to Landlord an application and credit information for Landlord's approval, and, if approved, sign a separate written agreement with Landlord and Tenant. Any proceeds received from sublessee, assignee, or transferee above the Rent shall remain with Tenant. Landlord's consent to any one sublease, assignment, or transfer, shall not be construed as consent to any subsequent sublease, assignment, or transfer, and does not release Tenant of Tenant's obligation under this agreement. 21. POSSESSION: If Landlord is unable to deliver possession within 14 calendar days after the agreed Commencement Date, Tenant may terminate this agreement by giving written notice to Landlord, and shall be refunded all Rent and security deposit paid. 22. TENANT'S OBLIGATIONS UPON VACATING PREMISES: Upon termination of agreement, Tenant shall: (i) give Landlord all copies of all keys or opening devices to Premises, including restroom and any common areas; (ii) vacate Premises and surrender it to Landlord empty of all persons and personal property; (iii) vacate all parking and storage spaces; (iv) deliver Premises to Landlord in the same condition as delivered by Landlord; (v) clean Premises; and (vi) give written notice to Landlord of Tenant's forwarding address. All improvements installed by Tenant, with or without Landlord's consent, become the property of Landlord upon termination. Landlord may nevertheless require Tenant to remove any such improvement that did not exist at the time possession was made available to Tenant. 23. DEFAULT: A. Event of Default: The occurrence of any of the following shall constitute an Event of Default of this Lease by Tenant: (i) The failure of Tenant to pay or cause to be paid within 10 days after receipt of written notice from Landlord, any Rent or charges required by this Lease to be paid by Tenant; (ii) The abandonment of the Premises by Tenant; (iii) The failure of Tenant to do or cause to be done any act, other than payment of rent, monies, or charges, required by this Lease within 30 days after written notice thereof to Tenant or such longer period as may be reasonably required to complete such cure so long as such cure is promptly commenced within such 30-day period and thereafter diligently and continuously prosecuted to completion; (iv) Tenant causing, permitting, or suffering, without the prior written consent of Landlord, any act when this Lease requires Landlord s prior written consent or prohibits such act, and failing to cure such act within 10 days after written notice thereof to Tenant; or (v) Any act of bankruptcy caused, suffered, or permitted by Tenant that is not discharged within 60 days. For the purposes of this Lease, act of bankruptcy shall include any of the following: i) Any general assignment or general arrangement for the benefit of creditors; ii) The filing of any petition by or against Tenant to have Tenant adjudged a bankrupt; iii) The appointment of a trustee or receiver to take possession of substantially all of Tenant s assets; iv) The attachment, execution, or other judicial seizure of substantially all of Tenant s assets;

8 (vi) Failure of Tenant to open for business within one hundred twenty (120) days after the Commencement Date as defined in section 6 of this Lease; (vii) The failure of Tenant to maintain insurance coverage as defined in section 28 of this Lease. B. In the event of a Tenant default in the payment of any installment of Rent, which default continues for ten (10) days after notice to Tenant and demand in writing by Landlord to correct such default, or, in the event of any other default which continues for thirty (30) days after notice from Landlord to Tenant, or if Tenant abandons the Premises prior to the expiration of the Term provided for in this agreement, the Landlord may at his option pursue the Default Remedies contained in this Lease. C. Default Remedies: If an Event of Default shall occur and continue, then in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and bring suit against Tenant and recover as an award in such suit the following: (i) the worth at the time of award of the unpaid Rent and all other sums due hereunder which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid Rent and all other sums due hereunder which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid Rent and all other sums due hereunder for the balance of the Term after termination exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease; and (v) such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. 24. DAMAGE TO PREMISES: If, by no fault of Tenant, Premises are totally or partially damaged or destroyed by fire, earthquake, accident or other casualty, Landlord shall have the right to restore the Premises by repair or rebuilding. If Landlord elects to repair or rebuild, and is able to complete such restoration within 90 days from the date of damage, subject to the terms of this section, this agreement shall remain in full force and effect. If Landlord is unable to restore the Premises within this time, or if Landlord elects not to restore, then either Landlord or Tenant may terminate this agreement by giving the other written notice. Rent shall be abated as of the date of damage. The abated amount shall be the current monthly Rent prorated on a 30-day basis. If this agreement is not terminated, and the damage is not repaired, then Rent shall be reduced based on the extent to which the damage interferes with Tenant's reasonable use of Premises. If damage occurs as a result of an act of Tenant or Tenant's guests, only Landlord shall have the right of termination, and no reduction in Rent shall be made. 25. HAZARDOUS MATERIALS: Tenant shall not use, store, generate, release or dispose of any hazardous material on the Premises or the property of which the Premises are part. However, Tenant is permitted to make use of such materials that are required to be used in the normal course of Tenant's business provided that Tenant complies with all applicable Laws related to the hazardous materials. Tenant is responsible for the cost of removal and remediation, or any clean-up of any contamination caused by Tenant. 26. CONDEMNATION: If all or part of the Premises is condemned for public use, either party may terminate this agreement as of the date possession is given to the condemner. All condemnation proceeds, exclusive of those allocated by the condemner to Tenant's relocation costs and trade fixtures, belong to Landlord. 27. INDEMNIFICATION: Tenant agrees to indemnify, defend, and hold harmless Landlord, and its officials, agents, and employees, from any and all liabilities, claims, demands, actions, losses, damages, and costs, including all costs of defense thereof and any award of attorney s fees, caused by, arising out of, or in any way related to Tenant s use or occupancy of the Premises, except to the extent caused by or arising from the gross negligence or willful misconduct of the Landlord or its agents, employees, or contractors outside of the leased Premises.

9 28. INSURANCE: Tenant shall procure and maintain for the duration of the Lease insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Tenant s operation and use of the Premises, as described in this section. The cost of such insurance shall be borne by the Tenant. A. Minimum Scope Of Insurance: (i) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). (ii) Workers compensation insurance as required by the State of California and Employer s Liability insurance (for tenants with employees). (iii) Property insurance against all risks of loss to any tenant improvements or betterments. B. Minimum Limits Of Insurance: Tenant shall maintain limits no less than: (i) General liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. (ii) Employer s liability: $1,000,000 per accident for bodily injury or disease. (iii) Property insurance: Full replacement cost with no coinsurance penalty provision. C. Deductibles And Self-Insured Retentions: Any deductibles or self-insured retentions must be declared to and approved by the Landlord. At the option of the Landlord, either: The insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the Landlord, its officers, officials, agents, and employees; or the Tenant shall provide a financial guarantee satisfactory to the Landlord guaranteeing payment of losses and related investigations, claim administration, and defense expenses. D. Other Insurance Provisions: The general liability policy is to contain, or be endorsed to contain, the following provisions: (i) The Landlord, its officers, officials, agents, and employees are to be covered as insureds with respect to liability arising out of ownership, maintenance or use of the Premises leased to the Tenant. (ii) The Tenant s insurance coverage shall be primary insurance as respects the Landlord, its officers, officials, agents, and employees. Any insurance or self-insurance maintained by the Landlord, its officers, officials, agents and employees shall be excess of the Tenant s insurance and shall not contribute with it. (iii) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be canceled, except after 30 days prior written notice by certified mail, return receipt requested, has been given to the Landlord. E. Acceptability Of Insurer: Insurance is to be placed with insurers with a current A.M. Best s rating of no less than A:VII. F. Verification Of Coverage: Tenant shall furnish Landlord with the original certificates and amendatory endorsements effecting coverage required by this clause. The endorsements should be on forms provided by the Landlord or on other than the Landlord s forms, provided those endorsements or policies conform to the requirements. All certificates and endorsements are to be received and approved by the Landlord before taking possession of the Premises. The Landlord reserves the right to require complete, certified copies of all required insurance policies, including endorsements effecting

10 the coverage required by these specifications at any time. 29. TENANCY STATEMENT (ESTOPPEL CERTIFICATE): Tenant shall execute and return a tenancy statement (estoppel certificate), delivered to Tenant by Landlord or Landlord's agent, within 15 days after its receipt. The tenancy statement shall acknowledge that this agreement is unmodified and in full force, or in full force as modified, and state the modifications. Failure to comply with this requirement: (i) shall be deemed Tenant's acknowledgment that the tenancy statement is true and correct, and may be relied upon by a prospective lender or purchaser; and (ii) may be treated by Landlord as an Event of Default of this agreement. Tenant shall also prepare, execute, and deliver to Landlord any financial statement (which will be held in confidence) reasonably requested by a prospective lender or buyer. 30. LANDLORD'S TRANSFER: Tenant agrees that the transferee of Landlord's interest shall be substituted as Landlord under this agreement. Landlord will be released of any further obligation to Tenant regarding the security deposit, only if the security deposit is returned to Tenant upon such transfer, or if the security deposit is actually transferred to the transferee as confirmed in writing by such transferee. For all other obligations under this agreement which accrue after the date of transfer, Landlord is released of any further liability to Tenant, upon Landlord's transfer. 31. SUBORDINATION: This agreement shall be subordinate to all existing liens and, at Landlord's option, the lien of any first deed of trust or first mortgage subsequently placed upon the real property of which the Premises are a part, and to any advances made on the security of the Premises, and to all renewals, modifications, consolidations, replacements, and extensions. However, as to the lien of any deed of trust or mortgage entered into after execution of this agreement, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant pays the Rent and observes and performs all of the provisions of this agreement, unless this agreement is otherwise terminated pursuant to its terms. If any mortgagee, trustee, or ground lessor elects to have this agreement placed in a security position prior to the lien of a mortgage, deed of trust, or ground lease, and gives written notice to Tenant, this agreement shall be deemed prior to that mortgage, deed of trust, or ground lease, or the date of recording. 32. TENANT REPRESENTATIONS; CREDIT: Tenant warrants that all statements in Tenant's financial documents and rental application are accurate. Tenant authorizes Landlord and Broker(s) to obtain Tenant's credit report at time of application and periodically during tenancy in connection with approval, modification, or enforcement of this agreement. Landlord may cancel this agreement: (i) before occupancy begins, upon disapproval of the credit report(s); or (ii) at any time, upon discovering that information in Tenant's application is false. A negative credit report reflecting on Tenant's record may be submitted to a credit reporting agency, if Tenant fails to pay Rent or comply with any other obligation under this agreement. 33. COSTS AND ATTORNEY FEES: Attorney fees in total amount not exceeding $5000, shall be recoverable as costs (by the filing of a cost bill) by the prevailing party in any action or actions to enforce the provisions of this Agreement. The above $5000 limit is the total of attorney fees recoverable whether in the trial court, appellate court, or otherwise, and regardless of the number of attorneys, trials, appeals, or actions. It is the intent of this provision that neither party shall have to pay the other more than $5000 for attorney fees arising out of an action, or actions to enforce the provisions of this Agreement. 34. DISPUTE RESOLUTION: A. Mediation: Tenant and Landlord agree to mediate any dispute or claim arising between them out of this agreement, or any resulting transaction, before resorting to court action, subject to section 33A(1) below. Mediation fees, if any, shall be divided equally among the parties. If for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.

11 (1) Exclusions From Mediation: The following matters are excluded from Mediation hereunder: (i) a judicial or non-judicial foreclosure or other action or proceeding to enforce a deed of trust, mortgage, or Installment land sale contract as defined in Civil Code 2985; (ii) an unlawful detainer action; (iii) the filing or enforcement of a mechanic's lien; (iv) any matter that is within the jurisdiction of a probate, small claims, or bankruptcy court; and (v) an action for bodily injury or wrongful death, or for latent or patent defects to which Code of Civil Procedure or applies. The filing of a court action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies, shall not constitute a violation of the mediation provision. 35. NOTICE: Notices may be served by certified mail, , or courier at the following address or location or at any other location subsequently designated: Landlord: Tenant: City of San Mateo c/o Capital Realty Group Oudi Antebi, Redkix, Inc Howard Avenue, Suite st Avenue Burlingame, CA San Mateo, CA Notice is deemed effective upon the earliest of the following: (i) personal receipt by either party or their agent; (ii) written acknowledgement of notice; or (iii) forty-eight hours following deposit in the mail, postage prepaid; whichever first occurs. 36. WAIVER: The waiver of any Event of Default shall not be construed as a continuing waiver of the same Event of Default or a waiver of any subsequent Event of Default. 37. OTHER TERMS AND CONDITIONS/SUPPLEMENTS: The site plan of the Main Street Garage is included in Exhibit A. 38. NONDISCRIMINATION: The Tenant herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the Tenant himself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. 39. BROKERAGE: Capital Realty Group is representing Landlord in the transaction. Cassidy Turley Northern California, Inc. d/b/a DTZ is representing Tenant in the transaction. 40. ENTIRE CONTRACT: All prior agreements between Landlord and Tenant are incorporated in this agreement, which constitutes the entire contract. It is intended as a final expression of the parties' agreement, and may not be contradicted by evidence of any prior agreement or contemporaneous oral agreement. The parties further intend that this agreement constitutes the complete and exclusive statement of its terms, and that no extrinsic evidence whatsoever may be introduced in any judicial or other proceeding, if any, involving this agreement. Any amendment to this agreement must be in writing. 41. SEVERABILITY: Any provision of this agreement that is held to be invalid shall not affect the validity or enforceability of any other provision in this agreement. 42. BINDING ON SUCCESSORS: This agreement shall be binding upon, and inure to the benefit of, the heirs, assignees and successors to the parties.

12 43. GOVERNING LAW AND VENUE: This Agreement is governed by the laws of the State of California and, in the event of litigation, venue will be in the County of San Mateo. Tenant: Redkix, Inc. Date 66 Willow Road City_ Menlo Park_ State CA Zip By: Name Oudi Antebi Title: CEO Landlord City of San Mateo Date By Larry Patterson, City Manager Address 330 W. 20 th Avenue City San Mateo State CA Zip APPROVED AS TO FORM: Gabrielle Whelan, Assistant City Attorney

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14 1350 Bayshore Highway, Suite 900, Burlingame, CA February 18, 2015 Brett Barron Capital Realty Group 1200 Howard Avenue, Suite 204 Burlingame, CA Re: Redkix Inc. Proposal to Lease st Street, San Mateo Brett, On behalf of Redkix Inc., I am pleased to submit the following proposal for your consideration. About Redkix Inc. Redkix Inc. is set to build the next generation , calendar and contact platform for the enterprise. in its current form has been around for over 30 years, at the same time technology and the way people work has dramatically evolved. We re building the platform that will serve the next generation enterprise users for communication and collaboration. Redkix has raised over $7M as a seed round from top names in the valley such as David Marcus (President of Paypal and now head of Facebook messaging, reporting to Mark Zuckerberg), Dan Rose, head of corporate development at Facebook, Amnon Landan, former CEO and founder of Mercury Interactive (Sold to HP for over $3B) and others. Redkix Founders Roy and Oudi Antebi are successful entrepreneurs that sold their first startup, OffiSync, to Jive Software. The company s growth plan includes making downtown San Mateo the company headquarters. More information can be found at BUILDING: st Street, San Mateo, California PARTIES: Landlord: Tenant: City of San Mateo Redkix Inc. PREMISES: Approximately 1,670 rentable square feet located at st Street, San Mateo, CA LEASE COMMENCEMENT DATE: The Commencement Date shall be April 1, LEASE TERM: The Lease Term would be for a period of twenty four (24) months from the Lease Commencement Date. BASE RENT: The Base Rent shall be $3.00 NNN, per square foot, per month. Base Rent shall increase by 3% on the anniversary of the Commencement Date. UTILITIES AND OPERATING EXPENSES: The Operating Expenses shall be triple net in nature. Please provide operating expense details.

15 EARLY ACCESS: Provided it does not interfere with improvements, Tenant, at no cost to Tenant, shall have access to the Premises to install furniture, fixtures, equipment or other special leasehold improvements for two (2) weeks prior to the Commencement Date. PREPAID RENT / SECURITY DEPOSIT: Upon lease execution, Tenant will deliver to Landlord the first month s Base Rent and a Security Deposit of one (1) month paid rent. TENANT IMPROVEMENTS: Landlord, at its sole cost, shall professionally clean the carpet and provide new paint throughout the Premises with one base color and one accent color. DELIVERY CONDITION: On the Lease Commencement Date, Landlord shall deliver the Premises to Tenant with, all building systems and subsystems, structural elements of the Premises and the foundation in good condition, working order and repair at Landlord s sole cost. In addition, Landlord shall deliver the Building and Premises Fire and Life Safety and ADA code compliant as of the time of the lease Commencement Date. Landlord shall be obligated for the repair of the foundation, parking lot, structural components and operating systems of the Premises (e.g. HVAC, electrical, roof, roof waterproofing membrane, plumbing, fire sprinklers, etc) throughout the Lease Term. ACCESS: Tenant shall have access to the Premises 24 hours per day, 7 days per week, 52 weeks per year with key/card access and electronic services being provided at all times. SUBLEASE/ASSIGNMENT: Tenant shall be permitted to assign or sublease any portion of the Premises, subject the approval of Landlord, which shall not be unreasonably withheld or delayed. Landlord s approval shall not be required for Tenant to sublease less than one half (1/2) of the Premises. SIGNAGE: Tenant shall have the right, at Tenant s sole cost and expense, to install building standard signage on the front door. CONDITION OF PROPERTY: Landlord shall warrant that the Premises, Building and surrounding property are free of hazardous materials or contamination. Please advise us immediately about the property s physical and environmental condition, including but not limited to, the existence of any underground storage tanks, sumps, piping and any other factor indicating the possible presence of hazardous materials in, on or around the property; its zoning, and any present or contemplated use restrictions of the property; material physical defects; and any other material matter affecting its condition or value. ENVIRONMENTAL: Tenant shall be indemnified by Landlord for all previously existing and non-tenant introduced hazardous materials or contamination in the Premises, Building and surrounding property. BROKERAGE FEE: Cassidy Turley represents the Tenant in this transaction. Upon completion of a transaction between both parties, Landlord shall pay DTZ per a separate written agreement. Page 2 of 8

16 EXPIRATION: The terms and conditions expressed in this letter will be effective until 12:00 P.M. NOON five (5) business days from the date of this proposal at which time all terms and conditions expressed shall become null and void. GENERAL DISCLAIMER: See attached standard DTZ disclaimers. CONFIDENTIALITY If any information is to be kept confidential between the parties concerning the subject matter of this letter, the parties shall execute separate confidentiality agreements on terms acceptable to them with respect thereto before or when such information is provided to the other party. This proposal to lease is intended to be a non-binding statement of the terms of a proposed transaction and to reflect the parties interest in pursuing further discussions concerning the property. No legally binding obligations will be created unless and until a definitive lease agreement has been prepared and executed by Lessor and Lessee. Each party acknowledges that it has incurred, and will incur, costs and expenses in connection with the contemplated transaction including but not limited to the costs of due diligence, of assessing the economic and other merits of the proposal, and legal expenses in connection with the preparation of a final and binding agreement, all of which costs are incurred at such party s sole cost and risk, and not in reliance upon any act or representations of the other party or its agent. The parties further acknowledge that either party may terminate the negotiations at any time for any reason, or for no reason, without liability or obligation whatsoever to the terminating party. Any agreement reached pursuant to these discussions shall be subject to all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over the parties, property or subject matter of this Agreement, including but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment in Realty Property Tax Act, the Comprehensive Response Compensation and Liability Act, and Americans with Disabilities Act. The parties expressly acknowledge that Broker has made no independent determination or investigation regarding the following: present or future use or zoning of the property; ADA-related issues; fire department approvals; environmental matters affecting the Property; the condition of the Property, including, but not limited to structural, mechanical and soils conditions, or issues relating to hazardous wastes or substances as set out above; violations of the Occupational Safety and Health Act or any other federal, state, county or municipal laws, ordinances, or statutes; measurements of land and/or buildings. Lessee is advised to contact a professional, such as a civil engineer, industrial hygienist or other persons with experience in these matters, for advice on these matters. Lessee agrees to make its own investigation and determination regarding such items. We look forward to your timely response. Sincerely, DTZ Shannon Chircop Associate Page 3 of 8

17 AGREED: Landlord: Tenant: By By Title Title Date Date Page 4 of 8

18 STANDARD AGENCY CONFIRMATION (per California Civil Code Section ) Property Address: st Avenue San Mateo, CA The following agency relationship(s) is/are hereby confirmed for this specific transaction: (Name of Seller s / Lessor s Agent) Capital Realty Group is the agent of (check one): [ x ] the seller / lessor only; or [ ] both the seller / lessor and the buyer / lessee. (Name of Buyer s / Lessee s Agent) _DTZ is the agent of (check one): [ x ] the buyer / lessee only; or [ ] both the buyer / lessee and the seller / lessor. Acknowledged: Seller/Lessor: Date Buyer/Lessee: Date Seller/Lessor Agent: BRE Lic. No. (Brokerage Firm) By: (Associate Licensee) BRE Lic. No. Date Buyer/Lessee Agent:DTZ BRE Lic. No. (Brokerage Firm) By: BRE Lic. No (Associate Licensee) Date 2/13/2015 Page 5 of 8

19 REAL PROPERTY DISCLOSURES Cassidy Turley Northern California, Inc., a California Corporation, d/b/a DTZ ( Broker ) provides this Notice in reference to a proposed transaction by and between City of San Mateo ( Lessor ) and Redkix Inc. ( Lessee ) regarding real property identified as: st Avenue in the City of San Mateo, California (the Property ). This Notice applies to any transaction involving any type of real property, whether improved or unimproved. As used herein, Seller includes, where applicable, a seller, landlord, lessor, or sub-lessor, and Buyer includes, where applicable, a buyer, tenant, lessee, or sub-lessee. Hazardous Materials and Underground Storage Tanks Comprehensive federal and state laws and regulations ( Laws ) control the use, storage, handling, removal and disposal of hazardous substances ( Hazardous Materials ). The term Hazardous Materials includes, but is not limited to, products containing petroleum, paint, solvents, lead, cyanide, DDT, inks, acids, pesticides, ammonium, asbestos, heavy metals, PCBs and a wide variety of other products. Hazardous Materials may be present at the Property due to current or prior use, or the use of adjacent properties. Some Laws impose liability upon owners, tenants, and users for clean-up costs and damages, regardless of such party s lack of fault or involvement in the presence of such Hazardous Materials. Other Laws establish certain duties of disclosure which may apply to this transaction. For instance, a seller who has reason to believe that Hazardous Materials are present is required to disclose such knowledge to a buyer; the seller of any Property which contains any residential unit must disclose whether lead-based paint is present; and a seller or landlord must disclose reports and other information regarding the presence of asbestos in the Property to a buyer or tenant, and to contractors, employees, and others who may occupy the Property. A party who fails to make required disclosures may face substantial liability. The Laws regulating Hazardous Materials are extensive and complex, and it is not practical to list all such Laws in this Notice; nor is Broker qualified to advise you regarding your rights, obligations or liability that may arise in connection with Hazardous Materials. Broker recommends that you consult with your advisors with respect to these issues, and investigate prior and surrounding uses which may have caused Hazardous Materials to be present at the Property. Americans with Disabilities Act (ADA) The Americans with Disabilities Act (42 USC et seq.) requires, among other things, that owners of public accommodations remove barriers to access by disabled persons, and provide auxiliary aids and services for hearing, vision or speech impaired persons. Any change of use or alterations of the Premises may trigger such requirements, even if existing use is in compliance with the ADA. Broker recommends that you consult with your advisors regarding the ADA and related Laws, to determine whether and how the ADA might affect you. Broker Disclaimer Broker has made no independent investigation regarding the present or future use or zoning of the Property; ADA-related issues, matters relating to Hazardous Materials, or the compliance of the Property with the Occupational Safety and Health Act or any other federal, state, county or municipal Law. Broker has not investigated, and is not qualified to provide any opinion about the structural, mechanical, or soils conditions of the Property. Broker has not independently verified the size, measurements, or boundaries of the Property, and any representation thereof is made solely based upon information provided to Broker, which Broker deems reliable but does not warrant as accurate. You should consult your advisors on these matters. Buyer agrees to make its own investigation and determination regarding all matters affecting the value, condition, utility, size, compliance with Laws, and all aspects of the Property s suitability for Buyer s intended use. Broker Representation Broker has a wide variety of clients, and may represent another buyer interested in the same property as Buyer, or may represent sellers with property similar to Seller s which may be competing with Seller s. Page 6 of 8

20 Broker may on occasion represent both the buyer and the seller in a transaction. Broker will not disclose the confidential information of one client to another client. Natural Hazards (Sale Only) Various state Laws require the seller and its broker to disclose the existence of certain Natural Hazards to a buyer, including whether the Property is located in an Earthquake Fault Zone, a Seismic Hazard Zone, a Special Flood Hazard Area, Area of Potential Flooding, a Fire Hazard Severity Zone, or a Wildland Fire Area. If Broker represents the Seller, Broker shall provide Buyer with a report prepared by an independent third party regarding such Natural Hazards during the due diligence period under the purchase contract. In addition, some lenders require as a condition of obtaining financing on a property located in certain flood zones that flood insurance be carried. The National Flood Insurance Program provides such insurance at a reasonable cost. Cities or counties participating in the National Flood Insurance Program may have adopted building or zoning restrictions, or other measures affecting the Property, as part of their participation in the program. Broker has not made any independent investigation of these matters and recommends that you consult with the local governmental authorities and your advisors regarding the requirement for, availability, and cost of such insurance. Taxes Sale Only Any real estate transaction may have federal, state and local tax consequences. Internal Revenue Code 1446 (FIRPTA) requires a buyer to withhold and pay to the IRS 10% of the gross sales price within 10 days after closing, unless the buyer can establish that the seller is a nonforeign person. The amount of tax required to be withheld may, depending on the structure of the transaction, exceed the seller s net proceeds, for which the buyer may be liable. The title company will require that seller deliver a Non- Foreign Seller Affidavit prior to closing, or in the alternative will withhold such proceeds and may require the buyer to pay any additional sums necessary to satisfy this requirement. In addition, California Revenue & Taxation Code requires a buyer to withhold and pay to the California Franchise Tax Board 3-1/3% of the gross sales price, subject to certain exceptions. Broker is not qualified to provide tax or accounting advice, and has made no independent investigation as to the possible tax withholding liabilities in this transaction. Broker recommends that you consult with your advisors regarding these issues. Commercial Property Owner s Guide to Earthquake Safety Sale Only California Government Code and 8893 et seq. require that the Seller (or its agent) of a precast concrete or reinforced or unreinforced masonry building with wood frame floors or roof which was built before January 1, 1975 must deliver to the Buyer a copy of The Commercial Property Owner s Guide to Earthquake Safety published by the California Seismic Safety Commission. Buyer acknowledges that Seller and/or Broker has disclosed whether such requirement applies to this Property, and if so, that Broker has delivered to Buyer a copy of that Guide. Water Heater Bracing Disclosure and Certification Sale Only Seller hereby certifies that all water heaters in or on the Property are braced, anchored or strapped to resist falling or horizontal displacement due to earthquake motions as required by state and applicable local codes. General Disclaimer This proposal is merely a statement of the terms upon which the parties may be interested in pursuing further negotiations concerning the property, and is not intended to be a complete or binding agreement. No binding agreements shall be created between the parties until a full and final written agreement, containing these and all other terms of the transaction, is prepared, reviewed and approved by the parties respective counsel, if any, and mutually executed and delivered. Page 7 of 8

21 Each party acknowledges that it has incurred, and will incur, costs and expenses in connection with the transaction contemplated hereby, including but not limited to the costs of investigation and assessment of the economic and other merits of the proposal, as well as legal expenses in connection with the preparation of a final and binding agreement, all of which costs are incurred at such party s sole cost and risk, and not in reliance upon any act or representations of the other party or its agent. Either party may terminate the negotiations at any time for any reason, or for no reason, without liability or obligation whatsoever. The parties acknowledge that Broker has made no independent determination or investigation regarding the present or future use or zoning of the property, its compliance with state, local, or federal laws, availability of governmental permits or approvals, measurements of land and/or buildings, or the condition of the property, including, but not limited to its environmental, structural, mechanical and soils conditions. Broker recommends the parties consult with their own advisors with experience in these matters. Buyer/Lessee agrees to make its own investigation and determination regarding such items. Any agreement reached pursuant to these negotiations shall be subject to all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over the parties, property or subject matter of this proposal, including but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment in Realty Property Tax Act, the Comprehensive Response Compensation and Liability Act, and Americans with Disabilities Act. A real estate broker is qualified to advise on real estate matters, but is not authorized to give legal or tax advice. No representation or recommendation is made by DTZ or its agents or employees as to the legal sufficiency, legal effect or investment or tax consequences of this document, the purchase and sale agreement, or any transaction relating thereto since these are matters which should be discussed with your consultants and advisors. Page 8 of 8